Stock prices in London were predominantly lower on Friday morning, as big news for several FTSE 100 and 250 constituents failed to adequately combat nervousness around the latest US jobs report.
The FTSE 100 index opened down 18.03 points, 0.2%, at 7,674.43. The FTSE 250 was down 65.78 points, 0.3%, at 19,518.20, and the AIM All-Share was up 1.58 points, 0.2%, at 739.48.
The Cboe UK 100 was down 0.3% at 768.69, the Cboe UK 250 was down 0.4% at 16,891.35, and the Cboe Small Companies was down 0.1% at 14,741.14.
In European equities on Friday, the CAC 40 in Paris was down 0.1%, while the DAX 40 in Frankfurt was down 0.2%. The CAC 40 topped 8,000 points for the first time on Thursday.
Interest rate optimism had helped equities on Thursday, but this was short lived.
The conviction that the European Central Bank will enact its first of the cycle in June grew following a post-decision press conference with President Christine Lagarde.
Meanwhile, Federal Reserve Chair Jerome Powell said the central bank ‘can and will’ cut rates this year if current economic trends continue. However, a red-hot US jobs report on Friday could threaten that outlook.
At 1330 GMT, the US jobs report will be released, giving a further indication as to the health of the labour market. The resilience of the jobs market has been a key factor behind the Federal Reserve’s reluctance to reduce interest rates.
According to FXStreet, nonfarm payrolls are expected to pick up by 200,000 in February, slowing from a 353,000 increase in January. The unemployment rate is expected to stay put at 3.7%.
‘If the data is sufficiently soft – or ideally softer than expected, the Fed doves will finish the week on a dominant note. But if we see another month of blowout jobs report, confusion will reign,’ said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
‘But in all cases, what matters the most is inflation. Even if the US jobs data comes in hot, if next week’s US CPI read is soft enough, investors will continue to daydream about that first rate cut.’
In the US on Thursday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.3%, the S&P 500 up 1.0% and the Nasdaq Composite up 1.5%.
The pound was quoted at $1.2803 early on Friday in London, higher compared to $1.2793 at the equities close on Thursday. The euro stood at $1.0933, slightly lower against $1.0934. Against the yen, the dollar was trading at JP¥147.90, down compared to JP¥148.09.
In the FTSE 100, DS Smith rose 5.6% whilst Mondi lost 2.6%.
Mondi and its packaging peer DS Smith have reached an agreement in principle that will see Mondi take over DS Smith in a proposed all-share deal.
In a statement dated Thursday, but was released on Friday, Mondi said the possible merger that would create a company worth more than £10 billion is subject to regulatory clearance and mutual confirmatory due diligence.
In terms of the agreement, Mondi shareholders would own 54%, while their DS Smith counterparts would hold 46%.
Based on Mondi’s closing share price of 1,381 pence on February 7, the day before Mondi launched its takeover bid, the terms of the combination would represent an implied value of 373 pence per DS Smith share and a premium of 33% to DS Smith’s closing share price of 281 pence per share on February 7.
In the FTSE 250, Just Group shot up 8.4%.
Pretax profit in 2023 swung to £172 million from a loss of £494 million a year earlier. On the back of the results, Just Group upped its dividend by 20% annually to 2.08p from 1.73p.
Chief Executive David Richardson said: ‘We are delighted with our financial performance in 2023, a record year for the group, and are confident of exceeding our medium term profit growth pledge. As such, we now expect to achieve our target of doubling profits in three years instead of the originally intended five. Given the multiple opportunities available and strong structural growth drivers in our chosen markets, we have never been more confident in our ability to deliver sustainable and compounding growth.’
Amongst London’s small-caps, Petrofac jumped 12%.
The energy infrastructure firm has been awarded an operations contract from Turkemengas at the Galkynysh gas field, in Turkmenistan. The three-year contract is valued at over $200 million.
On AIM, Mattioli Woods surged 33%, after it accepted a £432 million takeover offer from Pollen Street Capital funds.
Mattioli is a Leicester, England-based specialist wealth and asset management business, whilst Pollen Street is a London-based asset manager.
Under the terms of the acquisition, Mattioli Woods shareholders will receive 804p in cash. This represents a 34% premium to the closing price of 600p per share on March 7.
Mattioli CEO Ian Mattioli said: ‘We have a strong track record of combining like-minded businesses that share the same culture and ethos of putting clients first. The team at Pollen Street Capital share our passion for delivering exceptional client outcomes and have demonstrated their ability to partner with entrepreneurial financial services business. I believe that with Pollen Street Capital’s support and access to capital we can accelerate the delivery of our strategy and provide our clients with the proactive advice and bespoke investment solutions they require.’
In Asia on Friday, the Nikkei 225 index in Tokyo was up 0.2%. In China, the Shanghai Composite was up 0.6%, while the Hang Seng index in Hong Kong was up 0.8%. The S&P/ASX 200 in Sydney closed up 1.1%
Brent oil was quoted at $83.59 a barrel early in London on Friday, up from $82.80 late Thursday.
Gold was quoted at $2,161.77 an ounce, up against $2,155.87.
Focus on Friday will be on the latest US job report, though before that, there is a eurozone gross domestic product reading at 1000 GMT.
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