European stocks perked up on Monday morning despite a retreat in Asian stocks after a weak US nonfarm payrolls report at the end of last week.
The FTSE 100 index traded up 51.83 points, or 0.6%, at 8,233.30. The FTSE 250 was 102.93 points higher, 0.5%, at 20,596.93, and the AIM All-Share was up 3.29 points, or 0.4%, at 747.29.
The Cboe UK 100 was up 0.8% at 823.66, the Cboe UK 250 added 0.5% at 18,143.46, and the Cboe Small Companies edged up 0.1% to 16,858.74.
The CAC 40 in Paris and Frankfurt’s DAX 40 were each 0.5% higher.
On Friday, the FTSE 100 fell 0.7%, while the CAC and DAX lost 1.1% and 1.5%, after an unnerving US nonfarm payrolls print.
In New York on Friday, the Dow Jones Industrial Average shed 1.0%, the S&P 500 slumped 1.7%, while the Nasdaq Composite plummeted 2.6%.
In Asia on Monday, the Nikkei 225 index in Tokyo closed down 0.5%. In China, the Shanghai Composite fell 1.1%, while the Hang Seng in Hong Kong was down 1.7% in late trade. The S&P/ASX 200 in Sydney closed down 0.3%.
‘Last week ended on an ugly note, really, as the jobs data from the US revealed throughout the week was weak, but maybe not weak enough to tilt the Federal Reserve expectations toward a clear direction. Job openings fell more than expected, and Friday’s official data showed that hirings rebounded in August, though not as much as pencilled in by analysts,’ Swissquote analyst Ipek Ozkardeskaya commented.
Total nonfarm payroll employment in the US rose by 142,000 in August, with job gains in construction and healthcare, numbers on Friday showed. In July, nonfarm payrolls rose by 89,000, the outcome revised from an initially reported 114,000 increase.
The latest reading missed the FXStreet-cited market consensus of a 160,000 increase in jobs.
Swissquote’s Ozkardeskaya added: ‘And if all this is not enough, the data released in the earliest hours of this week pointed that the Japanese economy recovered slower-than-expected but that the price pressures remained higher than expected in Q2, and that inflation in China came in below estimates as well, not helping to relieve the growing tensions about China and its sputtering economy.
Chinese consumer inflation picked up slightly last month, spiking to its loftiest level in six months, numbers on Monday showed.
Consumer prices rose 0.6% on-year in August, picking up speed from 0.5% in July, but shy of an FXSTreet cited forecast of 0.7%.
While many major Western economies have been grappling with the threat of high inflation, China has instead been seeking to avert another dip into deflation.
At the end of 2023, the country sank into deflation for four months, with the sharpest contraction in consumer prices in 14 years in January.
Japan’s economic growth was lower than initially predicted, the nation’s Cabinet Office said.
Gross domestic product increased at annual rate of 2.9% in the second-quarter. Growth was downwardly revised from 3.1%.
On the docket this week is a European Central Bank interest rate decision on Thursday, after a UK unemployment reading on Tuesday and UK gross domestic product data on Wednesday.
XTB analyst Kathleen Brooks commented: ’The market is convinced that a cut is coming. The doves on the ECB committee have been vocal in their support for a rate cut, including Panetta, Centeno and Stoumaras, while the hawks have not directly spoken out against cutting rates. However, we continue to think that there will be robust debate at the ECB.
‘UK labour market data is scheduled for release on Tuesday. Expectations are for the unemployment rate to fall back slightly to 4.1% from 4.2%, and for average weekly earnings growth excluding bonus payments to moderate to 5.1% in the three months to July, from 5.4% prior. This is still elevated and remains well above the BOE’s 2% inflation target rate. However, it is worth noting that real pay, adjusted for inflation, is much closer to the BOE’s target inflation rate, and was 2.4% last month. Thus, another decline in nominal pay could ease UK inflation fears and allow the BOE to cut rates later this year, although we still believe that they will cut rates at a slower pace than the ECB and the Federal Reserve.’
Sterling faded to $1.3101 early Monday in London, from $1.3147 at the time of the London equities close on Friday. The euro slipped to $1.1057 from $1.1104. Against the yen, the dollar climbed to JP¥143.18 from JP¥142.12.
In London, Entain shares rose 7.1%. It said it has performed well so far in its second half, with the Ladbrokes owner returning to growth in its UK and Ireland online betting offering ‘earlier than expected’.
The firm, providing an update on its ‘strategic progress and trading performance’ ahead of investor meetings this week, said the improved momentum seen in the second-quarter has continued into the third.
Online net gaming revenue growth in the second-half so far is ‘ahead of our expectations’, with the UK & Ireland online division returning to year-on-year growth.
Among only a handful of fallers in the FTSE 100 in early dealings, luxury retailer Burberry fell 3.2%. Barclays cut the stock to ’underweight’ from ’equal-weight’.
SigmaRoc lost 3.1%. The building materials firm reported a rise in half-year revenue, following the integration of European lime businesses acquired from CRH, though it cautioned that some markets are showing ‘mixed demand’.
Revenue in the six months to June 30 jumped 60% to £468.8 million from £290.0 million a year prior. Pretax profit, however, fell 29% to £17.2 million from £24.3 million. Administrative expenses were up almost double to £69.9 million from £36.0 million. Net finance costs surged to £26.5 million from £7.1 million.
SigmaRoc sealed the acquisition of lime businesses in Germany, the Czech Republic and Ireland from CRH in January. Those units are now ‘fully integrated’. A UK lime acquisition was completed in March, with the ‘integration progressing ahead of schedule’.
CEO Max Vermorken says: ‘I am delighted to be sharing these results for the first half of 2024 which have come in ahead of our expectations despite continued mixed markets. The results show the resilience of SigmaRoc’s diversified business and operations and are testament to the hard work of all our staff. The integration of the core of the CRH acquisitions has gone well, with Poland completing post period end. We expect to report good progress on the integration of this last piece of the CRH acquisitions later in the year.’
CRH noted a ‘positive start’ to the second-half. However, it warned that ‘some end markets continue to show mixed demand with areas of weakness remaining in certain areas’. These include the German power and auto sectors, it added.
A barrel of Brent rose to $71.97 early Monday, from $71.50 at the time of the London equities close on Friday. Gold declined to $2,496.65 an ounce from $2,514.36.
The economic calendar has an Irish industrial production reading at 1100 BST.
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