The FTSE 100 was leading an otherwise directionless start to equities trading in Europe on Wednesday, as firm gold and oil prices supported the commodities-heavy London index.
The FTSE 100 index was up 34.53 points, 0.5%, at 7,487.37. The FTSE 250 was down 52.93 points, 0.3%, at 19,369.44, and the AIM All-Share was down 2.07 points, 0.3%, at 835.87.
The Cboe UK 100 was up 0.4% at 748.82, the Cboe UK 250 was down 0.3% at 16,710.47, and the Cboe Small Companies was down 0.6% at 16,710.47.
The internationally-focused FTSE 100 index continues to benefit from its exposure to commodity and oil stocks, as well as other defensive sectors. This lies is in contrast to the UK domestic-focused FTSE 250 index, which has suffered more due to the local economy’s worsening prospects.
At 1900 GMT on Wednesday, the US Federal Reserve will publish the minutes of the most recent meeting of its policy-making committee. Investors will be looking for any clues about the central bank’s decision-making process for future interest rate hikes.
There will also be US initial jobless claims a day early because of the Thanksgiving Day holiday on Thursday. Stock trading will be closed on Thursday and have a half-day session on Friday.
FXStreet-cited consensus expects the number of US workers filing for first-time unemployment benefits to increase to 224,000 in the week that ended November 18 from 222,000 a week earlier.
Before the FOMC minutes, there are flash purchasing managers’ index readings, including the UK at 0930 GMT and the US at 1445 GMT.
The UK S&P Global/CIPS manufacturing PMI is expected to show a further contraction in the sector in November, with a reading of 45.8 points, according to FXStreet-cited consensus. This compares with 46.2 in October.
‘The deceleration in overall activity is consistent with Q4 GDP contraction which would be a second successive quarterly decline, signifying a technical recession,’ said Lloyds Bank.
According to a PMI reading already out, Germany’s private sector remained in contraction territory in November, though the rate of decline slowed and pessimism among services providers and manufacturers ebbed, S&P Global said.
The flash composite PMI rose to a three-month high of 46.4 points in November, from October’s final reading of 45.1. The figure inched closer to the 50.0 neutral mark, suggesting the pace of decline slowed this month.
In Europe, equities opened flat, as the CAC 40 in Paris was marginally higher, while the DAX 40 in Frankfurt was marginally lower.
In Zurich, Credit Suisse fell 5.3%, as it predicted another quarterly loss, with its investment banking arm struggling amid a ‘slowdown in capital markets’.
The Zurich-based bank said it is pressing on with cost cuts, as it looks to boost its fortunes and turn the page on a difficult period.
The financial services firm expects a pretax loss of up to fr.1.5 billion, around $1.6 billion, in the fourth quarter of 2022. This would be slightly narrower than the fr.1.59 billion loss in the fourth quarter of 2021.
Sterling was quoted at $1.885 early Wednesday, firm on $1.1871 at the London equities close on Tuesday. The euro traded at $1.0337 early Wednesday, higher than $1.0275 late Tuesday. Against the yen, the dollar was quoted at JP¥141.28, marginally down from JP¥141.35.
In London, the FTSE 100 index was once again lifted by oil stocks and mining stocks.
Gold was quoted at $1,742.24 an ounce early Wednesday, higher than $1,741.10 on Tuesday, while Brent oil was trading at $88.89 a barrel, firm on $88.86.
BP and Shell were 1.8% and 1.5% higher in early trade.
Meanwhile, miners rose after a swathe of price target upgrades by brokers, with Antofagasta up 1.7%, Anglo American up 1.4%, and Rio Tinto up 0.6%.
Swiss diversified miner Glencore added 4.3%.
It has agreed on terms of a $1.1 billion sale of its Cobar copper mine in New South Wales, Australia with New York-listed special purpose acquisition company Metals Acquisition. Glencore will also receive a 1.5% net smelter return life of mine royalty upon completion.
Late Tuesday, Bernstein raised Glencore stock to ’outperform’, upping its price target to 770p from 560p.
At the other end of the FTSE 100, United Utilities shed 2.7% in early trading.
The water company reported strong profit growth in the six months to September 30, with pretax profit of £426.3 million, compared to £212.7 million a year before. However, this mostly reflects a £255 million decrease in reported net finance expense.
Revenue edged down to £919.3 million from £932.3 million. The water works increased its interim dividend to 15.17 pence, compared to 14.50p.
Looking ahead, United Utilities expects annual revenue to be around 1% lower than a year before.
‘While the current challenging macro environment is impacting financial performance, the economic performance of our business remains robust, supported by our strong balance sheet, effective hedging policies and tight cost control,’ United Utilities said.
In the FTSE 250, Pets at Home lost 4.6%, as costs ate into profit.
The pet supplies retailer said revenue grew to £727.2 million in the 28 weeks to October 13, compared with £677.6 million in the comparable period of the previous year. Pretax profit fell to £53.4 million from £65.7 million, due to higher costs of freight and energy, as well as higher investment.
The pet supplies retailer said there was no change to annual guidance, and continues to expect underlying pretax profit to be in line with analyst consensus of £131 million. The firm lifted its interim dividend 4.7% to 4.5p.
Commented Lara Martinez, an analyst at research house Third Bridge: ‘The UK saw a massive increase in pet ownership during Covid and our experts expect growth, albeit at a slower pace, to continue over the next 2-5 years as a structural shift in working patterns takes hold.
‘Pets owners will strongly resist trading down their pet food and pet care purchases during an economic downturn.’
Elsewhere, De La Rue plunged 25%.
The banknote printer reported a ‘challenging’ first half ending September 30, as revenue fell 8.3% to £164.3 million from £179.2 million a year before. This was mostly led by a decline in Currency revenue. The banknote company swung to a pretax loss of £15.9 million from a profit of £10.9 million a year before.
De La Rue now expects full-year adjusted operating profit between £30 million and £33 million, which is below £36 million analyst consensus.
The firm also laid out its plans to continue growth in Authentication and achieve ‘solid returns’ on investments in Currency. ‘We are reiterating that as part of this, next financial year, the company will generate free cash flow and see an improved [earnings before interest, tax, depreciation and amortisation],’ it said.
In Asia on Wednesday, Japanese financial markets were closed for Labor Thanksgiving Day. In China, the Shanghai Composite closed up 0.3%, while the Hang Seng index in Hong Kong was up 0.5%. The S&P/ASX 200 in Sydney was up 0.7%.
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