London shares were higher at midday on Thursday, attempting a pre-holiday rally after a positive US economic indicator on Wednesday and ahead of more data points for the world’s largest economy in the next hour.
The FTSE 100 index was up 34.11 points, 0.5%, at 7,531.43. The FTSE 250 was up 62.80 points, 0.3%, at 18,926.45 , and the AIM All-Share was down just 0.2 of a point, at 830.22.
The Cboe UK 100 was up 0.4% at 752.75, the Cboe UK 250 was up 0.4% at 16,376.71, and the Cboe Small Companies was up 0.1% at 12,933.78.
‘The markets seem to be heading into Christmas on a slightly more hopeful note amid signs the US consumer is proving more resilient than feared,’ said AJ Bell investment director Russ Mould.
This positivity did not extend to European equities, which had fallen into the red by early afternoon Thursday. The CAC 40 in Paris was marginally lower, while the DAX 40 in Frankfurt was down 0.2%.
Consumer confidence in the US economy improved in December, bouncing more than expected as inflation expectations eased and gasoline prices cooled, survey data showed on Wednesday.
The closely watched consumer confidence index rose more than analysts predicted to 108.3 points this month, markedly higher than the revised 101.4 figure in November, said think tank the Conference Board.
There are more US economic indicators to come on Thursday, with US weekly unemployment insurance claims, as well as a gross domestic product print, and personal consumption expenditures.
Annualised US GDP growth is expected to be confirmed at 2.9% in the third quarter.
The dollar was mixed ahead of the data, while stocks in New York were called lower.
Sterling was quoted at $1.2062 early Thursday, lower than $1.2093 at the London equities close on Wednesday. The euro traded at $1.0629, higher than $1.0612. Against the yen, the dollar was quoted at JP¥132.18, firm versus JP¥132.08.
‘We continue to believe that the fundamental outlook still favours the dollar,’ commented Brown Brothers Harriman. ‘We remain negative on the euro and sterling but our 2023 forecasts for USD/JPY will have to be marked lower as the timetable for BOJ liftoff has been moved forward and suggests the yen will remain relatively firm.’
The Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite all were called down 0.3%.
Earlier on Thursday, a new UK GDP print showed a sharper decline in the third quarter than previously forecast.
The UK economy is now estimated to have contracted by 0.3% between July to September. This was downwardly revised from a previous estimate of a 0.2% decline. It mainly reflects revisions to production and construction output estimates, ONS said.
The estimates were adjusted due to the additional bank holiday in September for the state funeral of Queen Elizabeth II, which saw businesses close or reduce their operations.
Meanwhile, annual real UK GDP was revised upwards to 7.6% growth in 2021 from a previous estimate of 7.5%. Despite this, downward revisions in 2022 meant that real GDP is now estimated to be 0.8% below its pre-pandemic size.
This compares with a previous estimate of being just 0.4% below. The estimate shows the UK is the only G7 country to continue to fall short of its pre-pandemic performance.
‘There is clearly a caveat in that the UK did shutter shops and close offices and factories to allow people to take time off to pay their respects to the late Queen. But all in all, it’s hard to find the silver lining in these gathering storm clouds,’ said AJ Bell’s Danni Hewson.
Gold was quoted at $1,814.65 an ounce at midday on Thursday, edging down from $1,815.20 on Wednesday. Brent oil fetched $83.69 a barrel, higher than $81.68.
In London, FTSE 100 heavyweights BP and Shell were up 1.7% and 1.0% respectively, tracking the oil price higher.
Amid a more risk-on mood, defensive stocks such as United Utilities and British American Tobacco were succumbing to selling pressure, losing 2.1% and 1.2% respectively.
In the FTSE 250, DiscoverIE was up 1.0%, having returned some of its early morning gain.
The specialised electronic components firm has acquired Magnasphere, a US-based company that designs and manufactures magnetic sensors and switches for industrial electronic purposes. It will pay out $22 million on a debt-free, cash-free basis before expenses, funded from existing debt facilities.
The acquisition will be immediately accretive to underlying earnings and underlying operating margin, discoverIE said.
‘This acquisition of Magnasphere continues our strategy of building a differentiated, international, growth-focused electronics group with strong operating margin,’ said discoverIE Chief Executive Nick Jefferies.
On AIM, Tekmar surged up 50%.
The offshore energy markets services and technology provider won a new contract to supply cable protection systems to phase three of the UK’s Dogger Bank C wind farm. The award comes from DEME Offshore.
The 3.6 gigawatt wind farm is located off the north east coast of England. Tekmar will design, manufacture and supply a further 172 CPS, having already supplied 380 CPS in the A and B project phases at Dogger Bank. It provided no financial details.
Destiny Pharma also added 10%.
The clinical-stage biotechnology company, said the completion of a partnering agreement for its NTCD-M3 phase 3 drug is expected in early 2023.
The company said it had entered exclusive negotiations with a US pharmaceutical company to secure a commercialisation partner for NTCD-M3 - its lead asset for the prevention of clostridioides difficile infection recurrence.
Thursday is the last full day of trading in London before Christmas, before an early finish at 1230 GMT on Friday.
By Elizabeth Winter, Alliance News senior markets reporter
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