Stocks in Europe went into reverse in midday trade on Thursday, giving back the gains made earlier in the session, as eyes turn to the jobs report in the US, with hopes the data could curtail the US Federal Reserve's recent interest rate hike pattern.
The central bank has moved aggressively, lifting rates by 75 basis points in each of its previous three meetings. Stocks perked up earlier this week as weaker data led to hopes that the Fed would pivot, dialling back rate hikes in a bid to support a struggling economy.
There was some nervousness in the air on Thursday, however, as the nonfarm payrolls report edges ever closer.
The FTSE 100 index fell 48.40 points, or 0.7%, at 7,004.22. The FTSE 250 was up just 7.10 points at 17,569.52. The AIM All-Share was down by 0.90 of a point, or 0.1%, at 814.54.
The Cboe UK 100 lost 0.7% at 699.44, the Cboe UK 250 added 0.2% at 15,020.65, and the Cboe Small Companies was down 0.6% at 12,683.37.
In mainland Europe, the CAC 40 in Paris lost 0.5%, while the DAX 40 in Frankfurt fell 0.3%.
The dollar was mixed on Thursday as currency traders weigh up whether or not the Fed will put the brakes on rate hikes.
The pound was quoted at $1.1253 at midday in London on Thursday, flat from $1.1252 at the equities close on Wednesday.
The euro stood at $0.9882 Thursday, up against $0.9859 late Wednesday. Against the yen, the dollar was trading at JP¥144.76, largely unchanged from JP¥144.78.
Central banks are juggling rampant inflation with weaker growth. The Reserve Bank of Australia on Tuesday slowed the pace of its rate rises, in a bid to strike a balance.
Inflationary worries intensified on Wednesday, AJ Bell analyst Russ Mould noted, after a group of oil producers cut output.
‘Adding to a difficult picture, oil prices are back on the move. Having helped ease inflationary pressures in the last month or two as crude slipped back, OPEC's decision to go for higher-than-expected output cuts is driving the market higher once again,’ Mould commented.
Brent oil was quoted at $92.86 a barrel at midday on Thursday, down from $93.34 late Wednesday.
Oil edged lower heading into Thursday afternoon, but had topped the $94 a barrel mark in morning trade.
OPEC's output cut was not enough to spare Shell from a share price slide in London. The oil major fell 4.7%.
It expects a third-quarter hit of $1.0 billion to $1.4 billion in its Chemicals & Products arm as indicative refining margins weaken.
Refining margins in the third quarter of 2022 weakened to $15 a barrel, from $28 a barrel in the previous three months.
Shell's earnings warning came after its departing Chief Executive Ben van Beurden on Tuesday said governments should ‘probably’ tax energy firms more to help protect the poorest from soaring electricity and gas bills.
Topping the FTSE 100, Imperials Brands added 3.6%. The owner of the Davidoff cigarette brand announced a £1 billion share buyback programme, and said including dividends, annual capital returns are expected to exceed £2.3 billion. This is about 13% of current market capitalisation, it noted.
It also said trading in its financial year ended September 30 was in line with expectations. It expects net revenue and adjusted operating profit to grow by around 1% in constant currency, in line with previous guidance.
Volution Group rose 9.3%, the best FTSE 250 performer, as the manufacturer of energy-efficient indoor air quality products reported double-digit rises in annual revenue and profit.
It said revenue in the year ended July 31 rose 13% year-on-year to £307.7 million from £272.6 million, and pretax profit increased 57% to £47.2 million from £30.0 million.
Victorian Plumbing was a standout performer on AIM, surging 15%.
The bathroom retailer said its revenue, earnings and cash flow topped market expectations in the year ended September 30.
Revenue in the second half alone rose 5% annually.
‘Against a wider bathroom market that is down year-on-year, this establishes Victorian Plumbing's position as the No. 1 bathroom retailer in the UK,’ it says.
Thursday's share price surge was welcome relief for a stock that has plunged more than 80% over the past 12 months.
It was one of the most valuable companies on the AIM junior market when it floated in June of last year, its market capitalisation even briefly hit the £1 billion mark, but stands at just £133.4 million now.
Shares in retailer N Brown dropped 12%. The Jacamo owner's revenue dropped 4.6% to £331.5 million in the half-year ended August 27, from £347.4 million a year prior. Pretax profit plunged 75% to £7.2 million from £28.4 million.
‘We anticipate continued softness in trading over the second half as macroeconomic pressures continue to weigh on consumers, despite government support,’ Chief Executive Steve Johnson warned.
Gold was quoted at $1,713.14 an ounce midday Thursday, up against $1,709.08 late Wednesday.
Still to come on Thursday is the latest US initial jobless claims reading at 1330 BST.
Ahead of the data, New York equity market futures were weaker. The Dow Jones Industrial is called down 0.6%, and the S&P 500 and Nasdaq Composite each down 0.7%.
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