(Alliance News) - It was a downbeat end on Wednesday to what has been a strong first half of 2021 for equities in London.
While a better-than-expected US ADP jobs report was able to lift Wall Street in early trade, Europe failed to receive a boost, with markets remaining cautious ahead of Friday's key US labour market update.
The blue-chip FTSE 100 index closed down 50.08 points, or 0.7%, at 7,037.47 on Wednesday - though at this price, remains 8.9% higher since 2021 began. The index gained 4.8% over the second quarter.
The FTSE 250 ended Wednesday's session 166.15 points, or 0.7%, lower at 22,376.02, though has risen 9.2% since the start of the year. The AIM All-Share closed down 7.75 points, or 0.6%, at 1,248.31, and has advanced 7.9% since the start of 2021.
The Cboe UK 100 ended down 0.5% at 701.66, the Cboe UK 250 closed down 0.4% at 20,136.72, and the Cboe Small Companies ended down 0.2% at 15,362.45.
In European equities on Wednesday, the CAC 40 in Paris slumped 0.9% and the DAX 30 in Frankfurt tumbled 1.0%. The two have outperformed London in the year-to-date, rising 17% and 13% respectively.
"US stocks have managed to ignore the weak lead given by European markets this morning and are striding ahead, putting some clear water between them and struggling indices this side of the Atlantic," said Chris Beauchamp, chief market analyst at IG.
US private businesses hired 692,000 workers in June, ADP data showed on Wednesday, down sharply from 886,000 in May. Still, the latest figure beat the market forecast, cited by FXStreet, of 600,000.
The ADP number is considered a preview of the closely watched US jobs report for June on Friday. Economists expect US nonfarm payrolls to rise by 690,000 in June, after an increase of 559,000 in May, and the unemployment rate to edge down to 5.7% from 5.8%.
"To summarize, the US labor market continues to grow at a healthy rate but is showing clear signs of slowing from the breakneck piece we saw over the previous couple of months. At the margin, the ADP report suggests that there could be upside risks to the 700k consensus estimate for Friday's NFP report," commented Forex.com.
While the APD figure could hint towards a positive surprise on Friday, disappointing prints for May and April may see traders remain wary as the end of the week approaches.
The dollar was riding high after the ADP data and stocks on Wall Street were mostly higher. The Dow Jones was up 0.4%, the S&P 500 index up 0.1%, and the Nasdaq Composite down 0.1%.
The euro stood at USD1.1856 at the European equities close Wednesday, down against USD1.1908 at the same time on Tuesday, after flash figures from Eurostat showed eurozone inflation is set to ease in June.
Euro area annual inflation is expected to be 1.9% in June 2021, slowing from 2.0% in May.
Sterling's falls were less steep as the UK and EU reached a deal to avoid a "sausage war" over the shipment of chilled meats from Great Britain to Northern Ireland. A grace period allowing the continued supply of chilled meats across the Irish Sea has been extended until September 30.
The pound was quoted at USD1.3812 at the London equities close Wednesday, lower compared to USD1.3840 at the close on Tuesday.
Against the yen, the dollar was trading at JPY110.94, higher compared to JPY110.48 late Tuesday.
Brent oil was quoted at USD75.02 a barrel at the London equities close Wednesday, soft on USD75.11 late Tuesday as traders eye an OPEC+ meeting on Thursday.
Gold was quoted at USD1,764.86 an ounce at the London equities close Wednesday, against USD1,760.21 at the close on Tuesday.
In London, Compass topped the FTSE 100 with shares advancing 1.9%.
"A steady bounce since October seems set to continue as the shares stabilise around the lows of the week at GBP15, and should put the shares on to a stronger footing if further good data on the US and other economies flows through July and August," said IG's Beauchamp, adding that the stock is "one to watch" as the global recovery unfolds.
Mid-cap Indivior jumped 6.4% after raising annual guidance following a better-than-expected first half performance.
The drugmaker said it expects higher annual net revenue in the range of USD705 million to USD740 million, up from the previously guided value of up to USD625 million, reflecting a stronger Sublocade performance. Group net revenue was USD647 million in 2020, which was down 18% from USD785 million in 2019.
Adjusted pre-tax income is expected to be "significantly above" original guidance. For 2020, Indivior company swung to a pretax loss of USD173 million from a USD180 million profit recorded in 2019.
Dixons Carphone rallied 5.9% as it resumed dividend payments on a stellar year for online sales as the pandemic shuttered shops.
For the financial year that ended May 1, the electronics retailer swung to a pretax profit of GBP33 million from a GBP140 million pretax loss last year on revenue of GBP10.3 billion, up 1.0% from GBP10.2 billion.
Dixons Carphone restarted dividend payments after they were suspended in April 2020, declaring a payout of 3.0p per share. The FTSE 250 company said it expects dividends to grow in the medium term. In the 2019 financial year, it paid out 6.75p per share.
Financial 2021 revenue was buttressed by online sales of GBP4.7 billion. In the UK & Ireland Electricals unit, online sales more than doubled in its most recently ended year, and jumped 79% in the international business.
Chrysalis Investments fell 6.1% despite reporting a jump in net asset value in the first half as its portfolio companies enjoyed higher valuations in funding rounds.
The company, which invests in technology and finance startups, made a pretax profit of GBP197.4 million in the six months ended March 31, after a GBP15.8 million loss in the same period last year. Net asset value per share at March 31 grew 28% year-on-year to 206.15 pence from 160.97p.
The UK corporate calendar on Thursday has a trading statement from Primark fashion chain owner Associated British Foods, interim results from enterprise software firm Micro Focus International and full-year results from online household appliances retailer AO World.
The economic calendar has manufacturing PMIs from Ireland, Japan, China, Germany, the eurozone and UK at 0101 BST, 0130 BST, 0245 BST, 0855 BST, 0900 BST and 0930 BST respectively, with the US Markit PMI at 1445 BST and the ISM report at 1500 BST.
Outside the PMI deluge, German retail sales are due at 0700 BST, there is eurozone unemployment at 1000 BST and US initial jobless claims at 1330 BST.
By Lucy Heming; lucyheming@alliancenews.com
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