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(Alliance News) - Stocks were higher in London early Friday, as mining stocks lifted the FTSE 100, buoyed by rumours of an end to China's zero-tolerance Covid policies.
The FTSE 100 index opened up 53.97 points, or 0.8%, at 7,242.60. The FTSE 250 was up 89.52, or 0.5% at 18,199.13, and the AIM All-Share was up 3.83 points, 0.5%, at 813.70.
The Cboe UK 100 was up 0.8% at 813.70, the Cboe UK 250 up 0.6% at 15,604.26, and the Cboe Small Companies up 4.2% at 12,363.42.
On Thursday, the Bank of England lifted the bank rate by 75 basis points, matching the Federal Reserve's hike of US rates on Wednesday. However, Governor Andrew Bailey's dovish remarks in the subsequent press conference were in stark contrast with the hawkishness of US counterpart Jerome Powell, putting pressure on sterling.
Bailey said UK interest rates will have to go up by "less than currently priced into financial markets". The benchmark rate currently stands at a 14-year high of 3.00%.
The BoE warned of a "very challenging outlook" for the UK economy. It expects UK gross domestic product to have contracted by 0.5% in the third quarter, before falling by 0.3% in the fourth.
It expects the UK economy to remain in recession throughout next year and into the first half of 2024. It only predicts a "gradual recovery" in GDP thereafter.
Focus will be on the US nonfarm payrolls report due at 1230 London time, an hour earlier than normal for European markets due to the time change in Europe and the UK this week. The US labour market is expected to have added 200,000 jobs last month, according to consensus cited by FXStreet. That outcome would be a slowdown from 263,000 in September.
"If the expected number of 200,000 jobs being added is exceeded and the unemployment rate more or less unchanged, this will add further fuel to the Fed’s policy. This is despite the fact that the release would signal a drop from the previous month’s reading of 263000, with the simple reality being that until unemployment begins to rise and the consumer therefore spends less, a lessening of inflation could remain out of reach, said interactive investor's Richard Hunter.
The dollar was mixed ahead of the US unemployment reading.
Sterling was quoted at USD1.1211 early Friday, higher than USD1.1184 at the London equities close on Thursday. The euro traded at USD0.9774 early Friday, higher than USD0.9754 late Thursday. Against the yen, the dollar was quoted at JPY147.67, up versus JPY147.08.
In European equities on Friday, the CAC 40 in Paris was up 0.8%, while the DAX 40 in Frankfurt was up 0.7%.
In Tokyo on Friday, Nikkei 225 stock index was down 1.7%. The S&P/ASX 200 in Sydney was up 0.5%.
Meanwhile stocks in China rallied, as the Shanghai Composite closed up 2.4%, while the Hang Seng index in Hong Kong was up 5.4%. This follows unsubstantiated speculation that China is preparing to roll back its zero-Covid measures.
"The limitations and lockdowns, which have exacerbated a decline in consumer confidence and a faltering property market, have crimped demand which has not only hampered the Chinese economy, but has also tipped over into other asset classes such as commodities and oil," said ii's Hunter.
Gold was quoted at USD1,647.45 an ounce early Friday in London, higher than USD1,625.97 late Thursday. Brent oil was trading at USD96.29 a barrel, higher than USD95.21.
London's blue-chip miners were doing well in early trading, tracking the price of commodities higher. Anglo American was up 5.1%, Rio Tinto up 4.1%, Glencore up 3.1%, Fresnillo up 3.2%, Endeavour Mining up 2.6% and Antofagasta up 2.9%.
AstraZeneca said its respiratory syncytial virus treatment Beyfortus, or nirsevimab, which it develops with French partner Sanofi, has received EU approval for prevention of the virus in newborns and infants.
The news follows a September recommendation from the European Medicines Authority's Committee for Medicinal Products for Human Use.
AstraZeneca was up 1.6%, while Sanofi was up 0.1% in Paris.
J Sainsbury gave back some of Thursday's gains, after the stock was cut to 'neutral' from 'outperform' by Exane BNP. It was down 2.2% in early trading, having closed up 7.1% on Thursday after a well-received set of interim results.
Among London mid-caps, Morgan Advanced Materials jumped 12%.
The advanced carbon and ceramic materials manufacturer upgraded annual guidance after a strong year-to-date.
It said sales in the nine months to September were up 11% year-on-year, on an organic constant currency basis. Morgan said revenue remains "robust", but notes a "slight moderation" in growth rates in the third quarter, in light of the wider economic challenges.
However, it now expects full-year organic constant currency growth to be between 7% to 9% higher than previous guidance, and expects adjusted operating profit to be "marginally above" the top end of market consensus.
4imprint was close behind, adding 8.3%, after it said trading in the year so far has gone well, and it expects annual revenue to be around USD1.1 billion.
Noting "consistent productivity from [its] marketing activities, relative stability in gross margins and operational leverage over the fixed and semi-fixed elements of the cost base", it now expects pretax profit for 2022 to be at the top end of current market consensus, and "not less than USD90 million".
"Looking forward, the board remains confident in and committed to the group's strategy, positioning and prospects," the promotional merchandise firm said.
"4imprint has resolutely proved that it has once again emerged from an economic downturn in a stronger position, accelerating market share gains," said finncap's Guy Hewett.
Smallcap sofa seller DFS Furniture added 5.2%, as it reported better market conditions.
Having warned of a markedly softed upholstery market since from April to September, it said the trend has been more positive since then. Group order volumes are up from the previous year, and also compared to pre-pandemic financial 2019, DFS said.
It said trading is in line with its mid case scenario of GBP36 million pre-tax profit for the full year, with profit likely to be weighted in the second half.
"Whilst the macroeconomic outlook is uncertain and inflationary pressures remain high...Our business has proven to be resilient, and given our inherent strengths, we are well positioned to maintain our trend of market share gains across the economic cycle," DFS said.
On AIM, Thor Mining jumped 19%.
Thor Mining said drilling returned "high grade" gold from the silicified altered contact along Kelly's Ridge, at the Ragged Range in Eastern Pilbara, Western Australia.
It reports the best intercept to date of 4 metres at 12.2 grammes per tonne gold from 194 metres.
"This confirms the potential of the site as indicated by historical drilling. Furthermore, with more drilling results to come, we are looking forward to gaining further understanding of the project. We anticipate more positive news to be shared with the market in due course," said Managing Director Nicole Galloway Warland.
In the global economic calendar on Friday, there are a slew of services PMIs, including Germany and the eurozone. There is a eurozone producer price reading at 1000 GMT, before the latest US nonfarm payrolls report at 1230 GMT
By Elizabeth Winter; elizabethwinter@alliancenews.com
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