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(Alliance News) - Stocks in London looked set to end an eventful week on a high note on Friday, with mining stocks giving the FTSE 100 a boost.
The large-cap index was up 98.77 points, 1.4%, to 7,287.40 at midday. The FTSE 250 was up 95.69 points, 0.5%, at 18,205.30, and the AIM All-Share was up 3.60 points, 0.4% at 813.47.
The Cboe UK 100 was up 1.4% at 728.55, the Cboe UK 250 was up 0.8% at 15,636.71, and the Cboe Small Companies was up 0.6% at 12,426.70.
The focus on Friday afternoon 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 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 net additions in September.
"The next test for investors' mettle comes in the form of the nonfarm payrolls report, which is almost seen as a no-win scenario. 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 263,000, 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," interactive investor's Richard Hunter said.
The dollar was mixed against major currencies at midday in London.
Sterling was quoted at USD1.1221, higher than USD1.1184 at the London equities close on Thursday. The euro traded at USD0.9792 on Friday, higher than USD0.9754 late Thursday. Against the yen, however, the dollar rose to JPY147.78 from JPY147.08.
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, which had been trading at USD1.1593 as recently as Monday.
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, predicting a recession that will last into mid-2024.
Meanwhile, the prices of commodities were lifted by ongoing speculation that China is preparing to transition away from its zero-Covid policies. The extreme measures have put a stranglehold on the country's economic growth in recent months, and lowered commodity prices, given that China is a major importer of industrial metals.
"So far, the speculation is only based on social media rumours with China's foreign ministry commenting that it is not aware of the issue. However, this has been enough to help lift risk appetite for stocks in Hong Kong and on the mainland with the Shanghai Composite enjoying its best weekly gain in over two years," said interactive investment's Victoria Scholar.
The stock index climbed 6.1% this week.
Gold was quoted at USD1,649.30 an ounce at midday on Friday in London, higher than USD1,625.97 late Thursday. Brent oil was trading at USD97.30 a barrel, higher than USD95.21.
London's miners at midday were adding to their gains in early trading, tracking the price of commodities higher. Anglo American was up 8.2%, Rio Tinto up 6.0%, Glencore up 3.7%, Fresnillo up 2.1%, Endeavour Mining up 4.3%, and Antofagasta up 6.5%.
AJ Bell's Russ Mould also noted that miners were helped by the fact that they all earn in dollars, given the slump in the pound.
"Looking at London-listed stocks [investors] clearly seem to prefer companies which earn in overseas currencies, judging by the performance on the FTSE 100 at the end of the week," Mould observed.
Stocks in construction firms failed to benefit from survey data showing UK's construction sector output rose at the fastest pace in five months during October.
The S&P Global/CIPS UK construction PMI rose to 53.2 points in October from 52.3 in September. It continued to pick up from the 26-month low of 48.9 in July. The reading was markedly higher than FXStreet-cited market consensus, which had been expecting growth to slow to a score of 50.5.
However, new work fell for the first time since May 2020, with concerns arising about longer-term tender opportunities. Business confidence also fell during the months, and reached its lowest levels since the early months of Covid.
Housebuilders Persimmon and Barratt Developments edged up 0.2% and 0.3% respectively.
Among London mid-caps, Morgan Advanced Materials surged 14%.
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, and expects full-year organic constant currency growth to be between 7% to 9% higher than previous guidance. It also expects adjusted operating profit to be "marginally above" the top end of market consensus.
Elsewhere, sofa seller DFS Furniture rose 7.0%.
Having warned of a markedly softened upholstery market from April to September, DFS 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 in pretax profit for the full year, with profit likely to be weighted in the second half.
"It shows that getting the basics of retail can take you a long way, no matter the economic environment. DFS has done a good job of managing its cash flow, stock and, most importantly, getting customers products they want at a price they are prepared to pay," said AJ Bell's Russ Mould.
In Europe, equities also were rallying on Friday, despite mixed economic data. The CAC 40 in Paris was up 2.1%, while the DAX 40 in Frankfurt was up 1.6%.
Factory gate inflation slowed in September, figures from Eurostat showed. Industrial producer prices were up 1.6% in the eurozone in September compared with a month before, slowing from a 5.0% month rise in August. This was slightly lower than FXStreet-cited consensus 1.7%
Annually, producer prices soared 41.9%, slowing a touch from growth of 43.4% in August.
However, the eurozone's private sector continued to contract in October, with weakness in both manufacturing and services sectors pointing to a winter recession.
The latest S&P Global eurozone services purchasing managers' index edged down to 48.6 in October, from 48.8 in September. Whilst the reading was a 20-month low, it came in higher than a previous flash estimate of 48.2.
Remaining below the 50.0 no-charge mark, it shows the single currency area's services sector is in contraction.
The composite PMI - which is a weighted average of the services and manufacturing sector - fell to a 23-month low of 47.3 from 48.1 a month before. The reading was also a slight improvement on a flash estimate of 47.1.
"High inflation is dampening demand and hurting business confidence. Fears that the energy crisis could intensify over the winter period are also feeding uncertainty and weighing on decision-making," said S&P Global senior economist Joe Hayes.
Stocks in the US were called to a higher open ahead of the jobs report, with the Dow Jones Industrial Average up 0.6%, the S&P 500 up 0.7% and the Nasdaq Composite up 0.7%.
In the global economic calendar on Friday, latest US nonfarm payrolls report at 1230 GMT with the US services PMI later on.
By Elizabeth Winter; elizabethwinter@alliancenews.com
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