(Alliance News) - Stocks in Europe were on the up heading into Wednesday afternoon, with equity markets in a confident mood on the eve of the Jackson Hole central banking event, shaking off tepid economic data which hurt the pound and euro.
Utility stocks were among the best performers in London's blue-chip FTSE 100 index, after a bullish note from Royal Bank of Canada on UK regulated utilities. National Grid and SSE added 2.4% and 2.2%, among the best large-cap performers.
It is a big day on the New York corporate calendar, meanwhile, with eagerly-awaited second-quarter results from Nvidia expected after the closing bell there. The chipmaker has been at the heart of an artificial intelligence boom, and its market value has soared above the USD1 trillion mark this year.
The FTSE 100 index climbed 50.00 points, 0.7%, at 7,320.76. The FTSE 250 added 148.46 points, 0.8%, at 18,172.72, and the AIM All-Share rose 2.08 points, 0.3%, at 734.26.
The Cboe UK 100 was up 0.7% at 729.69, the Cboe UK 250 was up 0.7% at 15,929.52, and the Cboe Small Companies rose 0.1% at 13,400.16.
In European equities on Wednesday, both the CAC 40 in Paris and the DAX in Frankfurt were up 0.4%.
Sterling was quoted at USD1.2632 early Wednesday afternoon, down markedly from USD1.2734 at the London equities close on Tuesday. The euro traded at USD1.0810, down from USD1.0851. Against the yen, the dollar was quoted at JPY145.50, down versus JPY145.79.
The pound hit a three-week low, while the single currency traded at its lowest level in two months.
"Poor European flash [purchasing managers' index readings] pushed on open door, giving the market a new reason to do what it was doing and that buying the dollar," Bannockburn Global Forex analyst Marc Chandler commented.
"The euro has approached important support around USD1.08 and sterling is approaching the lower end of its two-cent trading range (USD1.26-USD1.28)."
The UK private sector fell back into contraction in August, survey results suggested, amid a renewed deterioration in the services sector.
The S&P Global/CIPS flash UK composite purchasing managers' index fell to a 31-month low of 47.9 points in August from 50.8 in July.
Coming in below the 50-point no-change mark, it shows the UK private sector has fallen into contraction. Market expectations had been for a reading of 50.3, according to FXStreet-cited consensus.
After a string of readings showing growth, the flash services PMI fell to a seven-month low of 48.7 points in August from 51.5 in July and compared to expectations of 50.8. Manufacturing also deteriorated at a faster pace than expected, with the PMI falling to 42.5 from 45.3. It was a 39-month low and below market expectations of 45.0.
The downturn in the eurozone's private sector deepened, meanwhile. The Hamburg Commercial Bank flash composite PMI fell to a 33-month low of 47.0 points in August. The final reading for July was 48.6.
Ebury analyst Matthew Ryan commented: "The outlook for the euro area economy is far from favourable. Core inflationary pressures remain elevated, tighter monetary conditions are squeezing household spending power, and soft Chinese demand looks set to dampen export revenue. For now, we continue to expect one final interest rate increase from the European Central Bank at either its September or November meetings, although the weak growth environment suggests that an end to hikes isn't too far away. This could present a downside risk to our otherwise bullish view on EUR/USD."
Still to come on Wednesday is a US flash PMI reading at 1445 BST.
In London, pharmaceutical firms GSK and AstraZeneca, among the FTSE 100's largest constituents, added 1.6% and 0.8%.
GSK reported positive results from the first-ever efficacy trial of its preventative shingles treatment Shingrix in China. AstraZeneca and partner Daiichi Sankyo announced that their cancer drug Enhertu has received another approval in Japan.
JD Sports fell 4.0%, despite a positive start to the session. Poorly-received results from peer Foot Locker hurt the stock. Foot Locker said its sales fell 9.9% in its second quarter ended July 29. New York-listed Foot Locker said it saw a "softening in trends" in July. The stock plunged 27% in pre-market dealings.
Ithaca Energy lost 2.1%, among the worst FTSE 250 performers. The company said it has kept a lid on investments due to a UK windfall tax.
Ithaca said investment across its "operated and non-operated portfolio has and will reduce" due to the energy profits levy. It means there will be a deferral and cancellation of some projects in 2023 and 2024.
This will impact its production outlook. Ithaca expects output in 2024 to be weaker than this year's. Its guidance for 2023 was maintained at 68,000 to 74,000 barrels of oil equivalent per day.
For the first-half of the year, production rose 14% to 75,755 barrels of oil equivalent per day.
Costain added 5.2%. The construction firm is sizing up a resumption of its dividend, after a four-year break.
"The increase in operating performance and the positive outcomes regarding the pension review and refinancing, enables the board to consider the resumption of dividend payments, including the payment of an interim dividend in respect of the period to June 30," Chief Executive Officer Alex Vaughan said.
Elsewhere in London, Jadestone Energy added 28%. The Asia-Pacific-focused oil and gas firm has progressed with repairs at its Montara Venture floating production, storage and offloading vessel in Australia.
Production is temporarily shut in due to a small defect between water tank 4S and oil cargo tank 5C, but repairs have progressed in line with expectations, it said.
Stocks in New York are called to open higher on Wednesday. The Dow Jones Industrial Average is called up 0.4%, the S&P 500 up 0.5% and the Nasdaq Composite 0.6% higher.
Nvidia's stock was 0.9% higher in pre-market dealings, ahead of its quarterly results.
"That earnings focus looks to intensify today, with AI-bellwether Nvidia expected to drive sentiment across the board when they report later. Markets are expecting to see a dramatic surge in artificial intelligence-related revenues this quarter, with sales of the H100 chip providing a proxy for AI adoption and expansion," Scope Markets analyst Joshua Mahony commented.
"Nvidia earnings look to dominate tech sentiment, with the likes of Microsoft, Google, Meta, IBM, Oracle, and Amazon particularly expecting to see volatility based on the strength or weakness of Nvidia earnings. Meanwhile, markets gear up for tomorrow's Jackson Hole Symposium, with [Federal Reserve Chair] Powell's appearance on Friday providing the main event of note."
Gold was quoted at USD1,901.62 an ounce early Wednesday afternoon, higher than USD1,897.80 on Tuesday. Brent oil was trading at USD82.78 a barrel, down from USD84.25.
By Eric Cunha, Alliance News news editor
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