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(Alliance News) - European stocks largely advanced on Wednesday in an optimistic start to the new month, with recovery hopes lifting London-listed retailers and offsetting share price declines from the mining sector, which suffered a tough session.
A big miss in the latest US ADP jobs report perturbed investors in New York, despite data on Wednesday signalling more growth in the manufacturing sector. In Europe, equities closed off session highs but largely clung onto earlier gains, with exception of Frankfurt's DAX 30 index, which succumbed to selling pressure and ended lower.
"Choppy trade on Tuesday appeared to put some on edge but clearly, that was a little overblown, with month-end perhaps having a role to play. There are obviously downside risks to the outlook for the rest of this year, with the spread of delta naturally casting a shadow over the global recovery, but there's also plenty of reason to be hopeful," OANDA analyst Craig Erlam commented.
"Not only is the economy in a far better position than previously feared, vaccine rates in many countries mean restrictions during surges will be far less severe than before and central banks will be in no rush to withdraw stimulus. We are hearing a lot more talk of tapering of pandemic stimulus and rate hikes, but this will be extremely gradual and heavily communicated."
The FTSE 100 index closed up 30.14 points, or 0.4%, at 7,149.84. The mid-cap FTSE 250 index notched another record close, rising 148.64 points, or 0.6%, at 24,250.83. The AIM All-Share index ended up 11.38 points, 0.9%, at 1,304.37.
The Cboe UK 100 ended up 0.5% at 710.96, the Cboe UK 250 closed 0.7% higher at 22,036.96, and the Cboe Small Companies ended slightly lower at 15,565.21.
The CAC 40 in Paris surged 1.2% on Wednesday, while the DAX 30 in Frankfurt lost 0.1%, having been up 0.9% earlier in the session.
In New York, there was slight trepidation, with stocks mixed at the time of the London close. The Dow Jones Industrial Average was down 0.2%, but the S&P 500 up 0.2%, and the Nasdaq Composite up 0.7%.
Traders in New York mulled a poor ADP jobs report and largely strong manufacturing data for August.
The IHS Markit manufacturing purchasing managers' index slipped a touch to 61.1 points in August, from 61.2 in July. Market estimates cited by FXStreet had tipped the indicator to remain at 61.2 points.
Separate data from the Institute for Supply Management suggested growth quickened, however. The ISM manufacturing PMI rose to 59.9 points in August, from 59.5 points in July.
Indicators from IHS Markit and the Institute for Supply Management painted a slightly mixed picture. Markit's data found growth in the US manufacturing slowed marginally, though ISM's survey pointed to a stronger expansion.
The pound was quoted at USD1.3786 at the London equities close on Wednesday, against USD1.3753 on Tuesday. The euro was priced at USD1.1858, up from USD1.1802. Against the yen, the dollar was trading at JPY110.04, up slightly from JPY110.01.
The latest ADP jobs report, a precursor to Friday's nonfarms, massively missed consensus.
US private businesses hired 374,000 workers in August, up from 326,000 in July. However, the latest figure was well below market expectations, cited by FXStreet, of a 613,000.
IG Markets analyst Chris Beauchamp noted the meagre ADP figure contributed to London's blue-chip index giving back some earlier advances on Wednesday.
"The FTSE 100 has spent the day giving back its earlier strong gains, and while 'tech names' like Just Eat Takeaway and Ocado have made headway it is miners that have trimmed the opening bullishness of the index; the index's retreat came in the wake of the US ADP numbers, as the caution afflicting US cyclical names spread to London," Beauchamp commented.
Shares in oil majors fell on Wednesday, closing at session lows as oil prices slipped ahead of a virtual OPEC meeting.
Brent oil was quoted at USD70.76 a barrel late Wednesday, down from USD72.12 late Tuesday.
Royal Dutch Shell A shares fell 0.2%, its B stock lost 0.5%, while BP fell 0.9%.
Gold, meanwhile, was trading at USD1,812.84 an ounce at the London equity market close, up from USD1,805.13 a day earlier.
Just Eat Takeaway.com, which will leave the FTSE 100 once Wednesday's index review becomes effective, topped London's blue-chip benchmark on Wednesday, rising 7.6%.
It was a largely strong day for the takeaway delivery sector, with Deliveroo climbing 3.2%, Frankfurt-listed Delivery Hero surging 6.2% and Uber up 4.8% in New York.
The sector benefitted as research house AlsterResearch lifted Delivery Hero to Buy from Hold.
Back in London, recovery hopes helped retailers and the travel sector in the FTSE 250, contributing to the index achieving another record day. Marks & Spencer rose 2.8% while Sports Direct owner Frasers Group climbed 1.6%. Budget carrier Wizz Air rose 1.5%.
Also lifting the mid-cap index was intellectual property-focused investor IP Group, which surged 7.7%.
IP investee Oxford Nanopore is planning to launch an initial public offering in the coming weeks, Reuters reported on Wednesday.
The life sciences firm, which IP Group has a roughly 15% stake in, is working with banks for a London Main Market float.
Oxford Nanopore is eyeing to build on its GBP2.48 billion valuation it achieved during a funding round in May, Reuters reported, citing two sources familiar with the matter.
The IPO would represent a big win for London's Main Market. Biotechnology firms have previously listed on the junior AIM market or have aimed to make a mark on the Nasdaq in the US. Vaccitech, which like Oxford Nanopore is a University of Oxford spin-out, opted to overlook London markets entirely to list on the Nasdaq back in April. Life science research tools firm Abcam, an AIM constituent, is also Nasdaq-listed.
Thursday's local corporate calendar has interim results from industrial turnaround specialist Melrose Industries, soft drink bottler Coca-Cola Europacific Partners and low-cost gym operator Gym Group. Housebuilder Barratt Developments reports annual results.
Thursday's economic calendar has eurozone producer price numbers at 1000 BST before the latest US jobless claims data at 1330 BST.
By Eric Cunha; ericcunha@alliancenews.com
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