(Alliance News) - Stock prices in London made a muted start to Friday's session, with traders opting against big moves ahead of the latest US jobs report, due in the European afternoon.
The nonfarm payrolls come in the wake of hawkish Federal Reserve minutes that unnerved markets. US stocks were hit once again on Thursday, though Asian equities registered a better session on Friday.
The FTSE 100 index was down 13.68 points, or 0.2%, at 7,436.69 early Friday. The mid-cap FTSE 250 index was down 166.16 points, or 0.7%, at 23,250.76. The AIM All-Share index was down 5.26 points, or 0.4%, at 1,186.59.
The Cboe UK 100 index was down 0.1% at 737.96. The Cboe 250 was down 0.7% at 20,715.55, and the Cboe Small Companies up 0.1% at 15,572.90.
The CAC 40 in Paris was down 0.3%, and the DAX 40 in Frankfurt was 0.7% lower.
"Investors remain apprehensive following the Federal Reserve's move to a more hawkish stance, with the jobs report later providing further colour to the economic backdrop," Interactive Investor analyst Richard Hunter commented.
"The much stronger than expected ADP jobs number could be echoed in the non-farm payrolls number today, where the consensus is for around 400,000 jobs to have been added and for the unemployment rate to reduce slightly to 4.1%. November's figure of 210,000 was significantly lower than expected, and a bounce back is expected."
A strong US jobs report could give the Fed more of a reason to hike interest rates sooner, Hunter said.
The analyst explained: "The number also goes to the heart of the Fed's dual mandate in controlling employment and inflation. A strong NFP number could play into the Fed's hands in that maximum employment is close to being reached, thus allowing full attention to be turned to the question of persistently high inflation, thereby giving the green light for earlier than expected interest rate rises."
Tokyo's Nikkei 225 closed fractionally lower on Friday, though the S&P/ASX 200 in Sydney added 1.3%. In China, the Shanghai Composite ended down 0.2%, while the Hang Seng in Hong Kong rose 1.8%.
The dollar was somewhat weaker early Friday
The pound fetched USD1.3542 early Friday, firm on USD1.3534 at the London equities close on Thursday. The euro stood at USD1.1311, up on USD1.1304. Against the yen, however, the dollar edged up to JPY115.79 from JPY115.76.
Friday's economic calendar also features a eurozone inflation reading at 1000 GMT.
In early dealings in London on Friday, miners added some impetus to the FTSE 100.
Rio Tinto advanced 2.2%, while BHP gained 2.1%. Berenberg lifted its stance on Rio shares to Buy from Hold.
ITV fell 1.8% after Morgan Stanley cut the broadcaster to Equal Weight from Overweight.
C&C Group shares fell 3.4%. The Dublin-based beer, cider, wine, spirits and soft drinks maker said trading in December was hit by a fresh round of government curbs to combat Covid-19, following the emergence of the Omicron variant. It was the worst FTSE 250 performer in early trade.
During the key festive period, C&C said it traded with 81% of on-trade outlets when compared to pre-pandemic times. It delivered volumes of 64% of pre-pandemic times. Both undershot expectations of 90%.
"While December's performance was consequently behind expectation, the group generated a modest profit for the month," C&C added.
There was also a hint of a profit warning.
"The operating profit outcome for the H2 FY2022 period will be affected by the nature, extent and duration of government restrictions. Consequently, C&C will provide an updated operating profit range in its FY2022 pre-close trading statement in March," C&C added.
At the other end of the FTSE 250, shipping services provider Clarkson rose 3.9%.
It said trading in December was stronger than anticipated. It now expects underlying pretax profit for 2021 to be no less than GBP69 million, which would represent a 54% hike from GBP44.7 million in 2020.
Elsewhere in London, Royal Dutch Shell vowed to progress a share buyback programme "at pace", despite seeing a slight hit on oil products demand due to the Omicron variant.
Shell's A stock was down 0.4%, while its B stock lost 0.6%.
"The remaining USD5.5 billion of proceeds from the Permian divestment will be distributed in the form of share buybacks at pace. This decision was taken on December 31, 2021, at the first board meeting held in the UK following the decision to implement the simplification of the company's share structure," Shell explained.
"The Permian related distributions are in addition to the distributions of 20-30% of cash flow from operations as per our existing capital allocation framework."
The oil major added it will update on the amount and pace of shareholders distributions in its fourth-quarter results on February 3. Friday's trading statement also featured a warning on cashflow in Shell's Integrated Gas arm.
It warned of "significant outflows" of cash from operations in its Integrated Gas arm.
"[Cash flow from operations] excluding working capital is expected to have significant outflows from variation margin impacts on the back of the prevailing gas and electricity price environment, including the unprecedented gas price volatility at the end of the fourth quarter," the company said.
In Oil Products, Shell expects results to be largely in line with the fourth quarter of 2020, though down on a quarter-on-quarter basis.
The oil major put this down to "seasonal trends", as well as the impact on demand from the emergence of the Omicron variant of Covid-19. It also noted foreign exchange impacts in Turkey, where the lira has plunged in value.
A barrel of Brent oil changed hands at USD82.36 early Friday, down from USD82.42 late Thursday. Gold was quoted at USD1,789.00 an ounce, down from USD1,791.00.
By Eric Cunha; ericcunha@alliancenews.com
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