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(Alliance News) - Stock prices in Europe were markedly lower midday Thursday, though rising bank stocks allowed the FTSE 100 index to outperformed European peers in a tough session for equities.
Markets were spooked late Wednesday by hawkish comments in the minutes of the Federal Reserve's December meeting. US stocks tumbled overnight, but stock market futures suggest Thursday's session in New York may not be as choppy.
The FTSE 100 index was down 44.02 points, or 0.6%, at 7,472.85 midday Thursday. The mid-cap FTSE 250 index was down 241.22 points, or 1.0%, at 23,529.96. The AIM All-Share index was down 14.80 points, or 1.2%, at 1,196.14.
The Cboe UK 100 index was down 0.6% at 742.06. The Cboe 250 was down 0.8% at 20,992.62, and the Cboe Small Companies down 0.1% at 15,579.87.
The CAC 40 in Paris was down 1.3%, and the DAX 40 in Frankfurt was 1.0% lower.
"The Federal Reserve continues to wield considerable power over global markets, and its latest comments are not what investors want to hear," AJ Bell analyst Russ Mould commented.
"Minutes from its latest monthly meeting implied that a tight jobs market and ongoing inflation could result in a more aggressive change in monetary policy with interest rates going up sooner than expected."
Federal Open Market Committee members flagged persistent price pressures and agreed that the inflation goal had been met. The labour market has made "rapid progress" and some participants even viewed current conditions as consistent with maximum employment.
Ahead of the New York open, the Dow Jones Industrial Average was called 0.2% higher and the S&P 500 flat, though the tech-heavy Nasdaq Composite was pointed down 0.4%.
Mould added: "A lot of tech companies trade on high valuations with the hope of large profit growth in the future rather than today, and these types of stocks are very sensitive to rising rates."
Banks stand to benefit from higher interest rates, though, as they widen lending margins. Lloyds and NatWest were among the best large-cap performers in London, up 2.2% and 1.4%.
The dollar remained mostly on the front foot, though the greenback's gains have ebbed slightly.
The pound fetched USD1.3544 midday Thursday, down from USD1.3562 at the London equities close on Wednesday, but up from an intraday low of USD1.3489.
The euro stood at USD1.1315, down from USD1.1326, but similarly improving from a low of USD1.1284. Against the yen, however, the dollar fell to JPY115.80, versus JPY115.90.
A largely stronger dollar weighed on gold prices. An ounce of the precious metal was quoted at USD1,797.81 midday Thursday, down sharply from USD1,823.20 at the London equities close on Wednesday.
ThinkMarkets analyst Fawad Razaqzada commented: "Gold just can't catch a break. After struggling throughout last year to attract fresh buyers, the start of this year has been equally poor. With the Fed potentially on course to tighten its policy more aggressively, causing renewed strength in bond yields, gold bulls are finding it difficult to justify buying aggressively right now."
Elsewhere in commodities, Brent oil was quoted USD81.80 a barrel midday Thursday, up from USD81.20 late Wednesday.
In London, information and analytics firm Relx was among the worst performers, down 4.3%. Citi cut the stock to Neutral from Buy.
Next fell 2.2%. The fashion and homewares retailer lifted profit guidance and outlined plans for a special dividend but was cautious on future trading conditions.
Next said full price sales in the eight weeks to December 25 were up 20% from pre-pandemic times. The figure was GBP70 million ahead of guidance, it noted.
Following decent Christmas trading, Next has lifted profit guidance. It now expects pretax profit of GBP822 million for the financial year ending in January, which would be a 9.8% hike from pre-pandemic times. Its previous outlook was for pretax profit of GBP800 million. Pretax profit in the year that ended January 30, 2021 was GBP342 million.
Next declared a 160 pence special dividend which will be paid by the end of this month. It will return to its "pre-pandemic ordinary dividend cycle in the year ahead", Next said.
Looking ahead, the retailer reported "five areas of uncertainty in the wider economic environment". They include travel, pent-up demand and savings, essential goods inflation, Next goods inflation, and the tax and interest rates environment.
Oil and gas exploration company Capricorn Energy climbed 3.1%, one of the best FTSE 250 performers.
The company, previously named Cairn Energy, edged closer to receiving a tax refund of around USD1.06 billion from the Indian government. Capricorn on Thursday said it is in the final stage in its undertakings with the Indian government after withdrawing all global enforcement proceedings.
Dr Martens fell 8.5%, lying at the other end of the FTSE 250 index.
IngreLux, a company owned by funds advised by Permira Advisers, sold a 6.5% stake in the boot maker, Goldman Sachs International confirmed.
Goldman Sachs said it placed 65 million Dr Marten shares at 395 pence each, raising GBP257 million for the seller.
IngreLux had owned 429.1 million shares in the Wollaston, Northamptonshire-based footwear and clothing maker, about a 43% stake, and now has 364.1 million, a 36.4% holding. IngreLux is subject to a 90 lock-up period for the remaining shares.
"The boot was put into Dr Marten's shares after private equity shareholder Permira sold a chunk of stock at a 6.3% discount to last night's closing price," AJ Bell's Mould commented.
"That might explain why the shares are down...with investors speculating that Permira has now fired the starting gun for a gradual disposal of its remaining holding."
Still to come on Thursday's economic calendar is a Germany inflation reading at 1300 GMT. US initial jobless claims are due at 1330 GMT, followed by ISM's services PMI at 1500 GMT.
By Eric Cunha; ericcunha@alliancenews.com
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