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(Alliance News) - European equities moved lower in early trade on Monday, with markets still reeling from Friday's US jobs report.
A better-than-expected reading of the US jobs market is usually a bullish signal for equities. However, stock traders had hoped for an employment figure that would persuade the Federal Reserve to slow the pace of its rate hikes.
Friday's number, however, may have all but ensured a fourth successive 75 basis point rate hike by Fed when it meets at the start of next month.
The FTSE 100 index fell 28.55 points, or 0.4%, to 6,962.54. The FTSE 250 lost 112.47 points, or 0.7%, at 17,240.81 and the AIM All-Share fell 4.43 points, 0.6%, at 805.79.
The Cboe UK 100 opened down 0.4% at 695.53, the Cboe UK 250 fell 0.7% at 14,727.01, and the Cboe Small Companies traded flat at 12,627.63.
In European equities on Monday morning, the CAC 40 in Paris fell 0.6%, while the DAX 40 in Frankfurt opened down 0.2%.
Equities kicked off last week on the front foot, amid "investor optimism about an earlier-than-expected pivot in Fed policy", analysts at UBS commented.
That joy quickly turned to gloom when numbers showed US employment increased by 263,000 in September, beating expectations of 250,000 net job additions according to consensus cited by FXStreet. Jobs growth slowed from 315,000 in August.
UBS Global Wealth Management analyst Mark Haefele commented: "We continue to expect another 75-basis-point rate hike from the Fed in November. The consumer price index for September, due on 13 October, will be the key data release this week."
The dollar strengthened on the back of the US jobs report, and it continued to climb on Monday.
The pound faded to USD1.1107 early Monday in London from USD1.1130 late Friday. The euro stood at USD0.9727, down from USD0.9779. Against the yen, meanwhile, the dollar was trading at JPY145.27, up from JPY145.15.
Gold was on the back foot. The precious metal is traditionally seen has a hedge against inflation; however, it also has an inverse relationship with the dollar.
Gold fell to USD1,687.22 an ounce early Monday, from USD1,702.27 at the time of the London equities close on Friday. Brent oil was quoted at USD97.62 a barrel, up from USD97.09 a barrel late Friday.
"Oil climbs before Biden's - and the world's - desperate eyes," Swissquote analyst Ipek Ozkardeskaya commented.
"The rising oil prices also fuels inflation expectations and Fed hawks, and weigh on global risk appetite and equity valuations, except for oil stocks."
In London, DS Smith climbed 8.4%, the best large-cap performer. Fellow packaging firm Smurfit Kappa added 3.6% in a positive read across.
DS Smith lifted annual guidance, hailing "effective cost mitigation".
The company expects adjusted operating profit of GBP400 million in the six months to October 31, up 45% from GBP276 million a year earlier.
For the full year, DS Smith's performance is "expected to be ahead of our previous expectations".
"I am very pleased with the performance in the year to date and the momentum in our business. We remain focussed on delivering for our customers and managing our costs in an inflationary environment," Chief Executive Miles Roberts said.
Unite Group added 3.4%.
The student accommodation manager said it has sold more beds than expected for the current academic year, though it warned it will need to make hikes to the rent it charges amid inflationary pressure.
Unite has so far sold 99% of its beds for the 2022-23 academic year, up from 94.1% in 2021-22. It had expected to sell 97%. Rental growth for the academic year was 3.5%. It expects growth of 4.5% to 5.0% for the next academic year.
For the 2022 financial year, Unite expects adjusted earnings per share at the top end of 40 pence to 41p guidance.
Elsewhere in London, Hollywood Bowl added 2.1%. For the financial year that ended September 30, the ten-pin bowling operator expects to report revenue of GBP184.9 million, increasing sharply from GBP71.9 million the year prior and up 42% from GBP129.9 million in the pre-pandemic financial 2019.
"The strong performance has been supported by resilient customer demand for experiential leisure during the year. Delivering a high quality, affordable and family friendly experience remains at the heart of the group's strategy. The group has continued to invest in enhancing the customer experience, resulting in a higher spend per game. The group remained the lowest cost option of the major ten-pin bowling operators with a family of four able to bowl for under GBP22," the company said.
Tekmar surged 16%. The offshore energy services firm has received "indications of interest" from possible suitors.
The company had kicked off a strategic review back in June. It is now exploring options with possible buyers.
"There can be no certainty that an offer will be made, nor as to the terms on which any offer will be made," it said.
In addition, it said it has agreed a 12-month extension to its GBP3.0 million Coronavirus Business Interruption Loan Scheme facility with Barclays Bank. The loan ow matures at the end of October 2023.
Blue-chip mining stocks fell on the back of less-than-stellar economic data from China. Anglo American lost 1.8%, Antofagasta fell 1.0% and Glencore was 0.8% lower. China is a major buyer of minerals.
China's private sector slipped into contraction territory for the first time in four months in September.
The Caixin China composite purchasing managers' index fell to 48.5 points in September, from 53.0 in August. It was the first time the composite PMI declined to below the 50.0 no change mark since May.
The services PMI dropped to 49.3 points in September, from August's tally of 55.0.
Still to come on the economic calendar for Monday is a Sentix eurozone investor confidence survey at 0930 BST.
By Eric Cunha; ericcunha@alliancenews.com
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