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LONDON MARKET CLOSE: Cooler German CPI boosts DAX but FTSE 100 falls

Wed, 29th Nov 2023 16:55

(Alliance News) - The FTSE 100 closed lower on Wednesday, despite a bullish session for European peers, as the blue-chip index's China-exposed stocks and natural resources sector struggled.

Equities in New York tread water, returning gains after a confident start, following some hawkish words from a US central banker, which eased some pressure on the dollar.

The FTSE 100 index closed down 31.78 points, 0.4%, at 7,423.46. The FTSE 250, however, closed up 80.58 points, 0.4%, at 18,467.58, and the AIM All-Share rose 2.96 points, 0.4%, at 715.53.

The Cboe UK 100 fell 0.4% at 740.97, though the Cboe UK 250 closed up 0.6% at 16,021.17. The Cboe Small Companies fell 0.4% at 13,408.22.

In European equities, the CAC 40 in Paris rose 0.2%, while the DAX 40 in Frankfurt surged 1.1%.

The DAX 40 hit a near four-month high, aided by share price rises of 3.0% and 2.2% for automotive firms BMW and Mercedes. JPMorgan raised BMW to 'overweight' from 'neutral'. It cut Volkswagen to 'neutral' from 'overweight', though that stock still rose 1.6%.

Cooler inflation data in Germany also boosted the mood, with sportswear maker Adidas climbing 3.3%. The wider eurozone inflation print is at 1000 GMT on Thursday.

The FTSE 100 suffered as Asia-focused insurer Prudential, miner Anglo American and lender HSBC, three of the index's heavyweights, fell 3.5%, 3.0% and 2.0%.

AJ Bell analyst Russ Mould noted stocks with an exposure to China struggled as the spread of a respiratory illness in the nation is "causing nervousness", evoking memories of the emergence of Covid-19 almost four years ago.

The more domestically-focused FTSE 250 had a decent day, however, with budget carrier easyJet and pet care retailer Pets At Home extending gains, closing up 6.0% and 5.1%. They had climbed on Tuesday amid well-received earnings.

In New York, both the Dow Jones Industrial Average and the Nasdaq Composite were marginally higher, while the S&P 500 added 0.1%. All three averages traded around session lows at the time of the European close.

Richmond Federal Reserve Bank President Thomas Barkin cast doubt on the idea that US inflation will have an easy path back to 2%. Barkin said he would like the option of another hike, if inflation picks up again.

"There's no particular need to do anything with interest rates if inflation is coming down... But if inflation is going to flare back up, I think you want to have the option of doing more on rates," Barkin told CNBC.

Barkin said he is yet to be convinced that fight against inflation has been won.

The remarks, which contrasted with more dovish words from Fed Governor Christopher Waller on Tuesday, put some wind back in the dollar's sails.

The pound was quoted at USD1.2674 late Wednesday afternoon, down from USD1.2689 at the London equities close on Tuesday. The euro traded at USD1.0966, down from USD1.0987. Against the yen, the dollar was quoted at JPY147.36, down versus JPY147.59, but off an earlier low of JPY146.67.

Eyes will be on Thursday's personal consumption expenditures reading at 1330 GMT. The data is expected to show that the Fed's preferred core PCE annual inflation measure eased to 3.5% in October from 3.7% in November.

Data from the Bureau of Economic Analysis on Thursday showed, quarter-on-quarter gross domestic product in the US grew 5.2% on an annualised basis in the three months to September 30. In the second-quarter, GDP had risen 2.1%.

An earlier advance estimate, reported a month ago, said the US economy grew by 4.9% on-quarter during the period.

It was the chunkiest quarter-on-quarter GDP rise since a 7.0% increase in the fourth-quarter of 2021. US GDP has grown for five quarters in succession.

US GDP rose 3.0% year-on-year in the third-quarter, picking up speed from a 2.4% hike in the second. The latest reading was upwardly revised from an initially reported 2.9%. It was the fastest pace of annual GDP growth since a 3.6% rise in the first-quarter of 2022.

Gold was quoted at USD2,041.08 an ounce late Wednesday, higher than USD2,037.08 late Tuesday, boosted by what was a largely difficult day for the dollar prior to Barkin's remarks. Gold typically moves in the opposite direction to the dollar, benefitting when the greenback falls but struggling when the US currency leaps.

Fresnillo closed up 5.6%, among the best FTSE 100 performers on Wednesday. The miner tracked gold prices higher.

JD Sports added 5.7%, also among the best blue-chip performers. New York-listed sportswear retailing peer Foot Locker said its earnings for the third-quarter to October 28 topped expectations. It also reported bullish trading during the key US Thanksgiving week. The stock was up 17% at the time of the London equities close.

Back in London, inkjet printing technology firm Xaar set out downbeat guidance for 2024. Revenue and adjusted profit will be lower than expected next year amid "delays in some customer product launches" and weaker demand.

For 2023, adjusted pretax profit will be between GBP2.5 and GBP3 million, which is ahead of board expectations, though tricky second half trading means annual revenue will land between GBP70 million and GBP72 million, behind 2022's GBP72.8 million.

Xaar shares slumped 24%.

Halfords plunged 19%. The cycling and motor products retailer's guidance disappointed.

Halfords said trading patterns were "volatile" in its first half to September 29. It has also seen a "softening in our discretionary big-ticket categories" in the early part of the second half.

It is "challenging" to predict whether these trends will persist, the motoring and cycling products retailer added.

The first-half results showed revenue rose 14% on-year to GBP873.5 million from GBP767.1 million, while pretax profit rose 3.3% to GBP19.3 million from GBP18.7 million. It left its interim dividend unchanged at 3 pence.

Brent oil was trading at USD81.80 a barrel late Wednesday, up from USD81.63 on Tuesday. The price was on the up on the eve of the latest Opec+ meeting.

Aside from the oil cartel's latest meeting, Thursday's economic calendar also features manufacturing data from China and a retail sales reading from Japan overnight. There is German unemployment data at 0855 GMT, before the latest US jobless claims at 1330 GMT.

By Eric Cunha, Alliance News news editor

Comments and questions to newsroom@alliancenews.com

Copyright 2023 Alliance News Ltd. All Rights Reserved.

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