LONDON MARKET CLOSE: Stocks end shortened week on positive note

(Alliance News) - Stocks in London closed higher on Thursday, ahead of the long Easter weekend, defying gloomy local data as well as increasing expectations of a global economic slowdown.

The FTSE 100 index closed up 78.62 points, or 1.0% at 7,741.56 on Thursday. The FTSE 250 ended up 195.61 points, or 1.1%, at 18,797.03. The AIM All-Share closed up 7.51 points, or 0.9%, at 811.20.

The Cboe UK 100 ended up 1.1% at 774.27, the Cboe UK 250 closed up 1.5% at 16,382.65, and the Cboe Small Companies ended up 1.2% at 13,505.45.

UK house prices saw their weakest annual growth since late 2019, data from Halifax revealed.

According to the mortgage lender, average house prices edged up 0.8% in March on a monthly basis. Growth slowed from a 1.2% climb in February.

Annually, growth in house prices slowed to 1.6% in March, from the 2.1% climb seen in each of the previous three months. It was the weakest rate of growth since October 2019, Halifax noted.

In addition to this, growth in the UK construction sector slowed faster than expected last month, led by falling housing activity.

The S&P Global/CIPS UK construction purchasing managers' index fell to 50.7 points in March from 54.6 in February.

The slowdown was faster than the market had expected, with FXStreet-cited consensus anticipating a reading of 53.5.

As a result, sterling suffered. The pound was quoted at USD1.2436 at the London equities close on Thursday, down from USD1.2471 at the close on Wednesday.

Adding to Thursday's gloomy economic picture was the International Monetary Fund's managing director who warned that a continued slowdown in almost all the world's advanced economies is expected to drag global growth below 3% this year.

"With rising geopolitical tensions and still-high inflation, a robust recovery remains elusive," Kristalina Georgieva said in prepared remarks ahead of the IMF and World Bank's spring meetings next week.

She added that world growth will likely remain at roughly three percent for the next half-decade, the lowest medium-term forecast since the 1990s.

In the FTSE 100, Shell rose 2.3% after it said it expects a rise in Integrated Gas production in the first quarter of 2023.

However, the oil major also predicted an adjusted loss in its corporate segment between USD900 million and USD1.2 billion, widening from USD600 million in the fourth quarter of 2022. The outcome "includes one-off tax charges", the company said.

Oil company profits have come under tax scrutiny recently. Energy firms have benefitted from robust oil prices, a stark contrast to a cost of living crisis consumers are suffering from.

For Integrated Gas, Shell forecast production between 930,000 to 970,000 barrels of oil equivalent, up from 917,000 boe in the fourth quarter.

AstraZeneca climbed 0.8% after the NHS approved the use of its drug Olaparib, also known as Lynparza, for patients with breast cancer and prostate cancer.

The drug targets cancers with BRCA 1 or BRCA 2 mutations and works by stopping cancer cells from being able to repair their DNA, which causes the cancerous cells to die.

In the FTSE 250, Tui jumped 12% as it reported that booking momentum remained encouraging ahead of the Easter holding.

The holiday operator said bookings and trends for Easter holidays confirmed strong demand across all markets for destinations such as the Canary Islands, Turkey, the Balearics, mainland Spain, Egypt and Greece.

It expects over 500,000 customers on holiday with Tui over Easter, with a load factor in the range of 95%, which it said was broadly in line pre-pandemic levels.

Ferrexpo added 5.4% as it announced that iron ore pellet production doubled quarter-on-quarter in the first three months of 2023, as it saw a more steady supply of electricity during the period.

The firm, with operations in central Ukraine, reported that production for the first quarter ended March 31 was 901,000 tonnes, compared with 420,000 million tonnes in the fourth quarter of 2022.

Elsewhere in London, Robert Walters fell 2.5% as the company reported a "slower" start to the year amid continued economic uncertainty.

The recruitment company said net fee income in the first quarter of 2023 was GBP102.4 million, up 4.1% from GBP98.4 million the year prior.

Liberum analyst Sanjay Vidyarthi said that the first quarter slowdown was "as expected", warning that the first half of the year will "likely to be difficult" for the firm.

In European equities on Thursday, the CAC 40 in Paris ended up 0.1%, while the DAX 40 in Frankfurt ended 0.5% higher.

The euro stood at USD1.0919 at the European equities close on Thursday, unchanged from USD1.0919 at the same time on Wednesday.

Against the yen, the dollar was trading at JPY131.72, higher compared to JPY130.94 late Wednesday.

Stocks in New York were in the red at the London equities close, with the Dow Jones Industrial Average down 0.3%, the S&P 500 index down 0.2%, and the Nasdaq Composite trading marginally lower.

US initial claims for unemployment support topped expectations last week, in a further sign that the once red-hot labour market is weakening.

According to the Department of Labor, initial jobless claims amounted to 228,000 for the week ended April 1, down 18,000 from a week earlier. The previous week's reading was upwardly revised to 246,000 from 198,000.

The latest figure came in above expectations of 200,000.

The labour market data comes ahead of a "pivotal" nonfarm payrolls reading, released on Friday at 1330 BST.

Axel Rudolph, senior market analyst at IG, said: "Friday's US payrolls report will be a pivotal one for stocks. The worst outcome would be rising wages and a weaker jobs number, something that might reverse the growing expectation of a Fed pause in May. Such a scenario would likely put stocks at risk of giving back their recent gains."

Brent oil was quoted at USD84.88 a barrel at the London equities close on Thursday, up from USD84.48 late Wednesday. Gold was quoted at USD2,009.21 an ounce, lower against USD2,021.30.

"The outlook for gold is closely tied to that of US yields which have fallen considerably in the aftermath of the banking turmoil and are falling once more as recession fears resurface. That's helped propel gold above USD2,000, a level above which it has only ever spent a handful of days," said Craig Erlam, senior market analyst at Oanda.

Financial markets in London, New York and across Europe and will be closed tomorrow for Good Friday. In Friday's economic calendar, the latest US nonfarm payrolls reading is reported at 1330 BST.

By Heather Rydings, Alliance News senior economics reporter

Comments and questions to newsroom@alliancenews.com

Copyright 2023 Alliance News Ltd. All Rights Reserved.