LONDON MARKET MIDDAY: Stocks mixed as markets look to US jobs report

(Alliance News) - Stocks in London were mixed at midday on Thursday with investors looking tentatively ahead to the US jobs report on Friday, as a resurgence in global coronavirus cases continues to stifle the mood.

The FTSE 100 index was down just 5.11 points at 7,144.80. The mid-cap FTSE 250 index was down 54.27 points, or 0.2%, at 24,196.56. But the AIM All-Share index was up 0.2% at 1,306.95 - crossing the 1,300 mark for the first time in 20 years.

The Cboe UK 100 index was down 0.1% at 710.31. The Cboe 250 was down 0.2% at 22,000.52, and the Cboe Small Companies was down 0.4% at 15,511.81.

In mainland Europe, the CAC 40 stock index in Paris was up 0.1%, while the DAX 30 in Frankfurt was up 0.1%.

"After yesterday's ADP miss a muted tone prevailed at the start of trading in European markets, but a more positive outlook has prevailed as the morning has gone on. The ADP reading was a shocker, but given its loose relationship with the NFP number there is enough evidence from history to allow investors to ignore the number for the time being," said IG Group's Chris Beauchamp.

"September began on a shaky note for the FTSE 100, and today has not been much better, but then it is ex-dividend day and we have plenty of big names in that category today, enough to hold back the index while others make headway," Beauchamp added.

At the bottom of the FTSE 100 were BHP Group and Admiral, down 6.5% and 5.7% respectively after the stocks went ex-dividend meaning, new buyers no longer qualify for the latest payout.

Barratt Developments was down 2.9%, even as the housebuilder reported strong annual results.

For the financial year ended June 30, revenue rose 41% to GBP4.81 billion from GBP3.42 billion a year ago and pretax profit was GBP812.2 million, up 65% from GBP491.8 million. The pretax profit figure was at the top end of the company compiled consensus range of GBP761 million to GBP812 million.

During the period, Barratt completed 17,243 homes, up 37% from 12,604 completed last year and was in line with guidance given in July. In addition, Barratt declared a total dividend of 29.4 pence, having paid out nothing the year before.

Commenting on the share price decline, AJ Bell's Russ Mould said: "Perhaps it is down to concerns over the expiry of the stamp duty tax break in October, or worries over an increasing reliance on Help-to-Buy, or the potential impact of the proposed April 2022 launch of the Residential Property Developer Tax, but investors do not seem unduly moved by Barratt Developments' strong full-year results.

"Shareholders will also be keeping a wary eye on the costs associated with cladding remediation of previously-constructed sites, notably Citiscape in Croydon. The bill went up by a further GBP81.9 million in the year to June 2021, taking the total to GBP184 million since 2017, and management has flagged that the year to June 2022 could see further costs of GBP40 to GBP50 million, if its guidance for 'adjusted items' in the results presentation is any guide."

Unilever was down 2.1% after JPMorgan downgraded the consumer goods firm to Underweight from Neutral.

Melrose Industries was the best large-cap performer, up 4.6%. The industrial turnaround specialist said it was trading ahead of expectations and sees scope to return more cash to shareholders next year.

For the six months to June 30, revenue rose to GBP3.54 billion from GBP3.39 billion last year and its pretax loss narrowed to GBP256 million from GBP720 million.

Melrose declared an interim dividend of 0.75p per share, having skipped its payout last year. It did recently, however, unveil a GBP730 million return to shareholders after completing the sale of its Nortek Air Management division.

"Melrose has been working to get its balance sheet in check, with a series of disposals, cost saving efforts and a massive reduction in pension obligations. That's opened the door for rising shareholder returns, and we were encouraged to see the group upping its capital returns by 15p this year. If all goes to plan, there should be more where that came from," said Hargreaves Lansdown analyst Laura Hoy.

In the FTSE 250, Energean was the best performer, up 8.5%, after the Mediterranean-focused oil and gas firm reported a narrowed loss in the first half, with production ahead of guidance.

In the six months to June 30, Energean's pretax loss narrowed to USD20.5 million from USD99.1 million a year earlier. Revenue surged to USD205.5 million from USD2.1 million.

Average working interest production in the first half was 44,000 barrels of oil equivalent per day, up sharply compared to 2,100 a year before, and ahead of full year guidance of between 38,000 and 42,000.

Homeserve was up 4.5% after Barclays raised the home emergency cover provider to Overweight from Equal Weight.

Languishing at the bottom of the FTSE 250, CMC Markets was down 26% after the contract-for-difference provider warned on operating income after a subdued period of summer trading.

Peers IG Group and Plus500 were down 7.3% and 3.5% respectively in a negative read-across.

For the five month period which ended on Tuesday, CMC said it entered the current financial year with significant momentum following a year of record performance.

However, offsetting this, CMC said overall market activity has remained subdued through July and August following on from the moderation in activity reported in the first quarter.

The spread betting firm explained reduced volatility in markets resulted in lower trading activity across both the newly acquired and existing clients. Further, similar trends have been seen across its non-leveraged and leveraged businesses.

CMC said in addition to lower activity, year to date client income retention has been tracking moderately below its 80% target, although is expected to recover through the remaining seven months of the year based on a reversion towards historical averages in the mix of asset class trading.

As such, CMC warned that should current market conditions prevail for the remainder of the year the it now expects annual 2022 net operating income to settle in a range between GBP250 million to GBP280 million. CMC posted net operating income of GBP409.8 million for the financial year ended March 31.

Auction Technology was down 11% at 1,465.32 pence after two sizeable shareholders in the online auction platform sold a combined 12.6 million shares. Boston-based TA Associates and and London-based ECI Partners sold the shares via an accelerated bookbuild to institutional investors at a price of 1,500 pence each, raising gross proceeds of GBP189 million.

ATG will not receive any proceeds from the placing.

The pound was quoted at USD1.3791 at midday Thursday, firm on USD1.3786 at the London equities close Wednesday.

The euro was priced at USD1.1853, down from USD1.1858. Against the yen, the dollar was trading at JPY110.01, marginally lower from JPY110.04.

Brent oil was quoted at USD71.92 a barrel Thursday at midday, up from USD70.76 late Wednesday. Gold was trading at USD1,815.23 an ounce, firm from USD1,812.84.

The world's leading oil producers on Wednesday upheld a deal reached just over a month ago to boost output gradually despite US pressure to go further.

After weeks of wrangling, members of the Organization of Petroleum Exporting Countries along with allies such as Russia, known collectively as OPEC+, agreed in July to raise output by 400,000 barrels per day from August.

The move is aimed at supporting a global economic recovery, which has been battered by the coronavirus pandemic - a crisis that sent oil demand plummeting last year.

US stock market futures were pointed to a higher open ahead of the latest jobless claims numbers, as investors eye Friday's closely-watched jobs report for August amid disappointing ADP numbers on Wednesday.

The Dow Jones Industrial Average, S&P 500 and the Nasdaq Composite were all called up 0.2%.

There is still general confidence helped by Federal Reserve Chair Jerome Powell last week indicating that while the bank intends to start tapering its ultra-loose monetary policy, it would do so cautiously.

"Ahead of Friday's latest US Non Farms jobs figures it's important to understand why this is significant. These jobs reports could help determine when the Federal Reserve will begin tapering its asset purchasing programme and each time these numbers miss the forecasts the expectations for any tapering moves could be pushed back," explained analysts at OFX.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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