The FTSE 100 proved resilient on Wednesday, finishing the month higher despite fears about a forthcoming recession in the UK, as other indexes came to a mixed close.
The FTSE 100 index closed up 61.05 points, 0.8%, at 7,573.05. The FTSE 250 ended down 22.83 points, 0.1%, at 19,163.33, and the AIM All-Share closed up 4.37 points, 0.5%, at 848.59.
The Cboe UK 100 ended 0.9% at 758.76, the Cboe UK 250 closed down 0.2% at 16,584.32, and the Cboe Small Companies ended down 0.1% at 13,008.68.
‘Despite all the talk of recession, sky high inflation and an autumn statement designed to put hairs on any chest, UK equities have ended the month of November on a positive note. The FTSE 100 is up almost 7% since the start of the month and the more domestically focussed FTSE 250 is climbing just a touch more,’ said AJ Bell’s Danni Hewson.
In European equities on Wednesday, the CAC 40 in Paris ended up 1.0%, while the DAX 40 in Frankfurt ended 0.3% higher.
‘Today, London markets have been pulled in many directions with one eye on Wall Street as investors wait for a key speech from Fed Chair Jerome Powell which should give further clues about the central bank‘??s next rate hike plans,’ Hewson added.
The speech will cover the US economic outlook, inflation and the labour market, and begins at 1830 GMT.
‘Markets reacted positively to the November 2 [Federal Open Market Committee] statement that seemed to hint at a pivot, but Chair Powell absolutely shredded any notions of a pivot during his press conference. We believe he will take the same tone today; that is, the Fed may move to smaller hikes but the terminal rate is likely to be much higher than previously expected,’ said Brown Brother Harriman analysts.
The dollar strengthened ahead of the speech.
The pound was quoted at $1.1907 at midday on Wednesday in London, down from $1.1982 at the London equities close on Tuesday. The euro stood at $1.0295, falling from $1.0340 late Tuesday. Against the yen, the dollar was trading at JP¥139.54, up from JP¥138.38.
Investors were also digesting the afternoon’s GDP and job opening prints from the US.
‘Other economic data creates a slightly confusing spectacle, with GDP rebounding more strongly than had been expected but private employment data showing distinct signs of a cooling labour market,’ Hewson considered.
The US economy grew faster than previously thought in the third quarter, according to a second estimate from the US Bureau of Economic Analysis on Wednesday.
Gross domestic product in the US grew by 2.9% annually in the third quarter, the revised figures showed. This was an increase from the previous estimate of 2.6% growth, suggesting the US economy is handling higher interest rates better than previously thought.
US GDP had shrunk at an annual pace of 0.6% in the second quarter.
Meanwhile, new data payroll firm ADP showed US employers were easing hiring, with job creation slowing the most since early 2021.
Private employment rose by 127,000 jobs this month, much less than analysts expected and below the 239,000-job increase in October, with firms no longer in ‘hyper-replacement mode,’ the survey showed.
‘Turning points can be hard to capture in the labour market, but our data suggest that Federal Reserve tightening is having an impact on job creation and pay gains,’ said ADP chief economist Nela Richardson.
Stocks in New York were mixed at the London equities close, with the DJIA down 0.5%, the S&P 500 index down 0.2%, and the Nasdaq Composite up 0.2%.
In London’s FTSE 100 index, mining stocks Antofagasta, Glencore and Anglo American were up 4.1%, 2.7% , and 3.9% respectively, as Jefferies raised the stocks’ target prices.
Rio Tinto also added 1.4%, despite predicting a fall in diamond production for next year.
The miner said it expects diamond production in 2023 to fall to between 3.0 million and 3.8 million carats, down from between 4.5 million to 5.0 million carats in 2022. It anticipates iron ore production at Pilbara in Australia in 2023 to be similar to 2022 at 320,000 to 335,000 tonnes.
Oil major BP rose 1.1%, as it reported the safe delivery of first gas at its development in the Greater Cassia Area, under its Trinidad & Tobago subsidiary.
Cassia C is expected to produce, at peak, about 200 to 300 million standard cubic feet a day of gas. Production will go towards meeting bpTT’s gas supply commitments, and is expected to contribute to Trinidad and Tobago’s LNG and petrochemical industries.
Brent oil was quoted at $85.44 a barrel late Wednesday, up slightly from $85.06 late Tuesday. Gold fetched $1,753.29 an ounce, flat from $1,753.25.
SSE added 2.7% on news it has completed the £1.46 billion sale of a 25% minority stake in its SSEN Transmission unit.
The Perth, Scotland-based electricity utility sold the unit to pension fund company Ontario Teachers’ Pension Plan Board.
SSEN Transmission is SSE’s electricity transmission network business which operates under its licenced entity, Scottish Hydro Electric Transmission PLC.
SSE said proceeds from the sale will support SSEN Transmission’s growth, and further growth opportunities across SSE’s other core businesses. It added that the sale will ensure an ‘attractive’ balance of capital allocation across the group.
In the FTSE 250, Elementis was up 6.6%. The chemicals company announced the sale of its Chromium business for $170 million.
‘Whilst Chromium has been a part of Elementis for many years, our strategic review concluded that the interests of all stakeholders would now be best served by a sale of the business,’ said Chief Executive Paul Waterman.
The sale is subject to US regulatory approval, which is expected before the end of the first quarter of 2023. Proceeds from the sale will be used to reduce the firm’s debt, Elementis said.
At the other end of the index, Home REIT closed the day down 9.3%, after it responded to the short-selling report by Viceroy Research.
The investor in accommodation for homeless people expressed ‘deep frustration’ that it is spending time and resources responding to ‘baseless and misleading allegations’.
Home REIT rebutted five allegations made by Viceroy, including claims that its tenants do not appear to be paying rent and that the firm has systematically inflated the prices of properties on its balance sheet.
AIM-listed luxury fashion firm Mulberry shed 23%.
For the 26 weeks that ended on October 1, the company swung to a pretax loss of £3.8 million from a profit of £10.2 million the year before, as operating expenses jumped by 42% to £48.6 million from £34.3 million.
Mulberry said profit last year had benefited from a one-off profit of £5.7 million on the termination of a lease in Paris and for business rates relief worth £2.0 million.
Revenue slipped marginally by 1.2% to £64.9 million from £65.7 million.
Mulberry said UK retail sales were hurt by a weak economic environment, falling by 10% to £34.1 million from £38.0 million a year before. However, in China, retail sales increased despite Covid restrictions,
‘While you’d expect posh handbags seller Mulberry’s wealthy clientele to be insulated from cost-of-living pressures, its first half results have more in common with your humble high street retailer than a high-end brand,’ said AJ Bell’s Russ Mould.
‘Even though the company has raised prices, sales have fallen, and Mulberry is in the unenviable position of chalking up a material loss. That loss could have been even worse if the company hadn’t hedged its energy costs for three years in October last year, so management deserve a pat on the back for that move,’ Mould added.
In Thursday’s UK corporate calendar, there are annual results from investment platform AJ Bell, and online auction operator Auction Technology Group.
The economic calendar for Thursday has a slew of manufacturing purchasing managers’ indices, with the UK at 0930 GMT and the EU at 1000 GMT alongside EU unemployment figures. There are US unemployment insurance claims later in the day, as well as US manufacturing PMIs.
Copyright 2022 Alliance News Limited. All Rights Reserved.
