It was a gloomy day for European stocks on Wednesday, with blue chip benchmarks giving back some of the gains made earlier in the week, as new UK Prime Minister Liz Truss faced scrutiny after her first speech as premier.

The FTSE 100 index fell 75.79 points, 1.1%, at 7,010.67. The blue-chip benchmark is still 1.7% higher so far this week, however.

The FTSE 250 dropped 194.68 points, 1.1%, at 17,627.47 and the AIM All-Share traded 5.58 points, 0.7%, lower at 814.26.

The Cboe UK 100 lost 1.1% at 700.16, the Cboe UK 250 gave back 1.0% at 15,058.57, and the Cboe Small Companies was down 0.2% at 12,752.36.

The CAC 40 in Paris lost 0.6%, while the DAX 40 in Frankfurt fell 0.7%.

Sentiment early in the early exchanges of the fourth quarter of the year has been boosted by hopes that central banks will dial back hefty interest rate hikes to support struggling economies, despite inflationary pressures still being rampant.

That notion will be subject to a big test on Friday, when the latest US jobs report is released. Employment growth is expected to have slowed to 250,000 in September, from 315,000 in August.

A hotter-than-expected reading, however, will test the Federal Reserve’s resolve and strengthen the case for another turbocharged rate hike.

Figures on Tuesday suggested the US labour market is showing signs of a slowdown. The Bureau of Labor Statistics said job openings decreased to 10.1 million in August, from 11.2 million in July.

The pound traded back below the $1.14 mark on Wednesday, not helped by a less-than-stellar UK PMI figure.

The pound was quoted at $1.1361 at midday in London on Wednesday, down compared to $1.1438 at the stock market close on Tuesday.

The seasonally adjusted S&P Global/CIPS UK composite purchasing managers’ index slipped to 49.1 in September from 49.6 in August. September’s print marks the second straight month of contraction. Any figure below 50.0 denotes contraction, and a number above shows growth.

Elsewhere, Truss is delivering her first Conservative party speech as UK prime minister. The speech was interrupted by heckling as she battled to unite her party.

She promised to steer the country through the ‘tempest’ and ‘get Britain moving’.

Truss said: ‘These are stormy days. Together, we have mourned the death of Queen Elizabeth II, the rock on which modern Britain was built. We’re now in a new era under King Charles III. We’re dealing with the global economic crisis caused by Covid and by (Russian President Vladimir) Putin’s appalling war in Ukraine. In these tough times, we need to step up.’

The PM has endured a bruising conference after just a month in the job, with a U-turn over a totemic tax policy and dissent within her cabinet, and heckling during her speech illustrated the level of discontent.

The euro traded at $0.9918 midday Wednesday, lower than $0.9970 late Tuesday. Against the yen, the dollar was quoted at JP¥144.38, largely flat versus JP¥144.40.

Brent oil was trading at $92.40 a barrel midday Wednesday, rising from $91.77 late Tuesday.

‘Oil prices held on to previous gains as OPEC prepares to unveil an expected production cut. There will be a lot of attention on just how big this cut is - speculation they could be double the volume previously flagged at two million barrels per day has been behind the recent surge in crude,’ AJ Bell analyst Russ Mould commented.

In London, Tesco shares dropped 3.5% after it said its bottom-line was hit by an impairment charge. It also warned of pressures heading into the second half of the year.

For the 26 weeks ended August 27, the supermarket said revenue rose 6.7% to £32.46 billion from £30.42 billion a year before. Pretax profit, however, shrank 64% to just £413 million from £1.14 billion.

Nevertheless, the grocer proposed an interim dividend of 38.5 pence per share, a 20% increase from 3.20p a year before.

Tesco said retail adjusted operating profit will be ‘towards the lower end’ of a £2.4 billion to £2.5 billion range.

Hyve shares jumped 13%, as the company said the speed of its recovery has surpassed expectations, as a return to in-person events exceeded pre-pandemic numbers.

For the financial year ended September 30, the events organiser expects to report revenue of £122.0 million, jumping from £22.0 million a year prior.

Also defying a wider market malaise on Wednesday, Topps Tiles rose 2.7%. The tile seller said total sales in the year ended October 1 climbed 11% to a record £247.3 million. It rounded off the year with a 4.3% year-on-year sales hike in the fourth quarter.

Serinus Energy slumped 24% after a well came up dry. It said it is suspending its Moftinu Nord-1 well in Romania after not finding sufficient gas resources.

Gold was quoted at $1,708.64 an ounce midday Wednesday, lower than the $1,725.92 it fetched at the London equities close on Tuesday.

Still to come on Wednesday is a pair of US PMI readings, one from S&P Global at 1445 BST and another from ISM at 1500 BST.

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Issue Date: 05 Oct 2022