Miner looking at rubble
BP and Shell fell 2.1% and 1.8%, tracking Brent prices lower / Image source: Adobe

European equities were largely lower on Monday afternoon, with share price declines for miners and oil majors causing the FTSE 100 to underperform.

The mood in equity markets was subdued, with enthusiasm lacking as investors cautiously await Friday’s US jobs data.

The FTSE 100 index traded down 26.87 points, 0.4%, at 7,502.48. The FTSE 250 was up 59.36 points, however, 0.3%, at 18,446.98, and the AIM All-Share nudged up 0.61 of a point, 0.1%, at 716.90.

The Cboe UK 100 was down 0.4% at 748.78, though the Cboe UK 250 was up 0.4% at 15,999.31. The Cboe Small Companies was down 0.1% at 13,355.23.

In European equities on Monday, the CAC 40 in Paris fell 0.2% but the DAX 40 in Frankfurt edged up 0.1%.

‘A mixed session across Asia and Europe set the tone for what could be an uneven week on the markets. Tomorrow sees the first of several important US updates on jobs,’ AJ Bell analyst Russ Mould commented, referring to the latest job openings and labour turnover survey.

The ADP jobs report follows on Wednesday, before the official nonfarm payrolls on Friday.

‘Amid a decline in job vacancies, the market will want to see if workers are feeling confident enough to look around for new opportunities or whether they are feeling nervous and are staying put with their current employer. Any sharp increase in unemployment rates will be watched like a hawk by investors who are searching for clues as to whether the Federal Reserve has reason to start cutting rates. Nervousness about the outlook for the US economy is growing and every data point is being scrutinised for clues as to how the central bank might be thinking,’ Mould added.

Equities in the US are called to open lower. The Dow Jones Industrial Average is called down 0.2%, the S&P 500 0.3% lower and the Nasdaq Composite 0.4%.

The dollar was weaker at the start of the week.

Sterling rose to $1.2684 midday Monday, from $1.2659 late Friday. The euro climbed to $1.0878 from $1.0859. Against the yen, the greenback faded to JP¥146.57 from JP¥147.37.

Fed Chair Jerome Powell said Friday it is still ‘premature’ to speculate on when the US Federal Reserve will start cutting interest rates, despite the bank’s recent progress on inflation.

Elsewhere on the central banking front, European Central Bank President Christine Lagarde speaks at 1400 GMT.

In London, jet engine maker Rolls-Royce rose 3.3%. JPMorgan raised Rolls-Royce to ’overweight’ from ’neutral’.

BP and Shell fell 2.1% and 1.8%, tracking Brent prices lower. A barrel of Brent fell to $78.51 on Monday afternoon, $80.73 late Friday.

Miners also declined, with Glencore among the worst of the lot, falling 2.8%. Barclays resumed coverage of Glencore at ’equal-weight’.

Elsewhere, gambling firm 888 shot up 18%. The Gibraltar-based firm, which owns the William Hill and Mr Green brands, rebuffed a £700 million takeover bid from gambling software provider Playtech, the Sunday Times reported.

Citing City sources, the newspaper said Playtech had made an indicative approach in July, pitching an offer at 156 pence per share. Bookmaker 888 believed this undervalued the firm.

Playtech shares rose 2.0%.

Petrofac jumped 21%, despite predicting a free cash flow miss. The provider of services to the energy industry said it is mulling a ‘range of strategic and financial options’ to bolster its coffers.

‘Management has been making progress in organic actions to unwind working capital, collect receipts on ongoing and new contracts and to unlock long-outstanding commercial settlements. In addition, management is considering the sale of non-core assets, and is actively engaged in discussions with financial investors to take a non-controlling position in certain other components of the business portfolio,’ it added.

It warned it would miss free cash flow guidance, meanwhile.

‘While the group has made progress in reaching contractual settlements and unwinding working capital, given delays in securing advance payment guarantees, it no longer expects to receive these advances before the year-end,’ Petrofac said.

The stock suffered a 10-day losing streak prior to Monday’s update, which had wiped out some 60% of its value.

Gold lost some of its sparkle but went into Monday afternoon higher than it was at the time of the European equities close on Friday.

The yellow metal rose to $2,069.36 an ounce midday Monday, from $2,055.14 late Friday. It faded from a record high of around $2,120 it achieved earlier on Monday.

‘Gold prices touched an all-time high during early Monday trading, reflecting growing expectations of a Federal Reserve rate cut within the first quarter of 2024 and simmering geopolitical instability in the Middle East. With inflation coming down faster than expected and economic activity showing signs of weakness, investors are growing increasingly hopeful that the next Fed move will be a cut, which could, according to the most optimistic, come as early as March next year. Against this background, with softening treasury yields, the opportunity cost of holding the non-yielding metal is decreasing, with demand and prices moving in the opposite direction. At the same time, tensions are again rising in the Middle East, with attacks on ships in the Red Sea driving the precious metal’s haven appeal,’ ActivTrades analyst Ricardo Evangelista commented.

Israeli Prime Minister Benjamin Netanyahu said the war in Gaza would continue ‘until we achieve all its aims’ including eliminating Hamas.

‘Our soldiers prepared during the days of truce for total victory against Hamas,’ he said in Tel Aviv on Saturday, at his first press conference since fighting resumed.

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Issue Date: 04 Dec 2023