Equities in London, Paris and Frankfurt were attempting to rally on Friday, at the end of a difficult week for stock markets, but with the key US nonfarm payroll figures due in the early afternoon, a positive close was by no means certain.
Consensus, according to FXStreet, expects the US economy to have added 300,000 net jobs in August, slowing from the 528,000 added in July. A stronger-than-expected figure could firm up expectations of a 75 basis point rate hike from the Federal Reserve later this month.
The unemployment rate is expected to remain unchanged at 3.5%, according to Lloyds Bank, while it expects annual earning growth to edge up to 5.3% in August from 5.2% in July.
The FTSE 100 index was up 38.92 points, or 0.5%, at 7,187.42 midday Friday. The mid-cap FTSE 250 index was up 112.46 points, or 0.6%, at 18,606.20. The AIM All-Share index was down 1.47 points, or 0.2%, at 860.55.
The Cboe UK 100 index was up 0.8% at 718.58. The Cboe 250 was up 0.6% at 15,937.98, and the Cboe Small Companies up 0.1% at 13,755.18.
In mainland Europe, the CAC 40 in Paris was up 0.4%. Frankfurt's DAX 40 was up 1.2%, driven higher by its car makers, with Porsche Automobil Holding up 3.8%.
Wall Street was pointed for a muted, start ahead of the nonfarm payrolls data. The Dow Jones was called flat, the S&P 500 slightly lower, and the tech-heavy Nasdaq Composite down 0.2%.
The dollar was broadly higher heading into the US release, but the pound was staging a minor recovery after a dark week. Sterling was quoted at $1.1565 midday Friday, higher than $1.1534 at the London equities close on Thursday.
Sterling traders also were looking ahead to the unveiling on Monday of the next Conservative party leader in the UK, said Commerzbank.
Voting will close in the Conservative leadership contest at 5pm on Friday, before either Liz Truss or Rishi Sunak is announced as the new prime minister next week. Though voting closes on Friday, the result will not be announced until Monday.
Boris Johnson and his successor will then go to Balmoral in Scotland rather than Buckingham Palace in London for the appointment of the new prime minister, in a break from tradition. The Queen will receive Johnson on Tuesday at her Aberdeenshire summer home, where he will formally tender his resignation.
‘Liz Truss is leading the polls. She is not exactly the favourite candidate of the financial markets. In particular her announcement that she would like to examine the [Bank of England's] mandate is likely to cause some concerns,’ said Commerzbank's You-Na Park-Heger.
‘Should we see a surprise on Monday in the end, with Rishi Sunak being announced as the winner Sterling might benefit in an initial reaction,’ Commerzbank added. ‘However, fundamentally the outlook for sterling remains dampened.’
The euro traded at $0.9997, dipping from $1.0044 late Thursday.
Against the yen, the dollar was quoted at JP¥140.33, up above JP¥140 and from JP¥139.94 on Thursday.
‘With USD/JPY now above 140, we have been asked several times whether the yen has lost its safe haven status,’ said Dutch bank ING. ‘We think two factors are important drivers here: the nature of this year's shock which has seen Japan's trade surplus wiped out, and the extreme juxtaposition of Fed and Bank of Japan policy. Don't bet on a USD/JPY turn this year.’
Brent oil was trading at $94.26 a barrel, higher than $92.53 late Thursday but still more than $10 off the week's peak of $105 a barrel.
Still, the recovery in oil prices lifted the likes of BP and Shell, up 2.3% and 1.3% respectively.
Shell lagged its fellow energy major on a Reuters report that Ben van Beurden is set to leave as chief executive next year after almost 10 years leading the firm.
Citing two company sources, the news agency said plans for Beurden's replacement are underway, with a succession committee, led by Chair Andrew Mackenzie, having met ‘several times in recent months’.
Among the potential candidates are Wael Sawan, Shell's head of integrated gas & renewables, and Huibert Vigeveno, the head of its downstream refining operations, Reuters said.
Gold was quoted at $1,706.26 an ounce Friday, up from $1,694.00 on Thursday. Precious metals miner Fresnillo was up 2.4%.
At the bottom of the FTSE 100 were housebuilders, with Berkeley Group down 5.9%, Barratt Developments down 4.6% and Persimmon down 4.0%.
An estate and letting agent has predicted UK house prices are likely to stall next year as inflation continues to bite and mortgage rates rise, but rental prices will continue to increase despite affordability pressures on tenants.
Given the pressure on household incomes, Hamptons said it forecasts prices to be unchanged in the fourth quarter of 2023 compared with the same period in 2022, with 0% change across Britain. Sales are expected to be hit next year, with a drop stemming from mortgaged buyers, particularly first-time buyers, according to the forecast.
The estate agent said 2024 could be a ‘year of recovery’ helped by some pent-up demand from 2023.
In the FTSE 250, Ashmore rose 5.5%, despite saying assets under management were hit by ‘widespread risk aversion’ in the second half of its financial year, posting a dive in annual profit.
Assets under management fell to $64.0 billion as at June 30 from $94.4 billion a year prior, Ashmore reported. This 32% decline was due to negative investment performance of $16.6 billion and net outflows of $13.5 billion.
But the London-based emerging markets investment manager said it has a positive outlook, ‘underpinned by exceptionally attractive valuations across emerging markets’.
Elsewhere, shares in Cineworld were up 31%, continuing their wild ride after last week warning it is considering filing for Chapter 11 bankruptcy in the US. Shares have more than doubled since the start of the week, but remain more than 90% below where they stood a year ago.
On AIM, Alliance Pharma fell 15% after saying it has appealed against the UK Competition & Markets Authority's decision to seek a competition disqualification order against its chief executive officer Peter Butterfield.
The CMA is currently seeking the disqualifications of a total of seven directors from four companies, including Alliance's Butterfield. The procedures are in consequence of anti-competitive agreements in relation to the sale of prescription prochlorperazine.
Alliance said that Butterfield did not participate in, or profit from, any market sharing arrangement. It added that he retains the full confidence and support of the Alliance board.
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