China-exposed firms rise as stocks drift higher

(Alliance News) - Stock prices in London opened slightly higher on Thursday, with investors feeling quietly optimistic on the penultimate day of trading for 2023.

The FTSE 100 index opened up 13.31 points, 0.2%, at 7,738.26. The FTSE 250 was up 9.81 points, 0.1%, at 19,730.56, and the AIM All-Share was down 0.80 of a point, 0.1%, at 762.23.

The Cboe UK 100 was up 0.1% at 772.47, the Cboe UK 250 was up 0.2% at 17,230.80, and the Cboe Small Companies was marginally lower at 14,810.39.

In European equities, the CAC 40 in Paris and the DAX 40 in Frankfurt were both up 0.2%.

The dollar was soft against the pound and yen, but edged up against the euro.

Sterling was quoted at USD1.2810 early Thursday, higher than USD1.2797 at the London equities close on Wednesday. Against the yen, the dollar was quoted at JPY140.88, down versus JPY141.88. However, the euro traded at USD1.1111, a touch lower than USD1.1115.

Gold was quoted at USD2,082.30 an ounce, higher than USD2,080.29.

"The recent surge in buying activity in stocks and bonds is primarily linked to the widespread anticipation of lower yields in 2024, propelled by the expected rate cuts from the Federal Reserve. However, a significant unresolved aspect is the market's pricing of these rate cuts, which appears notably more aggressive than indicated in the December dot plot," noted SPI Asset Management managing partner Stephen Innes.

Swissquote Bank senior analyst Ipek Ozkadeskaya agreed. She warned the rally in stocks and sell-off in the US dollar "looks overstretched", risking a "wild correction when the euphoria comes to an end".

Meanwhile, oil prices retreated slightly as shipping disruption in the Red Sea eased. Brent crude fetched USD79.66 a barrel early Thursday, lower than USD80.15 late Wednesday.

French shipping company CMA-CGM has resumed some transit through the Red Sea, days after Danish group Maersk announced it would return as a US-led naval coalition is now policing the maritime route against Yemeni rebel attacks. The attacks prompted shipping companies to reroute vessels around the southern tip of Africa earlier this month – a longer and more expensive trip than the Red Sea route that links up with the Suez Canal.

London's oil producers saw slight weakness in early trade, with Shell down 0.6%, BP down 0.3%, and Tullow Oil down 0.9%.

Large-cap firms with exposure to China were the top performers on Thursday morning. Insurer Prudential rose 1.2%, and luxury fashion house Burberry added 0.6%. Miners Fresnillo, Anglo American and Antofagasta rose 1.0%, 0.8%, and 0.9%, respectively.

BT fell 1.6%, as the telecommunications company's stock went ex-dividend.

In a quiet day for corporate updates, Zanaga Iron Ore jumped 19% on AIM.

Zanaga said it has signed a memorandum of understanding with China Machinery Engineering Corp pertaining to hydroelectric power solutions for the Zanaga iron ore project in the Republic of Congo, and "associated funding of such power projects".

The iron ore exploration and development company also updated on the timing of its feasibility study update process alongside its Chinese engineering, procurement & construction partner. The initial review and recosting phase of the 2014 FS is now complete, which indicate potential cost reductions compared to the 2014 study. The second market enquiry and financial modelling phase is now underway and will extend into the first quarter of next year.

Wall Street ended marginally in the green on Wednesday, with the Dow Jones Industrial Average rising 0.3%, the S&P 500 up 0.1% and the Nasdaq Composite up 0.2%.

A federal court handed Apple a victory by suspending a ban on the US sale of its latest Watch models in a feud over patents with health company Masimo. Shares in Apple closed up 0.1% in New York.

The ban on certain Apple smartwatch models came into effect on Tuesday, after the Joe Biden administration opted not to veto a ruling on the patent infringements. But the federal court said the ban order would not take effect pending the appeals process.

In Asia on Thursday, the Nikkei 225 index in Tokyo closed down 0.4%, weighed down by the stronger yen.

In China, the Shanghai Composite closed up 1.4%, while the Hang Seng index in Hong Kong surged 2.5%. The S&P/ASX 200 in Sydney closed up 0.7%.

On the economic calendar for Thursday, there are the latest US jobless claims data at 1330 GMT.

By Elizabeth Winter, Alliance News deputy news editor

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