Stocks in the green before US non-farm payrolls

(Alliance News) - Stock prices in London held onto some modest gains during midday trading on Friday, with all eyes on the critical US jobs report.

The FTSE 100 index was up 18.63 points, 0.3%, at 7,532.35. The FTSE 250 was up 11.44 points, 0.1%, at 18,630.18, and the AIM All-Share was up 1.78 points, 0.3%, at 722.64.

The Cboe UK 100 was up 0.2% at 751.68, the Cboe UK 250 was slightly lower at 16,154.80, and the Cboe Small Companies was up 0.3% at 13,963.78.

In European equities, the CAC 40 in Paris was up 0.8%, while the DAX 40 in Frankfurt was up 0.3%.

Investors are looking ahead to the US non-farm payroll report, which could help set the direction for the Federal Reserve interest rate outlook. Friday's data is expected to show that nonfarm payrolls rose to 180,000 last month, from 150,000 in October.

The data will be an indicator of the health of the US labour market, ahead of the Fed's interest rate decision on Wednesday next week.

"An increase in jobless claims suggests the US labour market, a critical factor in Federal Reserve decision making, is cooling and investors will be looking for non-farm payrolls data as confirmation. Next week will also be a crunch moment as the Fed announces its latest rate decision, with the market pricing in rate cuts as early as March. Chair Jerome Powell may look to pour some cold water on this idea," AJ Bell investment director Russ Mould said.

Sterling was quoted at USD1.2585 at midday on Friday, edging higher from USD1.2580 at the London equities close on Thursday. The euro traded at USD1.0784, lower than USD1.0791.

Stocks in New York are expected to make little headway at the US market open. The Dow Jones Industrial Average and the S&P 500 index were both called up 0.1%, and the Nasdaq Composite called slightly lower.

The Nasdaq had a strong day on Thursday, rising 1.4% amid excitement around development in the artificial intelligence sector, as Advanced Micro Devices and Google parent Alphabet announced new product launches in the space.

The UK competition watchdog is also keeping a close eye on the AI market. The Competition & Markets Authority revealed it was inviting comment on the partnership between Microsoft and ChatGPT creator OpenAI. The CMA said it is looking to hear from interested parties as to whether the partnership between the two firms has resulted in a relevant merger situation, and any bearing this could have on competition in the UK.

It pointed to Microsoft's involvement in the recent governance developments at OpenAI, which unfolded in a rather dramatic fashion in November following the ousting of Co-Founder & CEO Sam Altman, before his subsequent reinstatement.

Meanwhile, in the FTSE 100, Anglo American dropped 8.4%.

The miner said production in 2023 is likely to have increased by around 3%, as its CEO Duncan Wanblad said "the prospects for mined products have rarely looked better".

However, it expects production to fall by around 4% next year and a further 3% or so in 2025, as it reschedules to enhance value and reduce unit costs, before production rises around 4% in 2026. "Operationally, we are improving cost performance and cash generation by reconfiguring a number of our assets to adjust the production profile to near term constraints and market conditions, and thereby also protect longer term value," explained CEO Wanblad.

Berkeley Group fell 2.3%, despite reporting profit growth in its half-year.

The Cobham, Surrey-based housebuilder said in the six months to October 31, pretax profit climbed 4.6% year-on-year to GBP298.0 million from GBP284.8 million, though revenue slipped to GBP1.19 billion from GBP1.20 billion.

However, the firm's CEO Rob Perrins warned that uncertainty caused by planning, tax, and regulatory regimes is making urban regeneration increasingly difficult to progress. Consequently, it will focus on cutting costs and investing in work in progress, rather than investing in new developments.

Sainsbury's was up 3.5%, as Goldman Sachs raised the stock to 'buy' from 'neutral'. The US investment bank cited a largely positive outlook for the UK grocery sector, and pointed to Sainsbury's market share gains and potential cash returns.

Among London's midcaps, Watches of Switzerland gained 3.3% as Societe Generale upped its price target.

On AIM, Landore Resources plunged 37%.

The exploration and development company said "turbulent market conditions" worldwide have led to "significant" fundraising challenges, and it has therefore decided to terminate its CAD5 million private placement which was set to fund its dual listing on the TSX Venture Exchange. It has postponed the proposed dual listing until further notice, and has begun a cost-cutting plan to preserve its existing cash.

"The company will revisit financing opportunities during Q1 2024 and is also exploring alternative funding options to enable it to, inter alia, proceed with a drilling campaign on its flagship BAM Gold Project at the Junior Lake property in Northwestern Ontario at the earliest opportunity," Landore said.

Elsewhere on the economic front, the focus was on the Japanese yen.

Against the yen, the dollar was quoted at JPY144.57 around midday in London, higher versus JPY144.07. The Japanese currency mostly held on to recent gains after Bank of Japan Governor Kazuo Ueda said handling monetary policy "will become even more challenging from the year-end and heading into next year", Bloomberg News reported. The dollar had fetched over JPY147 earlier this week.

Traders had interpreted Ueda's remarks to mean that the bank was on the brink of shifting away from its long-running ultra-loose monetary policy, which had been put in place to kickstart growth.

However, ING maintained speculation about any imminent policy adjustment is likely premature, interpreting the BoJ's remarks as more in the vein of "paving the way to a gradual normalisation".

Gold was quoted at USD2,030.246 an ounce at midday in London on Friday, edging higher than USD2,028.77 late Thursday.

Brent oil was trading at USD75.47 a barrel, higher than USD74.52.

Still to come in the economic calendar is the US jobs print at 1330 GMT.

By Elizabeth Winter, Alliance News deputy news editor

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