LONDON MARKET MIDDAY: Oil stocks weigh on FTSE 100 as Total cuts back

(Alliance News) - Stock prices in London were mixed on Friday at midday, with the FTSE 100 index held back by its heavyweight mining and oil stocks, and hesitant trading ahead of a key US jobs report.

The FTSE 100 index was down 14.18 points, 0.2%, at 7,544.31. The FTSE 250 was up 106.91 points, 0.6%, at 19,516.33, and the AIM All-Share was up 4.35 points, 0.5%, at 854.91.

The Cboe UK 100 was down 0.2% at 754.26, the Cboe UK 250 was up 1.0% at 16,892.03, and the Cboe Small Companies was down 0.1% at 13,017.53.

"The FTSE 100 was firmly lower on Friday, dragged down by some profit-taking in resources stocks. Investors may also be hedging their bets ahead of the US open," commented AJ Bell investment director Russ Mould.

Investors were looking ahead to the latest US jobs print, due at 1330 GMT.

Consensus, as cited by FXStreet, expects non-farm payroll employment to have increased by 200,000 in November. A stronger-than-expected figure would suggest ongoing strength in the US labour market, which would support the case for larger interest rate hikes by the Federal Reserve at its December meeting in just under two weeks time.

Whilst a strong NFP print would not bode well for equities, it would provide support for the dollar, which continues to weaken.

"Improving US inflation data and dovish Fed talk have fuelled expectations that the central bank could start to slow its pace of tightening, taking the wind out of the dollar bulls' sails," explained interactive investor's Victoria Scholar.

The pound was quoted at USD1,2273 at midday on Friday in London, higher than USD1.2266 at the London equities close on Thursday.

The euro stood at USD1.0528, higher against USD1.0487 late Thursday. Against the yen, the dollar was trading at JPY134.00, down sharply from JPY135.93.

In European equities on Friday, the CAC 40 in Paris was down 0.2%, while the DAX 40 in Frankfurt was up 0.3%.

Producer prices eased more than expected in the eurozone, according to the latest figures.

Eurostat said industrial producer prices fell 2.9% in the eurozone in October from a month before. This is compared to a rise of 1.6% in September.

The reading confirms the easing of inflationary pressures observed in Thursday's manufacturing purchasing managers' index for the eurozone. However, while input pressures and supply-side woes ease, the industry is now reckoning with a softening of demand.

Meanwhile, France's TotalEnergies said it will cut North Sea oil and gas investment by 25% next year after the UK government extended a windfall tax on energy firms.

Total will cut its North Sea investment by GBP100 million in 2023 after Chancellor Jeremy Hunt ramped up a windfall tax on oil and gas giants, whose profits have surged on fallout from the Ukraine war.

Total was 1.3% lower in Paris.

The move in last month's budget was aimed at helping fund support for British consumers hit by rocketing energy bills. 

Brent oil was quoted at USD86.85 a barrel at midday in London, lower against USD88.89 last Thursday.

It will be an consequential few days for the oil market. EU member states are close to agreeing a USD60 dollar per barrel price cap on Russian oil, diplomats said Thursday, with just Poland left to give the final nod.

Europe will begin enforcing an embargo on Russian crude shipments from Monday, so the price cap will apply to oil exported by sea by Moscow to ports around the world. 

In addition, the Organization of the Petroleum Exporting Countries will hold its meeting in Vienna on Sunday to decide on production quotas.

"A recent media report that the cartel was considering hiking production was quickly refuted by Saudi Arabia. Given this week's rally, perhaps the cartel will hold off from doing anything at all until China's demand trajectory becomes clearer," said ii's Scholar.

In London, oil stocks were leading the decline, with BP down 2.4%, Harbour Energy down 2.0% and Shell down 1.1%.

Miners also edged lower, succumbing to profit-taking. With Glencore down 1.2% and Fresnillo down 0.7%. Rio Tinto also shed 1.2%, as Citigroup cut the stock to 'neutral' from 'buy'.

The bank noted the "market euphoria" around China's reopening has sent Rio Tinto shares higher over the past month.

"For us, China reopening is an impact [to occur in the second half of 2023] and meantime we have a sharp ex-China downturn in steel production to navigate," the bank said, noting the miner's exposure to iron ore, which is used to make steel.

Primark-owner Associated British Foods was the top large-cap performer in London at midday, adding 4.0%. Goldman Sach raised the stock to 'neutral' from 'sell'.

In the FTSE 250, AJ Bell jumped 9.8%.

Jefferies raised the retail investment platform to 'buy' from 'hold'.

On Thursday, the company upped its annual payout once again as it reported improved profit despite lowering prices and investing in new offerings.

Asos lost 0.2% after IT infrastructure firm Softcat said it has appointed Kathryn Mecklenburgh as its new chief financial officer.

Mecklenburgh is currently interim CFO at fast-fashion retailer Asos, but will join Softcat by "no later than mid-June".

"A year from hell for online fast fashion firm ASOS isn't getting any better as interim finance boss Katy Mecklenburgh announces plans to step down just over a month after taking on the role," said AJ Bell's Mould.

"While there's nothing unusual about someone in a temporary position getting a job elsewhere, and she's not leaving for six months, it ramps up the pressure on ASOS to find a permanent replacement for Mecklenburgh's predecessor Mat Dunn and adds to the somewhat chaotic feel around the business," he added.

Shares in Softcat were up 1.2%.

On AIM, Orosur Mining plummeted 33%.

The South America-focused diamond minerals mining company provided a disappointing update on the assay results at the Pepas and Pupino prospects in Colombia.

The assays found 3.49 grams per tonne of gold at an intersection between 492.35 metres and 494.00 metres below ground, while 8.36g/t of silver was found at an intersection between 516.30 metres and 517.40 metres below ground.

The results at Pepas 009 had lower levels of gold mineralisation than intersected in previous drilling. No significant results were found at the Pupino prospect.

"While these drill results are not as exciting as hoped, this is not surprising. Epithermal gold systems by their nature are complex and several phases of drilling are often required to properly define the geometry before more substantial drilling can then be undertaken," said Orosur Chief Executive Officer Brad George.

The firm said it will now shift its focus to groundwork.

Gold was priced at USD1,799.79 an ounce at midday on Friday, up from USD1,796.43 late Thursday.

Stocks in New York were called lower, with the DJIA pointed down 0,2%, the S&P 500 index down 0.1%, and the Nasdaq Composite down 0.2%.

By Elizabeth Winter; [e-mail]

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