Economic Data Weakens Pound, Stocks Rise

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Stocks in Europe were up on Wednesday afternoon as equity markets were in a confident mood on the eve of the Jackson Hole event for central banks shrugging off tepid economic data that affected the pound and euro .

Utilities stocks were among the best performers in London’s FTSE 100 index, following a bullish rating from the Royal Bank of Canada on UK regulated utilities. National Grid and SSE gained 2.4% and 2.2%, among the best performers of large caps.

It’s an important day in the New York business calendar, with Nvidia’s highly anticipated second quarter results due after the closing bell. The chipmaker has been at the heart of the rise of artificial intelligence, and its market value has crossed the $1 trillion mark this year.

The FTSE 100 index gained 50.00 points, or 0.7%, to 7,320.76. The FTSE 250 index gained 148.46 points, or 0.8%, to 18,172.72 points, and the AIM All-Share index rose 2.08 points, or 0.3%, to 734, 26 stitches.

The Cboe UK 100 was up 0.7% at 729.69, the Cboe UK 250 was up 0.7% at 15,929.52, and the Cboe Small Companies was up 0.1% at 13,400 ,16.

In Europe, the CAC 40 in Paris and the DAX in Frankfurt were up 0.4%.

The pound was listed at $1.2632 early Wednesday afternoon, down sharply from $1.2734 at the close of London stock markets on Tuesday. The euro was trading at $1.0810, down from $1.0851. Against the yen, the dollar was listed at 145.50 yen, down from 145.79 yen.

The pound hit its lowest level in three weeks, while the single currency traded at its lowest level in two months.

“Weak European purchasing managers’ indices have kicked in an open door, giving the market another reason to do what it was already doing, namely buying the dollar,” commented Marc Chandler, analyst at Bannockburn Global Forex.

“The euro has approached important support around $1.08 and the pound is approaching the lower end of its two-cent trading range ($1.26-$1.28).

Britain’s private sector slipped back into contraction in August, the survey found, with further deterioration in the services sector.

The S&P Global/CIPS flash UK composite purchasing managers index fell to 47.9 points in August, its lowest level in 31 months, from 50.8 in July.

Sitting below the 50 point mark without change, it shows that the British private sector has entered into contraction. Market expectations were for a reading of 50.3, according to the consensus quoted by FXStreet.

After a series of readings showing growth, the flash services PMI fell to a seven-month low of 48.7 points in August from 51.5 in July and from expectations of 50.8. Manufacturing activity also deteriorated at a faster pace than expected, with the PMI index dropping from 45.3 to 42.5. This is a 39-month low and below market expectations (45.0).

At the same time, the slowdown in the euro zone’s private sector has deepened. The Hamburg Commercial Bank’s flash composite PMI fell to 47.0 points, its lowest level in 33 months, in August. The final result for July was 48.6.

Matthew Ryan, analyst at Ebury, commented: “The outlook for the eurozone economy is far from favourable. Core inflationary pressures remain elevated, tighter monetary conditions are reducing household purchasing power and Weak demand from China looks set to reduce export earnings For now, we continue to expect one last interest rate hike from the European Central Bank at its September or November meetings, even if the weak growth suggests an end to the upside is not far off. This could pose a downside risk to our otherwise bullish view on EUR/USD.”

On Wednesday, the US flash PMI index will be released at 2:45 p.m. (French time).

In London, pharmaceutical companies GSK and AstraZeneca, among the largest constituents of the FTSE 100, added 1.6% and 0.8%.

GSK has announced positive results from the first-ever efficacy trial of its shingles preventative treatment, Shingrix, in China. AstraZeneca and its partner Daiichi Sankyo have announced that their cancer drug Enhertu has received further approval in Japan.

Ithaca Energy lost 2.1% and is among the worst performers on the FTSE 250. The company said it kept control over investments due to the UK windfall tax.

Ithaca said investments in its “operated and non-operated portfolio have been and will be reduced” due to the energy profit tax. This means that there will be a postponement and cancellation of some projects in 2023 and 2024.

This will impact its production prospects. Ithaca expects 2024 production to be lower than this year. Its forecast for 2023 was kept between 68,000 and 74,000 barrels of oil equivalent per day.

In the first half, production increased by 14% to reach 75,755 barrels of oil equivalent per day.

Costain gained 5.2%. The construction company is considering resuming its dividend, after a four-year break.

“The increase in operational performance and the positive results regarding the review and refinancing of pensions allow the Board of Directors to consider the resumption of dividend payments, including the payment of an interim dividend for the period up to ‘as of June 30,’ said general manager Alex Vaughan.

Elsewhere in London, Jadestone Energy gained 28%. The Asia-Pacific-focused oil and gas company has made progress on repairs to its Montara Venture floating production, storage and offloading vessel in Australia.

Production is temporarily halted due to a small defect between the 4S water tank and the 5C oil tank, but repairs have progressed as expected, the company said.

Stocks in New York are set to open higher on Wednesday. The Dow Jones Industrial Average index is up 0.4%, the S&P 500 index 0.5% and the Nasdaq Composite index 0.6%.

Nvidia’s stock was up 0.9% ahead of its quarterly earnings release.

Earnings focus appears to be intensifying today, with artificial intelligence stalwart Nvidia likely to influence overall sentiment when it releases its quarterly results. Markets expect to see a dramatic increase in AI-related revenue this quarter, with sales of the H100 chip providing an indicator of AI adoption and expansion,” commented Joshua Mahony, analyst at Scope Markets. .

“Nvidia’s results appear to dominate tech sentiment, with companies like Microsoft, Google, Meta, IBM, Oracle and Amazon particularly expecting volatility based on the strength or weakness of Nvidia’s results. Meanwhile, markets are gearing up for tomorrow’s Jackson Hole Symposium, with [Federal Reserve Chairman] Powell’s appearance on Friday as the main event of note.”

Gold was quoted at $1,901.62 an ounce early Wednesday afternoon, up from $1,897.80 on Tuesday. Brent oil was trading at $82.78 a barrel, down from $84.25.

This article is originally published on zonebourse.com

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