Share prices in Europe ended mixed on Thursday, with the FTSE 100 outperforming despite some pressure on banking stocks, which suffered from negative cross-reading amid concerns for Metro Bank.
A quieter day in the bond market helped support stocks in Europe, but stocks finished below session highs after a less bright start to trading in New York.
U.S. bond yields could rise again if Friday’s jobs report turns out to be better than expected and raises interest rate expectations from the Federal Reserve, potentially leading to further turmoil for stocks .
In the UK, a Bank of England policymaker said there were signs that rate hikes were weighing on the economy.
The FTSE 100 index gained 39.09 points, or 0.5%, to 7,451.54. The FTSE 250 index gained 107.08 points, or 0.6%, to 17,599.98 points. The AIM All-Share finished 0.47 points lower at 694.74.
The Cboe UK 100 rose 0.6% to 743.75, the Cboe UK 250 added 0.7% to 15,324.39, and the Cboe Small Companies rose 0.1% to 13,246.48.
In Europe, the CAC 40 in Paris closed slightly higher, while the DAX 40 in Frankfurt fell 0.2%.
In New York, stocks were down. The Dow Jones Industrial Average lost 0.5%, the S&P 500 0.7% and the Nasdaq Composite 0.9%.
The pound was quoted at USD 1.2164 late Thursday in London, up from USD 1.2144 at the close of London stock markets on Wednesday. The euro settled at USD 1.0526, up from USD 1.0515. Against the yen, the dollar traded at 148.58 yen, down from 148.83 yen.
Figures on Thursday showed that initial jobless claims in the United States rose, but were slightly lower than expected.
According to the U.S. Department of Labor, initial claims for unemployment aid increased to 207,000 in the week ending September 30, up from 205,000 the week before. The previous figure was revised upwards by 1,000 people, from 204,000 to 207,000.
The latest figure is lower than the consensus cited by FXStreet, which predicted applications would increase to 210,000.
Attention now turns to Friday’s nonfarm payrolls data, the official jobs report. Job growth is expected to be 170,000 in September, down from 187,000 in August. Data is released at 1330 BST.
Bank of England Deputy Governor Ben Broadbent said there were “clear signs” that Threadneedle Street’s rate hikes were hurting the British economy, Bloomberg reported.
At an event hosted by the European Central Bank, Broadbent said economic indicators most sensitive to rate hikes had “weakened significantly.”
Last month, the Bank of England decided against another hike in UK interest rates, in a split decision, after a lower-than-expected inflation rate eased pressure on the bank central.
The BoE kept the bank rate at 5.25%, its highest level in more than 15 years, in a somewhat surprising decision. According to the consensus cited by FXStreet, a 25 basis point hike was expected, although a lower inflation rate in the UK earlier in the week prompted some investors to reduce their bets on a rate rise.
This ends a series of 14 successive increases since December 2021, which have pushed the bank rate up from a Covid-19-induced low of 0.10%. This is the BoE’s first pause since November 2021.
In London, all eyes were on the shares of Metro Bank. The stock plunged 26%. It confirmed that it continues to evaluate the best ways to improve its capital resources.
The British challenger bank was responding to a Financial Times report on Wednesday that Metro Bank was seeking to raise up to £600 million, citing people with knowledge of the plan.
The negotiations came after regulators last month rejected a request from Metro to reduce capital requirements tied to its mortgage business.
Analysts at Shore Capital Markets commented: “Although, according to a statement released by Metro Bank today, the group continues to meet its minimum regulatory capital requirements. Regardless, it is clear that the group operates very close to the line.
Against a negative backdrop, NatWest lost 0.8%, Lloyds fell 0.4% and Barclays finished 0.9% lower.
Imperial Brands climbed 3.9% after the cigarette maker announced a £1.1 billion share buyback and said it expected full-year results to be in line expectations to.
The company said that, at constant exchange rates and including Russia, net income from tobacco and next generation products increased by a low single-digit percentage in the fiscal year ended. on September 30.
At the same time, Imperial said its adjusted operating profit growth is expected to have accelerated to the “low end of the range” of its mid-single digits.
Imperials Brands shares suffered on Wednesday after British Prime Minister Rishi Sunak announced plans to combat smoking.
Mr Sunak said the legal age for buying tobacco in the UK should rise every year to stop young people taking up smoking, and he also pledged to crack down on the sale of disposable vapes to children.
He told the Conservative Party conference in Manchester that “a 14-year-old today will never legally be sold a cigarette” under England’s new legislation.
In the FTSE 250 index, Volution rose 8.4%.
The designer and manufacturer of energy-efficient solutions for indoor air quality welcomed “increasingly strict regulations” that are driving demand for its business, as it reported a higher payout after increasing its annual profit.
For the year ended July 31, Volution reported pre-tax profit of £48.8 million, an increase of 3.4% on the £47.2 million recorded the previous year. Turnover increased by 6.6%, from £307.7 million to £328 million.
The company noted that demand in the renovation market was “sustained” during the year, particularly in the UK where demand in the public renovation, maintenance and repair market improvement benefited from “increased awareness of the health risks associated with mold and condensation”.
Building on its strong annual results, Volution declared a final dividend of 5.5p per share, up from 5.0p the previous year. This brings the total dividend to 8.0p, 9.6% higher than the previous year’s 7.3p.
In Paris, train manufacturer Alstom fell 37%. A key indicator of its financial health has turned negative due to rising inventories and delays in reaching a deal with the UK.
Alstom released preliminary financial information on Wednesday, showing negative free cash flow of 1.15 billion euros for the six months ended September 30, the first half of its 2024 financial year, up from 45 million euros one year earlier.
As a result, it now expects the annual figure to reach up to -€750 million, whereas it previously predicted it would be “significantly positive”.
According to Deutsche Bank, Alstom has a “seemingly endless free cash flow problem.”
Analysts at the German bank added that “the group’s rating as a quality investor is now under threat and a capital increase is becoming increasingly likely.”
The barrel of Brent reached 84.56 dollars on Thursday at the end of the day in London, a sharp decline compared to the 87.91 dollars recorded on Wednesday at the close of the London stock markets. Gold was quoted at $1,815.53 an ounce, down from $1,826.09.
This article is originally published on zonebourse.com
