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LONDON MARKET MIDDAY: FTSE 100 solidly higher before US jobs data

European equities went into Friday afternoon in the green, on the hope that the US jobs report will be softer than the prior month and help calm some hawkish Federal Reserve interest rate expectations.

Every batch of hotter US data takes some conviction out of Federal Reserve rate cut bets. Earlier this year, investors hoped the Fed would cut three times in 2024.

The FTSE 100 index was up 39.24 points, or 0.5%, at 8,210.85. The FTSE 250 was up 67.82 points, or 0.4%, at 17,415.21, and the AIM All-Share was up 65.96 points, or 0.5%, at 14,314.807.

The Cboe UK 100 was up 0.5% at 819.96, the Cboe UK 250 was up 0.4% at 17,413.98, and the Cboe Small Companies was down 0.1% at 15,762.31.

In European equities on Friday, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was up 0.5%.

Stocks in New York were called higher. The Dow Jones Industrial Average was called up 0.8%, the S&P 500 index up 0.3%, and the Nasdaq Composite up 0.6%.

Friday’s US jobs report is expected to show nonfarm payrolls rose 243,000 last month, according to FXStreet cited consensus, easing from 303,000 in March.

‘This will be an important release for the Fed as well, since the resilience in the labour market has enabled them to keep the focus on inflation. Indeed, the March report showed nonfarm payrolls rise by a 10-month high of 303,000, whilst the three-month average growth was at a 12-month high of 276,000,’ Deutsche Bank analysts commented.

Interest rates were left unchanged on Wednesday by the US Federal Reserve, on a ‘lack of progress’ towards its inflation target.

Fed Chair Jerome Powell downplayed fears that the next move on interest rates could be upwards, suggesting policy will prove restrictive enough to lower inflation. However, he also dashed hopes for a near-term rate cut noting it was taking longer to gain confidence that inflation was on track to hit the central bank’s 2% target.

According to Eurostat, unemployment in the eurozone remained unchanged on-month in March. The seasonally-adjusted unemployment rate was stable at 6.5% compared to February, and down slightly from 6.6% in March 2023. The most recent figure was in line with the FXStreet-cited consensus.

The pound was quoted at $1.2554 at midday on Friday in London, up compared to $1.2487 at the equities close on Thursday. The euro stood at $1.0748, up against $1.0690. Against the yen, the dollar was trading at JP¥153.06, down compared to JP¥154.05.

In London, Anglo American gained 3.3%, after Reuters reported Glencore could launch a rival bid for the mining company.

The company is in preliminary discussions with its mining peer over a potential takeover, though no formal offer has been made. This comes amid ongoing interest in Anglo American from BHP.

Last Friday, Anglo American ‘unanimously’ rejected an ‘opportunistic’ offer from BHP on grounds that it ‘significantly undervalues’ the London-based miner. The all-share offer valued the miner at £31.1 billion.

Trainline gained 6.6%, after posting expectation-beating revenue, and said net ticket sales came in at the top end of its guidance range. The travel ticketing platform also announced a new share buyback.

Revenue in the year ended February 29 rose 21% to £396.7 million, from £327.1 million. Revenue topped the ‘previous guidance range’. Pretax profit jumped to £48.1 million from £22.1 million.

Net ticket sales were up 22% on-year to £5.30 billion, at the top end of its previous guidance range. For the new financial year, it predicts net ticket sales growth of 8%-12%, and revenue to rise between 7%-11%.

Trainline announced a £75.0 million share buyback programme. It recently completed a £50.0 million buyback which kicked off in September.

On AIM, chartered surveyor firm Fletcher King jumped 26%. It reported a ‘strong second half business performance’, a turnaround from the more ‘cautionary business outlook’ it gave back in December.

Revenue for the year ended April 30 ‘is now expected to be materially higher than management expectations’. Pretax profit is expected to be between two and three times higher than the £192,000 it reported for the prior year.

Stocks in New York were called higher. The Dow Jones Industrial Average was called up 0.8%, the S&P 500 index up 0.4%, and the Nasdaq Composite up 0.7%.

Brent oil was quoted at $83.91 a barrel at midday in London on Friday, from $83.40 late Thursday.

Of the black stuff, Panmure’s Ashley Kelty argued that while crude inventory builds ‘suggest softer demand’, ‘peak driving season is now underway’, which could help with a clearer picture of demand growth in coming weeks.

Kelty added: ‘While tensions in the Middle East continue to elicit a risk premium (albeit greatly reduced) there has been no material disruption to supplies of crude, and a wider regional conflict looks increasingly unlikely. OPEC has indicated it may extend quota cuts if demand fails to pick up to forecast levels in near term. Reports suggest the cartel members are discussing this informally, but traders will keep an eye on rhetoric ahead of the group’s next formal meeting.’

Gold was quoted at $2,300.35 an ounce, down against $2,303.10.

Still to come on Friday’s economic calendar, there is an S&P Global composite PMI reading from the US at 1445 BST, as well as an ISM services PMI print at 1500 BST.

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