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(Alliance News) - Stock prices in London were mixed at the market open on Wednesday, with the FTSE 100 index outperforming thanks oil and mining stocks, as investors looked ahead to the release of the US Federal Reserve minutes.
The FTSE 100 index was up 34.53 points, 0.5%, at 7,487.37. The FTSE 250 was down 52.93 points, 0.3%, at 19,369.44, and the AIM All-Share was down 2.07 points, 0.3%, at 835.87.
The Cboe UK 100 was up 0.4% at 748.82, the Cboe UK 250 was down 0.3% at 16,710.47, and the Cboe Small Companies was down 0.6% at 16,710.47.
"In the UK, the FTSE100 continued its defiant grind higher. A marginally positive opening leaves the index ahead by 1.2% in the year to date, with its diverse constituents still ticking some boxes for investors with an international view. Aside from an exposure to the commodity sector and oil in particular, the index has a number of defensive shares with pricing power, resulting in a partly inflation insensitive play," said interactive investor's Richard Hunter.
This is in contrast to the UK domestic-focused FTSE 250 index, which has suffered more due to the local economy's worsening prospects.
"Quite apart from rampant inflation and a rising interest rate environment, it is becoming increasingly difficult to see where strong growth may come from as the country attempts to balance its books," Hunter added.
At 1900 GMT on Wednesday, the US Federal Reserve will publish the minutes of the most recent meeting of its policy-making committee. Investors will be looking for any clues about the central bank's decision-making process for future interest rate hikes.
"The Federal Open Market Committee minutes out later today will be closely watched for the latest thinking of Fed officials with hopes for a firmer guide on the range rates will rise to," said Hargreaves Lansdown's Susannah Streeter.
There will also be US initial jobless claims a day early because of the Thanksgiving Day holiday on Thursday. Stock trading will be closed on Thursday and have a half-day session on Friday.
FXStreet-cited consensus expects the number of US workers filing for first-time unemployment benefits to increase to 224,000 in the week that ended November 18 from 222,000 a week earlier.
Before the FOMC minutes, there are flash purchasing managers' index readings, including the UK at 0930 GMT and the US at 1445 GMT.
The UK S&P Global/CIPS manufacturing PMI is expected to show a further contraction in the sector in November, with a reading of 45.8 points, according to FXStreet-cited consensus. This compares with 46.2 in October.
"The deceleration in overall activity is consistent with Q4 GDP contraction which would be a second successive quarterly decline, signifying a technical recession," said Lloyds Bank.
According to a PMI reading already out, Germany's private sector remained in contraction territory in November, though the rate of decline slowed and pessimism among services providers and manufacturers ebbed, S&P Global said.
The flash composite PMI rose to a three-month high of 46.4 points in November, from October's final reading of 45.1. The figure inched closer to the 50.0 neutral mark, suggesting the pace of decline slowed this month.
In Europe, equities opened flat, as the CAC 40 in Paris was marginally higher, while the DAX 40 in Frankfurt was marginally lower.
In Zurich, Credit Suisse fell 5.3%, as it predicted another quarterly loss, with its investment banking arm struggling amid a "slowdown in capital markets".
The Zurich-based bank said it is pressing on with cost cuts, as it looks to boost its fortunes and turn the page on a difficult period.
The financial services firm expects a pretax loss of up to CHF1.5 billion, around USD1.6 billion, in the fourth quarter of 2022. This would be slightly narrower than the CHF1.59 billion loss in the fourth quarter of 2021.
Sterling was quoted at USD1.885 early Wednesday, firm on USD1.1871 at the London equities close on Tuesday. The euro traded at USD1.0337 early Wednesday, higher than USD1.0275 late Tuesday. Against the yen, the dollar was quoted at JPY141.28, marginally down from JPY141.35.
In London, the FTSE 100 index was once again lifted by oil stocks and mining stocks.
Gold was quoted at USD1,742.24 an ounce early Wednesday, higher than USD1,741.10 on Tuesday, while Brent oil was trading at USD88.89 a barrel, firm on USD88.86.
BP and Shell were 1.8% and 1.5% higher in early trade.
Meanwhile, miners rose after a swathe of price target upgrades by brokers, with Antofagasta up 1.7%, Anglo American up 1.4%, and Rio Tinto up 0.6%.
Swiss diversified miner Glencore added 4.3%.
It has agreed on terms of a USD1.1 billion sale of its Cobar copper mine in New South Wales, Australia with New York-listed special purpose acquisition company Metals Acquisition. Glencore will also receive a 1.5% net smelter return life of mine royalty upon completion.
Late Tuesday, Bernstein raised Glencore stock to 'outperform', upping its price target to 770p from 560p.
At the other end of the FTSE 100, United Utilities shed 2.7% in early trading.
The water company reported strong profit growth in the six months to September 30, with pretax profit of GBP426.3 million, compared to GBP212.7 million a year before. However, this mostly reflects a GBP255 million decrease in reported net finance expense.
Revenue edged down to GBP919.3 million from GBP932.3 million. The water works increased its interim dividend to 15.17 pence, compared to 14.50p.
Looking ahead, United Utilities expects annual revenue to be around 1% lower than a year before.
"While the current challenging macro environment is impacting financial performance, the economic performance of our business remains robust, supported by our strong balance sheet, effective hedging policies and tight cost control," United Utilities said.
In the FTSE 250, Pets at Home lost 4.6%, as costs ate into profit.
The pet supplies retailer said revenue grew to GBP727.2 million in the 28 weeks to October 13, compared with GBP677.6 million in the comparable period of the previous year. Pretax profit fell to GBP53.4 million from GBP65.7 million, due to higher costs of freight and energy, as well as higher investment.
The pet supplies retailer said there was no change to annual guidance, and continues to expect underlying pretax profit to be in line with analyst consensus of GBP131 million. The firm lifted its interim dividend 4.7% to 4.5p.
"Although essentials like cat litter and hygiene products have provided a sunnier spot of rising sales, people are clearly putting off highly discretionary spending on toys and fashion for pets with accessories spending down 3.5%. The group's growing customer base does add resilience though because overall pet food sales grew by more than 15%," said Hargreave Lansdown's Susannah Streeter.
Elsewhere, De La Rue plunged 25%.
The banknote printer reported a "challenging" first half ending September 30, as revenue fell 8.3% to GBP164.3 million from GBP179.2 million a year before. This was mostly led by a decline in Currency revenue. The banknote company swung to a pretax loss of GBP15.9 million from a profit of GBP10.9 million a year before.
De La Rue now expects full-year adjusted operating profit between GBP30 million and GBP33 million, which is below GBP36 million analyst consensus.
The firm also laid out its plans to continue growth in Authentication and achieve "solid returns" on investments in Currency. "We are reiterating that as part of this, next financial year, the company will generate free cash flow and see an improved [earnings before interest, tax, depreciation and amortisation]," it said.
In Asia on Wednesday, Japanese financial markets were closed for Labor Thanksgiving Day. In China, the Shanghai Composite closed up 0.3%, while the Hang Seng index in Hong Kong was up 0.5%. The S&P/ASX 200 in Sydney was up 0.7%.
By Elizabeth Winter; elizabethwinter@alliancenews.com
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