London close: Stocks rise as investors digest US jobs data

(Sharecast News) - London's stock markets finished with a positive performance on Wednesday, with the FTSE 100 and FTSE 250 both closing in the green.

Investors were also digesting the latest ADP jobs report from the United States, although British American Tobacco stood out on the downside after a disappointing update.

The FTSE 100 rose 0.34% to reach 7,515.38 points, while the FTSE 250 posted a more substantial gain of 0.97%, closing at 18,666.73 points.

In currency markets, sterling was last down 0.08% on the dollar, trading at $1.2585, while it managed gains of 0.03% against the euro to change hands at €1.1668.

"Despite weaker-than-expected US ADP employment data across most sectors and unexpectedly falling German factory orders, US and European equity indices has another positive session," said IG senior market analyst Axel Rudolph.

"Risk on sentiment prevails ahead of Friday's US non-farm payrolls data and next week's rate decisions by the US Fed, Bank of England and European Central Bank.

"The dollar continues to regain some of its recent losses whereas the gold price has given back this week's entire gains while oil is on track for its fifth consecutive day of losses."

UK construction sector declines, US private sector adds fewer jobs

In economic news, the UK construction sector faced its third consecutive month of decline in November, primarily due to a sharp drop in residential housebuilding.

The S&P Global/CIPS UK construction purchasing managers' index (PMI) slipped to 45.5, marking the third straight month below the critical 50-point level that separates growth from contraction.

Elevated borrowing costs and subdued demand for housing projects were cited as the main factors hampering construction activity.

Housebuilding was notably weak, with a sub-index of just 39.2, while civil engineering stood at 43.5 and commercial building at 48.1.

New orders continued to decline, though at a slower rate, with input costs experiencing their steepest reduction in over 14 years.

"There is no doubt that 2023 has been a difficult year for the UK construction sector," said John Glen, chief economist at CIPS.

"Inflated borrowing costs and falling demand have conspired to further slow new building this month.

"Despite this, the sector has finally emerged from a period of intense supply chain pressure and prices are now falling across the board, especially for timber and steel."

Across the pond, the US private sector employment report from ADP showed a less-than-expected increase of 103,000 jobs in November, falling short of the anticipated 130,000.

Small businesses added 6,000 jobs, medium-sized businesses added 68,000, and large firms created 33,000 jobs.

In the services sector, 117,000 jobs were added, while the goods-producing sector saw a decline of 14,000 jobs.

The report also highlighted a slower pace of wage growth for job stayers and job-changers, reflecting 5.6% and 8.3% increases, respectively.

"Restaurants and hotels were the biggest job creators during the post-pandemic recovery," said Nela Richardson, chief economist at ADP.

"But that boost is behind us, and the return to trend in leisure and hospitality suggests the economy as a whole will see more moderate hiring and wage growth in 2024."

Turning to the eurozone, the construction sector struggled in November as demand remained weak.

The HCOB eurozone construction PMI reached 43.4, slightly improving from the 10-month low of 42.7 recorded in October.

Despite the uptick, the index remained in negative territory, accompanied by a sharp decrease in total output.

Additionally, inflationary pressures increased as input costs rose at a faster pace.

Finally on data, Germany witnessed a surprising downturn in factory orders for October, with a 3.7% decline after an upwardly revised 0.7% increase in September.

The decrease exceeded expectations, particularly impacting the manufacture of machinery and equipment sector, where new orders plummeted by 13.5%.

Tui jumps on improved expectations, BAT sinks

On London's equity markets, mining companies saw gains as copper prices increased.

Anglo American saw a rise of 2%, while Rio Tinto gained 1.31%, and Glencore was up by 1.83%.

Weir Group stood out with a 2.71% increase after it announced its ambition to achieve £60m in absolute savings by 2026 as part of its goal to reach a 20% operating margin by the same year.

It confirmed that market conditions and its 2023 guidance remained unchanged, focusing on delivering an operating margin of 17%.

Travel giant Tui rocketed 14.84% after saying it expected a 25% increase in operating profit this year, following a surge in 2023 earnings driven by solid demand.

Additionally, the company hinted at a potential relocation of its stock market listing from London to Frankfurt.

Paragon Banking Group saw an 8.76% jump after reporting a 25% increase in annual profits.

The company also announced a £50m share buyback program, reflecting a stronger-than-expected full-year performance.

Asia-focused Prudential gained 3.91%, having fallen the previous day due to Moody's negative credit outlook on China.

Commercial vehicle specialist Redde Northgate added 4.84% after reporting a robust first half.

The company reported a 30.9% rise in revenues to £911.3m for the six months ended 31 October, and earnings before interest and tax increased by 1.6% to £113.3m.

On the downside, British American Tobacco fell 5.93% after it scaled back its expectations for organic growth this year, citing macroeconomic pressures in the US affecting its combustibles performance.

The cigarette giant announced it would take a non-cash adjusting impairment charge of about £25bn related to some of its US combustibles brands.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,515.38 0.34% FTSE 250 (MCX) 18,666.73 0.97% techMARK (TASX) 4,102.28 0.65%

FTSE 100 - Risers

BT Group (BT.A) 136.65p 4.91% International Consolidated Airlines Group SA (CDI) (IAG) 161.90p 3.92% Croda International (CRDA) 4,715.00p 3.76% Prudential (PRU) 884.00p 3.59% Legal & General Group (LGEN) 235.70p 3.38% St James's Place (STJ) 688.80p 3.33% Flutter Entertainment (CDI) (FLTR) 13,000.00p 3.26% Rightmove (RMV) 563.80p 2.96% Standard Chartered (STAN) 663.40p 2.73% 3i Group (III) 2,316.00p 2.57%

FTSE 100 - Fallers

British American Tobacco (BATS) 2,279.50p -8.36% Shell (SHEL) 2,490.00p -1.43% Diageo (DGE) 2,774.50p -1.35% BAE Systems (BA.) 1,031.00p -1.29% BP (BP.) 465.95p -1.26% Rentokil Initial (RTO) 421.60p -0.89% Imperial Brands (IMB) 1,848.00p -0.83% Pearson (PSON) 935.40p -0.40% Compass Group (CPG) 2,042.00p -0.39% Reckitt Benckiser Group (RKT) 5,402.00p -0.22%

FTSE 250 - Risers

TUI AG Reg Shs (DI) (TUI) 588.00p 14.84% Paragon Banking Group (PAG) 532.00p 8.35% OSB Group (OSB) 399.00p 6.12% Carnival (CCL) 1,236.00p 6.00% Redde Northgate (REDD) 379.50p 5.56% Digital 9 Infrastructure NPV (DGI9) 32.85p 4.95% Ashmore Group (ASHM) 197.10p 4.84% Wizz Air Holdings (WIZZ) 2,023.00p 4.76% Baltic Classifieds Group (BCG) 217.00p 4.58% North Atlantic Smaller Companies Inv Trust (NAS) 4,030.00p 3.87%

FTSE 250 - Fallers

Future (FUTR) 752.00p -5.41% Indivior (INDV) 1,185.00p -5.28% Discoverie Group (DSCV) 670.00p -4.69% Diversified Energy Company (DEC) 1,298.20p -4.26% NB Private Equity Partners Ltd. (NBPE) 1,644.00p -2.49% PureTech Health (PRTC) 145.00p -2.03% Hipgnosis Songs Fund Limited NPV (SONG) 68.90p -1.99% Ceres Power Holdings (CWR) 177.20p -1.83% Dr. Martens (DOCS) 94.00p -1.73% ICG Enterprise Trust (ICGT) 1,206.00p -1.63%