London close: Stocks manage gains ahead of Fed minutes

(Sharecast News) - London's stock markets ended Wednesday on a positive note amid a robust performance from the mining sector, as investors digested a US nonfarm payrolls revision and UK borrowing figures.

They were also looking ahead to the release of the latest minutes from the US Federal Reserve, due at 1900 BST.

The FTSE 100 index rose 0.12% to close at 8,283.43 points, and the FTSE 250 advanced 0.96% to 21,187.19 points.

In currency markets, sterling was last up 0.31% on the dollar to trade at $1.3075, as it rose 0.16% against the euro, changing hands at €1.1730.

"US equity indices initially resumed their upward momentum following a US Labor Department preliminary estimate of a nonfarm payrolls downward benchmark revision, which would cut the March 2024 level of employment by 0.5%, or 818,000," said IG chief technical analyst Axel Rudolph.

"Wednesday evening's publication of the July FOMC minutes or Fed Chair Jerome Powell's speech at the Jackson Hole symposium later this week may reinforce the equity market ascent or poor cold water over it.

"US mortgage rates falling to a 15-month low have been pretty much ignored by investors."

Rudolph added that the gold price had come off its record $2,531 per ounce high on profit taking, while oil price stabilised around their June lows.

"Meanwhile, the US dollar basket continues to slide and trades in fresh eight month lows."

US nonfarm payrolls revised downwards, UK public sector borrowing widens

On the data front, the US economy added 818,000 fewer jobs than previously reported over the year ended 31 March, according to a preliminary annual benchmark revision by the Labor Department.

The adjustment marked a nearly 30% reduction from the initially-reported 2.9 million jobs, representing the largest downward revision since 2009.

The most significant adjustments were in professional and business services, which saw a reduction of 358,000 jobs.

Other sectors, including leisure and hospitality, manufacturing, and trade, transportation, and utilities, also experienced downward revisions.

On home shores, UK government borrowing for July exceeded expectations, reaching £3.1bn, according to the Office for National Statistics.

The figure was £1.8bn higher than July last year, and £100m above the forecast from the Office for Budget Responsibility.

The borrowing level also surpassed economists' expectations of £2.5bn, marking the highest July borrowing since 2021.

However, cumulative borrowing for the first four months of the financial year was £51.4bn, slightly lower than the same period last year but still £4.7bn more than the OBR's March forecast.

"Revenue was up on last year, with income tax receipts in particular growing strongly," said Jessica Barnaby, deputy director for public sector finances at the ONS.

"However, this was more than offset by a rise in central government spending where, despite a reduction in debt interest, the cost of public services and benefits continued to increase."

Elsewhere, Japan reported a larger-than-expected trade deficit in July, driven by a significant surge in imports.

The country's trade deficit widened to JPY 622bn, compared with a surplus of JPY 224bn in June and a JPY 61bn deficit in July 2023.

Imports rose 16.6% year-on-year, outpacing the expected 14.9% increase and sharply accelerating from the 3.2% growth recorded in the prior month.

Mining stocks rise, utility plays under pressure

On London's equity markets, mining stocks were mainly in the green as metal prices strengthened.

Anglo American gained 1.49%, Rio Tinto rose 1.22%, Glencore increased by 0.76%, and Hochschild Mining surged 4.56%, all benefiting from the uptick in commodity prices.

"Just days after iron ore prices hit their lowest level in two years, the metal staged a small recovery amid hopes that stimulus measures in China could help to avoid a major slump in demand for the metal," said Dan Coatsworth, investment analyst at AJ Bell.

"Iron ore is a key component in steelmaking and is used in property construction.

"China has suffered from a big slump in its real estate sector, with countless properties either sitting empty or half-built."

Elsewhere, JD Sports Fashion advanced 4.02% as investors anticipated a positive second-quarter trading update scheduled for Thursday.

Mobico Group saw a significant jump of 16.72% after the public bus operator maintained its annual guidance, reporting a 23.8% rise in adjusted interim operating profit to £71.2m, and narrowing its pre-tax losses.

The company, previously known as National Express, said it continued to focus on deleveraging, with adjusted operating profit for 2024 expected to be within the £185m to £205m range.

OSB Group also rebounded by 4.33%, recovering from last week's slump after lowering its net interest guidance for the year.

On the downside, BT Group fell 1.1%, extending losses from Tuesday after competitor CityFibre announced a broadband partnership with Sky.

Telecom Plus dropped 0.97%, impacted by the negative sentiment surrounding the Sky-CityFibre deal.

Housebuilders Barratt Developments and Redrow edged lower, down 1.09% and 0.43% respectively, as their potential merger neared regulatory approval from the Competition and Markets Authority.

Utilities stocks were also under pressure, with Severn Trent declining by 2.45%, United Utilities down 1.12%, and SSE falling 0.77%.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,283.43 0.12% FTSE 250 (MCX) 21,187.19 0.96% techMARK (TASX) 4,868.60 0.05%

FTSE 100 - Risers

JD Sports Fashion (JD.) 128.15p 4.02% Airtel Africa (AAF) 113.60p 2.90% Croda International (CRDA) 3,943.00p 2.10% Diageo (DGE) 2,490.50p 2.01% Rightmove (RMV) 549.80p 1.85% Prudential (PRU) 662.80p 1.59% Anglo American (AAL) 2,277.50p 1.49% Melrose Industries (MRO) 505.00p 1.49% Vistry Group (VTY) 1,378.00p 1.47% IMI (IMI) 1,814.00p 1.34%

FTSE 100 - Fallers

Severn Trent (SVT) 2,470.00p -2.45% Antofagasta (ANTO) 1,849.00p -1.68% 3i Group (III) 3,172.00p -1.40% United Utilities Group (UU.) 973.20p -1.12% BT Group (BT.A) 134.80p -1.10% Centrica (CNA) 126.40p -1.10% Barratt Developments (BDEV) 543.00p -1.09% Smiths Group (SMIN) 1,750.00p -0.85% AstraZeneca (AZN) 13,000.00p -0.78% SSE (SSE) 1,863.00p -0.77%

FTSE 250 - Risers

Watches of Switzerland Group (WOSG) 406.00p 6.28% Just Group (JUST) 151.20p 5.00% Hochschild Mining (HOC) 192.80p 4.56% Elementis (ELM) 164.60p 4.44% OSB Group (OSB) 400.00p 4.33% Clarkson (CKN) 3,940.00p 3.92% Marshalls (MSLH) 348.50p 3.87% Plus500 Ltd (DI) (PLUS) 2,632.00p 3.79% Dr. Martens (DOCS) 73.95p 3.57% Ashmore Group (ASHM) 176.00p 3.26%

FTSE 250 - Fallers

Pennon Group (PNN) 591.00p -2.48% Syncona Limited NPV (SYNC) 120.80p -1.63% PPHE Hotel Group Ltd (PPH) 1,320.00p -1.49% Redrow (RDW) 779.00p -1.08% Chemring Group (CHG) 400.00p -0.99% Telecom Plus (TEP) 1,830.00p -0.97% Caledonia Investments (CLDN) 3,625.00p -0.96% Wood Group (John) (WG.) 133.50p -0.74% VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 474.00p -0.73% Carnival (CCL) 1,067.50p -0.70%