Stocks in London made a subdued start on Monday, ahead of a busy week of central bank meetings, as weak data from China soured the mood.
The FTSE 100 index added just 3.29 points at 8,276.34. The FTSE 250 fell just 7.54 points at 20,887.83, and the AIM All-Share fell 1.16 points, 0.2%, at 744.07.
The Cboe UK 100 was up 0.1% at 827.83, the Cboe UK 250 fell 0.1% to 18,402.85, and the Cboe Small Companies was up 0.1% at 16,809.92.
In European equities on Monday, the CAC 40 in Paris was down 0.1%, while the DAX 40 in Frankfurt fell 0.3%.
Sterling was quoted at $1.3169 early Monday, up from $1.3137 at the London equities close on Friday. The euro rose to $1.1116 from $1.1084. Against the yen, the dollar faded to JP¥139.73 from JP¥140.53.
Focus this week will be on a trio of central bank decisions, starting with the US Federal Reserve on Wednesday.
‘The probability of a 50bp rate cut has risen sharply and is now 59%, according to the CME’s Fedwatch tool, this is up from 30% a week ago. As we get closer to the FOMC meeting, it feels like this could be epoch changing,’ XTB analyst Kathleen Brooks commented.
‘In the UK, economic data this week may complicate things at the BoE. CPI for August is released on Wednesday. The market is expecting headline inflation to remain steady at 2.2% YoY, core price growth, however, is expected to tick up to 3.5% from 3.3%. Service price inflation is expected to rise to 5.6% from 5.2%, which could lead to fears that inflation is raising its head once more.’
Brooks continued: ‘Economists do not think that the BoJ will cut rates at this meeting, and the futures market is only pricing in a very small chance of a rate cut. BoJ officials have sounded hawkish in recent weeks, and we think that the BoJ will maintain its bias to normalize interest rates in the coming months.’
Financial markets in Tokyo are closed on Monday. In China, the Shanghai Composite was ended 0.5%. The Hang Seng in Hong Kong was 0.2% higher in late trade. The S&P/ASX 200 in Sydney added 0.3%.
Chinese retail sales and industrial production growth slowed in August, official data showed Saturday, as leaders in Beijing seek paths to achieve growth targets despite consumers’ reluctance to spend.
More than a year and a half since abolishing strict Covid-19 measures that had dampened activity, the world’s second-largest economy has yet to achieve a highly anticipated post-pandemic recovery.
A prolonged debt crisis in China’s vast property sector, continued deflationary pressure and high unemployment are among the factors now weighing on investor confidence.
In August, retail sales increased 2.1% year-on-year, slowing from 2.7% in July, according to data released by the National Bureau of Statistics.
The figure also came up short of the 2.5% growth forecast by a Bloomberg survey of analysts.
Year-on-year industrial production also slowed, NBS data showed, dropping from 5.1% growth in July to 4.5% in August.
The Bloomberg forecast had anticipated industrial production to grow 4.7% last month.
Miners in London struggled in the wake of the China data. China is a major buyer of minerals.
Antofagasta shares fell 1.3%, Rio Tinto lost 1.1% and Anglo American fell 0.7%.
Elsewhere in London, TI Fluid surged 12%. It rejected a takeover approach from automotive components maker ABC Technologies.
Noting ‘recent press speculation’, ABC, which makes plastics and lightweighting products for the automotive industry, said two takeover tilts were rejected by TI Fluid.
A 165 pence per share offer for the designer and manufacturer of thermal management and fluid handling systems was fielded in August, before another of 176p earlier in September. The bids valued TI Fluid’s issued share capital at around £816.1 million and £870.5 million. The 176p bid was a 35% premium to TI Fluid’s share price on August 21, the day before ABC’s first approach.
‘Although the possible offer was also rejected by the board of TI Fluid Systems, ABC Technologies remains interested in a possible transaction and is therefore considering its position. There can be no certainty that an offer will be made, nor as to the terms on which any offer might be made, even if the pre-conditions are satisfied or waived,’ ABC added.
TI Fluid said it is ‘confident in the strategy and prospects of the company’. ABC is majority-owned by investment funds managed by Apollo Management.
TT Electronics tumbled 33%. The electronic component manufacturer reported a weak August after ‘operational efficiency issues in two North American sites’.
It now expects revenue in the second half of 2024 to be ‘£15 million to £20 million lower than previously anticipated’.
‘The drop-through impact of the revenue shortfall and higher production costs are expected to impact the North American operating profit by £13 million to £18 million,’ TT Electronics warned.
It now expects group adjusted operating profit for the year between £37 million and £42 million.
Gold was quoted at $2,581.24 an ounce early Monday in London, rising from $2,578.76 at the time of the European equities close on Friday. Brent oil traded at $72.17 a barrel, easing from $72.58.
The economic events calendar has a eurozone trade balance reading at 1000 BST.
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