London’s FTSE 100 made a fast start to the new year, thought it was shaping up to be a slower day in New York, with stocks there falling after the first hurdle following a poor US PMI reading.
Housebuilders led the way among London blue-chips, though leisure stocks fell as the sector deals with rail strike action at the start of the year. Elsewhere, Cineworld was in focus again, and AIM-listed GENinCode skyrocketed on good news from the US.
The FTSE 100 index ended up 102.35 points, or 1.4%, at 7,554.09 on Tuesday. The FTSE 250 rose 281.34 points, or 1.5% at 19,134.34 and the AIM All-Share added 7.30 points, or 0.9%, at 838.63.
The Cboe UK 100 rose 1.2% at 755.83, the Cboe UK 250 added 1.4% at 16,587.69, and the Cboe Small Companies climbed 1.8% at 13,473.80.
In Europe, the CAC 40 index in Paris closed up 0.4%, while the DAX 40 in Frankfurt added 0.8%.
The dollar was on the up against the pound and euro, largely reversing its late-2022 weakness. It was lower against the yen, however.
Sterling was quoted at $1.1980 late Tuesday, down from $1.2054 at the London equities close on Friday. The euro traded at $1.0550, lower than $1.0686. Against the yen, the dollar was quoted at JP¥130.89, down from JP¥131.84.
‘The strong greenback gains seem like a bit of unwinding some of the weakness seen in thin holiday markets, and what we suspect, is an overdue technical bounce. Recall that the dollar trading heavily in December,’ Bannockburn Global Forex analyst Marc Chandler commented.
Stocks were on the rise in Europe at the start of 2023, despite the global manufacturing economy showing signs of struggle.
Shares in New York failed to withstand selling pressure, however, after a weak reading of the US economy.
In New York, the Dow Jones Industrial Average was down 0.6% at the time of the closing bell in London, the S&P 500 was down 0.7% and the Nasdaq Composite slumped 1.0%.
The US manufacturing sector rounded off 2022 with another decline in activity, though inflationary pressure eased, survey results on Tuesday showed.
The S&P Global manufacturing purchasing managers’ index faded to 46.2 points in December from 47.7 in November, in line with the flash estimate. December’s reading was again below the 50-point mark which separates growth from decline.
Chinese manufacturers, meanwhile, indicated a further slight downturn in activity in December. The latest Caixin China general manufacturing purchasing managers’ index fell to 49.0 points in December from 49.4 in November.
It marked a fifth-successive monthly deterioration in operating conditions. Caixin said this occurred as efforts to stop the spread of Covid-19 continued to disrupt operations and damp client demand.
Leading the way among London large-caps, Rolls-Royce added 6.1%. Jefferies lifted the stock to ’buy’ from ’hold’.
Housebuilders also supported the FTSE, with Barratt and Persimmon adding 4.4% and 4.6%. They had slumped during Friday’s shorter session on the back of an unfavourable reading of the UK housing sector.
Among AIM listings, GENinCode shares more than doubled to 19.60 pence from 7.43p.
The cardiovascular disease-focused predictive genetics company won licensing approval in California state, as well CLIA certification for its Irvine laboratory in California. This allows its risk assessment products for CVD to be provided to patients in 49 US states.
The approval is a ‘major milestone’ in the commercialisation of its polygenic CVD products, CARDIO inCode and LIPID inCode, the firm said.
Fellow junior market constituent Bidstack tumbled 27%. It said it intends to claim damages against its commercial partner Azerion Technology for the ‘unlawful’ termination of their commercial agreement.
Bidstack said the two companies had been working to find a mutually agreeable solution to commercial issues raised by Azerion, during which ‘it became clear to the Bidstack Board that Azerion was withholding payment of sums which Bidstack considers to be due and owing in accordance with the agreement,’ the company said.
The company said it has performed its obligations under the agreement, and issued invoices which it expects to meet market expectations for financial 2022.
Bidstack claimed that it received notice from Azerion on December 30, that it was terminating the commercial agreement, the company said external legal advice had concluded that ‘Azerion has no present entitlement to end the agreement’. It added that it intends to claim damages.
The UK economy faced further disruption from multiple rail strikes at the start of the week.
Members of the Rail, Maritime & Transport union at Network Rail and 14 train operators will stage two 48-hour walkouts from Tuesday and Friday, while drivers in the Aslef union will strike on Thursday.
In London, leisure stocks fell as investors fret over what strikes could mean for footfall. Tenpin bowling company Hollywood Bowl lost 4.6%, while casino operator Rank shed 3.3%.
Cineworld edged higher, however, rising 0.8%. The beleaguered cinema chain put itself up for sale in hopes of securing its future.
Cineworld operates over 700 sites across the globe, including over 100 in the UK and Ireland.
Saying it was responding to recent media reports, Cineworld said that neither it, nor its lenders and advisors, have participated in discussions with US rival AMC Entertainment regarding any sale of its assets. New York-listed AMC is the owner of cinema chain Odeon.
Starting from this month, however, Cineworld will run a marketing process, focused on proposals for the group as a whole. This will run in parallel to the developing of a plan for a Chapter 11 reorganisation, Cineworld said.
Back in September 2022, Cineworld confirmed it was beginning Chapter 11 filing in US Bankruptcy Court in Texas, as it grappled with liquidity woes.
It had first announced it was considering a Chapter 11 filing on August 22, and any deleveraging would likely result in a ‘very significant dilution’ of its shares.
Brent oil fetched $83.03 a barrel late Tuesday, down from $83.21 on Friday. Gold was quoted at $1,829.14 an ounce, up from $1,818.60.
Wednesday’s economic calendar has a series of services PMI readings, including Germany at 0855 GMT and the eurozone at 0900 GMT. Minutes from the Federal Reserve’s most recent meeting are released at 1900 GMT.
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