Stocks in London were predominantly in the red at Monday’s open, as investors look for signs of cuts to national insurance ahead of the UK Spring budget on Wednesday.
The FTSE 100 index opened down 15.31 points, 0.2%, at 7,667.19. The FTSE 250 was down 39.07 points, 0.2%, at 19,315.31, and the AIM All-Share was up 1.16 points, 0.2%, at 742.47.
The Cboe UK 100 was down 0.3% at 768.30, the Cboe UK 250 was down 0.1% at 16,685.40, and the Cboe Small Companies was down 0.1% at 14,501.53.
In European equities on Monday, the CAC 40 in Paris was down 0.1%, while the DAX 40 in Frankfurt was up 0.1%.
Monday’s economic calendar is quiet, but the week picks up pace with the UK’s budget announcement on Wednesday.
UK Prime Minister Rishi Sunak hinted at a cut to national insurance in next week’s spring budget as he spoke to journalists at the Scottish Tory conference.
The prime minister initially refused to be drawn on potential tax cuts to be announced by Chancellor Jeremy Hunt, but stressed his dislike for high national insurance.
‘There are two other factors to consider alongside this budget. The chancellor is not going to want to do anything that could make an interest rate cut from the BOE less likely, as this could be more important for winning votes than future tax giveaways. This means that we don’t expect any major changes on Wednesday. Also, the OBR forecasts will be worth watching. Will they revise down growth forecasts to bring them more inline with the BOE? Could inflation be revised up? Either way, the OBR forecasts may paint the UK economy in an unflattering light,’ said Kathleen Brooks, research director at XTB.
The pound was quoted at $1.2668 early on Monday in London, up compared to $1.2641 at the equities close on Friday. The euro stood at $1.0840, higher against $1.0827. Against the yen, the dollar was trading at JP¥150.23, lower compared to JP¥150.25.
Meanwhile, Moscow, Riyadh and several other OPEC+ members on Sunday announced extensions to oil production cuts first announced in 2023 as part of an agreement among oil producers to boost prices following economic uncertainty.
The plan to extend cuts to mid-2024 comes on top of previous cuts to both oil output and exports as some of the world’s largest energy producers drive to push up market rates.
Saudi Arabia’s energy ministry said it would cut its production by one million barrels per day from April to June, while Russia announced 471,000 bpd of cuts in the same period.
The news, however, did little for oil prices. Brent oil was quoted at $83.84 a barrel early in London on Monday, down from $84.08 late Friday.
Amongst London’s blue-chips, oil major BP rose 1.5%, whilst Shell lost 0.1%.
BP got a boost after Jefferies raised its stock to ’buy’ from ’hold’.
In London’s FTSE 250 index, Hipgnosis Songs Fund fell 9.6%.
In December, the London-listed music investment company said Shot Tower Capital would conduct due diligence on the Hipgnosis Songs Fund’s assets as part of a strategic review.
HSF has faced shareholder scrutiny recently. In October, two key votes on the firm’s future, including a poll on its continuation, did not go its way. Roughly 83% of votes cast were against the company’s continuation. In addition, Hipgnosis said around 84% of votes rejected a planned portfolio sale.
In September, it said it would be selling off 29 of its music catalogues for $440 million to Hipgnosis Songs Capital, which is a partnership between HSF’s investment adviser Hipgnosis Song Management and funds advised by New York-based alternative asset manager Blackstone.
On Monday, HSF said Shot Tower Capital has provided an independent valuation of assets.
HSF noted its fair market value of portfolio is estimated at $1.80 billion to 2.06 billion, after deducting bonus provision the fair market value is between $1.74 billion and $2.00 billion. It said the Shot valuation compares to a fair value of $2.62 billion on September 30.
Chair Robert Naylor said: ‘The newly constituted board is making good progress with the due diligence work that will underpin its strategic review. We are disclosing the valuation at this time given its material difference to valuations previously disclosed. The board will provide further detail on this when the due diligence is complete. The Board remains focused on identifying all options to deliver shareholder value.’
Amongst London’s small-caps, PensionBee rose 10%.
It said it has entered into an exclusive, non-binding term sheet with a large, US-based global financial institution in order to expand into the US.
The company explained that the US has the ‘world’s largest defined contribution pension market’, representing approximately 80% of the global total and $22.5 trillion in assets.
‘Given the context of the enormous US market opportunity, PensionBee sees the potential for its US business to grow rapidly, becoming at least the size of its UK business over the next decade,’ it added.
In Asia on Monday, the Nikkei 225 index in Tokyo was up 0.5%. In China, the Shanghai Composite closed up 0.4%, while the Hang Seng index in Hong Kong was up marginally in late dealings. The S&P/ASX 200 in Sydney closed down 0.1%
In the US on Friday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.2%, the S&P 500 up 0.8% and the Nasdaq Composite up 1.1%.
Gold was quoted at $2,084.49 an ounce against $2,075.33.
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