London’s FTSE 100 was higher at midday, although Burberry suffered, ahead of US inflation figures and the latest round of central bank interest rate calls.
The FTSE 100 index traded up 49.96 points, or 0.6%, at 8,231.43. The FTSE 250 was 76.94 points higher, 0.4%, at 20,570.94, and the AIM All-Share was up 2.42 points, or 0.3%, at 746.42.
The Cboe UK 100 was up 0.7% at 823.23, the Cboe UK 250 added 0.4% at 18,108.61, and the Cboe Small Companies climbed 0.6% to 16,948.25.
The CAC 40 in Paris rose 0.6% and Frankfurt’s DAX 40 added 0.5%.
Sterling faded to $1.3077 early Monday afternoon in London, from $1.3147 at the time of the London equities close on Friday. The euro slipped to $1.1039 from $1.1104. Against the yen, the dollar climbed to JP¥143.69 from JP¥142.12.
‘US August jobs data, plus two Fed speeches, caused quite a lot of intra-day FX volatility on Friday. But we are no closer to knowing whether the Fed will cut by 25bp or 50bp on 18 September,’ ING analysts commented.
Total nonfarm payroll employment in the US rose by 142,000 in August, with job gains in construction and healthcare, numbers on Friday showed. In July, nonfarm payrolls rose by 89,000, the outcome revised from an initially reported 114,000 increase.
The latest reading missed the FXStreet-cited market consensus of a 160,000 increase in jobs.
ING added: ‘The focus this week will be on the US CPI data and Thursday’s ECB decision. Perhaps most important for FX markets will be the first Harris-Trump TV debate tomorrow night.’
In New York on Monday, the Dow Jones Industrial Average is called 0.6% higher, the S&P 500 up 0.7% and the Nasdaq Composite up 0.8%.
The ECB is expected to cut rates by 25 basis points on Thursday. Berenberg analyst Holger Schmieding expects the central bank to alternate between cuts and holds before the end of the year.
‘Inflation has receded to 2.2% while risks to growth have increased. As a result, the European Central Bank will likely cut its key policy rate, the deposit rate, by 25bp to 3.5% this Thursday. Amid elevated uncertainty, the ECB is unlikely to provide any clear guidance about the pace and extent of its further monetary easing thereafter. As before, the ECB will probably repeat its mantra that it all ’depends on the data’. Due to sticky core inflation (2.8% year-on-year in August), we expect the ECB to pause again on 17 October, as it had done in July, before lowering the deposit rate for a third time in the current easing cycle by 25bp on 12 December,’ Schmieding said.
Unemployment and gross domestic product data in the UK may also put the Bank of England under the spotlight. Its next decision is on September 19.
XTB analyst Kathleen Brooks commented: ‘The UK economy has bounced back in the first two quarters of the year, this week we will see if growth can be sustained in Q3. The monthly GDP reading for July is expected to show a 0.2% MoM expansion, with the 3-month expansion still expanding by 0.6%. Stronger than expected growth in the first half of this year is keeping a cap on expectations for interest rate cuts by the BOE, with only 49bps of cuts expected for the rest of this year, but the risk could be to the downside.
‘The market expects the UK to return to full capacity at the end of this year, which means that any upside surprise to GDP between now and the end of the year could be inflationary, which may delay the pace of BOE rate cuts. This week’s GDP is worth watching closely. An upside surprise could boost the pound. GBP/USD closed the week just above $1.31, however, a strong GDP report could send this pair back towards $1.32. The pound is currently one of the top performers in the G10 FX space so far in Q3.’
In London, Entain shares rose 8.9%. It said it has performed well so far in its second half, with the Ladbrokes owner returning to growth in its UK and Ireland online betting offering ‘earlier than expected’.
The firm, providing an update on its ‘strategic progress and trading performance’ ahead of investor meetings this week, said the improved momentum seen in the second-quarter has continued into the third.
Online net gaming revenue growth in the second-half so far is ‘ahead of our expectations’, with the UK & Ireland online division returning to year-on-year growth.
C&C Group added 1.7%.
The Dublin-based beer, cider, wine, spirits, and soft drinks maker and distributor across UK and Ireland said earnings in the first half of the financial year to August 31 have been in line with expectations.
Net revenue is expected to be down 3%, reflecting growth in Matthew Clark & Bibendum, in-line performance across core and premium brands, offset by the impact from the disposal of NAB business in Ireland, lower contract brewing volumes and softer cider volumes in GB.
C&C expects underlying operating profit in the range of €39 million to €41 million, in line with expectations.
On AIM, Andrada Mining jumped 19%. The critical raw materials producer struck a deal with Sociedad Quimica y Minera de Chile SA, one the world’s largest lithium chemicals producers. Andrada’s deal is with SQM’s SQM Australia (Pty) Ltd arm.
As part of the agreement, SQM can earn into the Lithium Ridge asset in Namibia. SQM will pay a $500,000 participation fee on signing the deal and a further $1.5 million upon satisfaction of conditions. It has the option to invest $20 million over three and a half years, in different stages to earn 40% of Lithium Ridge. Funding a definitive feasibility study will take that stake to 50%, Andrada added.
‘The agreement enables Andrada shareholders and Namibian stakeholders to benefit from the accelerated development of one of Andrada’s lithium assets,’ the AIM listing says.
Back on the Main Market, Burberry was down 6.1%. Paris-listed luxury peer Kering shed 3,.8%.
Barclays downgraded the duo, reflecting concerns about weaker-than-expected trading in China. It cut them both to ’underweight’ from ’equal-weight’.
A barrel of Brent edged up to $71.62 early Monday afternoon, from $71.50 at the time of the London equities close on Friday. Gold declined to $2,494.71 an ounce from $2,514.36.
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