Stocks in London, Paris and Frankfurt were down at midday Monday, as producer price inflation data from the US, to be out Tuesday, was nearing.
In disappointing news for Chancellor Rachel Reeves, a survey of UK chief financial officers by consultancy Deloitte found a net 26% felt more pessimistic about their businesses than they did three months ago. However, sentiment is still well above the lows seen during the Covid-19 pandemic and in 2022 during Liz Truss’s brief premiership.
Also, Reeves returned from her trip to China as concerns swirled that the government is in danger of failing to meet its own fiscal rules and will need to take action to remain on track. Reeves however insisted over the weekend that those fiscal rules are ‘non-negotiable’.
‘Gilt yields continued to creep higher as the market fretted about Rachel Reeves‘ spending plans and borrowing requirements,’ commented AJ Bell’s Russ Mould, who added: ‘The higher the yields go, the higher the cost of borrowing for the government and the greater the likelihood that we’ll see spending cuts to public services.
‘The number of stocks falling on the FTSE 100 outnumbered the risers two-to-one as investors reassessed their portfolios. Technology, industrials, healthcare and consumer stocks were firmly out of favour, while commodities, utilities and real estate shone. Those movements are what you might expect when investors believe inflationary pressures are going to intensify.’
Those investors’ eyes will therefore be on Wednesday, when UK consumer and producer price inflation data are scheduled for release.
The FTSE 100 index was down 33.52 points, 0.4%, at 8,214.97. The FTSE 250 was down 44.20 points, 0.2%, at 19,689.74, and the AIM All-Share was down 1.91 points, 0.3%, at 711.47.
The Cboe UK 100 was down 0.4% at 823.46, the Cboe UK 250 was down 0.4% at 17,121.59, and the Cboe Small Companies was up 0.3% at 15,320.91.
In large caps, Entain gained 2.5%, down from an early-morning high of 682.40 pence each.
The Isle of Man-based bookmaker said loss before interest, tax, depreciation and amortisation is expected to be around $250 million at the BetMGM business for financial 2024.
However, Entain expects group Ebitda to be ‘at the top’ of the £1.04 billion to £1.09 billion guidance range, owing to ‘operator friendly’ results in the fourth quarter.
‘Rather than deliver the bad news investors had expected, Entain...took the market by surprise and triggered a surge in the share price,’ Mould said.
However, he added: ‘Entain might have scored the winning goal in recent months, but its share price has more than halved since 2021 which implies something drastic needs to be done to revive its fortunes and win back the market‘s favour. Today’s trading update is a good start, but the market will need more good news rather than a stroke of luck.’
On the FTSE 250, Serco lost 1.9%.
The Hampshire, England-based provider of services to governments has promoted Anthony Kirby to chief executive, starting on March 1 and replacing Mark Irwin.
Kirby is currently CEO of Serco’s largest division, UK & Europe, while Irwin has been with Serco for 12 years - although Mould noted that he served ‘only two years in the [CEO] job’.
‘His predecessor Rupert Soames did a brilliant job turning around the company and Irwin kept things ticking over, but to leave after such a short time seems odd,’ Mould said, adding: ‘It will be interesting to see the scale of Kirby‘s ambitions and whether he has bold plans to take Serco to the next level.’
Among smaller caps, Eagle Eye Solutions plummeted 23%.
The London-based software-as-a-service marketing solutions provider said it expects revenue in financial year 2025 and 2026 to be around 15% and 18% below current market expectations respectively.
However, it also said group revenue increased by 0.4% on-year in its first half to £24.2 million, with SaaS revenue growing 10% to £19.5 million, although Professional Services revenue was down 16% to £4.4 million from £5.2 million.
Blue Star Capital soared 74%.
The Crawley, England-based investing company, which is focused on the esports and blockchain industries, reports that SatoshiPay Co-Founder Meinhard Benn - through Pinnow, Germany-based Flakenwerder Investment UG - holds an 8.34% stake in Blue Star as of Wednesday, January 8, up from none reported.
In European equities on Monday, the CAC 40 in Paris was down 0.9%, while the DAX 40 in Frankfurt was down 0.8%.
The pound was quoted lower at $1.2133 at midday on Monday in London, compared to $1.2200 at the equities close on Friday.
Sterling last week hit its lowest level against the dollar since November 2023, with government borrowing costs rising ever higher.
UK government bonds – also known as gilts – continued to see 10-year yields hit fresh highs not seen since 2008, up six basis points at 4.9%. The yield on 30-year gilts also hit new 27-year highs, up five basis points at 5.5%.
The euro stood at $1.0198, down against $1.0233. Against the yen, the dollar was trading lower at JP¥157.27 compared to JP¥157.81.
Stocks in New York were called lower. The Dow Jones Industrial Average was called down 0.4%, the S&P 500 index down 0.8%, and the Nasdaq Composite down 1.2%.
Brent oil was quoted higher at $80.52 a barrel at midday in London on Monday from $78.61 late Friday.
Gold was quoted lower at $2,678.91 an ounce against $2,690.05.
Still to come on Monday’s economic calendar are the consumer inflation forecast and the monthly budget statement from the US.
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