Banks and oil majors kept the FTSE 100 in the green at the London close on Monday, while other stocks slipped, joining peers across the pond.
The FTSE 100 index closed up 22.99 points, 0.3%, to 8,303.62. The FTSE 250 ended down 46.87 points, 0.2%, at 20,853.21, and the AIM All-Share closed up just 0.25 of a point at 738.61.
The Cboe UK 100 edged up 0.2% to 830.70, the Cboe UK 250 closed down 0.4% at 18,297.41, and the Cboe Small Companies lost 0.2% at 16,660.44.
In Europe, trading was mixed. The CAC 40 in Paris closed up 0.5%, while the DAX 40 in Frankfurt ended down 0.1%.
In New York at the time on London’s close, the Dow Jones Industrial Average was down 0.4%, the S&P 500 was 0.3% lower, while the Nasdaq Composite fell 0.4%.
US consumer price index figures are the major economic indicator this week, with an added focus after Friday’s strong jobs report.
Bank of America said after concerns around slowing activity, recent US data has taken a ‘turn for the better’.
‘Good news is good news for stocks as long as inflation doesn’t flare up again. Following the blowout jobs report last Friday, we believe the importance of CPI this week has risen.’
‘While stocks should be able to withstand a slight upside surprise in inflation given improving macro data, a sizeable surprise could bring uncertainty on the easing cycle and more volatility into the market.’
BofA noted ‘we and markets expect fewer cuts this year’.
The dollar gained further ground against sterling. The pound was quoted at $1.3082 late on Monday afternoon in London, fading from $1.3102 at the equities close on Friday.
But the euro firmed to $1.0978, up against $1.0962. Against the yen, the dollar was trading at JP¥148.03, lower compared to JP¥148.59.
On London’s FTSE 100, oil majors Shell and BP rose 2.1% and 1.4% respectively supported by a higher oil price as the Middle East crisis shows no signs of relenting.
Brent oil was quoted at $80.41 a barrel in London on Monday, up from $78.08 late Friday.
AFP reported that Israel’s military said that Lebanese armed group Hezbollah had fired some 135 projectiles into Israel on Monday, as the country marked the first anniversary of the October 7 Hamas attack.
‘The oil market is on a wild ride, caught in a whirlwind of geopolitical tension, OPEC+ strategy shifts, and a slowdown from its biggest customer, China,’ noted SPI Asset Management analyst Stephen Innes.
In addition, Shell said refining margins ebbed in the third quarter although it raised volume guidance across both upstream and liquefied natural gas businesses.
In a mixed third quarter trading update, Shell said Chemicals margins rose to $164 per tonne from $155/t in the second quarter, but noted the division is expected to revert to a loss again this quarter.
The company said the indicative refining margin for its Chemicals & Products arm amounted to $5.5 a barrel for the third-quarter of 2024, declining from $7.7 in the second-quarter.
Upstream production is predicted between 1,740 to 1,840 kboe/d. This was increased from 1,580 kboe/d to 1,780 kboe/d.
‘We see the release as positive given the increase in volume guidance across both upstream and Integrated Gas liquefaction in [the third quarter], which are the two key earnings drivers for Shell,’ analysts at RBC Capital Markets said.
Elsewhere on London’s blue-chip index, NatWest climbed 3.0%.
Strategists at Goldman Sachs highlighted the attractions of the sector.
‘The sector has re-rated but from a low starting valuation, and we find the current valuation is still lagging the current economic picture. Not only that, but credit quality/[non-performing loans] has generally been good and, relatedly, broad credit risk has generally been low. High-yield credit spreads are narrow and, again, banks’ sector valuation appears low and dislocated from this,’ Goldman said.
‘In equity strategy, we remain ’overweight’ on banks in our sector recommendation given the attractive valuation and non-recessionary forecast for growth,’ the broker added.
On Friday, equity analysts at Goldman started coverage of NatWest with a ’buy’ rating.
Elsewhere in the sector, Barclays firmed 1.1% and HSBC gained 0.5%.
Experian rose 0.3% as Deutsche Bank upgraded to ’buy’ from ’hold’, while Diploma climbed 0.9% as the same broker increased its share price target.
Rio Tinto was flat as it confirmed the potential acquisition of the US-based lithium producer Arcadium Lithium.
Rio said in a statement it had approached the company regarding the potential ‘non-binding’ acquisition.
‘We do not know what price a deal could be struck at, so that is clearly the next step, but this deal appears to be...manageable from a Rio standpoint,’ said analysts at Berenberg.
Endeavour Mining tumbled 5.4% amid concerns about its assets in Burkina Faso.
Burkina Faso junta leader Ibrahim Traore was quoted in a radio address saying the country is planning to withdraw mining permits from some foreign companies and will be seeking to produce more of its own gold, according to Reuters.
Housebuilders were weak despite figures showing UK house prices grew at the strongest pace in almost two years last month, on ‘steadily improving’ market confidence.
Mortgage lender Halifax’s September report showed UK house prices rose 0.3% from August and 4.7% year-on-year. In August, house prices rose 0.3% from July and 4.3% on-year.
September’s annual climb was the strongest since November 2022, Halifax said.
‘It’s essential to view these recent gains in context. While the typical property value has risen by around £13,000 over the past year, this increase is largely a recovery of the ground lost over the previous 12 months. Looking back two years, prices have increased by just 0.4%,’ Halifax analyst Amanda Bryden commented.
Persimmon and Taylor Wimpey declined 2.1% while Barratt Redrow ended flat.
Among small caps, Ferrexpo fell 2.2% after the iron ore pellets producer in Ukraine reported weaker output in the third-quarter.
Total commercial production weakens 16% on-quarter to 1.4 million tonnes, while pellet output alone falls 14% to 1.3 million tonnes.
Interim Executive Chair Lucio Genovese said: ‘For Ferrexpo’s operations, the third quarter presented a very challenging operating and macroeconomic environment.’
On AIM, SRT Marine Systems jumped 33% after winning a new contract worth $213 million to deliver an integrated SRT maritime surveillance system for an unnamed ‘sovereign government ministry’.
Gold was quoted at $2,649.60 an ounce late Monday, down slightly against $2,651.03 late
Friday.
Tuesday’s local corporate calendar sees a trading statement from tobacco seller Imperial Tobacco and provider of student accommodation, Unite.
The economic calendar has the British Retail Consortium’s retail sales monitor.
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