London’s stock prices were mostly lower at Monday’s open, ahead of several central bank meetings later this week, and as new research gave a pessimistic outlook for the UK property and manufacturing sectors.
The FTSE 100 index opened in the red, before recovering to around Friday’s closing level at 7,711.36. The FTSE 250 was down 61.38 points, 0.3%, at 18,728.39, and the AIM All-Share was up 1.94 points, 0.3%, at 747.29.
The Cboe UK 100 was down 0.2% at 768.30, the Cboe UK 250 was down 0.4% at 16,345.08, and the Cboe Small Companies was down 0.2% at 13,424.04.
In European equities on Monday, the CAC 40 in Paris was down 0.7%, while the DAX 40 in Frankfurt was down 0.4%.
The economic calendar this week has interest rate decisions from the US Federal Reserve on Wednesday and the Bank of England on Thursday, with the Bank of Japan to follow on Friday.
The US central bank is widely expected to leave interest rates unchanged after raising them to their highest level in 22 years in July. Investors will be paying attention to any guidance on future rate hikes, as well as any hints on the timeline for future rate cuts.
‘Central bank watching’ will be the name of the game this week with financial markets remaining highly sensitive to any shifts in the interest rate outlook, particularly given the recent ramping up of energy prices,’ said Tim Waterer, chief market analyst at KCM Trade.
‘The move higher in energy costs was born out in the US inflation data last week, which could nudge the [Federal Open Markets Committee] onto a more hawkish footing come the policy decision this week. While a hold for September is expected, the rise in headline inflation and resilience in the core CPI data will be keeping the Fed very much on their toes in coming months.’
The dollar was stronger against the euro and pound, but edged down against the yen.
Sterling was quoted at $1.2389 early Monday, lower than $1.2401 at the London equities close on Friday. The euro traded at $1.0664, down from $1.0672. Against the yen, the dollar was quoted at JP¥147.59, down from JP¥147.80.
In the FTSE 100, Mondi shares jumped 5.0% in early trading.
The Weybridge, England-based paper and packaging firm said it has agreed to sell its most significant facility in Russia to Sezar Invest for around 80₽ billion, or about €775 million.
Mondi early in June ended its plan to sell this facility, called JSC Mondi Syktyvkar, to Augment Investments due to lack of progress in gaining regulatory approvals in the country. In a statement on Monday, Mondi confirmed Russian authorities had signed off on the new deal. The disposal of the pulp and paper mill will complete the firm’s exit from Russia.
Mondi said it will return proceeds from the Mondi Syktyvkar sale to its shareholders.
Phoenix Group rose 0.8%, reporting that in the first half of 2023, its incremental new business long term cash generation more than doubled to £885 million from £430 million a year before.
The insurance provider also said new business net fund flows jumped 72% annually to £3.1 billion from £1.8 billion. Phoenix said it is now on track for positive group net fund flows from 2024. It now expects to deliver at the top end of its £1.3 billion to £1.4 billion guidance range for cash generation in 2023. For the interim period, it raised its dividend by 4.8% to 26.0 pence.
In the FTSE 250, International Distributions Services rose 4.5%, as JPMorgan raised the Royal Mail owner’s stock to ’overweight’. Energean rose 2.8% as Jefferies rose the stock to ’buy’.
In addition to central bank nerves, investors in London were assessing the latest economic data for the UK.
Overnight, new data pointed to continuing slow activity in the UK housing sector. The average new seller asking price in September was ‘lower than is usual’ for this time of the year, according to property portal Rightmove.
The Rightmove house price index showed the average new seller asking price increased by 0.4% month-on-month, or £1,386, in September to £366,281. On an annual basis, prices fell 0.4% in September.
Rightmove said this was the biggest drop since March 2019 and meant prices are still on track to meet its prediction of a 2% fall over the year as a whole.
Adding to the weak picture of the UK economy was research from Make UK and business advisory firm BDO suggesting that manufacturing firms have stopped plans to recruit more staff, as the sector experiences a slowdown in orders.
A survey of more than 300 manufacturers showed they were ‘battening down the hatches’ amid warnings of a sharp slowdown in activity and a potential recession. The study showed that a positive picture of the first half of the year has gone sharply into reverse. As a result, Make UK has cut its manufacturing growth forecast for 2023 with output set to fall this year, while the forecast for next year is within the margins of no growth at all.
In the US on Friday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.8%, the S&P 500 down 1.2% and the Nasdaq Composite down 1.6%.
US tech stocks suffered, with semiconductor companies especially hard hit, following a Reuters report pointing to potentially weak customer demand at TSMC.
In Asia on Monday, financial markets in Japan are closed for Respect for the Aged Day. In China, the Shanghai Composite closed up 0.3%, while the Hang Seng index in Hong Kong was down 1.0%. The S&P/ASX 200 in Sydney closed down 0.7%.
Gold was quoted at $1,928.60 an ounce early Monday, edging up from $1,927.20 on Friday. Brent oil was trading at $94.60 a barrel, higher than $93.72.
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