London indices closed higher on Monday with mining stocks benefitting from rising gold prices while aerospace & defence manufacturers waned.
The FTSE 100 index closed up 45.53 points, 0.6%, at 8,356.94. The FTSE 250 ended up 108.56 points, 0.5%, at 21,157.47, and the AIM All-Share closed up 2.32 points, 0.3%, at 776.59.
The Cboe UK 100 ended up 0.6% at 835.35, the Cboe UK 250 closed up 0.7% at 18,553.79, and the Cboe Small Companies ended up 0.1% at 16,862.15.
In Europe on Monday, the CAC 40 in Paris ended up 0.7%, while the DAX 40 in Frankfurt closed up 0.6%.
In New York at the time of the London close on Monday, the DJIA was up 0.5%, the S&P 500 was up 0.4% and the Nasdaq Composite was up 0.4%.
Investors will have to wait until Friday for the main event of the week when US Federal Reserve Chair Jerome Powell speaks at the Jackson Hole economic symposium.
The annual gathering, which runs for three days, is hosted by the Federal Reserve Bank of Kansas City at Jackson Hole, Wyoming, and attended by central bankers from around the world.
Powell will address the conference on Friday amid mounting expectations that the start of US interest rate cuts is imminent.
The Fed chair does not always attend or speak at the meeting. In 2013, Ben Bernanke skipped the meeting, as did Janet Yellen in 2015.
Bank of America explained the market typically cares about Jackson Hole for two reasons: First, it occurs during the longest Federal Open Market Committee inter-meeting period of the year, as there is no meeting in August. Second, it happens at a time when the market is generally quiet due to summer holidays.
Brown Brothers Harriman expects Powell to signal the Fed is prepared to begin cutting the funds rate in September and push back against any sort of pre-commitment to an aggressive easing path.
Bank of England Governor Andrew Bailey will also address the conference on Friday, while European Central Bank member Philip Lane will participate on the Saturday conference overview panel.
Expectations for US rate cuts saw gains for the pound and the euro. Sterling was quoted at $1.2980 at the London equities close Monday, up from $1.2899 at the close on Friday. The euro stood at $1.1063, up slightly against $1.0995. Against the yen, the dollar was trading at JP¥146.55, down compared to JP¥148.24.
ING stressed there is no ‘flash crash’ underway for the dollar. Instead, ‘the dollar’s decline looks to be part of an orderly adjustment cycle as the Fed prepares to cut rates.’
On the FTSE 100, Barratt Developments firmed 3.2% after it said the merger with fellow housebuilder Redrow would be completed this week, despite concerns raised by the UK’s competition regulator.
Leicestershire-based Barratt struck the £2.52 billion deal with Flintshire, Wales-based Redrow in February.
The merger has since come under scrutiny from the UK’s Competition & Market Authority, which launched a Phase 1 investigation in March.
Earlier this month, the CMA stopped short of pursuing a Phase 2 investigation after concluding that the combination only has a ‘high combined share’ in just one local area, which is Whitchurch, Shropshire.
The CMA said the deal does not raise UK-wide competition concerns.
To remove uncertainties, Barratt has decided to waive the CMA condition, allowing the combination to proceed.
‘This removes uncertainty for the employees, supply chain and wider stakeholder groups of both businesses,’ Barratt and Redrow said in a joint statement.
Redrow gained 4.5%.
AJ Bell’s Investment Director Russ Mould said Barratt will hope its timing is ‘good as the industry looks to pick itself off the floor following a difficult few years marred by a weak property market and rising interest rates.’
There was some better news for the housebuilders as Rightmove suggested the housing market could gather ‘energy’ for autumn after the Bank of England lowered interest rates.
‘While mortgage rates aren’t yet substantially lower since the rate cut, the fact that the long-hoped-for first cut has finally arrived, and mortgage rates are heading downwards, is positive for home-mover sentiment. As the summer holiday season comes to an end, the conditions are there for a more active autumn market,’ said Rightmove Director of Property Science Tim Bannister.
Elsewhere, JD Sports Fashion gained 1.6% ahead of Thursday’s trading statement.
The recent strength in the gold price supported Endeavour Mining, up 2.6% and Fresnillo, up 2.5%.
Gold was quoted at $2,503.87 an ounce, just below the all-time high hit on Friday, and higher against $2,486.76 at the close on Friday.
On Friday, the price of the yellow metal hit a new record supported by a softer US dollar and rate-cut expectations.
Other mining stocks were also in demand with Glencore up 2.8% and Anglo American up 2.3%.
Heading lower in London were BAE Systems and Rolls-Royce, down 0.8% and 0.2% respectively.
Germany will no longer grant new requests for aid to Ukraine as the government seeks to rein in spending, the Frankfurter Allgemeine Zeitung reported.
Although existing programs will generally continue, additional applications for military support won‘t be approved, the newspaper reported on Saturday citing government documents and emails as well as unidentified officials.
Under current plans, Germany’s military support for Ukraine - second only to the US, according to the Kiel Institute for the World Economy - is set to be almost halved next year and then reduced to less than a tenth of the current amount in 2027, the newspaper reported.
BAE and Rolls-Royce have been beneficiaries of increased orders across the defence sector as conflicts, such as the one in Ukraine, have proliferated.
On the FTSE 250, Plus500 led the way, rising 4.7%.
The London-based fintech group and trading platform operator said it expects full-year results to be ahead of expectations after ‘excellent’ financial, operational and strategic progress in the first-half.
In the six months that ended June 30, Plus500 said pretax profit rose 5.0% to $183.7 million from $174.9 million a year prior. Revenue climbed 8.1% to $398.2 million from $368.5 million a year earlier.
The firm also boosted the interim dividend by 14% and declared a special dividend of $0.5314, up 66% from $0.3200 previously.
In addition, Plus500 announced a $110.0 million share buyback, comprising an interim buyback programme of $35.4 million and a special buyback programme of $74.6 million.
In contrast, OSB fell 0.6% after Peel Hunt downgraded to ’hold’ from ’add’.
On AIM, Diaceutics rose 6.4% after striking a PMx partnership with ‘a leading biotech.’
‘This agreement is to deploy PMx through to the end of 2025 and is worth at least £2.4 million in service revenue to Diaceutics, with additional milestone fees estimated to be worth another £1.9 million payable during that period based on successful patient recruitment onto therapy. There is an expectation that the agreement will extend beyond 2025 should the initial phase be successful,’ Diaceutics said.
‘We see this as a significant step change for Diaceutics and anticipate that PMx-based partnerships will, in time, drive an increase in revenue per brand, which should, in turn, support Diaceutics’ growth ambitions,’ said broker Stifel.
Brent oil was quoted at $79.33 a barrel at the London equities close Monday, down from $79.91 late Friday.
The corporate calendar in London on Tuesday sees half-year results from mining firm Antofagasta and engineering services company John Wood.
Tuesday’s global economic calendar sees an interest rate decision in China overnight and Canadian consumer price inflation figures at 1330 BST.
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