London’s key stock index backed off from a four-year high on Monday morning was slightly below water at midday.
Stocks elsewhere were on the up, however, spurred on by an economic re-opening in China, as well as hope that the US Federal Reserve will slow its interest rate hikes.
The FTSE 100 was down just 2.44 points at 7,697.05. London’s equities benchmark spiked to 7,723.08, its best level since August 2018.
The FTSE 250 was down 110.85 points, or 0.6%, at 19,393.87, but the AIM All-Share was up 0.80 of a point, or 0.1%, at 848.14.
The Cboe UK 100 was marginally lower at 770.22, and the Cboe UK 250 lost 0.3% at 16,928.66. The Cboe Small Companies was down 0.1% at 13,699.83.
In European equities on Monday, the CAC 40 in Paris was 0.3% higher, while the DAX 40 in Frankfurt was up 0.4%.
In New York, the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite are all called to open 0.3% higher.
The week got off to a positive start as stock investors cheered moves by China to ease virus curbs.
China lifted quarantine requirements for inbound travellers on Sunday, ending almost three years of self-imposed isolation, even as the country battles a surge in Covid cases.
Beijing last month began a dramatic dismantling of a hardline zero-Covid strategy that had enforced mandatory quarantines and punishing lockdowns.
Friday’s US jobs report, and what it could mean for Fed policy, was still driving sentiment as well.
While numbers showed the US employment market is still running hot, wage growth has slowed, suggesting inflationary pressures may soon ebb.
Eyes now turn to the Fed, with the US central bank’s first interest rate decision of 2023 scheduled for February 1.
According to the CME FedWatch tool, which tracks interest rate probabilities, the market largely expects a hike of 25 basis points. There is a 75% chance of such a quarter-point lift, and a 25% chance of another half-point hike.
At the start of a key week of economic data, the dollar was largely on the back foot.
The pound rose to $1.2139 midday Monday, up markedly from $1.2051 at the London equities close on Friday. The euro climbed to $1.0680 from $1.0612. Against the yen, the dollar was unchanged at JP¥132.44.
Among this week’s key data reports are a US inflation reading on Thursday and gross domestic product data from the UK and Germany on Friday.
Already out on Monday, the eurozone’s unemployment rate remained at a record low in November, figures from Eurostat showed.
Eurostat said the eurozone unemployment rate was unchanged month-on-month in November, at 6.5%. The figure for November was in line with FXStreet-cited consensus.
The jobless rate is the joint-lowest since the current Eurostat series began in 1998.
‘The stability of the euro-zone unemployment rate in November, at a record low of 6.5%, shows that the labour market held up even better than we expected at the end of last year,’ commented Capital Economics.
Among London shares, BP and Shell added 1.9% and 1.5%, as the Brent price rose back above $80 a barrel.
A barrel of Brent fetched at $80.87 midday Monday, up from $79.64 late Friday.
Gold traded at $1,870.91 an ounce early Monday afternoon, rising from $1,861.63 at the time of the London stock market close on Friday.
Gold miner Fresnillo was unable to track gold prices higher, falling 2.2% after RBC cut the stock to ’sector perform’ from ’outperform’.
Also hitting the FTSE 100 were share price falls for British American Tobacco and Imperial Brands. The sale of cigarettes in the UK could be phased out under Labour party proposals to improve public health and ease the pressure on the National Health Service.
Shadow health secretary Wes Streeting said the party will consult on a package of measures, including a New Zealand-style gradual ban on tobacco.
Dunhill owner BAT was down 1.7%, while Lambert & Butler-owner Imperials Brands fell 0.9%.
New FTSE 250 addition Keller fell 9.6%. The geotechnical engineering contractor said it has identified ‘deliberate and sophisticated financial reporting fraud’ in its Austral arm in Australia.
Keller said two individuals have been dismissed and an internal probe is underway. It is also in the process of naming an external adviser to perform an independent investigation.
‘Austral, contributing [around] 3% of group revenue, is a unique business within the group, and is the only business that exclusively accounts for revenue on a percentage of completion basis in the division,’ Keller added.
The fraud relates to Austral’s performance from 2019 onwards. Keller expects a hit of £6 million for the first half of 2022 and £8 million to £10 million relating to prior years. The fraud continued into the second half of 2022, it noted.
Keller expects full-year operating profit ‘slightly below’ the bottom end of a £109 million to £114 million market forecast range. For 2021, Keller posted statutory operating profit of £80.5 million, or £92.8 million on an underlying basis.
The stock joined London’s mid-cap index at the start of the year, replacing speciality chemicals firm Johnson Matthey which received a promotion to the FTSE 100 after Homeserve’s acquisition came into effect.
Elsewhere in London, Nanoco tumbled 21%, amid the latest developments in its David-versus-Goliath legal battle with Samsung Electronics. The quantum dots manufacturer warned that it has not struck as big a knockout blow as it would have liked.
It said its settlement with Samsung is expected to be ‘towards the lower end of the range of expectations’.
On Friday, a term sheet for a no-fault settlement was agreed between the two parties, with both parties jointly requesting a stay of the trial, scheduled to commence on Friday, to allow the terms of a binding agreement to be finalised. Both parties had 30 days to agree on these terms.
Nanoco claimed Samsung infringed on its unique synthesis and resin capabilities for quantum dots. Quantum dot technology is used on Samsung quantum light-emitting diode televisions.
On AIM in London, video game shares were lagging. Devolver Digital lost 13% and Frontier Developments shed 40%. The game developers both warned of weak festive period sales. They dragged down shares in Keywords Studios by 2.7%. Keywords provides services to the video-game industry.
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