London’s FTSE 100 slipped slightly heading into Monday afternoon, as investors digest what was a busy week of interest rate action, while drab eurozone data put the European Central Bank in focus and hurt the euro.
Elsewhere on mainland Europe, Frankfurt’s DAX 40 traded resiliently in the face of weak German data, but French banks weighed on the CAC 40 on tax hike fears for larger companies.
The FTSE 100 index was down 8.53 points, 0.1%, at 8,221.46. The FTSE 250 was up just 0.85 of a point at 20,832.69, and the AIM All-Share was down 1.50 points, 0.2%, at 744.12.
AJ Bell analyst Russ Mould commented: ‘Investors are still weighing the Federal Reserve’s blockbuster 50 basis point interest rate cut last week, which was seen in some quarters as worrying about the state of the world’s largest economy, despite the Fed’s best efforts to offer reassurance.’
The Cboe UK 100 was down 0.1% at 823.22, the Cboe UK 250 was down 0.2% at 18,326.30, and the Cboe Small Companies was up 0.2% at 16,800.54.
The UK private sector economy remained in growth territory this month, though progress slowed across the board, date from S&P Global showed.
The flash UK composite purchasing managers’ index declined to 52.9 points in September, from 53.8 in August. The latest reading was a two-month low, but remained above the 50 point threshold.
The flash manufacturing PMI fell to 51.5 points in September, from August’s final reading of 52.5. The services PMI slipped to 52.8 from 53.7. The latest readings represented a three-month low for manufacturing and a two-month low for services.
S&P Global said the ‘overall speed of recovery moderated for the first time since June’.
Still, S&P Global analyst Chris Williamson said the figures ‘bring encouraging news, with robust economic growth being accompanied by a cooling of inflationary pressures’.
‘The data therefore hint at a ’soft landing’ for the UK economy, whereby the fight against inflation is showing increasing signs of being won without higher interest rates having caused a downturn,’ Williamson added.
On the FTSE 100, Kingfisher rose 1.1%. UBS raised the stock to ’neutral’ from ’sell’.
Also on Monday, the London-based DIY retailer, which owns B&Q, Castorama, and Screwfix, announced the start of a £75 million share buyback, to be completed by November 22.
This is the fourth tranche of Kingfisher’s £300 million buyback announced in September 2023.
Rightmove was up 1.6% amid another development in an M&A saga.
‘If you want to own the market leader, you must pay a premium price and that’s exactly the situation with Rightmove,’ AJ Bell’s Mould commented.
‘Rupert Murdoch’s REA Group is back for the third time with a higher bid for the UK property portal but...the latest bid of 770p is a step in the right direction but unlikely to be enough.’
Mould continued: ‘Rightmove digging in its heels and refusing to be bought on the cheap would also show that UK PLC isn’t for sale at any price...[and] might show to investors that not only is there good value on offer, but that certain companies might still be around to generate returns over the long term and not simply be a ’blink and you’ll miss it’ opportunity.’
Elsewhere on the London Stock Exchange, Alphawave IP dropped 25%.
The London-based designer of high-speed connectivity solutions now expects 2024 revenue of between $310 million and $330 million compared with guidance of $345 million to $365 million given in March.
Earnings before interest, tax, depreciation and amortisation are seen of $50 million, down from $70 million previously guided.
Alphawave said the changes to guidance reflect the impact on first half results of the merger of two large artificial intelligence customers in Korea.
In the first six months of 2024, pretax loss ballooned to $49.9 million from $6.6 million a year prior. Revenue more than halved to $91.0 million from $187.2 million.
In European equities the CAC 40 in Paris was down 0.3%, while the DAX 40 in Frankfurt was up 0.5%.
French banks hurt the CAC. Credit Agricole fell 4.9%, while BNP Paribas and Societe Generale each lost 3.5%.
French Prime Minister Michel Barnier promised cohesion and a willingness to compromise Sunday, a day after his new government was announced to immediate threats of a no-confidence motion in parliament.
The first major test for Barnier will be to submit a 2025 budget plan addressing France’s precarious financial situation, which he called ‘very serious’.
Barnier, elaborating on his plan for taxes targeting the rich, said on Sunday that they had to do their bit. He argued for ‘targeted levies on rich people or certain large companies’.
The eurozone’s private sector economy fell back into decline in September, as the manufacturing leg continued to limp, numbers on Monday showed.
The latest Hamburg Commercial Bank flash purchasing managers’ index faded to 48.9 points in September from August’s final figure of 51.0.
The flash manufacturing PMI fell to a nine-month low of 44.8 points in September from 45.8 in August. The services PMI hit a seven-month low of 50.5 points, down from August’s 52.9, though it remained in growth territory.
Hamburg Commercial Bank analyst Cyrus de la Rubia said the eurozone economy is ‘heading towards stagnation’, as the ‘recession has now dragged on for 27 months and even worsened in September’.
The pound was quoted at $1.3299 at midday on Monday in London, down compared to $1.3307 at the equities close on Friday. The euro stood at $1.1113, falling against $1.1164. Against the yen, the dollar was trading at JP¥143.29 down compared to JP¥143.85.
‘This morning’s rather disastrous eurozone PMI figures suggest that the market continues to under-price the chances of back-to-back ECB cuts, with the EUR overnight index swap curve discounting just a one-in-three chance of another 25 basis points cut in October,’ Pepperstone analyst Michael Brown commented.
Stocks in New York were called higher. The Dow Jones Industrial Average was called up 0.1%, the S&P 500 index up 0.2%, and the Nasdaq Composite up 0.3%.
Brent oil was quoted at $74.66 a barrel at midday in London on Monday, up from $74.43 late Friday.
Gold was quoted at $2,622.16 an ounce midday Monday, largely flat against $2,622.00 late Friday aftermoon.
Still to come on Monday’s economic calendar, there is a US flash composite PMI reading at 1445 BST.
Copyright 2024 Alliance News Ltd. All Rights Reserved.
