Stocks in London experienced a downbeat start to the week on Monday, closing lower as markets braced for the latest inflation figures from the world’s two largest economies.
The FTSE 100 index closed down 9.88 points, or 0.1% at 7,554.49 on Monday. The FTSE 250 ended down 72.95 points, or 0.4%, at 18,861.67. The AIM All-Share closed down 3.53 points, or 0.5%, at 759.88.
The Cboe UK 100 ended down 0.2% at 753.36, the Cboe UK 250 closed down 0.4% at 16,554.28, and the Cboe Small Companies ended down 0.2% at 13,197.81.
The July inflation figures from China and the US on Wednesday and Thursday, respectively.
Tim Waterer, chief market analyst at KCM Trade, said the US figures will be assessed in terms of whether inflation is receding fast enough to ‘cement the case’ for a pause in interest rate hikes by the US Federal Reserve in September.
In contrast, the China data will be viewed from the angle of whether prices are slowing ‘too much’, to the point where Beijing needs to ‘ramp up its stimulus efforts’, Waterer argued.
In London, Rolls-Royce was among the top blue-chip stocks at the close on Monday, finishing 1.7% higher.
JPMorgan raised the maker of power and propulsion systems to ’neutral’ from ’underweight’ and lifted its price target to 235 pence from 90p. The stock closed at 210.00p on Monday.
On Thursday, Rolls-Royce reported it swung to a pretax profit of £1.42 billion from a loss of £1.75 billion a year prior. Revenue rose by 34% to £7.52 billion from £5.60 billion the year before.
Meanwhile, Unite Group was one of the worst performing stocks in the FTSE 100, closing down 1.8% after RBC cut the student accommodation manager and developer to ’sector perform’ from ’outperform.’
In the FTSE 250, Clarkson lost 3.5% despite reporting a surge in interim revenue and profit amid ‘continued momentum’ in its business.
The company reported profit in the first half of 2023 increased 24% to £52.2 million, from £42.0 million the year prior. Revenue increased 20% to £321.1 million, from £266.7 million.
Despite this, Clarkson - which provides shipbroking and investment banking services to the shipping and offshore markets - left its full-year expectations are unchanged, remaining mindful of currency headwinds and a softening interest rate environment.
Elsewhere in London, Card Factory jumped 16%.
The greetings card retailer said, given the strength of its performance in the first half of its financial year, it now expects its annual results to be materially ahead of its previous expectations.
AJ Bell’s Russ Mould noted that Card Factory has been ‘consistently’ raising earnings expectations as of late so it ‘must be doing something right’ in what is a ‘very tricky’ retail environment.
‘The company’s offering is perfectly pitched for cost conscious consumers – and while some of this market has migrated online there are still plenty of people who want to go into a shop and peruse the cards while picking out extras like birthday balloons and party poppers,’ he said.
On AIM, Christie Group plunged 24% after it said it anticipates its full year performance to be ‘materially below’ previous expectations due to continued delays in achieving contractual exchange on ongoing transactions in its agency and advisory business.
The deal delays are anticipated to last until the end of summer.
‘The board nonetheless expects a positive second half trading performance, markedly ahead of first half performance and more consistent with second-half trading in 2022,’ the financial, inventory and systems services provider said.
In European equities on Monday, the CAC 40 in Paris ended up 0.1%, while the DAX 40 in Frankfurt ended flat.
Stocks in New York were largely higher at the London equities close, with the Dow Jones Industrial Average up 0.9% and the S&P 500 index up 0.5%, while the Nasdaq Composite was down 0.2%.
The dollar was mostly stronger on Monday, erasing some of the losses recorded at the end of the previous week in the wake of a mixed US jobs report.
The euro stood at $1.1004 at the London equities close on Monday, down from $1.1037 at the close on Friday. Against the yen, the dollar was trading at JP¥142.25 late Monday, up from JP¥141.82 late Friday.
The pound was quoted at $1.2776 at the London equities close on Monday, up from $1.2765 at the close on Friday, meanwhile.
‘A closer look at [Friday’s jobs] data reveals that despite the disappointing headline number, wages continued to increase, and unemployment actually fell in July, bringing home the reality of a hot economy where inflationary conditions remain a cause for concern. Against this background, the release of US inflation numbers later this week gained renewed importance,’ said Ricardo Evangelista, senior market analyst at ActivTrades.
‘A low reading will be likely to mark the end of the current hiking cycle and could generate dollar weakness. On the other hand, a surprise to the upside will raise the spectrum of at least one more Fed hike before the end of the year, and would be likely to drive dollar gains.’
Brent oil was quoted at $85.44 a barrel at the London equities close on Monday, down from $85.77 late Friday. Gold was quoted at $1,934.11 an ounce, lower against $1,940.94.
In Tuesday’s UK corporate calendar, there are half-year results from abrdn, Glencore, InterContinental Hotels and Quilter.
The economic calendar has German inflation data at 0700 BST.
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