Stocks in London opened in the green on Monday, following Wall Street gains at the end of last week.
The FTSE 100 index opened up 31.36 points, 0.4%, at 7,493.29. The FTSE 250 was up 138.44 points, 0.7%, at 19,009.85, and the AIM All-Share was up 1.87 points, 0.3%, at 737.70.
The Cboe UK 100 was up 0.5% at 749.15, the Cboe UK 250 was up 0.9% at 16,445.67, and the Cboe Small Companies was up 0.1% at 14,913.59.
In European equities, the CAC 40 in Paris was up 0.9%, while the DAX 40 in Frankfurt was up 0.7%.
In the US on Friday, stocks on Wall Street rallied, with the Dow Jones Industrial Average up 1.1%, the S&P 500 up 1.2% - reaching an all-time high - and the Nasdaq Composite up 1.7%.
The dollar pulled back against major currencies over the weekend. The US Federal Reserve has entered its ’blackout’ period ahead of next Wednesday’s monetary policy decision.
‘When the Fed goes silent ahead of the January policy meeting, the market does not necessarily fly blind; instead, it creates an environment where market participants will zero in on incoming economic data,’ said SPI Asset Management’s Stephen Innes.
The key US data for the week includes fourth-quarter gross domestic product figures on Thursday, as well as core personal consumption expenditures on Friday. There will also be earnings from US firms to consider, with highlights including Netflix on Tuesday and Tesla on Wednesday.
While the Fed is almost unanimously expected to leave interest rates on hold this month, investors will be focusing on any indicators of when rate cuts will begin. According to CME’s FedWatch tool, the likelihood of a once all-but-assured 25 basis point rate cut in March is now considered to stand at just 44%, with a 55% likelihood that rates are left unchanged.
Sterling was quoted at $1.2706 early Monday, higher than $1.2669 at the London equities close on Friday. The euro traded at $1.0898, higher than $1.0884. Against the yen, the dollar was quoted at JP¥148.08, down versus JP¥148.18.
Other key events this week will be the Bank of Japan monetary policy decision on Tuesday, and the European Central Bank’s rate call on Thursday.
‘The BoJ will not normalize rates this week. In the best-case scenario, it will give further hints regarding the timing of the first rate hike – perhaps April. More realistically, the Japanese policymakers will push back on the normalization expectations and say that the monetary policy in Japan will remain supportive for as long as needed,’ predicted Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
‘The ECB...will certainly keep their [rate] unchanged, but the nuance in their accompanying statement will be closely watched for any hints regarding the first rate cut.’
In London’s FTSE 100 index, real estate investor Segro jumped 3.5%, after Citigroup raised the stock to ’buy’ from ’neutral’. At the other end of the index, entreprise software firm Sage Group dropped 2.5% as Barclays cut the stock to ’underweight’ from ’equal weight’.
Endeavour Mining edged down 0.1%, after updating on its fourth-quarter and full-year production.
The gold miner, with operations in the Ivory Coast, Senegal and Burkina Faso expects production to total 1.1 million ounces for the 2023 full year, down 8% from 2022. Its fourth-quarter output was at 280,000 ounces, flat from the third quarter but down from 294,000 ounces year-on-year.
Endeavour expects production to increase by up to 18% in 2024, thanks to several project start-ups due to commence in the second quarter.
Financials were doing well in early trading, with Barclays up 2.8%, Lloyds up 2.0%, and Prudential up 1.9%.
Among London’s small-caps, Trifast dropped 23%.
The industrial fastenings firm said its third quarter saw significantly lower than forecasted volumes in its Asia operations and global distribution sales channel. It said the trends of ‘low visibility and volatile demand’ in several end market and geographic segments continued during the period. Consequently, it expects annual results for its year ending March 31 to be ‘significantly’ below its previous expectations. Revenue is expected at £230 million or so, with adjusted Ebit margin to be around 5%. Consensus forecasts had expected revenue of £254 million, with adjusted Ebit of £15.5 million. In 2022, Trifast brought in £238.5 million in revenue.
S4 Capital rose 8.3%
The London-based advertising agency said its fourth-quarter trading was in line with its expectations outlined in November. Consequently, it expects a like-for-like decline in net revenue of around 4% in 2023 as a whole, and operational Ebitda margin in the range of 10-11% - the margin was improved in the second half thanks to ‘significant’ cost reductions.
‘While it is early in the year, we are not expecting 2024 to show macro-economic improvement, and client caution on marketing spend will likely persist, although not at last year’s level,’ said Executive Chair Martin Sorrell.
On AIM, SmartSpace Software jumped 25% to 81.25 pence.
The designer and builder of smart software solutions said it has received a non-binding indicative proposal for a possible cash offer from Sign In Solutions, a firm majority owned and controlled by funds managed or advised by PSG Equity.
The price of 90p per share is one that SmartSpace’s board would be ‘minded unanimously to recommend that shareholders accept’. It represents a 32% premium to Friday’s closing price of 67.98p.
In China, the Shanghai Composite closed down 2.7%, while the Hang Seng index in Hong Kong dropped 2.3%.
China’s central bank left its key interest rates unchanged on Monday, as expected by the market.
The People’s Bank of China maintained the one-year loan prime rate, which serves as a benchmark for corporate loans, at 3.45%. It had been cut from 3.55% in August, in an attempt to counter the post-Covid growth slowdown in the world’s second-largest economy.
The five-year loan prime rate, which is used to price mortgages, was also held at 4.2%, having been cut by 10 basis points in June.
In Japan, the Nikkei 225 index in Tokyo closed up 1.6%.
Sony closed up 1.9%, after confirming it has pulled out of a $10 billion merger of its Indian operations with local rival Zee Entertainment Enterprises.
The tie-up was aimed at helping both firms compete with streaming rivals like Walt Disney, Amazon and Netflix in the vast and booming entertainment market of 1.4 billion people. Sony cited conditions of the merger agreement not being met as the reason for the decision.
The S&P/ASX 200 in Sydney closed up 0.8%.
Gold was quoted at $2,021.64 an ounce early Monday, lower than $2,035.35 on Friday. Brent oil was trading at $78.32 a barrel, lower than $79.06.
In the economic calendar on Monday, there are no major releases scheduled.
Copyright 2024 Alliance News Ltd. All Rights Reserved.
