London’s FTSE 100 was lower on Monday, with underwhelming corporate earnings and some caution ahead of a major day on the UK fiscal calendar keeping a lid on enthusiasm.
There was some impetus from M&A news among smaller listed companies in London.
The pound was also on the up, with Dutch bank ING predicting sterling could edge close to the $1.26 mark should there be a ‘risk-positive environment’ following Wednesday’s autumn statement.
The FTSE 100 index was down 12.68 points, 0.2%, at 7,491.57. The FTSE 250 was up just 9.03 points at 18,576.90, and the AIM All-Share was up by a point, or 0.1%, at 720.05.
The Cboe UK 100 was down 0.2% at 747.28, the Cboe UK 250 rose 0.1% to 16,092.18, and the Cboe Small Companies was 0.7% higher at 13,552.06.
In European equities on Monday, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was down 0.2%.
Sterling was quoted at $1.2463 early Monday afternoon, higher than $1.2421 at the London equities close on Friday.
UK Chancellor Jeremy Hunt’s autumn statement is scheduled for Wednesday.
Analysts at ING commented: ‘We think Jeremy Hunt might have around £16 billion to play with, given the better fiscal trajectory than expected. Speculation over tax cuts has centred on inheritance tax and perhaps even income tax and national insurance, which would favour workers at the lower end of the income spectrum. Our UK economist does not, however, think this moves the needle for the Bank of England rate story, where we think rates have peaked and the BoE will start easing next August.
‘Speculation over tax costs in a risk-positive environment should be good news for sterling. GBP/USD can push up to 1.2590.’
The euro traded at $1.0922 around midday London time, up from $1.0881 at the European equities close on Friday. Against the yen, the dollar was quoted at JP¥148.19, tumbling from JP¥149.77.
Stocks in New York are called to open higher. The Dow Jones Industrial Average is called a touch higher, the S&P 500 is also set for a marginally higher open, while the Nasdaq Composite is called up 0.1%.
AJ Bell analyst Russ Mould commented: ‘Tomorrow’s session includes the latest minutes from the Federal Reserve regarding its decision to keep interest rates unchanged. That has the potential to move markets, so do results on the same day from chip specialist Nvidia which has been this year’s stock market darling. It’s been a major driver of US equity market performance in 2023 so the slightest bit of bad news from the company could send shockwaves across the market.’
Nvidia’s stock is up more than three-fold so far this year, with the chipmaker front and centre in the artificial intelligence frenzy.
Struggling in Frankfurt on Monday, however, is pharmaceutical firm Bayer, plunging 19%.
Bayer called for an early end to a study on a drug once touted as a key prospect. A phase 3 study probing blood thinner asundexian in comparison to apixaban in patients at risk with stroke has been stopped early, the Leverkusen, Germany-based pharmaceutical and biotech firm said on Sunday.
‘This decision is based on the recommendation of the study’s independent data monitoring committee as part of ongoing surveillance which showed an inferior efficacy of asundexian versus the control arm. Bayer will further analyse the data to understand the outcome and publish the data,’ Bayer explained.
Asundexian, which has not been approved for use by any health authority worldwide, was a drug that Bayer predicted could achieve €5 billion in peak yearly sales.
In London, Ashtead fell 12%, the worst FTSE 100 performer. It said it expects to report ‘record results’ for its half year to October 31, but said lower operational activity across sectors has affected its performance in the latest quarter.
Ashtead said revenue late in the second quarter and into the third was hit by lower emergency response activity, due to a quieter hurricane season and fewer naturally occurring events like wildfires. Also in both quarters, its Film & TV business was impacted by the recent actors’ and writers’ strikes.
Compass gave back 4.0%. The Chertsey, England-based catering and food service provider said revenue for the year that ended September 30 increased 22% to £31.03 billion from £25.51 billion the previous year. Pretax profit increased 19% to £1.75 billion from £1.47 billion.
Revenue fell short of the £31.2 billion predicted by company-compiled consensus, however.
Compass also announced a $500 million new share buyback. In addition, it declared a final dividend of 28.1p per share for financial 2023, up from 22.1p. This brought the year’s total dividend to 43.1p from £31.5p.
Elsewhere in London, Foxtons climbed 8.6%. The firm been pressured by a minority group of shareholders to sell itself, according to the Sunday Times, amid a wave of consolidation in the UK estate agency sector.
The Sunday Times reported on Sunday that 10% of the London-based estate agency’s shareholders have asked it to sell. The latest is Milkwood Capital, an investment firm which invests in undervalued companies, and owns about 4% of Foxtons.
Converium Capital, a Canadian investor, has similarly been lobbying Foxtons, and has spent the last 18 months calling for a strategic review. The Sunday Times said that, according to City sources, Converium owns about 6% of Foxtons.
musicMagpie jumped 33% after the used-technology reseller confirmed it is in ‘early stage discussions’ with telecommunications provider BT Group and asset manager Aurelius Group for the pair to make a takeover offer. musicMagpie has a market capitalisation of around £27.0 million.
Talks are ‘ongoing and remain at a very early stage’, musicMagpie said. BT and Aurelius have a deadline of December 18 to announce a firm intention to make an offer or walk away.
BT traded 0.5% higher.
Halfords has also faced a takeover approach, the Sunday Telegraph reported.
FTSE 250-listed Redde Northgate sized up the cycling products retailer, but the duo could not strike an agreement on a price. Commercial vehicle hire firm Redde Northgate had floated a nil-premium merger price, the Sunday Telegraph reported.
Halfords shares fell 0.8%, while Redde Northgate gave back 1.2%.
Gold was quoted at $1,972.75 an ounce early Monday afternoon, falling from $1,981.88 on Friday.
Brent Crude fetched $81.82 a barrel, up from $79.74 late Friday. Speculation mounts that Saudi Arabia may extend its production cuts to boost oil prices as the 13 members of Opec and 10 other oil-producing countries, including Russia, or so-called Opec+, prepare to meet on Sunday.
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