Gold markets were where the impetus was on Tuesday, after an underwhelming equity trading day in Europe, as investors look ahead to what Wednesday’s UK budget has in store.
Among individual shares, gold miners were some of the shining stars in London on Tuesday, while Ashtead tumbled on an underwhelming third-quarter. FTSE 250-listed Spirent Communications jumped after backing a £1.01 billion takeover tilt.
The FTSE 100 index ended up 5.83 points, 0.1%, at 7,646.16. The FTSE 250 closed up 21.95 points, 0.1%, at 19,271.03, while the AIM All-Share fell 2.80 points, 0.4%, at 734.89.
The Cboe UK 100 rose 0.1% to 765.76, the Cboe UK 250 ended up 0.2% at 16,627.63, and the Cboe Small Companies closed down 0.1% at 14,481.05.
In European equities on Tuesday, the CAC 40 in Paris ended down 0.3%, while the DAX 40 in Frankfurt fell 0.1%.
In New York on Tuesday, the Dow Jones Industrial Average was down 0.6% at the time of the closing bell in Europe, the S&P 500 was 0.8% lower, and the Nasdaq Composite slumped 1.6%.
Gold was quoted at $2,125.97 an ounce late Tuesday, higher against $2,116.16 on Monday, as optimism around US interest rate cut builds. The precious metal had hit a record high of $2,141.81.
Shares in Fresnillo and Endeavour rose 3.7% and 4.4% in London.
Recent US data has been tepid, and a services purchasing managers’ index reading on Tuesday helped soothe some inflation worry.
The Institute for Supply Management’s services PMI faded to 52.6 points in February, from 53.4 in January. It had been expected to come in at 53 points, according to FXStreet cited consensus.
The prices paid index cooled to 58.6 points in February from 64.0 in January. That metric was in focus after January’s red-hot reading.
‘Services sector inflation remains a thorn in the side of the Fed,’ Scope Markets analyst Joshua Mahony explained ahead of the data.
The pound was quoted at $1.2721 at the time of the London equities close on Tuesday, higher compared to $1.2696 at the equities close on Monday. The euro stood at $1.0866, up against $1.0858. Against the yen, the dollar was trading at JP¥150.12, lower compared to JP¥150.51.
In the UK, focus is on Wednesday’s budget.
On the back of announcing a cut to the main 12% rate of employee national insurance to 10% during the autumn statement, eyes will be on whether Hunt will unveil some more tax cuts.
Ebury analyst Matthew Ryan commented: ‘A two-percentage point cut to national insurance contributions has been widely reported and will be heavily expected by market participants. The big question mark surrounds whether or not Chancellor Hunt will pull the trigger on a cut to income tax. The chancellor would likely justify such a move by raising taxes elsewhere, while saying that progress had been made on the government’s economic objectives. One could argue, however, that this would be a rather audacious throw of the dice, as it may act to keep inflation higher for longer at a time when the UK economy is firmly stuck in stagnation.
‘We think that the government has a difficult balancing act on its hands, as it attempts to bring voters onside, while preventing another collapse in UK bond markets. A modest and responsible fiscal injection could be supportive of UK assets on Wednesday, although the opposite would be true should investors perceive the tax cuts to be both reckless and unfunded.’
The budget is expected to be announced around 1230 GMT.
In London, Intertek rose 6.2%.
The London-based consumer product testing and certification agency reported that revenue in 2023 rose 4.3% to £3.33 billion from £3.19 billion a year earlier. Pretax profit edged up 0.6% to £422.3 million from £419.8 million.
On the back of the results, Intertek proposed a final dividend of 74.0p per share, up from 71.6p. This brings the full year dividend up 5.6% annually to 111.7p.
Ashtead fell 9.4%. It reported a sharp drop in profit in the third quarter of its financial year, saying rental revenue growth in the key US market was hurt by fewer natural disasters requiring emergency response, and by the strike by actors and writers in Hollywood.
London-based Ashtead provides equipment hire and makes by far the most of its money in the US via its Sunbelt arm.
Ashtead reported pretax profit of $442.0 million for the three months that ended January 31, down 12% from $505.1 million a year before. On an adjusted basis, excluding amortisation, pretax profit was $473.0 million, down 11% from $534.7 million.
Total revenue was $2.66 billion, up 9.5% from $2.43 billion, as rental revenue rose by 9.4% to $2.36 billion from $2.19 billion.
In the FTSE 250, Spirent Communications shot up 59%, after it agreed a £1.01 billion takeover by Viavi Solutions.
The Crawley, England-based automated test and assurance solutions provider said the all-cash offer was for 175 pence per share, comprising 172.5p cash and a 2.5p special dividend. It values Spirent’s entire equity at £1.01 billion.
Viavi Solutions is a Chandler, Arizona-based manufacturer of testing and monitoring equipment for networks. It is traded on Nasdaq in New York and has a market value of $2.17 billion.
Brent oil was quoted at $82.69 a barrel late in London on Tuesday, down from $83.37 late Monday.
Wednesday’s economic calendar has a eurozone retail sales reading at 1000 GMT, after a UK construction PMI at 0930 GMT. The Bank of Canada announces its latest interest rate decision at 1445 GMT.
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