Equities in Europe opened in negative territory on Monday, with markets seeing little reason to push higher ahead of inflation data drivers later this week.
Inflation readings from the US and China are reported this week, and stock market investors will be hoping for two differing outcomes. In the US, another inflation slowdown is the ideal outcome, as it would take some sting out of Federal Reserve interest rate expectations.
In China, however, a hotter inflation reading will be welcomed, as it would suggest the world’s second-largest economy is on better footing than feared.
The FTSE 100 index opened down 12.48 points, 0.2%, at 7,551.89. The FTSE 250 was down 20.76 points, 0.1%, at 18,913.86, and the AIM All-Share was down 1.73 points, 0.2%, at 761.68.
The Cboe UK 100 was down 0.2% at 753.08, the Cboe UK 250 was down 0.1% at 16,609.31, and the Cboe Small Companies was down 0.1% at 13,714.56.
In European equities on Monday, the CAC 40 in Paris was down 0.1%, and the DAX 40 in Frankfurt was down 0.2%.
In Asia on Monday, the Nikkei 225 index in Tokyo closed up 0.2%. In China, the Shanghai Composite closed down 0.6%, while the Hang Seng index in Hong Kong was flat in late trade. The S&P/ASX 200 in Sydney closed down 0.2%.
The pound was quoted at $1.2732 early on Monday in London, lower compared to $1.2765 at the equities close on Friday. The euro stood at $1.0989, lower against $1.1037. Against the yen, the dollar was trading at JP¥142.18, higher compared to JP¥141.82.
‘With [US nonfarm payrolls] now in the rearview mirror, inflation will be the focal point of markets this week. CPI and PPI readings from both the US and China will take centre stage this week, but for differing reasons,’ KCM Trade analyst Tim Waterer commented.
‘The US figures will be assessed in terms of whether inflation is receding fast enough to cement the case for a September pause by the Fed, while 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.’
UK house prices fell for the fourth consecutive month in July, according to Halifax data, but the mortgage lender noted the sector is showing some grit despite tough market conditions.
The Halifax house price index fell 0.3% on-month in July, having fallen 0.1% in June.
In June, the typical UK property cost £285,044, down from around £285,932 the month before.
On an annual basis, prices fell 2.4% in July, easing from a 2.6% fall in June.
Listed housebuilders succumbed to selling pressure, on the back of the data.
Persimmon was down 1.0%, Taylor Wimpey down 1.2% and Barratt Developments down 0.7%.
Elsewhere in the FTSE 100, Haleon shed 0.8%.
Sky News reported on Sunday that Inflexion is among suitors for Haleon’s Nicotinell anti-smoking aid.
In July, Bloomberg had reported that Haleon was exploring a potential divestment of some smoking cessation products, including the Nicotinell brand of nicotine gum, patches and lozenges.
Bloomberg sources said the business is attracting interest from both investment firms and consumer companies and could be worth up to $800 million in a sale, as Haleon reportedly seeks to offload non-core businesses.
However, Sky News said that bidders are hoping to pay ‘substantially less’ than the $800 million price tag.
Unite Group lost 1.5%. RBC cut the Bristol-based owner, manager and developer of purpose-built student accommodation to ’sector perform’ from ’outperform.’
In the FTSE 250, PageGroup fell 1.9%.
The recruitment firm said pretax profit in the six months to June 30 declined 45% to £63.3 million from £114.5 million a year prior. Revenue was up 5.8% to £1.03 billion from £977.3 million.
PageGroup declared an interim dividend of 5.13 pence per share, up 4.5% from 4.91p a year prior. Its special dividend however fell by 41% to 15.87p from 26.71p. The combined dividend decreased 34% to 21p from 31.62p.
For 2023, the company continues to expect operating profit in line with previous guidance.
Chief Executive Officer Nicholas Kirk said: ‘Looking forward, there remains a high level of global macro-economic and political uncertainty in the majority of our markets. However, against this backdrop, we continue to see candidate shortages and good levels of vacancies, as well as continued high fee rates.’
Among London’s small-caps, Card Factory jumped 16%.
It noted the positive start to its financial year has continued. The Wakefield, England-based greeting cards retailer’s financial year runs to the end of January.
It said trading in the first six months, to July 31, was materially ahead of the board’s expectations.
Card Factory warned that the macro backdrop continues to be ‘uncertain’, however it expects the full year results to be materially ahead of its previous expectations.
LSL Property lost 14%.
The Newcastle, England-based estate agency said that the larger than expected increase in the Bank of England base rate announced in June has had a material impact on the mortgage market.
LSL warned that this will ‘significantly impact’ second half profit, which are now expected to be lower than previous expectations.
The BoE had lifted rates by 50 basis points in June, though a hike of 25 basis points had been expected. Since then, Threadneedle Street has hiked by another 25 basis points, taking the bank rate to 5.25%.
In the US on Friday, Wall Street ended lower. The Dow Jones Industrial Average and the Nasdaq Composite were both down 0.4%. The S&P 500 was down 0.5%.
Brent oil was quoted at $86.14 a barrel early in London on Monday, down from $85.77 late Friday. Gold was quoted at $1,935.68 an ounce, lower against $1,940.94.
Still to come on Monday’s economic calendar, there is a Bank of England virtual question & answer session with Chief Economist Huw Pill at 1700 BST.
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