Stocks in London were in the red at midday on Monday, as investors continued to deal with last week’s sell-off in US tech shares and a ‘mixed’ jobs report.
A favourable inflation reading helped the Shanghai Composite achieve a 0.7% gain to start to the week, despite lingering concern for the Chinese economy. But it was the Nikkei 225 in Tokyo that was badly hit by tech share declines, giving back 2.2%. SoftBank Group closed among the worst performers, slumping 6.0%.
The FTSE 100 index fell 36.74 points, 0.5%, to 7,623.00. The FTSE 250 was down 65.24 points, 0.3%, at 19,536.54, and the AIM All-Share fell 1.42 points, 0.2%, at 739.14.
The Cboe UK 100 was down 0.5% at 763.37, the Cboe UK 250 lost 0.4% at 16,916.65, and the Cboe Small Companies fell 0.5% to 14,736.85.
In European equities on Monday, the CAC 40 in Paris was down 0.2%, while the DAX 40 in Frankfurt was 0.5% lower.
In New York, the Dow Jones Industrial Average and S&P 500 are called to open 0.2% lower, and the Nasdaq Composite down 0.3%. The Nasdaq had slumped 1.2% on Friday.
‘Artificial intelligence star Nvidia was a notable underperformer as investors absorbed a mixed jobs report,’ AJ Bell analyst Russ Mould commented.
Mould added that Friday’s nonfarm payrolls release was a mixed bag.
‘The headline number was higher than expected but revisions to previous data suggested the unemployment rate was at its highest in two years. Lower wage growth will have encouraged the idea rate cuts are on the way but the hints at a cooling economy suggest the landing may not be as soft as the market would have liked,’ the analyst commented.
According to the Bureau of Labor Statistics on Friday, nonfarm payroll employment rose by 275,000 in February, picking up speed from a 229,000 increase in January. January’s figure was downwardly revised by some degree from an initially reported 353,000. December’s figure, meanwhile, was lowered to 290,000 from 333,000.
In total, nonfarm payrolls for December and January were in total 167,000 lower than previously reported.
However, for February, the figure topped the FXStreet-cited consensus of 200,000.
Focus moves to Tuesday’s US inflation reading. The headline annual US inflation rate is expected to sit unchanged at 3.1% for February, according to FXStreet cited consensus. The core rate of inflation is forecast to ebb to 3.7% from the 3.9% reported for January.
The US data is reported at 1230 GMT. Before that, there is a UK unemployment reading at 0700 GMT. UK gross domestic product data follows on Wednesday.
Ebury analyst Matthew Ryan commented: ‘The labour market will continue to show full employment with wage gains above 6%, while the economy is expected to have returned to growth in January.
‘These will be key input to the Bank of England meeting next week.’
The pound was quoted at $1.2851 early Monday afternoon, down from $1.2860 at the London equities close on Friday. The euro stood at $1.0942, down from $1.0949. Against the yen, the dollar bought JP¥146.62, falling from JP¥147.21.
Gold rose to $2,179.36 an ounce midday Monday, from $2,174.74 at the London equities close on Friday. The precious metal traded off the record high of $2,195.13 it achieved on Friday, however.
‘We remain positive on the price of gold for 2024, and continue to recommend it as a portfolio hedge. We expect gold to trend higher to USD 2,250/oz, but would wait for price setbacks to gain exposure, even if these turn out to be modest and brief,’ UBS analyst Mark Haefele commented.
Brent oil was quoted at $81.65 a barrel early Monday afternoon, down slightly from $81.72 at the time London equities close on Friday.
In London, miners traded lower as a key political meeting in China drew to a close. Rio Tinto was among the worst of the lot, down 3.3%. China is a major buyer of minerals.
China’s leaders admitted more was needed to revive a sluggish economy battered by an ailing housing market, poor domestic demand and record high youth unemployment figures.
Also on the decline in London, Ladbrokes owner Entain fell 2.3%. Should it end the day in the red, it would extend its losing streak to six days.
On the flip side, one stock which has seen sentiment towards it improve, Darktrace surged 9.2%. The cybersecurity firm was the best FTSE 250-listed performer. It looks poised to extend its winning streak to five days. Shares had surged 6.2% last week Thursday on the back of improved interim results.
Currys gave back 7.5%. Suitor Elliott Advisors said it will not make an offer for the electricals retailer, following ‘multiple attempts to engage’ with the FTSE 250 listing’s board.
The private equity firm said it ‘is not in an informed position to make an improved offer for Currys on the basis of the public information available to it’. Currys in February said it rejected an upgraded takeover offer from Elliott. It said it received a proposal worth around £750 million or 67 pence per share from Elliott, lifted from a previous tilt of 62p.
Before the second Elliott proposal was made, Chinese e-commerce firm JD.com threw its hat in the ring. JD.com, noting press coverage, said it is mulling an acquisition of Currys. The Telegraph newspaper had reported JD.com held early talks with Currys.
Vanquis slumped 38% as it warned on its 2024 outturn, but backed guidance for 2023. The lender still expects adjusted pretax profit of £25 million for 2023, which would be down markedly from £126.6 million for 2022.
However, for 2024, it expects income to be ‘materially lower than market consensus expectations’ of £538.3 million.
Vanquis said that it is not part of Financial Conduct Authority investigations in motor financing.
Nonetheless, it has seen ‘significant levels of third-party complaint submissions,’ it stated.
It cautioned that even though the ‘vast majority’ of complaints are not upheld, rising costs of reviewing them will ‘materially’ impact profits.
Panmure Gordon analysts Rae Maile and Ross Luckman commented: ‘Another material downgrade to expectations is the last thing that long-suffering shareholders needed, but we have sympathy with the company that, this time, it is not entirely its own fault.
‘2025 will bear the IFRS9 provisioning costs of seeking growth, and it will be 2026 before there is any semblance of a return to ’proper’ profits and profitability. That is an awfully long time to wait, especially in such febrile stock markets, and without much in the way of dividends to ease the pain the shares will be moribund at best.’
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