Stock prices in London were in the green on Monday morning ahead of an important week of earnings, with three major interest rate decisions and key eurozone data also in the spotlight.
The FTSE 100 index traded up 51.96 points, or 0.6%, at 8,337.67 on Monday morning. The FTSE 250 rose 128.48 points, 0.6%, at 21,484.78, while the AIM All-Share added 2.31 points, 0.3%, at 781.98.
The Cboe UK 100 was up 0.6% at 832.50, the Cboe UK 250 added 0.5% to 18,823.66, and the Cboe Small Companies rose 0.2% to 17,343.71.
The CAC 40 in Paris fell 0.2%, while Frankfurt’s DAX 40 traded 0.4% higher.
The pound was quoted at $1.2850 on Monday morning, fading from $1.2859 at the London equities close on Friday. The euro stood at $1.0855, down from $1.0859. Against the yen, the dollar was trading at JP¥153.55, down from JP¥153.75.
The Bank of Japan announces an interest rate decision on Wednesday, before the US Federal Reserve later that day, and the Bank of England on Thursday.
Dutch bank ING expects to see ‘a hike, a hold and a cut’.
‘There are two close central bank calls this week: the BoJ, which we narrowly expect to hike by 15bp, and the BoE, where our call is a 25bp cut. We expect the Fed to hold rates but it may lay the groundwork for a September cut,’ ING added.
ING is ‘bracing for pound depreciation’ this week, but believes some dollar weakness could aid sterling. Instead, it favours ‘EUR/GBP to display weakness in the pound this week’.
As far as the single currency goes, gross domestic product data on Tuesday before a flash inflation report on Wednesday could provide it impetus, ING added.
‘The latest European Central Bank meeting has put greater emphasis on data dependence as President Christine Lagarde ditched forward guidance. The expected slowdown from 2.9% to 2.8% in July’s core CPI should not be enough to lead markets to price in more than the 55bp of 2024 easing already in the EUR [overnight index swap] curve. Incidentally, core inflation has beaten consensus in five of the seven flash estimates since the start of the year,’ the Dutch bank added.
In London, Reckitt shares fell 8.1%, the worst FTSE 100 performer. The consumer goods producer fell after New York-listed Abbott Laboratories was slapped with a $495 million in damages by a St Louis, Missouri state court.
A jury found Abbott’s infant formula caused a girl to develop a bowel disease. Abbott had fallen 5.0% after hours in New York.
Elsewhere, the top of the FTSE 100 were firms bouncing back from prior share price falls. British Gas owner Centrica added 1.9%, to build on its 1.6% gain on Friday. The share price rises followed a 9.9% slump following results on Thursday, however. Telecommunications firm Airtel Africa added 2.0%. It had risen 2.7% on Friday, though it slumped 7.0% on Thursday.
Pearson fell 4.3%. The education products publisher said sales in the first-half of 2024 declined 7.6% to £1.75 billion from £1.88 billion a year prior. Pretax profit fell 10% to £212 million from £236 million.
Adjusted operating profit was flat at £250 million, while underlying sales growth was 2%. Pearson raised its interim dividend by 5.7% to 7.4 pence from 7.0p.
For the whole of 2024, it expects underlying sales growth and adjusted operating profit in line with market expectations.
Elsewhere in London, SIG fell 6.6%. It is mulling going cap in hand to investors in a bid to raise up to £150 million, Sky News reported on Saturday.
Sky News said the company did not want to comment on ‘market speculation’.
The firm had secured some £165 million from an equity raise during the pandemic, including backing from private equity firm Clayton, Dubilier & Rice. CD&R has roughly a 29% stake in SIG.
The Sheffield-based supplier of insulation, roofing, commercial interiors and construction products said in June that market conditions have remained challenging in the calendar year to date.
SIG said softness in the building and construction sector had been most notable in French and German markets, and in the end markets of its UK Interiors business.
As a result, SIG said it expects 2024 full year underlying operating profit to be in the range £20 million to £30 million, below an analyst range.
SIG at the time had put the analyst range at between £36.7 million to £43.0 million.
In New York on Friday, the Dow Jones Industrial Average closed up 1.6%, the S&P 500 up 1.1% and the Nasdaq Composite added 1.0%. It meant US stocks ended a tough week with a flourish. The tech-heavy Nasdaq slumped around 2% last week, amid a rotation away from major technology names and some poorly-received earnings.
Swissquote analyst Ipek Ozkardeskaya commented: ‘Friday was a better day for the big tech stocks in the US. Roundhill’s Magnificent Seven ETF rebounded 1%. But overall, last week saw accelerated rotation flows as capital moved out of Big Tech and into smaller and non-tech sectors of the market, driven by rising Fed cut bets and disappointing earnings from Google and Tesla. Nasdaq 100 slipped more than 2.50% last week and the S&P 500 closed last week 0.8% down, while the equal weight index rebounded 0.8% over the week and the Russell 2000 stocks gained almost 3.5%.
‘A dovish Fed and weak economic data could accelerate the rotation trend. As such, the big tech can only rely on their earnings to slow and – maybe – reverse the selloff. 4 of ’magnificent seven’ companies : Microsoft, Meta, Apple and Amazon are due to announce their Q2 earnings this week. Their results should not only meet but also beat the sky-high expectations.’
Brent oil was quoted at $80.30 a barrel early Monday, up from $79.56 at the time of the London equities close Friday. Gold was quoted at $2,392.59 an ounce, climbing from $2,384.60.
Still to come on Monday is the latest UK mortgage approvals reading from the Bank of England at 0930 BST.
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