Stock prices in London closed lower on Monday, as investors await interest rate decisions from the US, the UK and Japan.
The FTSE 100 index closed down 58.44 points, 0.8%, at 7,652.94. The FTSE 250 ended down 340.50 points, 1.8%, at 18,449.27, and the AIM All-Share closed down 3.29 points, or 0.4%, at 742.06.
The Cboe UK 100 ended down 1.0% at 761.91, the Cboe UK 250 closed down 2.1% at 16,072.08, and the Cboe Small Companies ended down 0.4% at 13,394.89.
The economic calendar this week has interest rate decisions from the US Federal Reserve on Wednesday and the Bank of England on Thursday, with the Bank of Japan to follow on Friday.
The US central bank is widely expected to leave interest rates unchanged after raising them to their highest level in 22 years in July.
Stocks in New York were slightly higher at the London equities close, shrugging of pre-Fed nerves. The DJIA, the S&P 500 index, and the Nasdaq Composite were all down 0.1%.
Meanwhile, markets are undecided about what the BoE’s next move will be.
Some analysts are expecting a quarter point hike as inflation has proved to be stubborn, but others are saying the central bank should hold rates steady.
‘In its latest monetary policy report, the Bank of England forecasts that inflation would fall below the 2% target in the medium term, whether it keeps interest rates on hold, or follows market expectations by raising them and then trimming them back further down the line. Given the pain higher interest rates inflict on consumers and businesses, if the ultimate effect on inflation is the same, it makes sense to keep rates on hold rather than heap more pressure on a fragile economy,’ said Laith Khalaf, head of investment analysis at AJ Bell.
At its last meeting in August, the BoE enacted its 14th successive increase, taking the benchmark bank rate to 5.25% from 5.00%.
Eyes are also on the Bank of Japan’s policy meeting Friday, which could see the central bank move away from its ultra-loose monetary policy and negative interest rates.
The pound was quoted at $1.2393 at the London equities close Monday, down compared to $1.2401 at the close on Friday.
The euro stood at $1.0684 at the European equities close Monday, higher against $1.0672 at the same time on Friday. Against the yen, the dollar was trading at JP¥147.70, lower compared to JP¥147.80 late Friday.
In the FTSE 100, Mondi closed up 3.3%.
The Weybridge, England-based paper and packaging firm said it had agreed to sell its most significant facility in Russia to Sezar Invest LLC for around 80₽ billion, or about €775 million.
Mondi said it will return proceeds from the Mondi Syktyvkar sale to its shareholders.
The disposal of Mondi Syktyvkar, the pulp and paper mill, will complete Mondi’s exit from Russia.
In the FTSE 250 index, Diversified Energy closed down 5.0%.
It said Chief Financial Officer Eric Williams has resigned from the company to ‘pursue other professional opportunities,’ after six years in the role.
The oil and gas production company said Williams will work through to the end of this month to ‘ensure a smooth transition’.
Williams will be replaced by the company’s current chief operating officer, Brad Gray, effective immediately. Gray has been COO for Diversified since 2016, and prior to that worked as CFO for Royal Cup Coffee & Tea.
Amongst London’s small-caps, Pendragon surged 28%.
The Nottingham, England-based automotive retailer said it has agreed to sell its entire UK motor business and leasing business to Lithia Motors, its North American rival.
The arm will be sold at an ‘attractive valuation’ of £250 million, Pendragon said.
Following completion of the disposal, Pendragon will operate as a stand alone Pinewood business, making it a pure-play software as a service business. It will retain its existing listing on the London Stock Exchange and change its name to Pinewood Technologies PLC.
‘It’s an interesting move and one that completely changes the investment case,’ said AJ Bell’s Mould. He described the deal as ‘a takeover with a twist’.
The transaction will require shareholder approval. If achieved, Pendragon expects completion in the final quarter of this year.
On AIM, Orcadian Energy climbed 94%.
The North Sea-focused oil and gas development company entered a non-binding heads of agreement with an unnamed North Sea operator, including a potential farm-out of its Pilot development project.
It said the potential deal would enable the two parties to progress development at Pilot field, which it says is one of the largest undeveloped discoveries in the central North Sea, with ‘significant upside potential’ in the surrounding area.
RA International closed up 50%.
The specialist provider of complex and integrated remote site services said it has won a ‘strategically significant’ new contract with the UK’s Foreign, Commonwealth & Development Office.
The minimum two-year global framework agreement will see RA provide operational support capability funded through the Conflict, Stability & Security Fund.
The services which RA will most likely provide will be funded from a sub-lot allocated to the CSSF valued, at a maximum of £375 million over two years.
In European equities on Monday, the CAC 40 in Paris ended down 1.4%, while the DAX 40 in Frankfurt ended down 1.1%.
Over in Paris, Societe Generale plunged 13% as investors were less than impressed by its latest strategic plan.
The retail and investment bank and financial services firm said it is aiming to achieve average annual revenue growth between 0% to 2% between 2022 and 2026. It would fall short of the 8.8% growth achieved in 2022 alone.
Brent oil was quoted at $94.78 a barrel at the London equities close Monday, up from $93.72 late Friday. Gold was quoted at $1,927.22 an ounce at the London equities close Monday, down slightly against $1,927.20 at the close on Friday.
In Tuesday’s UK corporate calendar, there is a trading statement scheduled from Ocado. There are full year results from Hargreaves Lansdown, as well as half year results from Kingfisher.
On Tuesday, the Federal Open Market Committee meeting will begin. There is also CPI readings from Canada and the EU.
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