Stock prices edged lower in London early Monday, as investors assessed the latest economic data from China, and considered possible trajectories for US interest rate cuts.
The FTSE 100 index opened down 7.26 points, 0.1%, at 7,704.45. The FTSE 250 was down 3.03 points at 19,188.90, and the AIM All-Share was down 1.05 points, 0.1%, at 757.73.
The Cboe UK 100 was slightly lower at 771.49, the Cboe UK 250 was slightly higher at 16,606.75, and the Cboe Small Companies was up 0.1%.
In European equities, the CAC 40 in Paris was down 0.3%, while the DAX 40 in Frankfurt was down 0.2%.
Markets in New York will be closed on Monday to celebrate Washington’s birthday.
In the US on Friday, Wall Street ended in the red, with the Dow Jones Industrial Average down 0.4%, the S&P 500 down 0.5% and the Nasdaq Composite down 0.8%.
Sentiment suffered amid another set of surprise inflation data. US producer prices rose sharper than expected in January, data from the US Bureau of Labor Statistics showed on Friday. The figures followed hot consumer prices index data earlier last week.
In contrast, markets in mainland China reopened on an upbeat note after the Lunar New Year holiday period, with the Shanghai Composite adding 1.6%. Meanwhile, the Hang Seng index in Hong Kong was down 1.1%, weighed down by the weak performance of US tech stocks.
China’s new year holiday spending last week surged past pre-pandemic levels, official figures showed, a rare bright spot for an economy struggling with sluggish consumption and deflation. Domestic spending on entertainment, dining and travel soared during this year’s ‘Golden Week’, which officially ended on Saturday, according to a statement from Beijing’s Ministry of Culture & Tourism.
The People’s Bank of China will decide on interest rates overnight on Tuesday, with FXStreet-cited consensus expecting the key one-year loan prime rate, which serves as a benchmark for corporate loans, to remain at 3.45%. On Sunday, the PBoC kept the one-year medium-term lending facility rate steady at 2.50%.
‘The People’s Bank of China kept its MLF rate unchanged yesterday to avoid putting more pressure on the yuan – and to see the impact of an avalanche of measures announced earlier this year. The path to correction will be bumpy given that the past years’ $7 trillion erased from the Chinese equity markets cost 66 Chinee companies their place in the MSCI’s global indices,’ noted Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
‘Betting on Chinese market recovery is still swimming against the tide, until the winds turn. But resurfacing risk of a China boost on inflation is brought back on the table, with one major implication: delaying the first rate cuts from the major central banks,’ she continued.
According to CME’s FedWatch tool, the probability of a 25 basis point interest rate cut from the Fed in May has dropped to just 31%, compared to 52% a week ago.
However, the dollar was slightly weaker against major currencies in early exchanges in Europe.
Sterling was quoted at $1.2622 early Monday, higher than $1.2582 at the London equities close on Friday. The euro traded at $1.0783, rising from $1.0775. Against the yen, the dollar was quoted at JP¥149.97, down slightly versus JP¥150.13.
Meanwhile, in the FTSE 100, AstraZeneca was the top performer, rising 3.0%.
The firm reported positive analysis from its Laura phase III trial for Tagrisso in lung cancer. The treatment showed ‘statistically significant and highly clinically meaningful improvement in progression-free survival for patients with unresectable, Stage III epidermal growth factor receptor-mutated non-small cell lung cancer after chemoradiotherapy (CRT) compared to placebo after CRT,’ the pharmaceutical company said. Overall survival data showed a ‘favourable trend’ for Tagrisso, but Astra noted the data ‘were not mature’ at the time of the analysis. The trial will continue to assess overall survival as a secondary endpoint.
Separately, the firm announced Tagrisso with chemotherapy received US approval for use in locally advanced or metastatic epidermal growth factor receptor-mutated non-small cell lung cancer. Further, Astra noted its biologics license application for datopotamab deruxtecan has been accepted by the US Food & Administration.
Meanwhile, miners fell, with Antofagasta down 1.4%, Rio Tinto and Fresnillo down 1.3% and Anglo American down 1.2%.
In the FTSE 250, Currys surged 34% to 63 pence, as it fielded potential takeover offers.
Chinese e-commerce firm JD.com on Monday said it was considering a bid for the electricals retailer. The Telegraph cited sources that said that representatives from JD.com had held exploratory talks in recent weeks with the UK firm.
Over the weekend, Currys received an unsolicited proposal worth around £702.8 million from US activist investor Elliott Investment Management, or 62p per share. It rebuffed the offer, saying the sum ‘significantly undervalued the company and its future prospects’.
In Japan on Monday, the Nikkei 225 index in Tokyo ended flat, with Nintendo shedding 5.8% following reports of a delay to its next-generation console.
The successor to the popular Switch was targeted for release at the end of this year but several publishers have now been told to expect it to slip into next year, Bloomberg News reported, citing unnamed sources. That would mean that the next console would miss the key Christmas holiday shopping period in December.
‘Some investors may consider profit-taking opportunities as the Nikkei approaches new all-time highs as many wonder how long the weaker currency, which has supported exporter profits hugely, good times will last,’ considered SPI Asset Management’s Stephen Innes.
The S&P/ASX 200 in Sydney closed up 0.1%.
In commodities, gold was quoted at $2,020.53 an ounce early Monday, higher than $2,009.01 on Friday. Brent oil was trading at $82.93 a barrel, edging up from $82.88.
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