European equities moved lower at the start of the week, in subdued trade amid a US public holiday, and as stock market investors look to the first batch of major interest rate decisions of the year.
Financial markets in New York are closed for Martin Luther King Jr Day on Monday, but traders return to desks on Tuesday.
Among individual stocks, an underwhelming update from Crest Nicholson sent shares in the housebuilder lower. There was more share price pain for Burberry, meanwhile.
The FTSE 100 index was down 22.44 points, 0.3%, at 7,602.49. The FTSE 250 was down 39.38 points, 0.2%, at 19,158.24, and the AIM All-Share was down 0.52 of a point, 0.1%, at 748.54.
The Cboe UK 100 was down 0.3% at 759.67, the Cboe UK 250 was down 0.3% at 16,611.57, and the Cboe Small Companies was flat at 15,099.28.
In European equities on Monday, the CAC 40 in Paris and the DAX 40 in Frankfurt were both down 0.2%.
Investors on Monday have been digesting geopolitical tensions in the Middle East. Over the weekend, focus has been on the war between Israel and Hamas, which entered its 100th day on Sunday, and election results in Taiwan.
On Sunday, the US military said that it had shot down a cruise missile fired at an American destroyer warship from Houthi-controlled areas of Yemen. The attack appears to be the first against a US destroyer, amid a growing number of strikes or attempted strikes by the Houthis on vessels using the Bab-el-Mandeb strait.
Meanwhile, UK Foreign Secretary David Cameron suggested that Britain could strike Houthi targets in Yemen again if the rebel group continues to attack ships in the Red Sea.
AJ Bell investment director Russ Mould said: ‘An escalation of tensions in the Red Sea amid US and UK strikes on Houthi rebels raises the prospect of renewed inflationary pressures as the resulting disruption to global shipping pushes up freight costs.’
Oil prices declined on Monday, after rising as high as $80.72 per barrel last week. Brent oil was quoted at $77.72 a barrel at midday in London on Monday, down from $78.65 late Friday.
Eyes also remain on the trajectory of interest rates, following some cooler-than-expected US inflation data on Friday.
According to the Bureau of Labor Statistics, producer prices rose 1.0% year-on-year in December, picking up speed from a 0.8% climb in November. However, the data fell short of consensus, with FXStreet predicted a 1.3% increase.
Investors this week will be continuing to look for signs of what is in store for the US Federal Reserve’s monetary policy, with fresh economic data out later this week. Retail sales, import and export prices, and industrial production are due on Wednesday, followed by initial jobless claims and housing starts - amongst other readings from the US - on Thursday.
The data comes ahead of the first Fed decision of the year on January 31.
Meanwhile, the next European Central Bank decision is on January 25. The Bank of England follows suit on February 1.
The housing market has had a strong start to the year, according to property portal Rightmove.
Across Britain, the average price of a property coming on the market increased by 1.3% or £4,571 month-on-month, to £359,748, Rightmove said.
The number of potential buyers contacting estate agents about homes for sale in the first week of 2024 was 5% higher than in the same period last year, with the growth in activity strongest in London and the North East of England, Rightmove said.
Tim Bannister, Rightmove’s director of property science, said: ‘After a stop-start market in 2023, the initial signs suggest a smoother year for movers in 2024.
‘More new sellers are now entering the market, and with more confident pricing,’ he added.
Despite more positive data, housebuilders were mixed at midday Tuesday. Taylor Wimpey rose 0.3% and Barratt Developments edged up 0.1%. However, Persimmon lost 0.2%.
In the FTSE 250, Crest Nicholson sunk to the bottom of the index, down 4.8%.
The Surrey, England-based housebuilder said it now expects adjusted pretax profit to be around £41 million for the year ended October 31. This would be a 71% decline from the £137.8 million achieved in the prior year.
Back in November, Crest had guided for a range of £45.0 and £50.0 million, which was cut from its prior guidance for £50.0 million.
Crest explained that this stemmed from a ‘comprehensive’ review of costs associated with the Brightwells Yard, Farnham contract, as well as other legacy assets, which identified further additional costs. In November, it had recorded an incremental cost movement of around £11 million in its second half for Brightwells Yard.
Additionally, Crest now expects an exceptional charge of £13 million relating to a legal claim that pertains to a low rise apartment scheme it had built, which was damaged by fire in 2021. The charge is not cash in financial 2023, it said.
Back among the large-caps, Burberry plummeted 5.1%.
Goldman Sachs cut the luxury fashion brand’s stock to ’neutral’ from ’buy’. Stifel, Deutsche Bank, and SocGen cut the firm’s price target.
On Friday, Burberry cut its forecast for adjusted operating profit for the financial year ending March 30 to be in the range of £410 million to £460 million. The latest guidance would at worst represent a decrease of over a third from the £634 million achieved in financial 2023.
Back in November, it had guided for profit towards the lower end of the consensus range at that time of £552 million to £668 million.
HSBC was also hurt by a broker cut, losing 2.2%. Exane BNP cuts the bank’s stock to ’underperform’ from ’neutral’.
The pound was quoted at $1.2728 at midday on Monday in London, down compared to $1.2760 at the equities close on Friday. The euro stood at $1.0938, lower against $1.0971. Against the yen, the dollar was trading at JP¥145.69, higher compared to JP¥144.62.
Gold was quoted at $2,052.78 an ounce at midday Monday, largely unmoved from $2,053.68 on Friday.
Copyright 2024 Alliance News Ltd. All Rights Reserved.
