European markets edged slightly lower during tepid trade, though more M&A action in London and a milestone from luxury goods firm LVMH in Paris added some sparkle.
Investors are moving with caution ahead of a US gross domestic product reading later this week, and the Federal Reserve’s interest rate decision next week.
The FTSE 100 in London ended down just 1.93 points at 7,912.20 on Monday. The mid-cap FTSE 250 lost 43.07 points, or 0.2% at 19,226.94. The AIM All-Share shed 1.45 points, 0.2%, at 828.85.
The Cboe UK 100 edged 0.1% to 791.74, the Cboe UK 250 rose 0.2% to 16,877.12, and the Cboe Small Companies surged 1.5% to 13,340.80.
The dollar was largely weaker. The pound was quoted at $1.2457 at late Monday afternoon in London, higher compared to $1.2410 at the local equities close on Friday. The euro stood at $1.1026, up against $1.0974. Against the yen, the dollar was trading at JP¥134.38, higher compared to JP¥134.28.
The dollar’s outlook is somewhat tricky, if US data continues weakening. It may prompt the Federal Reserve to pivot from rate hikes.
‘The US dollar could remain under pressure as traders increasingly view the possibility of a softer monetary policy in the near future as US data continues to show signs of weakness. The effects of the banking crisis could also push monetary policy in the same direction as credit conditions could continue to worsen. Such a trend could affect small and medium-sized businesses in the US and jobs as well as inflation eventually,’ CPT Markets analyst Denys Peleshok commented.
‘The focus this week could remain on the US GDP figures that will be published toward the end of the week. Economic activity is expected to have slowed down significantly, which could further cement the current view for a softer monetary policy. The release of these figures could create strong volatility for the dollar.’
In the final three months of 2022, US GDP expanded by 2.6% from the preceding quarter in the final three months of 2022. Markets are expecting GDP growth to slow to 2.0% in the first quarter of 2023, according to FXStreet.
The Fed meets next week Tuesday, with a decision and press conference with Chair Jerome Powell a day later. The central bank is expected to lift rates by 25 basis points.
In European equities on Monday, the CAC 40 in Paris ended down marginally, while the DAX 40 in Frankfurt lost 0.1%.
LVMH ended 0.1% higher. The company’s market capitalisation topped $500 billion on Monday, becoming the first European firm to reach that threshold.
In London, luxury goods peer Burberry up 1.3%, among the best FTSE 100 performers.
In Zurich, Credit Suisse shares rose 0.6%. It reported a swing to profit in its first quarter but a flight of deposits and assets under management, following the wipeout of its bondholders.
In its first-quarter results on Monday, Credit Suisse reported ‘significant withdrawals of cash deposits’ and non-renewal of maturing time deposits during the period.
Customer deposits fell by fr.67 billion, or $75 billion, in the first quarter of 2023. Credit Suisse also saw significant net asset outflows, especially towards the second half of March, with net asset outflows of fr.61.2 billion during the quarter.
Last month, a hasty government-brokered deal saw troubled Credit Suisse agree to merge with its alpine compatriot UBS.
UBS reports quarterly results on Tuesday. Among London-listed banks, Standard Chartered reports on Wednesday, Barclays on Thursday and NatWest on Friday.
The mining sector ended lower on Monday, putting some pressure on the FTSE 100. Shares were sent lower by weaker iron ore prices.
Glencore lost 0.7%, while Anglo American fell 2.0%.
Elsewhere in London, Card Factory rose 10%. The greeting cards retailer expects revenue for the year ended January 31 of £463.4 million, with pretax profit of £52 million. Profit would be ahead of expectations, it said.
Card Factory delayed its annual results to May 3 as auditor KPMG needs more time. It had been due to report on Tuesday.
Medica Group surged 33%. It reached an agreement with private equity firm IK Investment Partners, on a takeover.
IK Investment will acquire the telemedicine services provider for 212 pence per share in cash. The deal values all of Medica at £269 million.
Stocks in New York were mixed at the time of the closing bell in Europe. The Dow Jones Industrial Average edged up 0.1%, the S&P 500 index was down 0.2%, and the Nasdaq Composite lost 0.7%.
‘US markets have been subdued ahead of the real earnings action that’s heading our way and, as usual, the sheer size of those big tech companies set to announce this week is sure to make waves, whatever their updates deliver,’ AJ Bell analyst Danni Hewson commented.
Coca-Cola shares were 0.5% higher. The Atlanta, Georgia-based drinks maker reported net operating revenue of $10.98 billion, up 4.7% from $10.49 billion. The company’s first quarter revenue beat Wall Street estimates of $10.80 billion, according to data from Refinitiv.
Brent oil was quoted at $82.10 a barrel late Monday in London, up from $81.23 late Friday. Gold was quoted at $1,982.78 an ounce, higher against $1,977.53.
Tuesday’s economic calendar has a US consumer confidence reading at 1500 BST.
The local corporate diary has interim results from Primark owner Associated British Foods, full-year numbers from Premier Inn owner Whitbread and a trading statement from builders’ merchant Travis Perkins.
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