Stock prices in London failed to shine on Monday despite dovish sentiment, while markets in the US enjoyed a strong opening as investors mulled the possibility of an interest rate peak.
The FTSE 100 index closed up 0.03 of a point at 7,417.76. The FTSE 250 ended down 236.37 points, 1.3%, at 17,747.47, and the AIM All-Share closed 0.46 of a point, or 0.1%, at 696.79.
The Cboe UK 100 ended up 0.3% at 740.88, the Cboe UK 250 closed down 1.5% at 15,412.08, and the Cboe Small Companies ended up 0.2% at 12,932.89.
Stocks in New York were higher at the London equities close, with the DJIA up 0.1%, the S&P 500 index up 0.2%, and the Nasdaq Composite up 0.3%.
‘Weak jobs figures from the US on Friday were the latest bit of news to underpin this status and with both Bank of England governor Andrew Bailey and Federal Reserve chair Jerome Powell due to speak this week, investors will be watching closely to see if they seek to counter or reinforce this narrative,’ said AJ bell’s Russ Mould.
The dollar was largely under pressure on Monday, as markets continued to digest the Federal Reserve’s more dovish approach, as well as soft data.
The pound was quoted at $1.2385 at the London equities close Monday, higher compared to $1.2369 at the close on Friday. Earlier on Monday, the pound traded at its best level since mid-September and was above the $1.24 mark.
The euro stood at $1.0736 at the European equities close Monday, up against $1.0730 at the same time on Friday. Against the yen, the dollar was trading at JP¥149.75, up compared to JP¥149.37 late Friday.
The US economy added fewer jobs than expected in October and the unemployment rate edged higher, painting a soft picture of the US jobs market.
The employment report came just two days after the Federal Reserve’s latest interest rate decision. The Fed decided against a rate hike, keeping the federal funds rate range between 5.25% and 5.50%.
The Bank of England also kept interest rates unchanged at its policy meeting last week. This also was not a surprise to markets, but Lloyds said markets have appeared ‘to find further solace that US and UK interest rates had reached a peak.’
Looking ahead, Swissquote Bank Ipek Ozkardeskaya said: ‘the Fed is now expected to start cutting rates by June and cut by 100bp before next year ends.’
Overnight, there will be an interest rate decision from Australia. ING’s Francesco Pesole expects the Reserve Bank of Australia to hike overnight.
‘The inflation figures for the third quarter came in hotter than expected at 5.4%, and the monthly CPI year-on-year figure jumped to 5.6% in September. Employment growth has been slow and full-time jobs declined in September, but the unemployment rate has remained very low at 3.6%,’ Pesole explained.
In the FTSE 100 index, Melrose Industries rose 3.5%, after it said it has signed a new deal with GE Aerospace.
Melrose said the total incremental sales from this new deal will be around $5 billion over the 30-year duration of the GEnx engine programme.
GE Aerospace is the Evendale, Ohio-based subsidiary of General Electric Co, and supplies engines to commercial aircraft worldwide.
Chief Executive Simon Peckham said: ‘This agreement illustrates the unique breadth and quality of our business across the aerospace engines industry and its position as a technology leader.’
It was a relatively strong session for London-listed airline stocks. easyJet rose 1.7%, Wizz Air was up 0.7%.
Over in Dublin, Ryanair closed up 5.4%. It reported a half-year profit rise and outlined ordinary dividend policy plans, which will kick off with a maiden €400 million payout.
Revenue jumped 30% on-year in the six months to September 30 to €8.58 billion from €6.62 billion. Profit after tax, before one-offs, surged 59% to €2.18 billion from €1.37 billion. Pretax profit rose at the same pace to €2.46 billion from €1.42 billion.
Ryanair declared a maiden ordinary dividend of €400 million, some €0.35 per share, though an interim and final dividend of €200 million each. These will payable in February and September of next year.
Back in London, on AIM, Plexus jumped 22%.
The West Sussex-based engineering services provider said it has signed a rental contract. The contract, worth £175,000, is with Neptune Energy UK.
It is for exact adjustable wellhead and centric mudline suspension equipment.
Aptamer lost 11%, after it said revenue in its first financial half will be lower due to weaker customer confidence.
The York-based biotech firm said revenue will be lower in the run-up to its £3.6 million fundraise. In the first half of financial 2022 to December 31, revenue was £1.0 million, which was a 26% fall from £1.4 million a year prior. The newest decline will be due to a lull in customer confidence,it said.
‘However, with revised strategy set out by the new management team gaining traction with a focus on building and converting the pipeline, we are completely focused on converting those opportunities and on achieving market expectations for the full year,’ it added.
In European equities on Monday, the CAC 40 in Paris ended down 0.5%, while the DAX 40 in Frankfurt ended down 0.3%.
Brent oil was quoted at $86.00 a barrel at the London equities close Monday, down from $86.44 late Friday. Gold was quoted at $1,982.98 an ounce at the London equities close Monday, lower against $1,990.11 at the close on Friday.
In Tuesday’s UK corporate calendar, there are full-year results from Associated British Foods, as well as Beazley third-quarter results.
On the economic calendar for Tuesday, there is the UK Halifax house price index at 0700 BST.
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