It was a shaky start for stocks in London on Monday after an anaemic UK gross domestic product reading, with focus now turning to inflation data later in the week to see if the country is heading into 'stagflation' territory.
GDP grew by 0.1% month-on-month in February, slowing from 0.8% growth in January, and coming in behind market consensus - according to FXStreet - for 0.3% growth.
‘It was the month the UK was supposed to start 'living with Covid' but if February is an indication of what that life will look like, the UK economy is in trouble. There was growth, but barely, the scaling back of covid testing programmes and with the booster boost long gone the economy was left limping, further hampered by a car industry still plagued by chip shortages and spiralling costs. And that was before Russia invaded Ukraine,’ said Danni Hewson, AJ Bell financial analyst.
The Office for National Statistics did note, however, that the UK economy is now 1.5% above its pre-coronavirus level in February 2020.
The FTSE 100 index was down 18.54 points, or 0.2%, at 7,651.02 early Monday. The mid-cap FTSE 250 index was up just 14.35 points at 21,188.11, while the AIM All-Share index was up just 0.39 of a point at 1,056.28.
The Cboe UK 100 index was down 0.2% at 761.53. The Cboe 250 was up 0.3% at 18,638.45, and the Cboe Small Companies down 0.2% at 15,498.48.
The pound was quoted at $1.3020 early Monday, unchanged from the London equities close on Friday, and regaining its composure after sliding to $1.2990 following the GDP release.
In London, high-street lenders were among the day's early risers. Lloyds Banking added 1.4%, Barclays 1.2% and NatWest 1.1%.
At the other end of the blue chip index, the mining giants got off to a rough start, as China continues to deal with a surge in Covid cases. Anglo American was down 2.2%, Rio Tinto 1.1% and Antofagasta 0.9%.
In the FTSE 250, Ascential rose 8.2%. The firm - responding to media reports - confirmed it is actively discussing ‘the merits’ of separating some of its assets.
‘As discussions are exploratory at this stage, they may or may not lead to the board making a decision to undertake a managed separation of these businesses in due course. The board is committed to open and transparent engagement with all of its stakeholders and will communicate further if and as appropriate,’ the company added.
This followed Sky News reporting on Saturday that Ascential was looking at demerging its digital operations and listing them separately in the US.
Shore Capital analyst Roddy Davidson said: ‘We are not hugely surprised to not this development given Ascential management's long-standing commitment to maximising shareholder value and optimising the group's portfolio of businesses.
‘This process has featured regular acquisition and disposal activity throughout its tenure as a listed company extending a wholesale repositioning undertaken while under private equity ownership.’
Staying in the midcaps, Johannesburg and London-listed Sirius Real Estate advanced 1.5% in London, after it reported it expects its annual financial performance to be in line with market expectations following an acquisition spree.
In a pre-close trading update, Sirius said total annualised rent roll of its portfolio grew 73% to €167.1 million for the year ended March 31, up from €96.5 million in the prior year.
Like-for-like annualised rent roll in Germany increased by just 6.4%, representing the eighth consecutive year of rent roll growth in excess of 5%, while rent roll in the UK grew 7.5% on a like-for-like basis.
Over the full-year period, like-for-like occupancy increased to 87.4% as at March 31 from 86.6% previously.
In the small caps, Lamprell gained 6.4% after it signed a memorandum of understanding with New York-listed energy services firm NOV Inc to support its delivery of three 1 gigawatt offshore floating wind farms for Cerulean Winds, the UK-based floating offshore wind farm and green hydrogen infrastructure developer.
‘Under the terms of the MoU, NOV has stated its intent to use Lamprell as its provider for the fabrication, assembly and outfitting in relation to the construction of NOV designed tri-floaters to be used as floating foundations for the three wind farms,’ the company explained.
Amigo jumped 17%. The guaranteed loans provider noted it has made a ‘significant improvement’ to its scheme redress proposals - after the UK regulator told the company it will not appear at the upcoming sanction hearings.
The scheme is being proposed to settle claims following probes from UK regulators into mis-sold loans and the way that Amigo dealt with customer complaints.
‘The FCA has made clear that it will continue to engage closely with Amigo, taking into account the outcome of the sanction hearings,’ Amigo said on Monday.
It noted, however, the FCA has told the company it does not consider it ‘necessary to appear at the sanction hearings either to oppose the schemes or to present any evidence of its own concerning the schemes unless the court requests or otherwise requires assistance from it.’
Chief Executive Gary Jennison said: ‘We thank the FCA for its confirmation that there has been a significant improvement in the fairness of the schemes compared with Amigo's first Scheme, which was rejected by the court in May 2021.
‘There remain significant obstacles to overcome, including the need for a significantly dilutive equity issue, to recapitalise the ongoing business given the requirements of the schemes for the transfer of virtually all existing assets to the redress creditors.’
In mainland Europe, the CAC 40 in Paris was down 0.1% but saw a spike into the green immediately after the open, while the DAX 40 in Frankfurt was down 0.7%.
French President Emmanuel Macron topped the first round of presidential elections on Sunday, beating far-right rival Marine Le Pen by a larger than expected margin and setting up what is expected to be a tight run-off between the pair later this month.
Projections showed Macron scoring 28% to 29% on Sunday with Le Pen on 23% to 24%. As the top two finishers, they advance to the second round on April 24.
Despite entering the campaign late and holding just one rally before the vote, Macron performed more strongly than predicted and won immediate support on Sunday night from most of his defeated rivals ahead of the run-off.
While the dollar was largely higher against major currency pairings at the start of the week, the euro edged up. The single currency was priced at $1.0904, up from $1.0875 on Friday night.
Against the yen, the dollar was trading at JP¥125.15 in London, up from JP¥124.33.
In Asia on Monday, the Japanese Nikkei 225 index closed down 0.6%. In China, the Shanghai Composite ended 2.6% lower, while the Hang Seng index in Hong Kong lost 3.1%. The S&P/ASX 200 in Sydney ended up 0.1%.
China's factory-gate inflation was higher than expected in March, official data showed Monday, as Russia's war on Ukraine pushes up oil prices while a domestic Covid-19 resurgence strains food supplies and consumer costs.
The producer price index - measuring the cost of goods at the factory gate - grew 8.3% annually, National Bureau of Statistics figures showed.
This was slightly more than a Bloomberg poll of economists expected, while PPI also rose month-on-month.
‘Geopolitical and other factors have pushed global commodity prices to continue increasing, driving the prices of oil, non-ferrous metals and other related industries to rise further domestically,’ NBS senior statistician Dong Lijuan said in a statement.
China's consumer price index, a key gauge of retail inflation, rose more than expected as well, by 1.5% year-on-year in March, the NBS said.
Brent was quoted at $100.12 a barrel on Monday morning, down from $101.33 a barrel Friday evening.
Gold stood at $1,945.90 an ounce, against $1,945.10 late Friday.
There is little data to come Monday, but the rest of the short week is full of eye-catching events, with consumer inflation from Germany and the US on Tuesday, followed by inflation data from the UK on Wednesday. The headline event, however, will be a European Central Bank rate decision on Thursday afternoon. The week will be a shortened trading week for most countries, due to Good Friday.
In the US, earnings season kicks off later this week with first quarter results due from JPMorgan Chase, Wells Fargo, Citigroup, Morgan Stanley and Goldman Sachs.
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