Stocks in London ended the day in mixed fashion with blue-chips nursing modest losses and mid-caps ending in the green.
A solid start to the day in the US helped, with the S&P hitting a 12-month high, as investors look ahead to CPI figures and the Federal Reserve’s interest rate decision on Wednesday.
The FTSE 100 index closed down 9.58 points, 0.1%, at 7,544.89. The FTSE 250 ended up 48.40 points, 0.3%, at 18,750.39, and the AIM All-Share closed up 1.88 points, or 0.3%, at 725.33.
The Cboe UK 100 ended flat at 753.88, the Cboe UK 250 closed up 0.3% at 16255.97, and the Cboe Small Companies ended little changed at 14,007.70.
In European equities on Monday, the CAC 40 in Paris ended up 0.3%, while the DAX 40 in Frankfurt ended up 0.2%.
Equities had earlier opened lower after China’s economy slipped further into deflation in November, according to official figures released on Saturday.
Consumer prices fell by 0.5% compared to the same month last year, the sharpest fall in three years, according to China’s National Bureau of Statistics. It was steeper than the 0.2% fall seen in October.
This means that Chinese consumer prices are now in deflationary territory for the second month in a row.
But the mood brightened as US blue-chips made a stronger-than-expected start. At the time of the London close, the DJIA was up 0.2%, the S&P 500 was little changed and the Nasdaq Composite was down 0.5%.
The S&P 500 had earlier hit a 52-week high of 4,613.70 before falling back.
The market moves come ahead of a key week for investors and central bank policymakers. On Wednesday, markets will be eyeing an interest rate decision from the US Federal Reserve, while the European Central Bank and the Bank of England will make their own decisions on Thursday.
Ahead of those, US consumer prices figures will be released on Tuesday.
Bank of America forecasts headline and core CPI to rise by 0.0% month-on-month and 0.3% month-on-month, respectively, in November.
It expects the annual headline inflation rate to tick down a tenth to 3.1% with the core rate edging up to 4.1% from 4.0% on an annual basis.
The bank expects energy prices to hold down headline inflation, while lodging away from home and used cars should lead to a firmer core.
The Bank of England, European Central Bank and US Federal Reserve are all expected to leave interest rates unchanged this week.
In London, Goldman Sachs said recent data have shown continued progress on disinflation since the November BoE meeting. Core and services inflation surprised to the downside and sequential wage pressures also moderated notably.
‘We therefore expect the December MPC meeting to be uneventful. A hold is widely expected and we look for a 7-2 vote split with Mann and Haskel dissenting for a further hike. We expect the guidance to remain largely unchanged, with the minutes likely to re-emphasise the need for rates to remain restrictive for an extended period based on the MPC‘s current forecasts,’ the bank commented.
The pound was quoted at $1.2545 at the London equities close Monday, up compared to $1.2535 at the close on Friday. The euro stood at $1.0746 at the European equities close Monday, down against $1.0758 at the same time on Friday.
Against the yen, the dollar was trading at JP¥146.52, higher compared to JP¥144.07 late Friday.
In the FTSE 100, Rolls Royce led the risers, gaining 2.4% after Citi increased its share price target to 431 pence from 294p following the recent Capital Markets Day.
Last Friday, analysts at Deutsche Bank and UBS raised their price target to 400p, joining a number of upbeat comments on the engineering firm.
Leading the fallers was Endeavour Mining, down 3.4%, while gold and silver mining firm, Fresnillo fell 0.8%, after falls in the price of gold and silver.
Gold was quoted at $1,981.92 an ounce at the London equities close Monday, down against $2,006.01 at the close on Friday.
Glencore declined 3.8% reflecting the weak economic data from China and after it was touted as a possible bidder for Anglo American.
Anglo American tumbled 19% on Friday after lowering production targets but rallied 0.8% on Monday.
The Times noted a report from analysts at Jefferies suggesting that if Anglo cannot revive its fortunes and its share price ‘continues to lag’, it may become ‘involved in the broader trend of industry consolidation’.
Jefferies pointed to Glencore as a potential suitor.
They noted that Glencore-backed Xstrata proposed a merger with Anglo in 2009; Xstrata has since been fully subsumed into Glencore, which is in the process of buying the coal assets of Canada’s Teck to combine with its own coal assets into a spin-off company.
The analysts said that Glencore‘s strategic fit with Anglo after the Teck deal ‘appears even stronger now due to operating synergies, even greater marketing benefits, and a cost of capital arbitrage’.
Elsewhere, SSE fell 1.7% after UBS downgraded to ’neutral’ from buy while St James’s Place fell 0.7% after Bank of America downgraded to ’neutral’ from ’buy’.
Meanwhile, in the FTSE 250, Qinetiq rose 2.4%, among the best FTSE 250 performers. JPMorgan lifted the defence technology to ’overweight’ from ’neutral’.
The investment bank set out a promising assessment for the Farnborough, Hampshire-based firm’s shares, as well as the wider defence sector.
Concerns about Qinetiq’s M&A record, which has hurt its stock, are ‘valid’, JPMorgan said. However, share price weakness represents a ‘buying opportunity’.
On London’s AIM, Synectics shares ended 25% higher as the security and surveillance systems provider predicted annual results will be ‘materially ahead of market expectations’.
It hailed strong trading in the second half ended November 30, particularly in the oil and gas market.
Its order book is in loftier territory, sitting at £28.6 million at year-end, up from £24.4 million a year earlier.
Brent oil was quoted at $75.41 a barrel at the London equities close Monday, down from $76.00 late Friday.
Tuesday’s economic calendar has UK unemployment data at 0700 GMT, before a US inflation reading at 1330 GMT.
The local corporate calendar has annual results from Chemring, a provider of technology products and services to aerospace, defence and security markets.
Copyright 2023 Alliance News Ltd. All Rights Reserved.
