Blue-chip European equities opened mixed on Monday, with enthusiasm at the start of the week tempered by less-than-stellar data from China, as well as more poor headlines from the nation’s property sector.
The pound continued to trade above the $1.26 mark, meanwhile, with traders optimistic that US interest rates have peaked. A key US inflation reading later this week could challenge that notion, however.
The FTSE 100 index opened down 9.67 points, 0.1%, at 7,478.53. The FTSE 250 was up 44.70 points, 0.2%, at 18,502.80, and the AIM All-Share added 1.17 points, 0.2%, at 718.07.
The Cboe UK 100 was down 0.2% at 746.35, the Cboe UK 250 was up 0.3% at 16,047.82, and the Cboe Small Companies was a touch lower at 13,443.32.
In European equities, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt edged down 0.1%.
The pound rose to $1.2614 early Monday, from $1.2605 late Friday. The euro climbed to $1.0947 from $1.0935. Versus the yen, the dollar faded to JP¥149.04 from JP¥149.59.
In Asia on Monday, stocks were lower. The Nikkei 225 index in Tokyo fell 0.5%, while the Shanghai Composite in China lost 0.3%. The Hang Seng Index in Hong Kong fell 0.2%, while Sydney’s S&P/ASX 200 gave back 0.8%.
The mood in Asia was hurt by weaker China data.
Industrial profit growth for Chinese companies eased last month, numbers from the National Bureau of Statistics showed on Monday.
According to the NBS, industrial profit in October rose 2.7% year-on-year, ‘achieving positive growth for three consecutive months, and the efficiency of industrial enterprises continued to improve’. However, growth eased markedly from a roughly 12% surge in September.
Industrial profit declined 7.8% year-on-year over the wider 10-month period. The pace of decline narrowed from the 9.0% seen in the first nine months of 2023.
‘The profit decline has narrowed month by month since March this year,’ NBS analyst Yu Weining commented.
In the mining industry alone, profit declined by 20% year-on-year over the 10 months.
Shares in London-listed miners struggled in early trade on Monday. China is a major buyer of minerals.
Rio Tinto fell 0.4%, while Glencore lost 0.2%. BHP Group was 1.0% lower.
Chinese police have opened an investigation into Zhongzhi Enterprise Group after the debt-ridden financial giant declared itself insolvent, meanwhile.
Police in Beijing, where the group is headquartered, said late Saturday they had opened an investigation into unspecified ‘alleged offences’, adding that they had taken measures against several suspects.
Zhongzhi declared itself insolvent on Wednesday with its arrears estimated at nearly $66 billion, according to a letter to investors cited by local media.
During China’s real estate boom, many developers used Zhongzhi to finance their projects.
The company managed assets worth more than ¥1 trillion, around $141 billion, according to investment bank Nomura.
Also hurting the FTSE 100, Shell and BP each fell 1.1%, as oil prices continue to struggle to find upward momentum.
A barrel of Brent oil fetched $79.91 early Monday, down from $81.47 at the time of the London equities close on Friday.
Oil markets will be in focus with an Opec+ meeting of producing nations to come on Thursday.
The North Sea benchmark found some footing on Friday, after dropping following the unexplained postponement of the Opec+ meeting. The key ministerial gathering of the oil-producing alliance was pushed back from Sunday.
SPI Asset Management analyst Stephen Innes commented: ‘Oil traders are bracing for an OPEC+ current policy extension without a deeper group cut so that a modest surprise cut would be perceived as temporarily bullish. Still, with fundamental developments leaning bearish with rising U.S. oil inventories and poor refining margins, evidence of inventory draws would likely be needed for a bullish inference to push Brent +$90 per barrel.
‘In a worst-case scenario where leaks of disagreement among members emerge, the short-term price action will likely be negative even if it ultimately leads to a modest group cut. This is because the market will perceive a higher probability of reduced OPEC unity, which could introduce uncertainty over compliance already showing signs of weakening.’
Gold continued to shine. An ounce of gold traded at $2,012.60 early Monday in London, up from $1,999.98 late Friday. Gold has been boosted by the weaker dollar recently.
Back in London, Rightmove surged 5.8%. The property portal said revenue growth has ‘continued to track marginally ahead of consensus expectations’ since it reported first-half results back in July. This is despite ‘uncertainty in the housing market’.
It has seen better-than-forecast average revenue per advertiser. Its ARPA is set to grow between £112 and £116 in 2023, better than its previous forecast of £103 to £105. In 2022, its ARPA amounted to £1,314. Its overall revenue growth outlook is at the 8% to 10% range.
It predicts underlying operating profit growth of 7% to 8%. In 2022, it achieved underlying operating profit of £245.4 million, on revenue of £332.6 million.
‘Our performance underscores the strength and resilience of the business, with both estate agent subscriptions and new homes development listings stable. Our share of consumer time in the second half to date remains unchanged - at [around] 85% - demonstrating the strength of our brand, our position with consumers and the established network effect of our business model,’ the firm said.
Further, it set a 2028 revenue target of over £600 million, with underlying operating profit targeted at over £420 million.
Elsewhere in London, abrdn European Logistics surged 10% as it announced a strategic review.
‘The board will consider all options available to the company that offer maximum value for its shareholders including, but not limited to, undertaking some form of consolidation, combination, merger or comparable corporate action, selling the entire issued share capital of the company,’ the investor of urban logistics real estate assets said.
Still to come on Monday there is a US new home sales reading at 1500 GMT. As the week progresses, focus will be on inflation readings. There is a US personal consumption expenditures reading and eurozone inflation data on Thursday. There is a US gross domestic product reading on Wednesday, meanwhile.
European Central Bank President Christine Lagarde speaks at 1400 GMT on Monday.
Analysts at Lloyds Bank commented: ‘Speaking last week, Ms Lagarde indicated that the ECB was now in a position to pause and monitor the effects of interest rates hikes delivered so far. That suggested that there was neither a bias towards hiking nor cutting in the near term.’
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