Share price gains for miners and another rise for British Airways owner IAG propelled the FTSE 100 into positive territory on Monday.
Save for a slight decline for the DAX 40 in Frankfurt, it was a largely positive day in mainland Europe too, helped by favourable eurozone data.
There are two central bank decisions for equity markets to negotiate, first the Reserve Bank of Australia on Tuesday, before the Bank of England, the focus of the week, on Thursday.
The FTSE 100 index edged up 5.14 points, 0.1%, at 7,699.41. The FTSE 250 rose 19.62 points, 0.1%, at 19,143.76, and the AIM All-Share fell 1.51 points, 0.2%, at 764.72.
The Cboe UK 100 rose 0.1% to 768.34, the Cboe UK 250 added 0.2% at 16,814.64, and the Cboe Small Companies also climbed 0.2%, closing at 13,792.50.
In European equities on Monday, the CAC 40 in Paris rose 0.3%, while the DAX 40 in Frankfurt fell 0.1%
Stocks in New York were higher. The Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite were each up 0.1%.
The pound was quoted at $1.2860 late on Monday in London, largely flat from $1.2861 at the equities close on Friday.
Focus this week will be on the Bank of England, which announces an interest rate decision on Thursday. The BoE is all but certain to raise rates by 25 basis points from 5.00% currently.
‘The Fed and ECB surprised nobody last week when they both hiked rates by another 25bps. With the Monetary Policy Committee meeting this week, it’s likely that they will follow suit. However, recent cooling in the economy has tempered market expectations of how high rates will go. Will this be the peak of rate hikes? For the US, it seems so. But UK inflation is proving stickier, so the MPC cannot be so certain,’ analysts at NatWest commented.
The euro stood at $1.1027, lower against $1.1030. Against the yen, the dollar was trading at JP¥142.12, higher compared to JP¥140.53.
The euro traded as high as $1.1046 on Monday, before surrendering progress.
Eurozone inflation fell in line with market expectations, according to data on Monday, as the single currency area also returned to growth during the second quarter of 2023.
Eurostat said the single currency area’s yearly inflation rate faded to 5.3%, according to a flash estimate, from 5.5% in June. The figure was in line with FXStreet consensus.
The eurozone inflation rate faded markedly from 8.9% in July 2022. It peaked at 10.6% in October.
Eurostat said that seasonally adjusted gross domestic product increased by 0.3% in the eurozone in the second quarter of 2023, compared to the first quarter. This preliminary flash estimate comes in ahead of FXStreet consensus of 0.2%.
In the first quarter of 2023, GDP had fallen by 0.1% in the eurozone quarter-on-quarter.
‘These mixed data allow the ECB to both argue for a longer hold as well as for another hike. We still expect that the ECB is done hiking rates, but a setback in the data over the summer could push the ECB towards another hike,’ Rabobank analysts commented.
China announced fresh measures to boost consumption, providing further support to markets, after the government on Friday unveiled a number of initiatives for light industry.
Authorities released a 20-point plan that includes more support for housing demand, the culture and tourism sector, and green consumption such as electric vehicles.
The move comes as spending by China’s army of consumers remains subdued, even after the lifting of strict Covid containment measures late last year.
Factory activity contracted for the fourth straight month in July, data showed Monday.
The official manufacturing purchasing managers’ index – a key measure of factory output – came in at 49.3, below the 50-point mark that separates expansion and contraction, according to the National Bureau of Statistics.
July’s reading was slightly higher than June’s 49.0 figure and was better than forecasts in a Bloomberg survey.
The expectation of stimulus out of China lifted shares in London-listed miners, supporting the FTSE 100. Glencore rose 1.5%, while Anglo American added 0.6%.
Also on the up, British Airways parent IAG extended gains, rising 3.4%. Its half-year results were well-received on Friday.
Dr Martens added 5.1% after Sky News reported activist investor Sparta Capital has bought up a stake worth ‘tens of millions’ in the bootmaker.
Oil and gas firms Ithaca Energy added 8.2% and Harbour Energy 5.9%.
The UK government said Monday it would issue ‘hundreds’ of new oil and gas licences in the North Sea to secure energy reserves while still aiming for net-zero carbon emissions by 2050.
Harbour Energy said its Viking CO2 transportation & storage network in Humber, northern England and there Acorn carbon capture & storage project in northeast Scotland were awarded Track 2 status by UK government, meanwhile. This allows both projects to progress to front end engineering & design plus discussions with the government over economic licence terms.
Brent oil was quoted at $85.08 a barrel late Monday in London, up markedly from $83.67 late Friday. Gold was quoted at $1,969.90 an ounce, up against $1,962.33.
Tuesday’s economic calendar has an interest rate decision from the Reserve Bank of Australia in the early hours. There are a slew of manufacturing purchasing managers’ index readings as the day progresses, including the eurozone at 0900 BST, the UK at 0930 BST and the US at 1545 BST.
The corporate calendar has annual results from brewer and distiller Diageo. Oil major BP and baker Greggs report half-year numbers.
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