London’s FTSE 100 opened the week in the green, with a deal by US lawmakers to avoid a shutdown lifting the mood.
If last week was anything to go by, however, it will be a difficult final quarter for equities. Interest rate worries and China growth concerns continue to loom large.
The FTSE 100 index opened up 13.28 points, or 0.2%, at 7,621.36. The FTSE 250 was up 100.97 points, or 0.6%, at 18,380.39, and the AIM All-Share was up 0.81 of a point, or 0.1%, at 726.99.
The Cboe UK 100 was flat at 760.79, the Cboe UK 250 was up 0.1% at 16,044.46, and the Cboe Small Companies was largely unmoved at 13,484.69.
In European equities on Monday, the CAC 40 in Paris added 0.7% and the DAX 40 in Frankfurt rose 0.5%.
The US Congress passed an 11th-hour funding bill Saturday to keep federal agencies running for another 45 days and avert a costly government shutdown – although the deal left out aid to war-torn Ukraine requested by President Joe Biden. Three hours before the midnight deadline, the Senate voted to keep the lights on through mid-November with a resolution that had advanced earlier from the House of Representatives in a day of high-stakes brinkmanship on Capitol Hill.
Sterling was quoted at $1.2207 early Monday, flat from where it stood late Friday. The euro traded at $1.0581, slightly lower than $1.0585. Against the yen, the dollar was quoted at JP¥149.67, up versus JP¥149.30.
Business activity in China saw a marginal increase in September, according to the latest survey data from Caixin. The composite purchasing managers’ index, which measures the manufacturing and services sectors, eased to 50.9 points in September from 51.7 the month before. The services PMI fell to 50.2 from 51.8, while manufacturing fell to 50.6 from 51.0.
‘Total new order growth also moderated in September, with both manufacturers and service providers recording only marginal increases in sales. On the employment front, renewed job shedding at goods producers was largely offset by a slight increase in service sector headcounts,’ S&P Global said.
Financial markets in Shanghai are closed for Golden Week. They do not re-open until next Monday. Markets in Hong Kong are also closed Monday, but re-open on Tuesday.
In commodities, the Brent price was largely muted in early exchanges, changing hands at $92.32 a barrel, down from $92.64 at the time of the London equities close Friday.
Gold continued to struggle. The precious metal was quoted at $1,842.60 an ounce early Monday, lower than $1,856.33 on Friday.
Swissquote analyst Ipek Ozkardeskaya commented: ‘In the commodity space, gold feels like it’s tied to a stone and thrown into the sea. The price of an ounce is now below $1,950. Oversold market conditions hint that we should soon see a pause and correction, but the US yields look appetizing and a potential fall in the yields would make the stocks appetizing leaving little room for gold to make a comeback.’
In London, BAE Systems added 2.3% after Berenberg lifted the stock to ’buy’ from ’hold’. In addition, the defence firm is among the names involved with contracts worth £4 billion to finance a new phase of the SSN-Aukus next-generation attack submarine project, according to government officials.
The deals also involve Rolls-Royce Holdings and Babcock International. Rolls-Royce slipped 0.1% but Babcock added 0.8%.
United Utilities added 2.7%. It is planning just shy of £14 billion worth of total expenditure across 2025-30, the water utility said as it set out its latest business plan.
Focused on the North West of England, the company said the plan will support 30,000 jobs in the area, 7,000 of them being new ones.
The plan will drive ‘significant’ regulatory capital value growth of 8.7% per year during the period. In water utility, RCV is essentially a firm’s market value plus its accumulated capital investment.
Chief Executive Officer Louise Beardmore said: ‘We’ve been listening to customers and communities right across our region to understand what really matters. What’s clear is that we need to improve services for customers and the environment. That’s why we are proposing the largest investment in water and wastewater infrastructure in over 100 years, with £13.7 billion planned between 2025 and 2030 to build a stronger, greener and healthier North West for everyone.’
United Utilities said it has the ‘options and flexibility’ in funding the expenditure plans.
Pennon added 4.0% as similar plans were also well-received. Its South West Water delivered to the UK watchdog its latest five-year business plan. South West Water, which covers areas such as Devon and Cornwall, is plotting £2.8 billion of capital investments for the period between 2025 and 2030.
Pennon CEO Susan Davy said: ‘In our South West Water 2025-30 business plan, we’re set to tackle the challenges that matter most in our region head on, with progress already underway. We plan to invest £2.8 billion in water quality and resilience, with a pledge to fix storm overflows at beaches and eradicate pollutions, whilst delivering on our net zero 2030 promise to the planet. Our robust balance sheet underpins our ambition. This plan will create 2000 jobs in our communities, alongside our plan for 1000 apprenticeships and graduates. At the same time, we will do more with less, as we drive efficiency and innovation, with a nature first principle, keeping unwelcome bill increases as low as possible.’
Elsewhere in London, XP Power slumped 43% as it warned third-quarter trading was below expectations.
The Singapore-based manufacturer of power controllers said: ‘The economic uncertainty in China has also led to a reduction in demand in that market. These conditions are likely to continue for the remainder of the year, leaving the outlook below our prior expectation, with operating profit for the year ended 31 December 2023 now expected to be broadly similar to last year.’
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