City of London skyline
FTSE 100 lower as pound climbs to 2-month high / Image source: Adobe

Stock prices in London opened mixed on Monday morning, making few moves in anticipation of UK fiscal announcements and US central bank minutes.

The FTSE 100 index opened down 25.58 points, 0.3%, at 7,478.67. The FTSE 250 was up 5.81 points at 18,573.68, and the AIM All-Share was up 0.39 of a point, 0.1%, at 719.44

The Cboe UK 100 was down 0.3% at 746.20, the Cboe UK 250 was slightly lower at 16,070.17, and the Cboe Small Companies was marginally higher at 13,466.01.

In European equities on Monday, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was down 0.2%.

In the FTSE 100, Ashtead Group plunged 12% in early trade.

The industrial equipment rental company cut its annual guidance, despite expecting ‘record’ results. It noted revenue late in its second quarter was hit by lower emergency response activity, due to a quieter hurricane season and fewer naturally occurring events. It also noted the hit from the actors’ and writers’ strikes on its Film & TV arm, which persisted for longer than expected. Both factors have continued into the third quarter, it added.

Consequently, it expects group and US rental growth between 11% and 13% in its full year, compared to prior guidance of 13% to 16%, which will drag Ebitda down to 2% to 3% below market expectations. Additionally, it expects a further bottom-line hit from a depreciation charge of around $2.12 billion and a net interest cost of around $540 million.

At the other end of the FTSE 100 was Diploma, up 5.5%.

Following its recent promotion to London’s large-cap index, the supplier of technical products and services reported a year of double-digit growth.

Revenue in the year ended September rose 19% year-on-year to £1.20 billion from £1.01 billion, or 8% on an organic basis - ahead of its own forecasts of 7%. Meanwhile, pretax profit rose 20% to £155.6 million from £129.5 million. Adjusted operating profit rose 24% to £237.0 million, which was ahead of company-compiled analyst consensus expectations of £230.9 million.

Looking ahead, it expects growth in financial 2024 to be in line with its financial model ‘albeit with stronger margins’.

AIM saw M&A activity continue.

Used-technology reseller musicMagpie jumped 30%, as it confirmed early-stage discussions with telecoms firm BT and The Body Shop-owner Aurelius about a possible takeover offer. However, it stressed the talks were at a ‘very early stage’ with no certainty of any offer being made, nor on the terms of a potential offer.

However, Velocys sank 53% to 0.32 pence.

The cash-strapped sustainable fuels technology company said it has received a non-binding all-cash takeover offer of 0.25p per share, from a consortium led by private equity firm Lightrock and growth investor Carbon Direct Capital Management. The offer forms part of ongoing discussions with potential strategic investors over long-term funding for the business.

The price represents a substantial discount, 63%, to the firm’s closing price on Friday of 0.68p. However, the consortium would provide the firm with some much-needed ‘significant additional funding’. Velocys said it is continuing discussions with the consortium with ‘a view to progressing and recommending the proposal’.

On the economic front, Prime Minister Rishi Sunak is expected to use a speech to paint a more positive picture of the economy ahead of the autumn statement.

Sunak will hail having last week hit his pledge of halving inflation as he gives an update on the state of the nation’s finances in London on Monday morning.

Chancellor Jeremy Hunt heightened expectations that businesses could find some relief in his financial statement as he said now is the time to boost growth. But he persistently warned against changes that could fuel inflation, dampening speculation that the pressure of income tax could be eased.

Hunt suggested during a round of interviews on Sunday that the personal tax burden will not come down ‘overnight’ as he seeks to avoid prices spiralling again.

Meanwhile, another key catalyst this week will be the latest minutes from the Federal Open Markets Committee on Tuesday, which will provide insight into the US Federal Reserve’s thinking behind its most recent meeting.

Earlier this month, the central bank left the federal funds rate range unmoved at 5.25% to 5.50%, a 22-year-high.

The dollar was weaker in early exchanges in Europe.

Sterling was quoted at $1.2493 early Monday, higher than $1.2421 at the London equities close on Friday. The euro traded at $1.0928, up from $1.0881. Against the yen, the dollar was quoted at JP¥148.72, down versus JP¥149.77.

Gold was quoted at $1,979.43 an ounce early Monday, edging down from $1,981.88 on Friday.

Oil prices were higher, following reports of longer production cuts. Brent crude fetched $81.26 a barrel early Monday, up from $79.74 late Friday.

Saudi Arabia is preparing to prolong oil production cuts into next year as Opec+ weighs further reductions in response to falling prices and rising anger over the Israel-Hamas war, the Financial Times reported on Friday. After prices hit a four-month low of $77 a barrel last week, four people familiar with the Saudi government’s thinking told the FT that Riyadh is highly likely to extend its 1 million barrel-a-day cut at least until the spring.

In Asia on Monday, the Nikkei 225 index in Tokyo closed down 0.6%. It had reached a new 33-year high earlier in the session, but succumbed to profit-taking by the afternoon.

In China, the Shanghai Composite closed up 0.5%, while the Hang Seng index in Hong Kong was up 1.6%. The S&P/ASX 200 in Sydney closed up 0.1%.

In the US on Friday, Wall Street ended flat to higher, with the Dow Jones Industrial Average little changed, the S&P 500 up 0.1% and the Nasdaq Composite up 0.1%.

Over in New York, there are hotly-anticipated third-quarter results from AI chipmaker Nvidia late on Tuesday.

Developments at OpenAI, the owner of ChatGPT, were in focus over the weekend. The firm’s board pushed out its co-founder & Chief Executive Sam Altman, after a review found he was ‘not consistently candid in his communications’ with the board. On Monday, in a post on X, Microsoft CEO Satya Nadella said he would hire Altman and other members of his team to ‘lead a new advanced AI research team’.

The week picks up pace with UK public sector finances data on Tuesday, before the all-important autumn statement from Chancellor Jeremy Hunt on Wednesday.

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Issue Date: 20 Nov 2023