Stock prices in London were lower at midday on Monday, as markets nervously eyed upcoming inflation data from the world’s two largest economies, out on Wednesday and Thursday.
The FTSE 100 index was down 55.72 points, 0.7%, at 7,508.65. The FTSE 250 was down 96.25 points, 0.5%, at 18,838.37, and the AIM All-Share was down 2.30 points, 0.3%, at 761.11.
The Cboe UK 100 was down 0.7% at 749.00, the Cboe UK 250 was down 0.5% at 16,533.22, and the Cboe Small Companies was up 0.1% at 13,744.41.
US inflation data for July will be released on Thursday at 1330 BST. According to FXStreet consensus, markets are expecting a 3.3% annual rise in headline US consumer price inflation in July. Core inflation, however, is meant to cool slightly to a 4.7% rise.
Another inflation slowdown will be the ideal outcome, as it would take some sting out of Federal Reserve interest rate expectations.
The US consumer price index rose 3.0% on an annual basis in June, cooling from a 4.0% rise in May. It was the smallest 12-month increase since March 2021. Core inflation - which excludes items such as food and energy - was 4.8% in June, down from 5.3% in May.
‘Officials at the Federal Reserve are suggesting they are not yet done in their battle with rising prices. Having been slow to respond to what they believed was transient inflation in 2021, it seems central banks like the Fed are in no mood to be complacent,’ said AJ Bell investment director Russ Mould.
Federal Governor Michelle Bowman said Saturday that more interest rate hikes ‘will likely be needed’ to bring inflation down further, shortly after policymakers lifted rates to the highest level since 2001.
In a move priced in by financial markets, the central bank’s Federal Open Market Committee at the end of July raised its funds rate by a quarter percentage point to a target range of 5.25% to 5.50%.
There will also be an inflation reading from China on Wednesday, but investors are hoping for a much different outcome. In China, a hotter inflation reading will be welcomed, as it would suggest the world’s second-largest economy is on better footing than feared.
Stocks in New York were called to open higher on Monday. The Dow Jones Industrial Average was called up 0.2%, the S&P 500 index up 0.4%, and the Nasdaq Composite up 0.5%.
The pound was quoted at $1.2722 at midday on Monday in London, lower compared to $1.2765 at the equities close on Friday. The euro stood at $1.0968, down against $1.1037. Against the yen, the dollar was trading at JP¥142.38, higher compared to JP¥141.82.
In the FTSE 100, Rolls-Royce rose 1.8%.
JPMorgan raised the London-based maker of power and propulsion systems to ’neutral’ from ’underweight’.
On Thursday last week, Rolls-Royce reported that it swung to a pretax profit of £1.42 billion from a loss of £1.75 billion a year prior. Its revenue rose by 34% to £7.52 billion from £5.60 billion.
Unite Group lost 2.6%. RBC cut the Bristol-based owner, manager and developer of purpose-built student accommodation to ’sector perform’ from ’outperform.’
In the FTSE 250 index, Clarkson fell 2.6%.
Clarkson is a London-based provider of shipbroking and investment banking services to the shipping and offshore markets.
Its pretax profit in the six months ended June 30 increased 24% to £52.2 million, from £42.0 million year-on-year. Revenue in the half year increased 20% to £321.1 million, from £266.7 million from the year before.
Looking ahead, Clarkson said its full-year expectations are unchanged, while it remains mindful of headwinds.
Amongst London’s small-caps, Card Factory jumped 14%.
In the six months ended July 31, the Wakefield, England-based greeting cards retailer said trading has continued to be strong. It cautioned that the macro backdrop continues to be uncertain, however, with much to be delivered over the rest of the year.
Based on this, Card Factory said it expects full year results to be materially ahead of its previous expectations.
AJ Bell’s Mould noted that Card Factory has been ‘consistently’ raising earnings expectations as of late so it ‘must be doing something right’ in what is a ‘very tricky’ retail environment.
LSL Property Services plummeted 12%.
In the six months to June 30, the Newcastle, England-based estate agency said total revenue fell by 35% to around £104 million from £160.9 million a year prior, while underlying operating profit dropped by 75% to around £3.5 million from £14.2 million the year before, although still remained in line with expectations.
Looking ahead, the company said mortgage lending in the second half of the year remains ‘highly uncertain’, and expects lower levels of purchasing and remortgaging activity than previously expected. LSL added full year profit will be lower than expected.
On AIM, Trinity Exploration & Production surged 39%.
The independent exploration and production company confirms discovery of oil at Jacobin-1 site in the Lower Cruse sandstones within the Palo Seco area of the Southern Basin, near Trinidad.
CEO Jeremy Bridglalsingh said: ‘This is a very significant and material achievement by the team. To find virgin oil in our mature acreage points to a step-change in our understanding of the hydrocarbon system, the remaining resource potential and how we can approach the exploitation of these resources.’
In European equities on Monday, the CAC 40 in Paris was down 0.2%, while the DAX 40 in Frankfurt was down 0.5%.
In Frankfurt, Siemens Energy shed 5.5%, after it slashed its outlook.
Siemens Energy is a Munich, Germany-based company with a product range including gas and steam turbines and electricity grid technology. It was spun off from Siemens AG in 2020.
Siemens Energy confirmed on Monday it saw around €2.2 billion in charges at the wind turbine unit during the quarter. €1.6 billion of this pertained to the quality issues of the onshore platforms.
The company now expects an annual net loss of around €4.5 billion. Previously it expected its financial 2022 profit of €712 million to be exceeded by up to a low-triple digit million euro amount.
Brent oil was quoted at $85.31 a barrel at midday in London on Monday, down from $85.77 late Friday. Gold was quoted at $1,934.11 an ounce, lower against $1,940.94.
Still to come on Monday’s economic calendar, there is a Bank of England virtual question & answer session with Chief Economist Huw Pill at 1700 BST.
Copyright 2023 Alliance News Ltd. All Rights Reserved.
