US flag and dollar bill
Investors will be hoping US data shows inflation is cooling across the pond / Image source: Adobe

Stock prices in London opened in the red on Monday, despite a favourable inflation reading from China, as investors nervously await Tuesday’s US data.

While a hotter-than-forecast Chinese consumer price index print reassured, stock market investors will be hoping the US data shows inflation is cooling, however.

The FTSE 100 index fell 3.85 points, 0.1%, to 7,655.89. The FTSE 250 was down only 9.60 points at 19,592.18, and the AIM All-Share fell 0.89 of a point, 0.1%, at 739.67.

The Cboe UK 100 was down marginally at 767.37, the Cboe UK 250 lost 0.2% at 16,947.58, and the Cboe Small Companies flat at 14,812.61.

In European equities on Monday, the CAC 40 in Paris was down 0.3%, while the DAX 40 in Frankfurt was 0.7% lower.

The pound was quoted at $1.2843 early Monday, down from $1.2860 at the London equities close on Friday. The euro stood at $1.0946, down slightly from $1.0949. Against the yen, the dollar bought trading at JP¥146.79, falling from JP¥147.21.

Tokyo’s Nikkei 225 slumped 2.2%, while in Sydney, the S&P/ASX 200 lost 1.8%. In China, the Shanghai Composite rose 0.7%, and the Hang Seng in Hong Kong shot up 1.4%.

A stronger yen, driving share price declines for a string of major Tokyo listings, weighed on the Nikkei.

Toyota fell 3.1% on Monday. The wider Nikkei 225 had topped the 40,000 point level for the first time this time last week, but ended at 38,820.49 on Monday.

Helping lift the mood in China, consumer prices rose in February for the first time since August, data showed Saturday, bucking a months-long stretch of deflation that compounded the country’s myriad economic woes.

Official statistics Saturday showed the consumer price index rose 0.7% on-year last month, according to Beijing’s National Bureau of Statistics – the first increase since August.

The figure was higher than a 0.3% rise analysts surveyed by Bloomberg had expected and a sharp increase on the 0.8 fall seen in January, their sharpest drop in more than 14 years.

Nonetheless, concerns for the Chinese economy remain, sending shares in miners lower. China is a major buyer of minerals. Rio Tinto lost 2.0% in early trade, Anglo American fell 1.7% and Glencore declined 1.6%.

China’s leaders on Monday wrap up a week-long key conclave at which they admitted more was needed to revive a sluggish economy battered by an ailing housing market, poor domestic demand and record high youth unemployment figures.

But details of how they plan to tackle the problems have been scant. They have also simultaneously moved to deepen powers to deal with threats to their rule and tightened a veil of secrecy around policymaking, scrapping a traditional annual press conference and vowing to include national security provisions into a raft of new laws.

Stocks in New York struggled on Friday following a US jobs report which offered mixed signals. The Dow Jones Industrial Average fell 0.2%, the S&P 500 lost 0.7% and the Nasdaq Composite slumped 1.2%.

According to the Bureau of Labor Statistics on Friday, nonfarm payroll employment rose by 275,000 in February, picking up speed from a 229,000 increase in January. January’s figure was downwardly revised by some degree from an initially reported 353,000. December’s figure, meanwhile, was lowered to 290,000 from 333,000.

In total, nonfarm payrolls for December and January were in total 167,000 lower than previously reported.

However, for February, the figure topped the FXStreet-cited consensus of 200,000.

On Tuesday, US inflation data for February is reported. The headline annual US inflation rate is expected to remain unchanged at 3.1%, according to FXStreet cited consensus. The core rate of inflation is forecast to ebb to 3.7% from 3.9%.

In London, Currys shares slumped 11%. Suitor Elliott Advisors said it will not make an offer for the electricals retailer, following ‘multiple attempts to engage’ with the FTSE 250 listing’s board.

The private equity firm said it ‘is not in an informed position to make an improved offer for Currys on the basis of the public information available to it’. Currys in February said it rejected an upgraded takeover offer from Elliott. It said it received a proposal worth around £750 million or 67 pence per share from Elliott, lifted from a previous tilt of 62p.

Before the second Elliott proposal was made, Chinese e-commerce firm threw its hat in the ring., noting press coverage, said it is mulling an acquisition of Currys. The Telegraph newspaper had reported held early talks with Currys.

Vanquis Banking tumbled 36% as it warned on its 2024 outturn, but backed guidance for 2023. The lender still expects adjusted pretax profit of £25 million for 2023, which would be down markedly from £126.6 million for 2022.

However, for 2024, it expects income to be ‘materially lower than market consensus expectations’ of £538.3 million.

Chief Executive Officer Ian McLaughlin said: ‘We have short term challenges to address but remain confident that the group’s new strategy will deliver good outcomes for our customers and attractive and sustainable returns for our shareholders over the medium and longer term.’

The company holds a ‘strategy seminar’ later this month.

Brent oil was quoted at $82.15 a barrel early Monday, up from $81.72 at the time London equities close on Friday. Gold rose to $2,180.30 an ounce, from $2,174.74. The precious metal had hit another record high of $2,195.13 on Friday.

Swissquote analyst Ipek Ozkardeskaya commented: ‘The question is, could the rally extend beyond $2,200? Yes, it could. The inflation-adjusted gold price is below the 2020 peak – which would stand at $2,323 if the price is adjusted to inflation of today. In 2011, gold traded at $2,581 and back in 1980, the price of an ounce went past $3,000 in inflation-adjusted terms. There is never an upper limit when people want to buy. But any retreat in Fed expectations could cool down the short term price surges.’

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Issue Date: 11 Mar 2024