Major UK shares defied predictions of a positive start to the trading week on Monday with investors evidently nervous about a big week of data from the US.

Worries over an imminent US interest rate rise, which could be triggered by a red-hot inflation reading later this week, put a dampener on sentiment. Friday’s US jobs numbers didn’t help confidence, with the prospect of wage pressures adding to the jitters.

The US consumer price inflation data, on Wednesday, is expected to show headline CPI breaking above 7% year-on-year, approaching a four-decade high, while producer price inflation data the following day is also expected to show a surge higher.

The UK benchmark FTSE 100 fell 0.35% in early trade at 7,458.89, while mid-caps were also under pressure, the FTSE 250 off by a similar measure at 23,282.15.

The inflation and interest rate concerns were reflected in a weak start for stock markets across Europe where the Euro Stoxx 50 index joined Germany’s Dax and the French CAC indexes in posting 0.5% to 0.7% declines.

INVESTORS EYE BANK REPORTS

In corporate news, the banking sector is likely to be in focus this week, with fourth quarter results from several large US banks, including JPMorgan Chase, Citigroup and Wells Fargo Starting the earnings season on Friday.

Oil prices stabilised Monday after the sharp gains of the previous week, as operator Chevron said Sunday that Kazakhstan’s largest oil venture, Tengizchevroil, is gradually returning to normal production levels after recent protests limited output.

Brent crude futures rose 0.2% to $81.95 having posted gains of around 5% last week. Gold futures fell 0.3% to $1,791.85 an ounce.

The housebuilders were the morning’s biggest casualties amid fears they will all have to bear significant additional costs from the Grenfell Tower cladding scandal.

The housing secretary will unveil plans this week for a £4 billion grant scheme to pay for repairs demanded by banks and insurers in the wake of the Grenfell fire.

Persimmon (PSN), Berkeley (BKG), Barratt Developments (BDEV) and Taylor Wimpey (TW.) were all down between 3% and 4% in early trade on Monday.

Supermarkets Sainsbury’s (SBRY) and Tesco (TSCO), online fashion retailers Boohoo (BOO:AIM) and ASOS (ASC:AIM) and consumer favourites like Marks & Spencer (MKS), JD Sports (JD.) and Games Workshop (GAW) are all due to update on Christmas trading this week.

MOVING ON THE MARKET

Derivatives trading platform Plus500 (PLUS) rose nearly 3% to £14.75 after it said it expects annual profit to beat market expectations even after slower fourth-quarter growth.

Drug developer Hikma Pharmaceuticals (HIK) plans to launch a new outsourced sterile compounding business focused on providing high quality, ready-to-administer injectable medications that are customised to the specific needs of patients in the US.

Investors shrugged off the news leaving the shares 0.6% down at £21.025.

Private hospitals operator Spire Healthcare (SPI) will again provide support to the NHS this winter as Omicron infections run wild across the UK. The terms are still to be settled but it is anticipated that the deal will operate on similar terms to the contract in place during January to March 2021 which was announced on 21 December 2020.

Avacta (AVCT:AIM) plunged 24% to 88.22p after being forced to pause the sale of its AffiDX antigen test as it does not perform as well against Omicron as previous variants.

In a statement to investors, the company said laboratory analysis indicates that the sensitivity of the test is reduced at lower viral loads when compared with the sensitivity of the test with previous Covid variants.

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Issue Date: 10 Jan 2022