London city skyline
Stocks lower as geopolitics hurts sentiment / Image source: Adobe

European stocks went into Monday afternoon in negative territory, with geopolitical tensions putting the brakes on a post-central bank decision rally seen in equities last week.

The FTSE 100 index was down 32.76 points, 0.4%, at 7,898.16. The FTSE 250 was down 143.23 points, 0.7%, at 19,581.09, and the AIM All-Share was down 1.03 points, 0.1%, at 738.49.

The Cboe UK 100 was down 0.5% at 789.82, the Cboe UK 250 lost 0.8% at 16,987.65, and the Cboe Small Companies down 0.3% at 14,568.90.

In European equities on Monday, the CAC 40 in Paris was down 0.4%, while the DAX 40 in Frankfurt was down 0.1%.

Hurting the mood at the start of the week were rising geopolitical risks, AJ Bell analyst Russ Mould commented.

‘Heightened tensions between Ukraine and Russia have brought a halt to the rally in equity markets seen last week,’ the analyst said.

Mould added that Brent prices spiked. The North Sea benchmark rose above the $86 mark on Monday. It faded to $85.17 a barrel by midday, however, down from $85.52 late Friday.

Last week, the US Federal Reserve last week left rates unmoved, but a set of projections which accompanied its decision suggested three cuts are still in the offing this year.

The Bank of England also left its benchmark rate unmoved, but there is a growing conviction it will soon cut.

BoE Governor Andrew Bailey said that interest rates are in play this year, as signs that the risk of a wage-price spiral ebb. Bailey said he is increasingly confident that inflation is heading towards the bank’s target in an interview with the Financial Times.

He signalled that markets were right to expect more than one interest rate cut this year, and stressed how small the technical recession last year had been.

The pound was quoted at $1.2632 on Monday at midday, up from $1.2596 on Friday. The euro was quoted at $1.0825, up from $1.0808. Against the yen, the dollar was trading at JP¥151.33, lower compared to JP¥151.43.

Stocks in New York were called lower. The Dow Jones Industrial Average was called down 0.2%, the S&P 500 index down 0.3%, and the Nasdaq Composite down 0.6%.

In the FTSE 100, shares in AstraZeneca declined amid the risk-off trade, falling 1.0%.

The company, however, said its Ultomiris treatment has been approved by the US Food & Drug Administration as the first and only long-acting C5 complement inhibitor to treat some adult sufferers of central nervous system disorder neuromyelitis optica spectrum.

The Cambridge-based pharmaceutical company said this was based on positive results from the Champion-NMOSD phase 3 trial, in which Ultomiris met its primary endpoint. NMOSD is a rare autoimmune disease that affects the central nervous system, including the spine and optic nerves.

‘The diagnosed prevalence of adults with NMOSD in the US is estimated at approximately 6,000,’ AstraZeneca said.

Kingfisher shares reversed course and were 0.1% higher heading into the afternoon. It had fallen 4.5% in morning dealings, however.

The B&Q and Screwfix owner reported a decline in annual sales and profit, although hailed a ‘resilient’ performance in its UK and Ireland operation.

Pretax profit fell 22% to £475 million in the financial year that ended January 31 from £611 million a year earlier, while sales fell 0.6% to £12.98 billion from £13.06 billion. Kingfisher maintained its total dividend for the year at 12.40 pence per share.

Like-for-like sales so far in the first-quarter are down 2.3% on-year, it said.

Kingfisher expects adjusted pretax profit for the new year in the range of £490 million to £550 million, potentially a 14% decline from what was achieved in the year just gone. Adjusted pretax profit in financial 2024 fell 25% to £568 million from £758 million.

In the FTSE 250, Direct Line lost 13%, after Ageas late Friday withdrew its bid interest for the motor and home financial services group.

Belgian insurer Ageas had made two proposals to buy Direct Line, but its advances were rejected.

Mobico lost 4.3%, after it lowered earnings guidance as it announced a further delay to its 2023 results as it grapples with accounting issues at its German rail business.

The Birmingham-based public transport provider, formerly known as National Express, now expects annual results to be published in the second half of April, compared to a previous expectation of by the end of March, itself delayed from February 29.

Mobico expects adjusted earnings before interest and tax in the range of £160 million to £175 million, reduced from previous guidance of £175 million to £185 million.

Ferrexpo gained 4.2%.

The iron ore pellet producer said its Ferrexpo Poltava Mining operation has not suffered any disruption in the face of legal proceedings.

It said production volumes for February were the highest since the beginning of Russia’s invasion of Ukraine in 2022.

On AIM, ImmuPharma surged 32%, after it updated on Incanthera’s commercial skincare deal, announced in December 2023, with Marionnaud, part of the AS Watson Group.

The drug discovery and development company said the first order from Marionnaud has now doubled to 50,000 units due to the strong demand anticipated by Marionnaud’s management.

The first order, on track to be delivered during the second quarter of 2024, will generate around £2 million in revenue for Incanthera, ImmuPharma said.

ImmunPharma holds an 11% stake in Incanthera. Shares in Incanthera, traded on the Aquis Exchange, were 84% higher.

Gold was quoted at $2,170.32 an ounce early on Monday afternoon, up against $2,165.58 late Friday.

Still to come on Monday’s economic calendar, Bank of England Monetary Policy Committee member Catherine Mann speaks at 1415 GMT, while US new home sales data is out at 1400 GMT.

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Issue Date: 25 Mar 2024