City of London skyline
Stocks takes a breather / Image source: Adobe

Stocks in London kicked off at a more tepid level on Monday following a week of all-time highs, balanced by success at Diploma and a downturn at BAE Systems, as investors await Wednesday’s US inflation data.

The FTSE 100 index opened up 9.34 points, 0.1%, at 8,441.86. The FTSE 250 was up 14.63 points, 0.1%, at 20,660.01, and the AIM All-Share was up 4.37 points, 0.1%, at 4,590.66.

The Cboe UK 100 was flat at 843.82, the Cboe UK 250 was up marginally at 17941.39, and the Cboe Small Companies was up 0.2% at 16146.68.

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

The main focal point for investors this week will be Wednesday’s US inflation figures, which will likely inform market expectations of potential US interest rate cuts.

According to FXStreet-cited consensus, consumer prices are expected to have risen 3.4% annually in April, cooling slightly from 3.5% in March.

Markets will also hear from from Federal Reserve Chair Jerome Powell on Tuesday and Vice Chair Philip Jefferson on Monday.

The pound was quoted at $1.2525 early on Monday in London, compared to $1.2513 at the equities close on Friday. The euro stood at $1.0771, against $1.0769. Against the yen, the dollar was trading at JP¥155.87, down compared to JP¥155.87.

In the FTSE 100, Diploma soared 7.1% after upgrading its annual guidance as it reported a strong set of half-year results.

The specialised technical products and services provider said revenue grew 9.5% annually to £638.3 million in the six months to March 31, from £582.8 million a year before. Pretax profit edged lower to £77.8 million from £78.7 million.

For its full financial year, Diploma now expects constant currency revenue growth of 16% or so, with 6% organic growth and 10% to come from acquisitions. It also expects its operating margin to improve to 20.5%, having previously guided for it to be in line with financial 2023 at 19.7%.

‘We’ve delivered another strong first half with good volume-led organic growth in a more challenging market environment. Our momentum is encouraging going into the second half, underpinning our upgrade to full year guidance,’ said Chief Executive Johnny Thomson.

Leading the fallers was BAE Systems, down 2.1%, after Bank of America downgraded the stock to ’neutral’ from ’buy’.

Anglo American rose 0.1%.

Bloomberg reported shareholders are pushing the company to speed up the release of its turnaround plan as the 107-year-old miner seeks to present an alternative to BHP Group Ltd‘s takeover bid.

Anglo has been reviewing its business since mid-2023, looking at every mine in its portfolio to help reshape a company that’s fallen behind competitors in recent years, the report noted.

Anglo may unveil the strategy as soon as the coming week, Bloomberg suggested, when the world‘s top mining bosses attend Bank of America’s annual conference in Miami.

In the FTSE 250, Victrex fell 3.0% after reporting a weaker performance in its interim period to March 31.

The high-performance polymer supplier said revenue fell 14% year-on-year to £139.3 million from £162.2 million, as sales volumes dropped 11% to 1,737 tonnes. Pretax profit plunged 92% to £3.3 million from £39.1 million, as margins took a hit from high inventory levels and recent industry destocking amongst medical device customers, and lower asset utilisation.

On London’s AIM market, Mission Group rose 5.6% after confirming receipt of an unsolicited conditional takeover proposal from digital advertising and technology company and fellow AIM-listing Brave Bison Group.

Brave Bison fell 2.4%.

Mission said Brave Bison’s potential offer was for an all-share offer at an exchange ratio of 11.5 Brave Bison shares for each share in Mission.

Mission said its board unanimously rejected the possible offer last week, terming it ‘opportunistic’ and as significantly undervaluing the company.

In Asia on Monday, the Nikkei 225 index in Tokyo was down 0.1%. In China, the Shanghai Composite was down 0.2%, while the Hang Seng index in Hong Kong was up 0.7%. The S&P/ASX 200 in Sydney closed marginally higher.

In the US on Friday, Wall Street ended mostly higher, with the Dow Jones Industrial Average up 0.3%, the S&P 500 up 0.2% and the Nasdaq Composite slightly lower.

Brent oil was quoted at $82.85 a barrel early in London on Monday, down from $83.66 late Friday.

Gold was quoted at $2,350.03 an ounce against $2,362.94.

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Issue Date: 13 May 2024