15th Jul 2024 16:52
(Alliance News) - Stock prices in London closed lower on Monday, with luxury retail and miners struggling, while markets in New York traded higher ahead of words from Federal Reserve Chair Jerome Powell.
The FTSE 100 index ended down 69.95 points, 0.9%, at 8,182.96. The FTSE 250 closed down 13.37 points, 0.1%, at 21,189.52, and the AIM All-Share edged down 0.69 of a point, 0.1%, at 785.48.
The Cboe UK 100 ended down 0.9% at 816.46, the Cboe UK 250 fell 0.2% at 18,434.58, and the Cboe Small Companies also lost 0.2% at 17,335.75.
In European equities on Monday, the CAC 40 in Paris slumped 1.2%, while the DAX 40 in Frankfurt closed down 0.8%.
The pound was quoted at USD1.2984 late on Monday afternoon in London, down slightly compared to USD1.2989 at the equities close on Friday. Sterling hit an intraday high of USD1.2994, however, its best level in around a year.
The euro stood at USD1.0912, up slightly against USD1.0907. Against the yen, the dollar was trading at JPY157.85, lower compared to JPY157.90.
"The decline for US inflation has helped lift expectations of a September rate cut, with Fedwatch now signalling an incredible 96% chance that we see the [Federal Open Market Committee] ease by at least 25-basis points. Perhaps more notably, last week saw the possibility of two 2024 rate cuts move to become the base case scenario, with the chance of 50-basis points worth of easing by year end moving from 26% to 53%. However, this week sees the focus shift towards the outlook closer to home, with Wednesday's UK CPI release providing the precursor to an interest rate decision from the ECB on Thursday," Scope Markets analyst Joshua Mahony commented.
Fed Chair Powell speaks at the Economic Club of Washington, in Washington, DC from around 1730 BST.
A Bank of England rate-setter has said that interest rates should be cut in order to stop squeezing the living standards of British households.
Swati Dhingra, a member of the bank's nine-strong Monetary Policy Committee, said "now is the time" for a reduction in the bank rate.
UK interest rates – which are used to help set mortgage rates and other borrowing costs – are currently at a 16-year-high of 5.25% after they were increased in a bid to tackle soaring inflation.
The MPC, which votes to set the rate, has held interest rates at this level for the past seven meetings, but some economists have predicted they will cut the rate at the next vote on August 1.
In New York, the Dow Jones Industrial Average was up 0.8% at the time of the closing bell in Europe. The S&P 500 was 0.9% higher, while the Nasdaq Composite shot up 1.3%.
In London, Burberry plunged 16%.
It parted ways with its chief executive after just two years on the job, as the British luxury brand suspended dividend payments amid a drop in sales.
Burberry said Jonathan Akeroyd is leaving the company immediately "by mutual agreement with the board". He will be replaced as chief executive officer by Joshua Schulman, who was CEO of US fashion brand Michael Kors from 2021 to 2022. Shulman previously was CEO and brand president at handbag maker Coach.
Akeroyd's sudden departure came as Burberry issued a profit warning for the first half of its financial year and full-year and said it will suspend dividend payments for financial 2025.
Deutsche Bank analysts commented: "Burberry has made a sensible strategic choice in view to replace the CEO but maintaining Daniel Lee as the creative designer. The early stylistic changes are being pared back, more accessible price points are being introduced and the focus is being returned to the areas such as trenchcoats and scarves where Burberry has brand authority. Investors were becoming increasingly frustrated with the performance at Burberry and looking for a change in strategic direction. We expect that this will start as a gentle turn but will evolve into a larger shift over time."
Shares in LVMH fell 2.8% in Paris in a negative read across.
Miners Antofagasta and Anglo American ended down 3.6% and 1.3%, after disappointing data from China. China is a major buyer of minerals.
China's economy grew 4.7% year-on-year in the second quarter of 2024, official data showed Monday, less than analysts had expected. In the first quarter, GDP increased by 5.3%.
The figures were much lower than the 5.1% anticipated by FXStreet market consensus.
ING analysts commented: "This brought the year-to-date GDP growth down to 5.0% YoY for the first half of the year, which keeps China still on pace to achieve its 5% GDP growth target for now."
ING believes "more policy support will be needed in order to achieve this year's 5% growth target", however.
Back in London, Genedrive jumped 31%. The firm received breakthrough device designation from the US Food & Drug Administration for the Genedrive MT-RNR1 ID Kit. The kit is a rapid point-of-care test to screen infants in an urgent care setting for a genetic variant that can cause life-long hearing loss when carriers of the variant are given certain antibiotics.
CEO James Cheek said: "The US is an attractive market for this unique test given the potential to save hundreds of individuals from life-long deafness and reduce litigation costs relating to the unwanted side effects from antibiotic use on those carrying the gene variant, and given its size, birth rates, use of diagnostic testing and reimbursement structure.
"The FDA breakthrough device designation process will be invaluable in mitigating study design risks associated with bringing a novel test such as this to the US market where no predicate device exists with which to align study designs to."
Ocado lost 10%.
Bernstein cut Ocado's rating to 'underperform' from 'outperform'.
The grocer and warehouse technology firm reports half-year earnings on Tuesday. Elsewhere, there are trading statements from B&M European Value Retail and miner Rio Tinto.
Tuesday's economic calendar has US retail sales data at 1330 BST.
Brent oil was quoted at USD84.83 a barrel in London on Monday afternoon, down from USD85.66 late Friday. Gold was quoted at USD2,436.88 an ounce, higher against USD2,410.50.
By Eric Cunha, Alliance News news editor
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.