11th Sep 2023 17:03
(Alliance News) - The FTSE 100 ended in the green on Monday, lifted by a rally among mining stocks after data over the weekend provided some positive news for China's troubled economy.
Further gains for the blue-chip index were capped by growing market apprehension ahead of a busy week for economic data and the latest interest rate decision from the European Central Bank on Thursday.
The FTSE 100 index closed up 18.68 points, or 0.3% at 7,496.87 on Monday. The FTSE 250 ended up 59.25 points, or 0.3%, at 18,522.44. Meanwhile, the AIM All-Share closed down 1.09 points, or 0.2%, at 742.35.
The Cboe UK 100 ended up 0.3% at 746.84, the Cboe UK 250 closed up 0.5% at 16,167.28, and the Cboe Small Companies ended up 0.3% at 13,062.23.
In London, mining stocks were the top performers in the FTSE 100 at the close on Monday. Fresnillo, Antofagasta, Rio Tinto and Anglo American finished 4.7%, 3.2%, 1.7%, and 1.5% higher, respectively.
The stocks were boosted amid hopes that China's economic troubles may be fading after figures over the weekend showed consumer prices in China edged back into positive territory.
The consumer price index was 0.1% higher annually in August, compared to a 0.3% deflation in July. Month-on-month, consumer prices were 0.3% higher in August, accelerating from a 0.2% rise in July.
AJ Bell's Russ Mould explained that the print implies an "improvement" in the resource demand picture as China is one of the world's biggest buyers of commodities.
Melrose Industries was the worst blue-chip performer, meanwhile, closing 5.3% lower in the wake of a downgrade from RBC.
RBC downgraded Melrose to 'sector perform' from 'outperform', explaining that even with fresh upgrades to its full-year outlook, the company's valuation looks in line with peers.
"The fundamentals remain very supportive - the business is growing well, we expect further earnings upgrades and a share buyback is set to start in October. However, we think this is all 'known' now, even the [earnings per share] upgrade potential may not surprise the street given traditional management conservatism," RBC said.
In the FTSE 250, Vistry jumped 14% after it announced an "exciting" new restructuring plan.
The housebuilder said it is revising its strategy to focus solely on building affordable homes through its "high return" Partnerships division, to help address the UK's "chronic shortage of affordable mixed tenure housing".
Vistry said it plans to focus operations on its "high return, capital light, resilient partnerships model" by merging its Housebuilding and Partnerships businesses before the end of this year.
"Having another string to its bow is proving useful to developer Vistry. Unlike rival housebuilders it has a significant regeneration and affordable housing footprint which it can pivot to when times are tough," said AJ Bell's Russ Mould.
Mould also noted that affordable housing "is much less sensitive to interest rates and the economic backdrop" and should therefore give Vistry some "solid foundations" that its peers could "only dream of right now."
Elsewhere in London, Restaurant Group added 3.4% after the company confirmed it has agreed to sell its Frankie & Benny's and Chiquito chains to the owner of Bella Italia, Las Iguanas and Banana Tree.
The buyer, Big Table Group, will pay a nominal GBP1 for Restaurant Group's loss-making Leisure business and will receive a "contribution" from Restaurant Group of GBP7.5 million.
Restaurant Group will consist of three divisions after the sale: Wagamama, Pubs and Concessions. It said the disposal will "significantly accelerate" its goals of improving margin and deleveraging.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said shareholders are "clearly hopeful" that this "significant shift" in strategy with a leaner focus on Wagamama, concessions across travel hubs, and its pub restaurants business will reap more consistent rewards for Restaurant Group going forward, "without the drag of mid-market flab".
On AIM, shares in Barkby more than doubled to 7.90 pence.
The roadside property and life science-focused investor said its subsidiary, Cambridge Sleep Sciences, is in advanced negotiations with "several household names" for multi-year enterprise licensing deals for its SleepEngine technology.
Barkby also announced that it has appointed advisers to conduct a strategic review of its investment in CSS and confirmed that it aims to focus on its roadside real estate strategy.
"We expect CSS to become a significant business in its own right and the purpose of the strategic review is to evaluate the most appropriate corporate setting and structure for the company to allow it to develop its full potential as well as what is in the best interests of Barkby's shareholders," Executive Chair Charles Dickson said.
On Sunday, Sky News reported that Barkby had decided to sell CSS to focus on its roadside real estate assets portfolio, with a potential value of GBP50 million for the Barkby subsidiary.
In European equities on Monday, the CAC 40 in Paris ended up 0.5%, while the DAX 40 in Frankfurt ended up 0.4%.
The European Commission cut its 2023 forecast for economic growth in the eurozone by 0.3 points to 0.8% on Monday, mainly due to Germany's poor performance.
"Latest data confirm that economic activity in the EU was subdued in the first half of 2023 on the back of the formidable shocks that the EU has endured," the commission said.
The eurozone inflation forecast has also been revised down, forecast to remain well over target at 5.6% in 2023 compared to 5.8% in the previous outlook.
The cut comes ahead of a key interest rate decision from the ECB on Thursday. UBS expects the ECB to deliver a final 25 basis point hike on Thursday but, in light of weak economic data in recent weeks, the Swiss bank acknowledged that the central bank may pause, "leaving the door open for a hike in October."
Stocks in New York were higher at the London equities close, with the Dow Jones Industrial Average up 0.1%, the S&P 500 index up 0.4%, and the Nasdaq Composite up 0.7%.
The pound was quoted at USD1.2528 at the London equities close on Monday, up from USD1.2477 at the close on Friday. The euro stood at USD1.0747, higher against USD1.0715. Against the yen, the dollar was trading at JPY146.42, lower compared to JPY147.64 late Friday.
Brent oil was quoted at USD90.42 a barrel at the London equities close on Monda, down from USD90.70 late Friday. Gold was quoted at USD1,923.84 an ounce, higher against USD1,921.00.
In Tuesday's UK corporate calendar, there are half-year results from a slew of companies including Dowlais, Fevertree Drinks, Gym Group and Cornerstone FS.
The economic calendar has UK unemployment data at 0700 BST.
By Heather Rydings, Alliance News senior economics reporter
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