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LONDON MARKET CLOSE: FTSE 100 extends win streak with record in sight

16th Jan 2023 16:51

(Alliance News) - London's FTSE 100 edged closer to a record high on Monday, with housebuilders and retailers among the star performers at the start of the week.

The FTSE 100 index closed up 16.00 points, or 0.2%, at 7,860.07. London's blue-chip benchmark fell just short of a record closing of 7,877.45 points. Its best-ever intraday level is 7,903.50 points.

It has now risen for four days in-a-row.

The FTSE 250 ended up 129.49 points, or 0.7%, at 20,082.33, while the AIM All-Share closed down 3.01 points, or 0.4%, at 861.59.

The Cboe UK 100 closed up 0.2% at 786.59, the Cboe UK 250 rose 0.7% at 17,544.05, and the Cboe Small Companies closed up 0.4% at 14,078.47.

Financial markets in the US were closed on Monday for the Martin Luther King day holiday.

In European equities on Monday, both the CAC 40 in Paris and the DAX 40 in Frankfurt both rose 0.3%.

The pound was quoted at USD1.2203 at the time of the London equities close on Monday, down slightly compared to USD1.2209 on Friday. The euro stood at USD1.0822, largely flat against USD1.0820.

"The greenback ended last year as the top performer amongst major currencies, gaining 8% as a result of the Federal Reserve's aggressive shift towards monetary tightening. However, the tide appears to be turning, as a slowdown in US inflation creates scope for a more benign Fed. Such a scenario which may weigh on the dollar, especially as other central banks are running behind and still have some way to go before switching to a more dovish approach," ActivTrades analyst Ricardo Evangelista commented.

Elsewhere on the central banking front, eyes are on the Bank of Japan, which kicks off a two-day policy meeting on Tuesday.

The Bank of Japan bought over JPY2 trillion, or USD15.58 billion, worth of government bonds on Monday ahead of its meeting, Japanese financial newspaper Nikkei reported.

The BoJ, which announces an interest rate decision on Wednesday, bought JPY2.115 trillion worth of bonds at the start of the week, according to Nikkei.

There has been speculation that the BoJ will call time on its yield curve control tool, a way of controlling long-term interest rates.

The yield on the 10-year government bond, which Nikkei noted serves as a benchmark for long-term interest rates, spiked above the BoJ's 0.5% target.

The yield rose as high as 0.52% on Monday. It was the second-successive day that the yield has spiked to above the BoJ's target.

Against the yen, the dollar was trading at JPY128.55, up compared to JPY127.85.

"JPY net short positions dropped last week to their lowest levels since August 2022. Speculators are betting on another move in the BoJ's [yield curve control] policy at this week's policy meeting," analysts at Rabobank commented.

In London, housebuilders closed higher on much-needed favourable data.

Following successive monthly falls, UK house prices began 2023 with an improvement. According to Rightmove, the average price of a property coming to the market for sale rose 0.9% to GBP362,438 in January, from GBP359,137 in December.

Taylor Wimpey rose 2.3%, Barratt Developments added 1.8% and Persimmon climbed 1.6%.

The trio's shares had crashed last year. Taylor Wimpey dropped 42% over 2022, Barratt lost 47% and Persimmon plunged 57%.

Monday was another strong day for the retail sector. Asos extended gains, adding 5.2%. Since reporting a trading statement on Thursday, where it reported "encouraging" margin developments recently, the stock has jumped by roughly a third.

Marks & Spencer rose 2.9% on Monday. The retailer has announced plans to ramp up its store overhaul with aims to open 20 new shops across the UK in a move that will create more than 3,400 jobs.

The group said that over the next financial year, it will open eight full-line stores in shopping centres such as the Bullring in Birmingham and the Trafford Centre in Manchester, as well in as retail parks and high streets across key cities.

"The retail environment is not exactly buoyant right now so it feels significant that Marks & Spencer has revealed an investment worth hundreds of millions of pounds to open 20 new stores. The company had already announced plans to close a large number of shops last October so on a net basis its presence in retail parks and on the high street will be reduced. However, it demonstrates physical retail continues to have a role and that Marks & Spencer sees its multi-format stores, with a mix of clothing, homewares and food, as a competitive advantage," AJ Bell analyst Russ Mould commented.

"Coming off the back of the group's better-than-expected Christmas trading, it seems Marks & Spencer has rediscovered its mojo. Whether it can maintain the momentum as the headwinds provided by rising costs and increased pressures on household budgets continue to bear down on the business is the key test facing management."

M&S joint-venture partner Ocado surged 5.2% on Monday, among the best FTSE 100 performers. Ocado releases a trading statement on Tuesday.

Elsewhere in London, Amigo slumped 25%. The company said it has so far been unable to find a cornerstone investor for a fundraise to pay what it owes to customers that were mis-sold loans.

Amigo is therefore assessing whether there is sufficient interest for a syndicate of such investors to be formed in order to support a GBP45 million capital raise.

If the capital raise is not completed, it will revert to the fallback solution outlined in the scheme of arrangement, which is a wind-down of the business

Inland Homes dropped 16%. The housebuilder and brownfield developer in south and south east England said Donagh O'Sullivan has resigned as chief executive officer "by mutual agreement" after just five weeks in the role.

Inland Homes provided no reason for the sudden change.

Brent oil was quoted at USD84.20 a barrel late Monday, down from USD84.80 late Friday. Gold was quoted at USD1,917.90 an ounce, higher against USD1,911.40.

On the UK political front, Britain and the EU agreed to continue "scoping work" to solve the dispute over the post-Brexit Northern Ireland Protocol, as gaps in their positions remained despite talks.

UK Foreign Secretary James Cleverly and European Commission Vice-President Maros Sefcovic said they would continue to search for "potential solutions" in a "constructive and collaborative spirit".

There had been speculation ahead of their virtual meeting on Monday that the two sides were edging towards a breakthrough, but Downing Street said there are "still gaps".

Tuesday's economic calendar has a Chinese gross domestic product reading overnight, before UK unemployment data and German inflation at 0700 GMT. There is also an Irish inflation reading at 1100 GMT.

Tuesday's local corporate calendar has trading statements from credit checking company Experian, e-commerce company THG and money transfer firm Wise.

By Eric Cunha, Alliance News news editor

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