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LONDON MARKET CLOSE: Stocks close mixed as elections take top billing

1st Jul 2024 17:02

(Alliance News) - Stocks in London faded into the close Monday to end mixed as investors weighed a potentially changing political landscape in Europe plus fluctuating data in the US.

The FTSE 100 index ended up slightly at 8,166.76. The FTSE 250 fell 63.95 points, 0.3%, at 20,222.08, while the AIM All-Share climbed 0.80 points, 0.1%, to 765.18.

The Cboe UK 100 rose marginally to 813.97, the Cboe UK 250 rose 0.2% to 17,654.04, and the Cboe Small Companies closed up 0.4% at 16,919.99.

In European equities on Monday, the CAC 40 in Paris jumped 1.5%, while the DAX 40 in Frankfurt added 0.5%.

The bounce in France came in the wake of results from the first round of legislative election.

On Sunday, Marine Le Pen's far-right party won the first round of voting, although its share of the vote was around 2 percentage points below that predicted by opinion polls.

Le Pen’s Rassemblement National came top with 33.2%, ahead of the leftwing New Popular Front on 28% and President Emmanuel Macron’s Ensemble alliance on 22.4%.

"The result is probably better than feared, but not as good as the status three weeks ago pre-elections," said Jefferies economist Mohit Kumar.

A second round of voting will take place on Sunday, with analysts suggesting that a hung parliament is likely.

In the UK, opinion polls continue to point to a sizeable majority for the opposition Labour Party.

Labour leader Keir Starmer said he would face a "difficult inheritance" and would need to do "tough things" if he becomes prime minister later this week.

He acknowledged that after "14 years of failure", he would not be able to "get a chequebook out on the Friday after the election" to boost funding for local services.

While Prime Minister Rishi Sunak evoked the late drama of England's win at Euro 2024 to suggest "it's not over until it's over".

Investors were also weighing up the latest figures on the manufacturing sector.

Manufacturing activity continued to contract in the eurozone, albeit at a slower pace than expected, data published by S&P Global showed.

The HCOB eurozone manufacturing PMI declined to 45.8 in June from May's 14-month high of 47.3. This however outperformed the flash estimate of 45.6 posted on June 21. Falling further from the 50-mark separating growth from contraction, it indicates that the slowdown in activity accelerated.

In the UK, the manufacturing sector continued to grow in June, but at a slower rate, data showed.

The seasonally adjusted S&P Global UK manufacturing purchasing managers' index registered 50.9 in June, down slightly from May's 22-month high of 51.2 and below the earlier flash estimate of 51.4.

The PMI has posted above the neutral 50.0 mark – signalling expansion – in each of the past two months.

Elsewhere, numbers showed UK house prices climbed. The Nationwide tracker showed a 0.2% increase in seasonally adjusted UK house prices in June, following a 0.4% climb a month earlier.

Annually, the house price index rose by 1.5%, picking up speed from 1.3% in May.

"Although house prices rose slightly in June, an earlier dip means they were flat on the quarter in Q2. With signs mortgage rates are causing demand to falter and that supply is improving, we think that house prices will flatline at best over the coming months," said Andrew Wishart at Capital Economics.

The news boosted housebuilders with Persimmon up 1.5%, Barratt Developments up 2.4% and Taylor Wimpey up 1.2%.

The pound was quoted at USD1.2639 late Monday afternoon, unchanged from USD1.2639 at the time of the London equities close Friday. The euro firmed at USD1.0723, up from USD1.0713. Against the yen, the dollar was trading at JPY161.58, up from JPY160.88.

In New York, the Dow Jones Industrial Average and S&P 500 were little changed, while the Nasdaq Composite was 0.3% higher.

US manufacturing sector data painted a mixed picture for the month of June, results from a pair of surveys showed Monday.

The latest S&P Global US manufacturing purchasing managers' index rose to 51.6 points in June, a three-month-high, from 51.3 in May. However, the June reading was just shy of the 51.7 flash estimate.

But, data from the Institute for Supply Management suggested the US manufacturing sector remained in decline.

The ISM manufacturing PMI fell to a tally of 48.5 in June, from 48.7 points in May. It is the third-successive contraction in the sector, according to the ISM measure. The PMI landed below the FXStreet cited consensus of 49.1 points.

"US manufacturing activity continued in contraction at the close of the second quarter. Demand was weak again, output declined, and inputs stayed accommodative," ISM analyst Timothy Fiore commented.

"While the ISM has not been a good leading indicator of GDP growth in recent years, the weak reading adds to evidence that momentum is softening," Olivia Cross at Capital Economics said.

In London's FTSE 100, Centrica rose 1.4% after Berenberg upgraded to 'buy' from 'hold'.

"Centrica's strong balance sheet, with nearly GBP3 billion of net cash, continues to afford it optionality, which leads us to a more constructive view of the investment case," analysts at Berenberg wrote.

But Anglo American fell 2.8% after it suspended production at the Grosvenor steelmaking coal mine in Australia.

Analysts at Citi said the procedures towards reopening of the mine will likely "takes months" and it is likely the 1.2 million tonnes of production planned in the second half of 2024 will be lost.

"More importantly, [Anglo American] is currently running the process for divestment of the steel making coal business and a major incident at an asset that accounts for close to a quarter of the production could impact the timing/value outcome of the process," it added.

Among small caps, Pharos Energy PLC jumped 15% after appointing Katherine Roe as its new chief executive officer.

Roe has over 20 years of senior corporate, industry and capital markets experience and most recently served as the CEO of Wentworth Resources.

On AIM, Westminster Group climbed 6.1% after agreeing a GBP1.5 million convertible loan note facility with Pantheon A Family Office Ltd.

Chief Executive Peter Fowler said the firm was "delighted", to secure this funding from the investor who has been "extremely supportive" of Westminster's business model.

Brent oil was quoted at USD86.18 a barrel late Monday afternoon, up from USD84.84 late Friday. Gold was quoted at USD2,327.85 an ounce, up slightly from USD2,326.14.

By Jeremy Cutler, Alliance News reporter

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