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LONDON MARKET CLOSE: Stocks downbeat before central bank rate storm

18th Mar 2024 17:09

(Alliance News) - Stocks in London closed in the red on Monday, as tech gains in New York failed to make an impact ahead of several interest rate decisions from central banks across the world this week.

The FTSE 100 index closed down 4.87 points, 0.1%, at 7,722.55. The FTSE 250 ended down 26.38 points, 0.2%, at 19,486.53, and the AIM All-Share closed down 1.68 points, 0.2%, at 736.63.

The Cboe UK 100 ended down 0.1% at 773.55, the Cboe UK 250 closed up slightly at 16,914.28, and the Cboe Small Companies ended up 0.2% at 14,775.62.

In European equities on Monday, the CAC 40 in Paris ended down 0.2%, while the DAX 40 in Frankfurt ended up marginally.

Stocks in New York were higher at the London equities close, with the DJIA up 0.4%, the S&P 500 index up 0.9%, and the Nasdaq Composite up 1.2%.

On Wall Street, shares in Alphabet climbed 5.4% following a report Apple is in talks to build Google's Gemini artificial intelligence offering into its iPhone.

Bloomberg said the two companies are in active negotiations to let Apple license Gemini, Google's set of generative AI models, to power some new features coming to the iPhone software this year.

Shares in Apple rose 1.6%.

It is a key week on the central banking calendar, with decisions from the Reserve Bank of Australia and Bank of Japan on Tuesday, US Federal Reserve on Wednesday and the Swiss National Bank and Bank of England on Thursday.

In London, James Moberly at Goldman Sachs expects the Bank of England to hold interest rates steady in a split decision given mixed incoming data.

He noted recent communication has indicated that internal Monetary Policy Committee members are comfortable with the market pricing rate cuts this year and believe that policy would remain restrictive even if they began to lower rates.

Moberly pointed out most committee members see no immediate rush to cut and will wait for further evidence that the economy is evolving in line with its projections.

"In this context, we look for another split decision with a 7-1-1 majority voting to keep Bank Rate unchanged," he said.

"We do not expect any meaningful changes to the MPC’s policy language, with the minutes likely to reiterate that the Committee is keeping "under review" how long Bank Rate needs to remain at its current level."

On Wednesday, the US Federal Reserve is also expected to leave interest rates unchanged.

The pound was quoted at USD1.2722 at the London equities close Monday, down slightly compared to USD1.2735 at the close on Friday. The euro stood at USD1.08707 at the European equities close Monday, down against USD1.0889 at the same time on Friday.

Against the yen, the dollar was trading at JPY149.12, unchanged compared to JPY149.12 late Friday.

The Bank of Japan is expected to make a monumental shift away from its negative interest rate policy at its March meeting, according to local media.

The central bank began March's two-day monetary policy meeting on Monday and will announce its decision on Tuesday.

Citing "sources close to the matter", the Japan Times on Friday said the BoJ's policymakers have the requisite confidence that a "virtuous cycle" of wage growth and price hikes is taking place.

This follows the outcome of recent pay negotiations between Japanese employers and unions, which have seen stronger-than-expected wage hikes.

In the FTSE 100, Phoenix Group fell 4.5% after a report suggested it would set aside GBP70 million to cover the cost of reducing customer charges.

The Times said Phoenix, which manages GBP269 billion in assets, is expected to report the one-off provision when it releases its annual results on Friday.

It will cover a cut in annual pension charges across old funds, and other customer support measures, to comply with the Financial Conduct Authority’s new consumer duty rules. These will start to apply to off-sale or closed-book financial products from July 31.

Haleon fell 2.3% after Pfizer announced plans to reduce its stake to 24% from 32%.

In the FTSE 250, Currys jumped 5.4% after raising profit guidance for the current financial year after stronger-than-expected sales.

The London-based consumer electronics retailer, which spurned a recent bid approach, expects full-year adjusted pretax profit to be at least GBP115 million, ahead of previous guidance of GBP105 million to GBP115 million.

Last Monday, Elliott Advisors UK said it did not intend to make a bid for Currys after having a 67p per share proposal rejected.

On Friday, JD.Com, another potential bidder for Currys, said it would not be making a bid.

Aston Martin jumped 5.0% after Bank of America upgraded to 'buy' from 'neutral,' while a GBP57 million contract award lifted Chemring by 4.8%.

On AIM, Faron Pharmaceuticals leapt 27% after a study showed more patients responding to treatment in a new readout of the Bexmab study focused on myelodysplastic syndrome, or MDS.

Chief Executive Markku Jalkanen says: "These data are really remarkable and confirm our belief that we may finally have a treatment for this underserved patient population."

Brent oil was quoted at USD86.27 a barrel at the London equities close Monday, up from USD85.33 late Friday.

Gold was quoted at USD2,158.93 an ounce at the London equities close Monday, lower against USD2,162.90 at the close on Friday.

In Tuesday's UK corporate calendar, half-year results are due from retailer DFS Furniture and Close Brothers Group.

The economic calendar for Tuesday sees interest rate decisions overnight in Japan and Australia.

By Jeremy Cutler, Alliance News reporter

Comments and questions to [email protected]

Copyright 2024 Alliance News Ltd. All Rights Reserved.

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