16th Dec 2024 16:51
(Alliance News) - The FTSE 100 started the week on the back foot hindered by weak economic data and caution ahead of interest rate calls either side of the Atlantic this week.
The FTSE 100 index closed down 38.28 points, 0.5%, at 8,262.05. The FTSE 250 ended 76.12 points lower, 0.4%, at 20,813.03, and the AIM All-Share gave back 3.52 points, 0.5%, at 729.84.
The Cboe UK 100 ended down 0.5% at 828.87, the Cboe UK 250 fell 0.3% at 18,326.16, and the Cboe Small Companies shed 0.5% at 16,061.01.
In the UK, manufacturing activity declined this month, while employment fell at the fastest rate since 2009 if the pandemic is excluded, according to purchasing managers' index survey results from S&P Global.
The flash UK composite output index remained unchanged at 50.5 points in December, as improved service sector growth was offset by faster factory sector decline.
The services business activity index improved to 51.4 points in December from 50.4 in November.
However, S&P Global said: "December data indicated a fall in total staffing numbers for the third month in a row. Moreover, the rate of job shedding across the private sector economy was the fastest for almost four years."
Barclays said the figures are consistent with "meagre growth."
Also, S&P Global data showed UK consumer confidence deteriorated in December.
The consumer sentiment index fell to 46.6 points in December from 46.9 in November.
In addition, figures from Rightmove showed the fall in new seller asking prices accelerated to 1.7% on-month in December, from a decline of 1.4% in November.
On Thursday, the Bank of England is widely expected to leave interest rates unchanged. The decision will follow consumer inflation data the day before.
"Sticky services inflation and the prospect of stronger growth next year means the Bank of England seems content with cutting rates more gradually than its European peers. We don’t expect a cut this week, but better underlying inflation data could unlock faster easing in the spring," remarked analysts at ING.
Also on Wednesday, the US Federal Reserve is forecast to lower rates by 25 basis points.
JPMorgan's Michael Feroli expects the Federal Open Market Committee will lower the target range for the fed funds rate by 25bp to 4.25-4.5%.
"We don’t look for major changes in the statement language or the forward guidance, even though we still think a pause is likely at the January meeting. We think that the economic forecasts will show better growth and firmer inflation this year, and that the median interest rate forecast dots will be revised to show three cuts next year instead of four, as in the September dots."
Stocks in New York were mostly higher on Monday at the London equities close. The DJIA was little changed, the S&P 500 index was 0.4% higher and and the Nasdaq Composite rose 0.8%.
"While not a very high-stakes [FOMC} meeting, a lack of surprises could trigger the time-tested Santa rally," commented Bank of America.
Figures on Monday showed US economic activity accelerated in December, with output rising at the steepest rate for 33 months.
The S&P Global Flash US Composite purchasing managers' index rose to 56.6 in December from 54.9 in November, marking the highest level of activity in nearly three years and building on the surge in the index seen last month following Donald Trump's victory in presidential elections. The reading was well above the 50 mark, which separates growth from decline.
In European equities on Monday, the CAC 40 in Paris ended down 0.8%, while the DAX 40 in Frankfurt ended down 0.4%.
In Paris, government bonds experienced renewed selling pressure in the day’s first trading after rating agency Moody’s downgraded the country owing to its "materially weaker" economic outlook.
The pound was quoted higher at USD1.2694 at the London equities close Monday, compared to USD1.2620 at the close on Friday. The euro stood slightly higher at USD1.0504 against USD1.0494.
Against the yen, the dollar was trading higher at JPY154.23 compared to JPY153.64 late Friday.
Back in London, and shares in Canal+ slumped 22% on their first day of trading in London.
The global media and entertainment company, spun-out of Vivendi, was quoted at 226.40 pence, down from its opening price of 290p. With 992.0m shares in issue, the price in London gives Canal+ a market capitalisation of GBP2.25 billion.
In another rare win for the London market, Greek industrial group Metlen Energy and Metals has applied for a primary listing in London.
The company, currently listed in Athens with a market capitalisation of EUR4.9 billion, said the move would reflect its geographical diversity and boost liquidity. It is targeting inclusion in the FTSE 100 index.
On the FTSE 100, Entain topped the fallers list, slumping 6.3%, after Australia's anti-money laundering and counter-terrorist financing regulator said it was investigating the Ladbrokes owner.
Australian Transaction Reports & Analysis Centre Chief Executive Brendan Thomas said the agency considers there were systemic failures in Entain's approach to its AML/CTF obligations.
"Austrac's proceedings allege that Entain did not develop and maintain a compliant anti-money laundering program and failed to identify and assess the risks it faced. We are alleging this left the company at serious risk of criminal exploitation."
Entain said it has co-operated fully throughout the investigation. It said the outcome of the proceedings is "uncertain", and may result in a penalty being levied which could be "potentially material".
Analysts at Davy Research commented: "This is a difficult situation for Entain, particularly given it follows the GBP615 million deferred prosecution agreement for bribery offences in Turkey. Its leverage ratio is also relatively high at 3.3x, so the uncertainty around any potential penalty is unhelpful."
Last year, Entain agreed a GBP585 million settlement with HM Revenue & Customs to resolve an investigation into alleged bribery at its former Turkish business. Additionally, the company made a charitable donation of GBP20 million and paid GBP10 million towards costs.
Elsewhere, DCC dropped 1.4% after RBC downgraded to 'sector perform' from 'outperform'. But Bunzl climbed 1.1% as the same broker upgraded the firm to 'outperform' from 'sector perform'.
On the FTSE 250, Johnson Matthey rose 3.3% after its biggest shareholder, Standard Investments called for "decisive action" to unlock the firm's "unrealized promise", and enable "significant" value creation.
Standard Investments demanded a strategic review and a board overhaul and also recommended the sale of Johnson Matthey's loss-making Hydrogen Technologies arm.
Johnson Matthey said it was "resolute" in improving share price performance and recognised the need to restore shareholder returns.
Computacenter fell 3.1% after the abrupt departure of its Chief Financial Officer Christian Jehle while Saga jumped 7.6% after sealing two deals with Belgium's Ageas.
Brent oil was quoted lower at USD73.82 a barrel at the London equities close Monday from USD73.94 late Friday.
Gold fell to USD2,650.30 an ounce on Monday against USD2,660.10 on Friday.
Tuesday's UK corporate calendar has trading statements from distribution and outsourcing company Bunzl, plus full-year results from ten-pin bowling operator Hollywood Bowl and technology products supplier Chemring.
Tuesday's global economic calendar has Canadian CPI data, a UK unemployment reading plus US industrial production figures.
By Jeremy Cutler, Alliance News reporter
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