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LONDON MARKET MIDDAY: FTSE 100 nudges higher ahead of rate decisions

29th Jan 2024 12:02

(Alliance News) - Stock prices in London were mixed going into Monday afternoon, ahead of a busy week of interest rate decisions and economic data.

The DAX 40 was lower, however, and stocks in New York are called mixed, suggesting there is still some trepidation in equity markets.

Oil majors rose on Monday, as tensions in the Red Sea deepened, taking Crude prices higher.

The FTSE 100 index was up 20.42 points, 0.3%, at 7,655.51. The FTSE 250 was up 84.67 points, 0.4%, at 19,253.35, and the AIM All-Share was up 1.62 points, 0.2%, at 749.08.

The Cboe UK 100 was up 0.1% at 764.51, the Cboe UK 250 was down 0.5% at 16,714.71, and the Cboe Small Companies was down 0.2% at 14,918.60.

In European equities on Monday, the CAC 40 in Paris was up 0.1%, while the DAX 40 in Frankfurt was down 0.4%.

The price of oil jumped on Monday morning, amid rising tensions in the Red Sea. Brent oil was quoted at USD83.11 a barrel in London at midday on Monday, up from USD81.36 late Friday.

A drone attack on a base in Jordan killed three American troops and wounded more than 30 on Sunday, with President Joe Biden blaming Iran-backed militants and vowing to hold the perpetrators to account. It is the first time American military personnel have been killed by hostile fire in the Middle East since the war between Israel and Iran-backed Hamas began.

On the back of the higher prices, Shell and BP rose 1.5% and 1.9%, respectively. Both oil majors were trading towards the top of the FTSE 100 index.

It also resulted in fears around inflation, at the start of a week with key interest rate decisions.

"Crude hitting its highest level since November feels ominous given it adds inflationary pressure at a time when borrowers and the markets are hoping to see interest rates cut. Geopolitical factors seem to be propping up oil at a time when the wider dynamics of supply and demand look less than favourable for the energy market," said AJ Bell's investment director Russ Mould.

The economic calendar for this week has the US Federal Reserve announcing its latest interest rate decision on Wednesday at 1900 GMT, followed by the Bank of England on Thursday at 1200 GMT. Both central banks are expected to keep rates on hold.

On Tuesday, there are gross domestic product readings from the eurozone and Germany. On Thursday, there is inflation data from the eurozone. Across the pond, in the US, there are nonfarm payrolls out on Friday.

Elsewhere in the FTSE 100, China-exposed stocks were trading lower. Asia-focused insurer Prudential lost 2.0%.

A Hong Kong court on Monday ordered the liquidation of battered Chinese property developer Evergrande, dealing another blow to the firm that has become the symbol of a property crisis that has sent shivers through the economy.

High Court Judge Linda Chan's decision effectively kickstarts a long process which includes liquidating the developer's assets and replacing its management to assuage concerns of its creditors.

In the FTSE 250 index, Ferrexpo lost 3.1%.

Ferrexpo said a Ukrainian court of appeal confirmed a USD125 million claim against the company over loan agreements.

Ferrexpo said the claim was made against Ferrexpo Poltava Mining. FPM now will file an appeal to the Supreme Court in Ukraine, with Ferrexpo saying the local subsidiary has "compelling arguments to defend its position".

Ferrexpo is Baar, Switzerland-based iron ore pellet producer in Ukraine, supplying the pellets to steelmakers globally. It said its operations in Ukraine remain unaffected by the legal case.

Among London's small-caps, Digital 9 Infrastructure jumped 13%, after it said it plans to put forward a proposal for a managed wind-down of the company.

The London-based investor in internet infrastructure, such as data centres and subsea fibre, said that the decision was "carefully considered", and intends to immediately begin sale preparations for its wholly-owned assets ahead of launching competitive processes later this year.

"Throughout the strategic review process, the board's primary objective has always been to maximise shareholder value going forward. Having carefully considered a number of options, we have ultimately concluded that a managed wind-down of the company is likely the best route to achieve this objective and seek to address the discount to NAV that impacts our shareholders," said Interim Independent Chair Charlotte Valeur.

Superdry rose 4.6%.

The clothing retailer confirmed it is working with advisors to consider "the feasibility of various material cost saving options".

Sky News on Saturday had reported that Superdry is working with PricewaterhouseCoopers on a restructuring plan that could involve store closures and job cuts. The plan could involve a company voluntary arrangement, an insolvency mechanism that enables businesses to reduce their liabilities to creditors, Sky said without citing sources.

On London's AIM, Inspecs plummeted 28%.

The eyewear company expects to report revenue of GBP200.3 million for 2023, down from GBP201.3 million a year earlier. It said that this was below company expectations, due to "softer" trading in December.

The pound was quoted at USD1.2702 at midday on Monday in London, lower compared to USD1.2721 at the equities close on Friday. The euro stood at USD1.0821, lower against USD1.0866. Against the yen, the dollar was trading at JPY147.86, down compared to JPY147.92.

Stocks in New York were called mixed. The Dow Jones Industrial Average was called down 0.1%, while the S&P 500 index was called up 0.1%, and the Nasdaq Composite up 0.2%.

Gold was quoted at USD2,026.44 an ounce at midday Monday, lower against USD2,018.76 on Friday.

By Sophie Rose, Alliance News senior reporter

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