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LONDON MARKET MIDDAY: Stocks go red as cautious sentiment prevails

14th Oct 2024 12:24

(Alliance News) - Stock prices in London were lower at midday on Monday, as investors wait for a number of inflationary prints later in the week.

The FTSE 100 index was down 7.70 points, or 0.1%, at 8,245.95. The FTSE 250 was down 55.44 points, or 0.3%, at 20,709.49, and the AIM All-Share was down 0.74 points, or 0.1%, at 733.11.

The Cboe UK 100 was down 0.2% at 825.83, the Cboe UK 250 was down 0.4% at 18,169.46, and the Cboe Small Companies was up slightly at 16,856.18.

The UK budget will focus on boosting living standards, reviving the NHS and "rebuilding Britain", Prime Minister Keir Starmer said as he signalled investment in schools, housing and transport.

Chancellor Rachel Reeves will deliver her first budget on October 30 following gloomy warnings about the tough decisions and tax rises needed to deal with the economic legacy left by the Tories.

But Starmer indicated that the focus of the financial statement will be on "making people better off".

The prime minister said his three priorities were "driving up living standards – making sure people feel better off, making sure our NHS is back on its feet and fit for the future, and that we're rebuilding the country, particularly what we're doing on housing".

Accordingly, investors will be looking to UK CPI, due out Wednesday.

"The British CPI due Wednesday is expected to confirm that the British inflation has also come below the Bank of England's 2% target, but core inflation is still near 3.5%. The BoE Governor Bailey had recently told investors that the bank is about to get 'more aggressive' on its rate policy – a comment that had triggered an aggressive selloff in pound sterling. This week's inflation numbers could give more substance to Bailey's comments and send Cable below the 1.30 mark, but services inflation will say the last word," said Swissquote Bank's Ipek Ozardeskaya.

In European equities on Monday, the CAC 40 in Paris was down 0.4%, while the DAX 40 in Frankfurt was up 0.2%.

Meanwhile, the European Central Bank is expected to lower interest rates again this week as anxiety about inflation in the eurozone fades and concerns over sluggish growth mount.

Inflation fell to 1.8% across the 20 members of the euro area in September, the first time it has been below the ECB's target of two percent since 2021. While the rate is expected to tick up again towards the end of the year, the sense that consumer prices are back under control has grown.

ECB policymakers will meet in Slovenia Thursday to decide whether to reduce rates further and up the tempo of cuts.

"The EURUSD pulled out the major 38.2% Fibonacci support last week and extends losses within the medium term bearish consolidation zone. The next bearish target stands near 1.0875, the 200-DMA, that will either give support to the pair on the back of a cautious cut (due to concerns around sticky core inflation), or clear that support on the back of a dovish cut. Lagarde will tell," added Ozardeskaya.

The pound was quoted at USD1.3048 at midday on Monday in London, down compared to USD1.3074. at the equities close on Friday. The euro stood at USD1.0920, lower against USD1.0924. Against the yen, the dollar was trading at JPY149.48, up compared to JPY149.13.

In London, Mulberry Group gained 18%, while Frasers lost 1.2%.

Mulberry Group said the firm would consider its "position" in light of a raised offer from Frasers Group, though majority owner Challice still has no interest in selling its shares.

This follows an improved offer from Frasers, which owns 37% of Mulberry Group, following Mulberry's rejection of a previous approach last week.

On Friday after the London market close, Frasers revealed a revised bid of 150 pence per share, higher than the 130p offer made before. The initial offer was rejected by Mulberry with the support of 56.4% shareholder Challice, and Challice on Sunday said it doesn't support the latest offer either.

The revised offer is the latest chapter in a tussle between retailer Frasers and the Bath-based fashion group, after struggling Mulberry launched an equity raise last week, of which Frasers said it wasn't given enough notice.

AstraZeneca rose 0.8%.

Enhertu, which is developed by AstraZeneca and Daiichi Sankyo, received approval by the National Medical Products Administration in China as first HER2-directed therapy for patients with HER-2 mutant metastatic non-small cell lung cancer. It is the fourth approval in China for Enhertu across three different tumour types.

easyJet gained 1.9%.

The group named Jan De Raeymaeker as chief financial officer, with effect from January 20, 2025, replacing Kenton Jarvis who as previously announced will succeed Johan Lundgren as chief executive on January 1.

Jan De Raeymaeker is currently CFO of Lineas, a private rail freight operator in Europe, where he oversees the Finance, Legal and Purchasing teams. Prior to Lineas, he was CFO of Brussels Airlines.

Elsewhere, Entain dropped 7.3%, following a report that the Labour government is considering an up to GBP3 billion tax hit on the sector.

Late Friday, the Guardian reported that Treasury officials are understood to be weighing up proposals, put forward by two influential think tanks and backed by one of the party's top five individual donors, to double some of the taxes levied on online casinos and bookmakers.

Measures could be included in this month’s budget, the report said.

Shares in William Hill-owner, Evoke, tumbled 12%, while Flutter Entertainment lost 5.6%.

Guardian sources said the Treasury had yet to make a decision but appeared "receptive" to tweaking the UK's regime of betting and gaming duties to raise extra funds of between GBP900 million and GBP3 billion, despite opposition from industry lobbyists.

"It's definitely on the map," said a source familiar with Treasury thinking. "There's no obvious pushback to it."

Stocks in New York were called mainly higher. The Dow Jones Industrial Average was called down 0.1%, the S&P 500 index up 0.2%, and the Nasdaq Composite up 0.3%.

Democratic White House candidate Kamala Harris will release a medical report confirming her fitness to be president, her campaign said, in a bid to put pressure on rival Donald Trump to publish his own health records.

An adviser to 59-year-old Harris's campaign said the report would conclude: "She possesses the physical and mental resiliency required to successfully execute the duties of the presidency."

Brent oil was quoted at USD77.06 a barrel at midday in London on Monday, down from USD78.67 late Friday.

China's consumer inflation rate slowed in September, official data showed, in a sign that demand remains fragile in the world's number two economy.

The consumer price index, a key measure of inflation, rose 0.4% year-on-year in September, cooling from the 0.6% climb recorded in August, the National Bureau of Statistics said.

The figure came in below the 0.6% forecast in a Bloomberg survey of economists. August's figure, the highest level since February, had raised hopes that consumer confidence may be picking up.

At the end of 2023, the country had sank into deflation for four months, with the sharpest contraction in consumer prices in 14 years in January.

Also on Monday, China said it would issue special bonds to help its sputtering economy, signalling a spending spree to bolster banks, shore up the property market and ease local government debt as part of one of its biggest support packages in years.

The plan is part of a series of actions undertaken by Beijing to draw a line under a years-long property sector crisis and chronically low consumption that has plagued the world's second biggest economy.

Gold was quoted at USD2,658.10 an ounce, slightly lower against USD2,658.30.

Still to come on Monday's economic calendar, there is US consumer inflation expectations.

By Holly Beveridge, Alliance News senior reporter

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Copyright 2024 Alliance News Ltd. All Rights Reserved.

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