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LONDON MARKET MIDDAY: Tepid start to new week as investors take stock

6th Nov 2023 12:04

(Alliance News) - London's FTSE 100 drifted marginally lower heading into Monday afternoon in uncertain trade as investors reassess the near-term outlook for equity markets after a bullish week for stocks last week.

"European markets have kicked off the week on a hesitant tone, with traders left wondering whether last week's dramatic surge represents an opportunity to sell or a sign that the bulls are back at the helm," Scope Markets analyst Joshua Mahony commented.

The FTSE 100 index was down just 2.42 points at 7,415.31. London's large-cap benchmark had achieved a 1.7% gain last week.

The FTSE 250 was down 78.16 points, 0.4%, at 17,905.68 and the AIM All-Share was up 1.56 points, 0.2%, at 698.81.

The Cboe UK 100 was up 0.1% at 739.94, though the Cboe UK 250 was down 0.4% at 15,587.93, and the Cboe Small Companies fell 0.1% at 12,897.61.

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

Large-cap benchmarks rallied on Friday after a softer-than-expected US jobs report, which took some sting out of Federal Reserve interest rate expectations.

According to data from the Bureau of Labor Statistics on Friday, US non-farm payrolls rose by 150,000 payrolls in October, slightly below FXStreet-cited consensus of 180,000. The October read was also below the 297,000 registered in September.

Scope's Mahony added: "In a week that was dominated by central bank activity, Friday's jobs report appears to have provided a goldilocks scenario for those hoping for an end to the Federal Reserve's tightening process. Weak payrolls data, higher unemployment, and lower-than-expected wage growth figures saw the Fedwatch December hike expectations fall back below 10%, having stood around the 30% mark earlier in the week. To add fuel to the fire, Friday's surprise collapse in the US ISM services PMI survey (51.8 from 53.6) further highlighted the Fed's need to hold off in anticipation of a potential downturn for the US economy."

The dollar was largely under pressure on Monday. Sterling was quoted at USD1.2424 early Monday afternoon, higher than USD1.2369 at the London equities close on Friday. The pound traded at its best level since mid-September.

The euro traded at USD1.0752, edging up from USD1.0730. Against the yen, the dollar was quoted at JPY149.60, rising versus JPY149.37.

Adding some impetus to the FTSE 100, Melrose shares rose 3.4%. It said its GKN Aerospace Engines unit has landed a "major new agreement" with GE Aerospace.

Melrose said the total incremental sales from this new deal will be around USD5 billion over the 30-year duration of the GEnx engine programme.

"GKN Aerospace and GE Aerospace have significantly widened their long-term partnership with a new agreement that expands RRSP participation on the GEnx programme, the fastest-selling high-thrust engine. The new agreement also covers new technology insertion, aftermarket repair of high-volume engines structures, and production of fan cases for a range of GE engines," Melrose said.

Housebuilders and property stocks returned some gains, keeping a lid on the FTSE 100. Barratt fell 0.6% and Berkeley gave back 0.5%. Property investors Segro and Land Securities fell 1.7% and 1.5%.

Latest construction data painted a poor picture of the UK housebuilding sector.

The latest S&P Global/Chartered Institute of Procurement & Supply construction purchasing managers' index rose to 45.6 points in October, from 45.0 in September. The latest reading was still below the 50-point no-change mark. It was the second-lowest reading since May 2020.

"House building decreased for the eleventh successive month in October and at a much steeper pace than elsewhere in the construction sector," S&P Global said.

It was a strong session for London-listed airline stocks so far, however. easyJet rose 4.5%, Wizz Air climbed 2.8% and BA parent IAG was up 1.6%.

Over in Dublin, Ryanair surged 7.0%. It reported a half-year profit rise and outlined ordinary dividend policy plans, which will kick off with a maiden EUR400 million payout.

Revenue jumped 30% on-year in the six months to September 30 to EUR8.58 billion from EUR6.62 billion. Profit after tax, before one-offs, surged 59% to EUR2.18 billion from EUR1.37 billion. Pretax profit rose at the same pace to EUR2.46 billion from EUR1.42 billion.

Ryanair declared a maiden ordinary dividend of EUR400 million, some EUR0.35 per share, though an interim and final dividend of EUR200 million each. These will be payable in February and September of next year.

"Ryanair's shareholders invested EUR400 million in a share placing during the peak of the Covid crisis in September 2020, which was key to Ryanair subsequently issuing a timely, low cost, EUR850 million bond, which helped the group emerge from the Covid pandemic in a position of unrivalled strategic and financial strength," the firm said.

Back in London, Strip Tinning jumped 25%. The electrical connectors provider for the automotive sector said its Glazing arm won a "new production nomination".

"The nomination is for the supply of glazing connectors to a range of leading global automotive OEMs including Mercedes, Volkswagen, Toyota and Skoda, for a number of battery and combustion engine-based vehicle programmes. Supply will commence in Q2 2024 and will continue for two to five years, depending on the end of production dates of the individual programmes," the AIM listing explained.

The lifetime sales value of the pact is predicted to be EUR3 million.

Mosman Oil & Gas fell 12% after it said production fell in the third quarter on weakness from its Cinnabar and Stanley wells. Net production in the third quarter ended September 30 was 3,564 barrels of oil equivalent, down from 5,937 the previous quarter.

The firm said the lower output figure was due to reduced production from its Cinnabar-1 and Stanley-5 wells.

The firm said it is optimising production at Cinnabar, while a jet pump has been installed at Stanley, which had previously halted production.

Gold was quoted at USD1,987.27 an ounce early Monday afternoon, lower than USD1,990.11 on Friday. Brent oil was trading at USD86.17 a barrel, down from USD86.44.

"Crude oil prices have now given up most of the risk premium built up since the start of the Israel-Hamas war, with market concerns about crude demand growth resurfacing on poor US and China economic data," SP Angel analysts commented.

By Eric Cunha, Alliance News news editor

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