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London open: Stocks steady as investors eye rate decisions
London stocks were steady in early trade on Monday as investors eyed rate decisions this week from the Bank of Japan, the Federal Reserve and the Bank of England.
At 0825 GMT, the FTSE 100 was flat at 7,730.62.
Richard Hunter, head of markets at Interactive Investor, said: “The Fed’s two-day policy meeting will begin tomorrow, culminating in its latest interest rate decision on Wednesday. With a virtually zero chance of a rate cut priced in, investors are now moving towards being equally split between whether or not the first reduction might be on the cards for June. This follows economic data from last week which generally lessened the likelihood of an imminent cut, with inflation remaining stubborn in its final leg towards the 2% target, while the economy more broadly continues to show few signs of meaningful weakness.
“The central bank theme this week also extends to the UK, where the Bank of England is expected to hold rates at 5.25% barring a totally unexpected inflation print the day previous on Wednesday. Recent data showing a cooling of wage growth, itself an inflationary pressure, has been accompanied by other readings showing anaemic progress and a shallow technical recession which adds pressure on the Bank to make some moves to revive the economy. Even so, the first cut is not expected to arrive until August, with the generally difficult balancing act providing some support for sterling but also being reflected in a weak showing from the FTSE 250, which remains down by 1% so far this year.”
Investors were mulling data showing that house prices jumped in March as confidence in the UK housing market continued to recover.
According to the latest House Price Index from Rightmove, national average asking prices jumped 1.5% in March.
That was an improvement on February’s 0.9% increase, and above the historic average increase in March of 1.0%. It was also the biggest rise for 10 months.
Year-on-year, prices increased 0.8%. They rose 0.1% in February on the same basis.
The average asking price is now £368,118.
Agreed sales, meanwhile, were up 13% year-on-year. Buyer demand was up 8%, led by larger homes and London, which are less sensitive to mortgages rates, Rightmove noted.
Tim Bannister, Rightmove’s director of property science, said: “March is typically a strong month for asking price growth, as both buyer and seller activity levels rise and the spring selling season gets underway.
“However, the stronger-than-usual price growth this March indicates that new sellers are feeling much more confident – with some perhaps being over-optimistic – that there is enough buyer activity and affordability in their local market to achieve a higher price.”
However, Bannister also sounded a note of caution. Asking prices, he said, still remained £4,776 below their May 2023 peak, while elevated interest rates were continuing to stretch affordability for many buyers.
Elsewhere, a survey by Make UK and accountancy firm BDO showed that confidence levels among UK manufacturers remain “robust” despite a subdued economic outlook.
In equity markets, electricals retailer Currys gained as it lifted guidance and reported stronger-than-expected sales since the busy Christmas period.
The company, which also confirmed that it no longer faced takeover threats from Elliott Advisors and China’s JD.com, said pre-tax profit was now expected to be at least £115m, compared with previous guidance of £105-115m.
Currys shares fell sharply on Friday after it said that JD.com was not planning to make an offer for the group.
Reckitt Benckiser rallied, having tanked late on Friday amid concerns about baby formula compensation.
The shares took a tumble after Reuters reported that an Illinois jury had ordered Reckitt unit Mead Johnson to pay $60m to the mother of a premature baby who died of an intestinal disease after being fed the company’s Enfamil baby formula.
British Land rose after saying it had sold half its stake in London office 1 Triton Square – the former HQ of Facebook owner Meta – to Royal London Asset Management. A new 50:50 joint venture will be formed “to accelerate the delivery of 1 Triton Square into a best in class science and innovation building at Regent’s Place,” British Land said.
On the downside, Haleon lost ground as the consumer healthcare company said that Pfizer plans to sell around 630m shares in the company in a public offering. The sale will reduce Pfizer’s stake from 32% to approximately 24%.
Bytes Technology tumbled despite hailing a “record year” for the group, as it updated the market on the circumstances surrounding the resignation of its former chief executive Neil Murphy.
Marshalls slid as it downgraded its profit and revenue outlook for 2024 and posted a slump in full-year profits and revenue as the landscape products manufacturer was hit by “challenging end markets”.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | +3.99% | +18.30 | 477.30 |
| 2 |  |
British Land Company Plc | +2.53% | +9.30 | 377.50 |
| 3 |  |
Persimmon Plc | +1.48% | +19.00 | 1,306.50 |
| 4 |  |
Rentokil Initial Plc | +1.46% | +6.90 | 480.30 |
| 5 |  |
Tui Ag | +1.41% | +8.00 | 575.00 |
| 6 |  |
British American Tobacco Plc | +1.35% | +31.50 | 2,372.00 |
| 7 |  |
Itv Plc | +1.32% | +0.94 | 72.22 |
| 8 |  |
Imperial Brands Plc | +1.30% | +22.00 | 1,717.50 |
| 9 |  |
International Consolidated Airlines Group S.a. | +1.30% | +2.05 | 160.20 |
| 10 |  |
Carnival Plc | +1.14% | +13.00 | 1,152.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Phoenix Group Holdings Plc | -4.44% | -22.40 | 482.00 |
| 2 |  |
United Utilities Group Plc | -3.16% | -33.50 | 1,025.00 |
| 3 |  |
Severn Trent Plc | -2.37% | -61.00 | 2,514.00 |
| 4 |  |
Bt Group Plc | -1.98% | -2.15 | 106.40 |
| 5 |  |
Vodafone Group Plc | -1.93% | -1.35 | 68.50 |
| 6 |  |
Flutter Entertainment Plc | -1.87% | -320.00 | 16,795.00 |
| 7 |  |
Antofagasta Plc | -1.57% | -30.50 | 1,917.50 |
| 8 |  |
Prudential Plc | -1.23% | -9.80 | 786.20 |
| 9 |  |
Sainsbury (j) Plc | -1.15% | -2.90 | 248.40 |
| 10 |  |
Smith & Nephew Plc | -1.13% | -12.00 | 1,051.00 |
US close: PPI data dampens stocks as investors eye Fed meeting
US stocks finished with moderate losses on Thursday after another round of inflation statistics surprised to the upside, clouding the outlook for interest rates in the near term.
The Dow finished 0.4% lower while the S&P 500 and Nasdaq both fell 0.3%, while 10-year US Treasury yields surged from 4.191% to 4.297%.
February’s US producer price index advanced 0.6% last month, double the increase economists had been expecting, while the year-on-year change picked up to 1.6% from 1.0% previously.
The data came ahead of the Federal Reserve’s next monetary policy meeting on 19 and 20 March and followed a hotter-than-expected reading of US consumer price inflation earlier in the week.
“Today’s stronger PPI readings in the US couple with the CPI figures earlier in the week to suggest the Fed’s tone next week might not be quite what investors were hoping for,” said Chris Beauchamp, market analyst at IG.
Matthew Martin, US economist at Oxford Economics, said the two releases “reduce our subjective odds that the Fed will begin its easing cycle at the May Federal Open Market Committee meeting, as is the case in our baseline.”
However, he added: “With broader evidence of decelerating wage growth and further disinflation in the pipeline from market rents, we still believe the Fed will begin cutting rates around mid-year.”
In other macro news, jobless claims dipped unexpectedly last week. According to the Department of Labor, in seasonally adjusted terms the number of initial unemployment claims slipped by 1,000 over the week ending on 9 March to 209,000. Economists had anticipated a rise to 218,000.
Meanwhile, the Department of Commerce reported that retail sales volumes grew 0.6% in January to reach $700.7bn in seasonally adjusted terms. Economists had pencilled-in an increase of 0.8%.
Market movers
Shares in American steel producer US Steel was under pressure on Thursday after president Joe Biden said he’s opposed to its $14.9bn takeover by Japan’s Nippon Steel. In prepared remarks, Biden said that is “vital” for an American steel company to be domestically owned and operated.
Under Armour tanked 11% after investors gave a negative reaction to the news that founder Kevin Plank was returning o become chief executive, having stepped aside as CEO to be the company’s chair since 2019. This will be the third CEO change in just five years.
Dick’s Sporting Goods jumped 15% after bumper holiday season trading beat expectations. The retailer said fourth-quarter net sales jumped 7.8% to $3.88bn – its largest-ever sales quarter – while net income rose 26% to $296m and earnings per diluted share increased 31% to $3.85.
Monday newspaper round-up: Mike Lynch, London population, heat pumps
A record 6.7 million people in Britain are in financial difficulty, a campaign group has claimed, as the cost of living crisis pushes more households into debt. A survey for Debt Justice found that 13% of adults had missed three or more credit or bill payments in the last six months, a figure that rose to 29% among 18- to 24-year-olds and a quarter of 25- to 34-year-olds. – Guardian
The criminal fraud trial of the British technology tycoon once dubbed “Britain’s Bill Gates” is due to begin in San Francisco today. Mike Lynch, co-founder of the UK software company Autonomy, stands accused of artificially inflating the software firm’s sales; misleading auditors, analysts and regulators; and intimidating people who raised concerns before its blockbuster takeover by Hewlett-Packard in 2011. – Guardian
London’s population has surged to a new record high after a sharp rise in migration and a reversal of the Covid-era “race for space”. New research from think tank Centre for Cities found that the capital had “almost certainly” surpassed its pre-pandemic peak of 10.1m people in a report that raised concerns about the impact on London’s creaking infrastructure and services. – Telegraph
Jeremy Hunt’s stealth tax raid on landlords is set to leave property owners paying hundreds of pounds more when they sell up, according to analysis from estate agency Hamptons. The Chancellor announced a cut to the higher rate of capital gains tax (CGT) in the Budget, from 28pc to 24pc, but for most landlords the benefit will be outweighed by a reduction in tax-free allowances, a decision made in the Autumn Statement of 2022. – Telegraph
Every household must be engaged by the government in the shift to clean heating as uptake of heat pumps to replace boilers is running at less than half of expected levels, the public spending watchdog has warned. A report by the National Audit Office (NAO) described assumptions on consumer demand for heat pumps, which use electricity to draw heat from the ground, air or water for heating buildings, as “optimistic”. – Sky News
