We could not find any results for:
Make sure your spelling is correct or try broadening your search.

Trending Now


It looks like you aren't logged in.
Click the button below to log in and view your recent history.

ADVFN Morning London Market Report: Monday 18 September 2023

Share On Facebook
share on Linkedin

London open: Stocks flat as risk appetite declines ahead of central bank decisions


London stocks opened more or less flat on Monday morning, pausing at a four-month high as investors exercised caution ahead of some pivotal monetary policy decisions later in the week.

The FTSE 100 was trading 0.1% lower at 7,701 by 0832. The index closed at 7,711.38 on Friday following a 3.1% rise last week – it hasn’t closed above this level since 23 May.

Sentiment was being dampened somewhat by a mixed performance from Asian stock markets overnight, with concerns about China’s property crisis continuing. China Evergrande shares tanked more than 20% after the struggling developer saw a number of employees at its wealth management unit detained by police.

“While there have been signs of economic recovery in certain areas, the primary concern for the market continues to be the property sector,” said Stephen Innes, managing partner at SPI Asset Management. “Despite the recent signs of growth and inflation bottoming out amid measures taken by Beijing to boost investor confidence, foreign funds have been talking with their feet, exiting Chinese stocks en masse.”

The only major noteworthy economic release out Monday was the Rightmove House Price Index in the UK, which showed that house prices nudged up just 0.4% in September, following a 1.9% fall in August. The rise was below average for this time of year. Year-on-year prices fell 0.4%, building on August’s 0.1% decline and the biggest annual dip since March 2019.

All eyes on the central banks

It’s set to be a busy week, with policy decisions due from the Federal Reserve (Wednesday), the Bank of England (Thursday) and a host of other central banks elsewhere, including Japan, Brazil and Turkey.

The Fed is widely expected to hold rates steady following a recent barrage of economic data showing the US economy to have cooled slightly in August. Though analysts are holding out the possibility of one further rate hike to 5.50-5.75% later this year.

“The Fed decision on Wednesday is fully expected to result in a no-change decision, but crucially the accompanying comments should give something of an insight into its current thinking. With investors currently split on the outlook over the next year, the latest thoughts from the Fed could well prove to be market moving,” said Richard Hunter, head of markets at Interactive Investor.

The Bank of England is set to hike its benchmark interest rate by 25 basis points to 5.5%, according to economists, but it is hoped that this will be the peak for rates in the current cycle, before it begins to loosen monetary policy in 2024.

“The market has massively scaled back expectations for any future tightening and will therefore be very interested in the BoE’s statement,” said analyst Chris Turner from ING.

However, a lot will ride on the outcome of August’s UK consumer price index (CPI) due out on Wednesday. Prices are expected to have risen 0.7% after a 0.4% fall in July, according to consensus forecasts, though the annual rate of core inflation is estimated to have eased to 6.8% from 6.9%.

“Although inflation figures for August will not be published until the day before the rate announcement, the July figures exceeded expectations for both headline and core inflation with most notably service inflation reaccelerating,” said analysts at Danske Bank.

Phoenix and Mondi rise early

Paper and packaging group Mondi rose strongly after selling its last remaining facility in Russia to Sezar Invest for 80bn roubles (€775m). Western companies have exited Russia after sanctions were imposed in response to Moscow’s unprovoked invasion on neighbouring Ukraine.

Savings and retirement group Phoenix was also in favour after lifting its interim dividend by 5% after smashing forecasts with cash generation in the first half.

Providing a drag on the Footsie were utility stocks such as SSE, United Utilities and Severn Trent.


Top 10 FTSE 100 Risers

Sponsored by Plus500
# Name Change Pct Change Cur Price
1 Ocado Group Plc +6.57% +50.20 813.80
2 Mondi Plc +4.23% +56.50 1,393.50
3 Marks And Spencer Group Plc +1.46% +3.20 222.90
4 Admiral Group Plc +1.23% +30.00 2,466.00
5 Hikma Pharmaceuticals Plc +1.11% +23.00 2,086.00
6 Phoenix Group Holdings Plc +1.08% +5.80 543.80
7 Centrica Plc +0.91% +1.55 171.25
8 Direct Line Insurance Group Plc +0.71% +1.30 184.70
9 Glencore Plc +0.67% +3.05 459.45
10 Gsk Plc +0.65% +9.80 1,519.40


Top 10 FTSE 100 Fallers

Sponsored by Plus500
# Name Change Pct Change Cur Price
1 Crh Plc -3.23% -143.00 4,279.00
2 Persimmon Plc -2.87% -31.00 1,048.00
3 British Land Company Plc -2.76% -8.90 314.10
4 Prudential Plc -2.29% -21.60 920.00
5 Rightmove Plc -2.07% -11.60 550.00
6 Land Securities Group Plc -2.02% -12.00 580.80
7 Johnson Matthey Plc -1.95% -34.00 1,706.50
8 Auto Trader Group Plc -1.87% -11.60 607.80
9 Berkeley Group Holdings (the) Plc -1.78% -75.00 4,134.00
10 Easyjet Plc -1.73% -7.70 438.00


US close: Tech stocks drag Wall Street into the red

US indices finished with heavy losses on Friday as a poor performance by heavyweight tech stocks dragged markets lower, offsetting any positivity around a barrage of uplifting economic data.

The Dow Jones Industrial Average finished the session down 0.8%, the S&P 500 dropped 1.2% while the Nasdaq tanked 1.6%.

Friday’s fall entirely wiped out Thursday’s strong performance – the S&P 500 had risen 0.8%, its best daily performance in over two weeks – after a raft of economic data did little to change investors’ predictions that the Federal Reserve would hold rates steady when it meets next week.

Meanwhile, a blockbuster stock-market debut by Arm lifted sentiment across Wall Street, after the biggest IPO since 2021 went off with a bang. However, after a big jump the previous sessions, shares in the British chip designer reversed on Friday, along with a bunch of other heavyweight tech stocks, including Adobe.

Data starting to turn more positive

Friday saw yet another flurry of economic data, which was being closed watched ahead of next Wednesday’s Federal Open Market Committee meeting. Fed chair Jerome Powell has said that the central bank is watching each economic indicator closely to gauge its approach to monetary policy decisions. “Given how far we have come, at upcoming meetings we are in a position to proceed carefully as we assess the incoming data and the evolving outlook and risks,” he said at the Jackson Hole symposium last month.

Friday saw the release of the University of Michigan’s consumer confidence index, which dipped from 69.5 for August to 67.7 in early September – below the 69.1 level expected by economists but only a moderate decline.

Joanne Hsu, the survey’s director, noted the “modest” improvement in measures of short and long-run expectations for the economy.

Furthermore, inflation expectations one year ahead retreated to 3.1% – the lowest since March 2021 and just above the 2.3-3.0% range seen over the two years prior to the pandemic.

In other data releases, the so-called ‘Empire State’ manufacturing index jumped to 1.9 in September, from -19 the month before and well ahead of the -10 consensus forecast.

Meanwhile, US industrial production growth eased to 0.4% during the month of August, from a revised 0.7% gain in July but ahead of the 0.1% expected by analysts.

Tech stocks tank

Arm shares dropped 4% after closing at $63.59 the previous session, up 25% on the day and valuing the company at $65bn. The initial public offering, which was priced at $51, was said to be 10 times oversubscribed.

“When a stock goes up 25% in a day, there will naturally be FOMO among investors,” said Russ Mould, investment director at AJ Bell. Nevertheless, Mould added that: “If Nvidia is capable of delivering mega returns, plenty of people will expect the same from Arm. However, investing is never that simple and there are plenty of risks to owning shares in Arm, including the fact it makes a quarter of revenues from China, which exposes it to geopolitical tensions between that country and the West.”

Adobe also declined 4% despite beating earnings and revenue estimates in its third quarter. Some analysts had put Friday’s fall down to an underwhelming forecast for current-quarter sales, while others suggested profit-taking, with the stock having surged over 60% since the start of the year.

Other blue chip tech stocks like Microsoft, Apple, Nvidia and Palo Alto Networks were also out of favour.

FordGeneral Motors and Chrysler owner Stellantis were in focus after the United Auto Workers went ahead with strikes against the Big Three automakers as workers demand better pay and benefits, along with clarity over how the industry transition to electric vehicles will affect staff. Ford finished lower, while GM and Stellantis gained.


Monday newspaper round-up: Rents,.Manufacturers, BAE Systems

Residential rents across Britain are rising at their fastest on record as high interest rates shut would-be buyers out of the property market. Monthly rental costs are on average 12 per cent higher than they were this time last year, up £140 to breach £1,300 for the first time, according to the estate agent Hamptons. Separate research from the property website Rightmove suggests that more than a third of homes for sale have had their asking prices reduced as vendors try to drum up demand. – The Times

Britain’s manufacturers are “battening down the hatches” amid a sharp drop in activity, according to the latest quarterly data from Make UK, which represents manufacturers, and the business advisory firm BDO.Their manufacturing outlook survey shows that factory recruitment plans are weakening significantly for first time since the EU referendum in 2016, due to a slowdown in orders from domestic and overseas customers. Make UK has cut its forecast for 2023, predicting output will fall by 0.5% this year. – Guardian

The boss of defence contractor BAE Systems has opened the door to Saudi Arabia becoming involved in the UK’s flagship fighter jet programme. Charles Woodburn, BAE’s chief executive, said the kingdom can ‘offer a lot’ and had a talented workforce that could boost the project. Woodburn was speaking after it emerged that the Saudi government is pushing to become a full partner in the international global combat air programme. – Daily Mail

Home sellers are cutting asking prices at the highest rate in 12 years as mortgage rates hit buyer demand, new data shows. More than a third of homes had prices cut at least once in the four weeks to September 9, according to property website Rightmove, which was the largest share since January 2011. Those making reductions typically wiped £22,700 off their initial prices, a discount of 6.2pc. – Daily Telegraph


CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

Support: +44 (0) 203 8794 460 | support@advfn.com

V: D: 20230928 04:31:52