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

by | Sep 18, 2023

(Sharecast News) – 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.

Market Movers

FTSE 100 (UKX) 7,701.48 -0.13%
FTSE 250 (MCX) 18,750.74 -0.21%
techMARK (TASX) 4,409.28 -0.08%

FTSE 100 – Risers

Mondi (MNDI) 1,397.00p 4.49%
Ocado Group (OCDO) 778.60p 1.96%
Marks & Spencer Group (MKS) 221.80p 0.96%
Phoenix Group Holdings (PHNX) 542.80p 0.89%
Glencore (GLEN) 459.25p 0.62%
IMI (IMI) 1,520.00p 0.53%
Ashtead Group (AHT) 5,228.00p 0.42%
Aviva (AV.) 402.30p 0.40%
Rolls-Royce Holdings (RR.) 228.30p 0.40%
BP (BP.) 525.20p 0.38%

FTSE 100 – Fallers

WPP (WPP) 754.60p -2.33%
Unite Group (UTG) 909.50p -1.46%
SEGRO (SGRO) 729.80p -1.27%
United Utilities Group (UU.) 974.40p -1.14%
Severn Trent (SVT) 2,458.00p -1.13%
Land Securities Group (LAND) 586.60p -1.05%
RS Group (RS1) 737.00p -0.94%
SSE (SSE) 1,654.00p -0.87%
Sainsbury (J) (SBRY) 277.20p -0.86%
Taylor Wimpey (TW.) 117.80p -0.84%

FTSE 250 – Risers

Bridgepoint Group (Reg S) (BPT) 200.80p 4.31%
International Distributions Services (IDS) 267.60p 4.00%
Drax Group (DRX) 516.80p 3.86%
Energean (ENOG) 1,200.00p 3.00%
Helios Towers (HTWS) 83.60p 2.83%
Baltic Classifieds Group (BCG) 211.00p 2.68%
NCC Group (NCC) 102.20p 2.20%
Currys (CURY) 50.25p 2.18%
Target Healthcare Reit Ltd (THRL) 78.10p 1.96%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 461.00p 1.65%

FTSE 250 – Fallers

Ceres Power Holdings (CWR) 348.80p -3.11%
Jupiter Fund Management (JUP) 97.60p -2.30%
Games Workshop Group (GAW) 11,230.00p -2.26%
Wizz Air Holdings (WIZZ) 2,018.00p -2.04%
Indivior (INDV) 1,774.00p -1.93%
Crest Nicholson Holdings (CRST) 182.80p -1.93%
RHI Magnesita N.V. (DI) (RHIM) 2,826.00p -1.74%
Savills (SVS) 913.00p -1.72%
ICG Enterprise Trust (ICGT) 1,170.00p -1.68%
Foresight Group Holdings Limited NPV (FSG) 433.00p -1.59%

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