2023-06-19 15:54:08
(Alliance News) – Shares in London ended lower on Monday, weighed down by a disappointing post-Covid recovery in China and growing expectations of higher interest rates in the UK.
Chris Beauchamp, chief market analyst at IG, added that Monday’s downward moves were “amplified” by the lack of volume due to a US holiday. New York’s financial markets are closed on Monday for the June 19 holiday.
The FTSE 100 index closed down 54.24 points, or 0.7%, at 7,588.48 points on Monday. The FTSE 250 index ended down 176.60 points, or 0.9%, at 18,854.29 points. AIM All-Share closed down 2.48 points, or 0.3%, at 790.11.
The Cboe UK 100 ended down 0.7% at 756.79, the Cboe UK 250 closed down 0.7% at 16,510.34, and the Cboe Small Companies ended down 0.7 % to 13,247.73.
Meanwhile, the pound remained close to the $1.28 mark at Monday’s close, boosted by expectations that the Bank of England will enact another 25 basis point rate hike on Thursday.
The pound was listed at $1.2797 at the close of London stock markets on Monday, down slightly from $1.2819 at Friday’s close.
Societe Generale’s Kit Juckes said the “biggest driver” of exchange rates has been changing expectations for short-term interest rates. Mr Juckes said anticipation of five more 25 basis point rate hikes in the UK this year was pulling the pound towards the $1.30 level.
The euro stood at $1.0928 at the close of European stock markets on Monday, virtually unchanged from $1.0926 at the same time on Friday.
Expectations that the European Central Bank will continue to raise interest rates have kept the euro firm against the dollar.
An ECB official said Monday that more interest rate hikes will be needed to get stubbornly high inflation in the euro zone under control.
“We must remain very dependent on data and avoid doing too much rather than too little,” ECB executive board member Isabel Schnabel said during a speech in Luxembourg.
“We must therefore continue to raise interest rates until we have convincing evidence” of a return of inflation to the ECB’s 2% target, she added.
Against the yen, the dollar was trading at 141.85 yen, against 141.59 yen on Friday evening.
Brown Brothers Harriman analysts explained that while the tougher stance of other central banks against the US Federal Reserve has kept the dollar broadly weak in recent days, a “doveish” Bank of Japan has given the US currency “a leeway to move up”.
In London, Next was the best performing blue chip stock, closing up 4.8% on Monday.
The apparel and home goods retailer has raised its full-year forecast after enjoying better-than-expected sales in recent weeks due to warmer weather and higher high consumer purchasing power.
Next said full-price sales in the first seven weeks of its second quarter were up 9.3% year-on-year, a marked improvement from forecasts that had forecast a decline in 5%. The second quarter of Next ends on July 29.
As a result, the company raised its pre-tax profit forecast to £835m from £795m previously. This would represent a fall of 4.1% from the previous year’s £870.4m.
It also raised its full-price sales forecast to £4.67bn from £4.53bn, up 1.4% year-on-year from the previous forecast of 4.53 billion pounds, which would have represented a decline of 1.5%.
Entain added 1.3% after Reburn raised the sports betting company from “neutral” to “buy”. The broker said the weak market reaction to Entain’s attempt to acquire a Polish operator was unfair.
“The negative reaction to the acquisition of STS has been dramatic. Flutter has outperformed Entain thanks to FanDuel’s dominance in the US. But Entain’s BetMGM joint venture remains a top-three value player, while the acquisition of STS is reasonable,” commented Redburn analyst Andrew Tam.
Last Tuesday, Entain said its Central and Eastern European operation, Entain CEE, had agreed – together with joint venture partner EMMA Capital – to acquire 100% of STS, Poland’s leading betting operator.
Mining stocks were among the worst performers in the FTSE 100. Anglo American closed down 2.3%, Antofagasta down 2.5% and Endeavor Mining down 2.7%.
Stocks took a hit after Goldman Sachs cut its Chinese economic growth forecast to 5.4% from 6% previously. China is a big consumer of commodities and with weak economic growth forecast for the world’s second largest economy, the outlook for demand looks weak.
In the FTSE 250, Kainos fell 5.8% after announcing that its chief executive of 22 years, Brendan Mooney, would complete his term at the end of September. To replace him, Kainos has appointed Russell Sloan, director of digital services, as CEO.
Elsewhere in London, boohoo jumped 6.4% after the online fashion retailer demanded sweeping changes to the board of struggling company Revolution Beauty. boohoo owns just under 27% of Revolution Beauty.
boohoo said it would vote against reappointing chief executive Bob Holt, chairman Derek Zissman and chief financial officer Elizabeth Lake as directors at the beauty company’s annual general meeting.
It has also called for a general meeting to be held at which it will seek to present an offer to remove these directors and add Alistair McGeorge and Neil Catto, the former as executive chairman and the latter as chief financial officer.
Trading in Revolution Beauty shares has been suspended since September 1 after the company failed to deliver its first audit by August 31.
On the AIM, Creo Medical jumped 19%. The medical device company said its endoscopy product Speedboat Inject has been cleared for use throughout the gastrointestinal tract in European markets.
Speedboat Inject is already cleared for full use in the gastrointestinal tract for soft tissue cutting and coagulation using radio frequency and microwave energy in the United States and Asia-Pacific regions . It is used for the prevention and treatment of bowel cancer.
In Europe, the CAC 40 in Paris ended down 1.1%, while the DAX 40 in Frankfurt ended down 1.0%.
Brent oil was quoted at $76.02 a barrel at the close of London stock markets on Monday, up from $75.62 last Friday. Gold was listed at $1,952.97 an ounce, down sharply from $1,960.83.
In Tuesday’s UK business calendar, there are annual results from IG Design and a business statement from SThree.
By Heather Rydings, Alliance News business reporter
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