LONDON MARKET OPEN: Rightmove shines despite UK housing market strife

(Alliance News) - Stock prices in London opened mixed on Monday, while the pound continued its ...

Alliance News 27 November, 2023 | 8:49AM
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(Alliance News) - Stock prices in London opened mixed on Monday, while the pound continued its ascent, as the expectation that US interest rates have peaked continues to put pressure on the dollar.

The FTSE 100 index opened down 9.67 points, 0.1%, at 7,478.53. The FTSE 250 was up 44.70 points, 0.2%, at 18,502.80, and the AIM All-Share added 1.17 points, 0.2%, at 718.07.

The Cboe UK 100 was down 0.2% at 746.35, the Cboe UK 250 was up 0.3% at 16,047.82, and the Cboe Small Companies was a touch lower at 13,443.32.

In European equities, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt edged down 0.1%.

The pound rose to USD1.2614 early Monday, from USD1.2605 late Friday. The euro climbed to USD1.0947 from USD1.0935. Versus the yen, the dollar faded to JPY149.04 from JPY149.59.

In Asia on Monday, stocks were lower. The Nikkei 225 index in Tokyo fell 0.5%, while the Shanghai Composite in China lost 0.3%. The Hang Seng Index in Hong Kong fell 0.2%, while Sydney's S&P/ASX 200 gave back 0.8%.

The mood in Asia was hurt by weaker China data.

Industrial profit growth for Chinese companies eased last month, numbers from the National Bureau of Statistics showed on Monday.

According to the NBS, industrial profit in October rose 2.7% year-on-year, "achieving positive growth for three consecutive months, and the efficiency of industrial enterprises continued to improve". However, growth eased markedly from a roughly 12% surge in September.

Industrial profit declined 7.8% year-on-year over the wider 10-month period. The pace of decline narrowed from the 9.0% seen in the first nine months of 2023.

"The profit decline has narrowed month by month since March this year," NBS analyst Yu Weining commented.

In the mining industry alone, profit declined by 20% year-on-year over the 10 months.

Shares in London-listed miners struggled in early trade on Monday. China is a major buyer of minerals.

Rio Tinto fell 0.4%, while Glencore lost 0.2%. BHP Group was 1.0% lower.

Also hurting the FTSE 100, Shell and BP each fell 1.1%, as oil prices continue to struggle to find upward momentum.

A barrel of Brent oil fetched USD79.91 early Monday, down from USD81.47 at the time of the London equities close on Friday.

Oil markets will be in focus with an Opec+ meeting of producing nations to come on Thursday.

The North Sea benchmark found some footing on Friday, after dropping following the unexplained postponement of the Opec+ meeting. The key ministerial gathering of the oil-producing alliance was pushed back from Sunday.

SPI Asset Management analyst Stephen Innes commented: "Oil traders are bracing for an OPEC+ current policy extension without a deeper group cut so that a modest surprise cut would be perceived as temporarily bullish. Still, with fundamental developments leaning bearish with rising U.S. oil inventories and poor refining margins, evidence of inventory draws would likely be needed for a bullish inference to push Brent +USD90 per barrel.

"In a worst-case scenario where leaks of disagreement among members emerge, the short-term price action will likely be negative even if it ultimately leads to a modest group cut. This is because the market will perceive a higher probability of reduced OPEC unity, which could introduce uncertainty over compliance already showing signs of weakening."

Gold continued to shine. An ounce of gold traded at USD2,012.60 early Monday in London, up from USD1,999.98 late Friday. Gold has been boosted by the weaker dollar recently.

Back in London, Rightmove surged 5.8%. The property portal said revenue growth has "continued to track marginally ahead of consensus expectations" since it reported first-half results back in July. This is despite "uncertainty in the housing market".

It has seen better-than-forecast average revenue per advertiser. Its ARPA is set to grow between GBP112 and GBP116 in 2023, better than its previous forecast of GBP103 to GBP105. In 2022, its ARPA amounted to GBP1,314. Its overall revenue growth outlook is at the 8% to 10% range.

It predicts underlying operating profit growth of 7% to 8%. In 2022, it achieved underlying operating profit of GBP245.4 million, on revenue of GBP332.6 million.

"Our performance underscores the strength and resilience of the business, with both estate agent subscriptions and new homes development listings stable. Our share of consumer time in the second half to date remains unchanged - at [around] 85% - demonstrating the strength of our brand, our position with consumers and the established network effect of our business model," the firm said.

Further, it set a 2028 revenue target of over GBP600 million, with underlying operating profit targeted at over GBP420 million.

Elsewhere in London, abrdn European Logistics surged 10% as it announced a strategic review.

"The board will consider all options available to the company that offer maximum value for its shareholders including, but not limited to, undertaking some form of consolidation, combination, merger or comparable corporate action, selling the entire issued share capital of the company," the investor of urban logistics real estate assets said.

Still to come on Monday there is a US new home sales reading at 1500 GMT. As the week progresses, focus will be on inflation readings. There is a US personal consumption expenditures reading and eurozone inflation data on Thursday. There is a US gross domestic product reading on Wednesday, meanwhile.

European Central Bank President Christine Lagarde speaks at 1400 GMT on Monday.

Analysts at Lloyds Bank commented: "Speaking last week, Ms Lagarde indicated that the ECB was now in a position to pause and monitor the effects of interest rates hikes delivered so far. That suggested that there was neither a bias towards hiking nor cutting in the near term."

By Eric Cunha, Alliance News news editor

Comments and questions to newsroom@alliancenews.com

Copyright 2023 Alliance News Ltd. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
abrdn European Logistics Income PLC 63.10 GBX -0.16 -
BP PLC 468.20 GBX -0.47
Rightmove PLC 551.00 GBX 3.42 -
Glencore PLC 379.90 GBX -1.59
Shell PLC 2,506.50 GBX -0.06
Rio Tinto PLC Registered Shares 5,170.00 GBX 0.37
BHP Group Ltd 2,300.00 GBX 0.74
BHP Group Ltd 44.43 AUD 0.29

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