LONDON MARKET CLOSE: Stocks react mixed to cooling euro, US inflation

(Alliance News) - The FTSE 100 in London closed up on Thursday, but share prices were firmly down ...

Alliance News 30 November, 2023 | 5:06PM
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(Alliance News) - The FTSE 100 in London closed up on Thursday, but share prices were firmly down in the FTSE 250, while European equities were buoyed by cooling inflation in the eurozone.

Meanwhile, US equities were mixed, following evidence of cooling inflation, according to the Federal Reserve's preferred price gauge.

The FTSE 100 index closed up 30.29 points, 0.4%, at 7,453.75. The FTSE 250 ended down 234.11 points, 1.3%, at 18,233.47, and the AIM All-Share closed down 1.75 points, or 0.2%, at 713.78.

The Cboe UK 100 ended up 0.3% at 742.82, the Cboe UK 250 closed down 1.6% at 15,769.33 and the Cboe Small Companies ended down 0.6% at 13,334.49.

In European equities, the CAC 40 in Paris ended up 0.6%, while the DAX 40 in Frankfurt ended up 0.4%.

Eurozone consumer price inflation cooled tantalisingly closer to the European Central Bank's 2% target, numbers from Eurostat showed.

The single currency bloc's consumer price index rose by 2.4% in November from a year before, the rate of annual inflation slowing from 2.9% in October. Inflation had been expected to cool to just 2.7%, according to FXStreet cited consensus.

The latest reading represents the slowest rate of inflation since July 2021's 2.2%. That was the first time the rate of consumer price inflation topped the ECB's 2% target. It went on to peak at 10.6% in October 2022 but has steadily ebbed since.

Meanwhile in the US, inflation pressure eased last month, according to the Federal Reserve's preferred price gauge, adding to the conviction that the next move in interest rates will be a cut.

According to the Bureau of Economic Analysis, the core personal consumption expenditures price index rose 3.5% in October from a year before, slowing from 3.7% inflation in September. The latest figure landed in line with the FXStreet-cited market consensus.

The core reading, the Fed's preferred inflation gauge, does not include food or energy.

The headline PCE index rose 3.0% on-year last month, cooling from September's 3.4% rise.

"US inflation is also heading in the right direction, although the bulk of the PCE readings were in line with expectations. Still, the monthly headline figure printing at 0% was another step in the right direction and below market expectations which again suggests disinflationary pressures are stronger than central banks have been willing to accept," said Oanda analyst Craig Erlam.

"Policymakers at the Fed must already be considering withdrawing such a hawkish rhetoric after the meeting in two weeks and it will be interesting to see whether the jobs and CPI inflation reports in the interim tip them one way or the other."

Stocks in New York were mixed at the London equities close, with the DJIA up 1.0%, the S&P 500 index flat, and the Nasdaq Composite down 0.6%.

The pound was quoted at USD1.2652 at the London equities close on Thursday, down from USD1.2674 at the close on Wednesday. The euro stood at USD1.0909, down from USD1.0966 at the same time on Wednesday. Against the yen, the dollar was trading at JPY147.85, up from JPY147.36.

The FTSE 100 snapped its streak of underperformance, with oil majors and China-exposed stocks leading the charge.

BP and Shell closed up 1.5% and 0.3% respectively, tracking an initially rising Brent price. Brent rose as high as USD84.57 on Thursday, its best level since November 7. But the North Sea benchmark eased to USD80.56 a barrel by the time of the London equities close, down from USD81.80 late Wednesday afternoon.

Major oil-producing nations led by Riyadh and Moscow were moving towards an agreement to further slash production to prop up volatile prices, a source close to the negotiations told AFP.

Ministers from the 13-member Organization of the Petroleum Exporting Countries headed by Saudi Arabia and its 10 partners led by Russia have agreed to "further cut production by 600,000 to one million barrels a day", the source said.

The exact size of the fresh cuts would need to be finalised at today's last virtual meeting, which began at around 1430 GMT, the source added.

China's manufacturing purchasing managers' index – a key measure of factory output – dipped to 49.4 points. The reading was down slightly from 49.5 in October and also weaker than the 49.7 market forecast cited by FXStreet.

Shares in miners and Asia-focused lenders were mixed, however, amid the expectation that weaker data will lead to a stimulus. Glencore lost 0.5% in London, while Standard Chartered climbed 2.0%.

NatWest was another lender on the up, rising 0.2%, after JPMorgan lifted the stock to 'overweight' from 'neutral'.

Entain ended a difficult week up 0.3%, ending a five-day losing streak.

The Ladbrokes Coral owner noted a fine by the Dutch gaming authority for its subsidiary BetEnt, which trades as BetCity and was acquired by Entain in January.

The Dutch gaming authority Kansspelautoriteit on Thursday fined BetEnt EUR3 million under the country's money laundering and terrorism financing prevention act.

Entain said the activities relate to the period between December 2022 and February 2023, adding that it was aware of instructions from September 2022 before its EUR300 million acquisition of BetEnt, which trades as BetCity.

In the FTSE 250, Auction Technology was the worst performer, plunging 23%.

It reported a sharp drop in annual profit due to higher finance costs and despite a rise in overall revenue.

The London-based online auction operator said the economic environment has become "more challenging", hurting growth in the second half of its financial year. However, it predicted continued revenue growth in the new year, helped by burgeoning value-added services.

Pretax profit was GBP7.1 million in the 12 months that ended September 30, down 23% from GBP9.3 million the year before.

Revenue rose by 13% to GBP135.2 million from GBP119.8 million. Of this, 5% was organic growth. Gross merchandise value on the platform was down 3% at constant currency, however, partly due to slower growth in total hammer value. THV was up 3% at constant currency to GBP10.8 billion for the full year, though declined slightly in the second half of the year.

Offsetting the revenue rise, net finance costs doubled to GBP15.4 million from GBP7.5 million. This was due to higher interest paid on loans and a foreign exchange loss.

Boot maker Dr Martens slumped 21%.

In the half-year ended September 30, pretax profit fell by 55% to GBP25.8 million from GBP57.9 million the year before. Revenue declined 5.4% to GBP395.8 million from GBP418.8 million the year before. Its top line was hurt by "an increasingly difficult consumer environment" in the US.

It said it expects full year revenue to decline by a high single-digit percentage, on a constant currency basis.

It also said it expects financial 2024 Ebitda to be "moderately below the bottom end of the range of consensus expectations" of GBP223.7 million to GBP240.0 million.

Dr Martens cautioned that a bounce in its US division will take longer to materialise than initially anticipated.

Among London's small-caps, Metro Bank closed up 2.3%.

The lender said it it expects to cut a fifth of its workforce and the lender is reviewing its policy of keeping branches open seven days a week as it looks to "simplify its operations".

It had announced a cost reduction plan in early October, to be implemented in the fourth quarter of 2023. It expected this to deliver savings of at least GBP30 million per year.

On Thursday, however, Metro Bank said these cost cuts will go deeper. It has identified potential cost savings of up to GBP50 million annually.

Gold was quoted at USD2,038.85 an ounce on Thursday at the London equities close, down from USD2,041.08 late Wednesday.

In Friday's UK corporate calendar, Mind Gym posts its half-year results.

The economic calendar has a slew of manufacturing purchasing managers' index releases, including for China, EU, Germany, the UK and the US.

By Greg Rosenvinge, Alliance News senior reporter

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
Metro Bank Holdings PLC 36.70 GBX -0.81 -
Auction Technology Group PLC 608.00 GBX 1.33 -
Standard Chartered PLC 605.60 GBX 0.77
BP PLC 468.20 GBX -0.47
Dr. Martens PLC Ordinary Shares 97.70 GBX 2.36 -
Glencore PLC 379.90 GBX -1.59
Entain PLC 911.80 GBX 1.45 -
NatWest Group PLC 228.10 GBX -0.39
Shell PLC 2,506.50 GBX -0.06

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