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LONDON MARKET CLOSE: Stocks up on rate cut hopes risk-on sentiment
Investors in London showed confidence on Monday, with stocks closing up on hopes on interest rate cuts being around the corner.
The FTSE 100 index closed up 3.94 points at 8,424.20. The FTSE 250 ended up 123.43 points, 0.6%, at 20,873.33, and the AIM All-Share closed up 15.92 points, 2.0%, at 809.94.
The Cboe UK 100 ended up 0.1% at 840.87, the Cboe UK 250 closed up 0.6% at 18,250.48, and the Cboe Small Companies ended up 0.8% at 16,532.02.
In European equities on Monday, the CAC 40 in Paris ended up 0.4%, while the DAX 40 in Frankfurt ended up 0.3%.
Investors this week are eyeing Wednesday’s inflation reading for the UK. It is expected to show that the rate of consumer price inflation moderated markedly to 2.1% in April, from 3.2% in March, according to FXStreet cited consensus.
If the reading comes in line with expectations, hopes for an interest rate cut from the Bank of England will climb.
Last week there was some good news from the US in terms of cooling inflation.
Swissquote Bank analyst Ipek Ozkardeskaya commented: ‘Equity bulls around the globe celebrated in style the softer-than-expected US CPI data last week. The global equity rally was further juiced by the expectation that a softer inflation in the US would not only allow the Federal Reserve to start cutting the rates this year, but also allow the other major central banks, like the European Central Bank and the Bank of England, to carry on with their plans to cut their own rates and maybe cut more than people think they could.’
Hopes of an interest rate cut have prompted the price of gold higher, with the precious metal hitting a record high above $2,450 an ounce earlier Monday.
Gold was quoted at $2,423.50 an ounce at the London equities close Monday, up against $2,407.63 at the close on Friday.
Higher gold prices pushed gold miner Fresnillo up 4.0% to the top of the FTSE 100 index.
The pound was quoted at $1.2702 at the London equities close Monday, higher compared to $1.2696 at the close on Friday. The euro stood at $1.0862 at the European equities close Monday, lower against $1.0866 at the same time on Friday. Against the yen, the dollar was trading at JP¥156.14, higher compared to JP¥155.53 late Friday.
In the FTSE 100, Airtel Africa rose 2.2%.
The Africa-focused telecommunications firm confirmed that its subsidiary Bharti Airtel International (Netherlands) BV has fully repaid a $550 million bond in 5.35% guaranteed senior notes maturing on Monday.
In the FTSE 250 index, Kainos rose 17%.
The London-based IT service company said in the year ended March 31, statutory pretax profit rose 19% to £64.8 million from £54.3 million the year prior. Revenue increased 2.0% to £382.4 million from £374.8 million.
Kainos declared a final dividend of 19.1 pence per share, up 19% from 16.1p. Therefore, the total dividend paid for the year stands at 27.3p, up 14% from 23.9p.
Chief Executive Officer Russell Sloan commented: ‘Our latest results, record our 14th consecutive year of growth with disciplined execution in the current macro-economic climate.
On London’s AIM, ValiRx shot up 23%.
ValiRx noted that the peptide nanoparticle formation Cytolytix received a Knowledge Transfer Voucher grant in conjunction with The Open University. Cytolytix Ltd is a partially-owned ValiRx subsidiary established to progress CLX001.
The life sciences company focused on early-stage cancer therapeutics and women’s health highlighted that the assessment of formulation options for the triple negative breast cancer project CLX001 has progressed during the first quarter of 2024.
On the other hand, Haydale Graphene Industries closed down 11%.
The Carmarthenshire, Wales-based technology solutions company warned sales and earnings would miss City forecasts as an upturn in orders in the US was taking longer than hoped to materialise.
In a trading update for the year ending June, Haydale said it expects full-year sales of £4.7 million behind current market forecasts of £5.8 million. This would still be above last year’s £4.3 million, Haydale said.
Adjusted earnings before interest, tax, depreciation and amortisation is expected to only be ’marginally behind‘ market expectations, at a £3.2 million compared to forecasts for a £3.0 million loss.
Stocks in New York were higher at the London equities close, with the DJIA up 0.2%, the S&P 500 index up 0.4%, and the Nasdaq Composite up 0.7%.
Brent oil was quoted at $83.65 a barrel at the London equities close Monday, up from $83.61 late Friday.
In Tuesday’s UK corporate calendar, there is a trading statement from Kingfisher, as well as Smiths Group.
The economic calendar for Tuesday has current account and trade balance data from the eurozone. There is also a PPI reading from Germany.
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