The FTSE 100 made a strong start to the week on Monday, as investors shrugged off rising oil prices and eyed key earnings and economic data later in the week.
In London, the FTSE 100 index ended up 104.23 points, 1.0%, at 10,656.28. The FTSE 250 climbed 114.28 points, 0.5%, to 24,328.06, and the AIM all-share fell 2.62 points, 0.3%, at 774.91.
Despite the gains, Kathleen Brooks, research director at XTB, said that “beneath the surface calm” there is growing concern about the “plumbing” in financial markets, everything from the cost of capital to the sustainability of the AI trade.
“This is a high-impact week for financial markets. Earnings season will ramp up with Q3 reports from the major Wall Street banks. US CPI, the UK’s August GDP reading, Eurozone CPI and US retail sales will dominate the economic calendar,” she added.
The week sees the start of the third quarter corporate earnings season, with US banks JP Morgan, Goldman Sachs and Bank of America due to report on Tuesday.
Earnings from ASML and TSMC this week will also provide some idea of the outlook for the AI sector.
Also due this week are US inflation figures, which could determine the Federal Reserve’s next move on interest rates.
UBS expects core CPI inflation to remain steady at 2.4% year-on-year in September, while higher energy costs will likely see headline CPI inflation pick up to 3.6% from 3.4%.
UBS also notes Federal Reserve chair Kevin Warsh and a range of other Federal Open Market Committee participants will speak on the economic outlook and monetary policy.
“We expect little in the way of concrete forward guidance, but policymakers will likely suggest a need for additional policy firming over the next several months,” the broker said.
On Monday, crude prices rose following Houthi attacks on Saudi Arabia’s international airport in Riyadh.
Strikes on the airport killed at least 18 people, including 13 on Saturday in the deadliest attack on the country in more than a decade.
Doubts surrounding US President Donald Trump’s claim of an “energy ceasefire” between Ukraine and Russia, following his surprise announcement of a deal to buy diesel from Moscow, further unsettled investors.
Brent oil was quoted at 106.60 dollars a barrel on Monday, up from 104.86 late on Friday.
In European equity markets on Monday, the Cac 40 in Paris ended up 0.4%, while the Dax 40 in Frankfurt rose 0.8%.
In New York, markets were mixed. The Dow Jones Industrial Average was up 0.4% at the time of the closing bell in London, the S&P 500 was down 0.1%, and the Nasdaq Composite was 0.3% lower.
The US observes Columbus Day on Monday. The Securities Industry & Financial Markets Association in the US has recommended a Treasury market closure on Monday as a result. Equities trade as normal.
The pound was quoted at 1.3211 dollars, down from 1.3233. Against the euro, sterling firmed to 1.1829 from 1.1818.
Gold was quoted at 4,167.84 dollars an ounce, down from 4,189.88.
On the FTSE 100, Standard Life gained 1.1% as RBC Capital Markets upgraded the London-based retirement savings provider to “outperform” from “sector perform”.
The broker thinks the recent pullback in Standard Life has created a “better entry level”, and sees the 10% plus total return yield as “particularly attractive”.
Informa was a weak feature, down 2.4%, on fears that renewed Middle East tension could disrupt the upcoming Global Health Exhibition due to take place later this month in Riyadh.
On the FTSE 250, GlobalData rose 6.4% after The Times reported late Friday that Mike Danson, the firm’s founder and chief executive, is willing to mull an offer for one of more of the data, analytics, and intelligence firm core divisions.
In 2023, Inflexion Private Equity Partners bought a 40% stake in the company’s healthcare division.
“The market cap is less than £500 million at the moment. If somebody came along and they said, we’ll buy one unit for the Inflexion-type valuation, it would be fairly transformative,” GlobalData CEO Danson told The Times.
Hays fell 13% after a poorly received trading update from the recruiter.
Among its sector peers, Robert Walters fell 5.5%, and Michael Page declined 8.5%. Michael Page updates on trading on Tuesday.
Hays said its first quarter went in line with expectations, as the decline in net fees slowed.
However, it noted activity in the permanent recruitment sector is “mixed with sustained strong growth in North America but ongoing fragility in Northern Europe”.
Russ Mould, investment director at AJ Bell, said the update implies the jobs market is as “tough as ever”, particularly for permanent roles.
“While Hays has put a positive spin on the period, the numbers speak for themselves. First quarter like-for-like net fees are down across its key regions, with only its ‘rest of world’ operations avoiding losses and even that division was flat year-on-year,” he added.
Pennon traded 9.5% as it traded ex-rights, following last week’s equity issue and dividend cut.
Deutsche Bank Research lowered the water utility to “hold” from “buy”.
Analyst James Brand still believes there is a high chance of success in Pennon’s turnaround, but thinks the near-term buy case now looks “increasingly difficult”.
This reflects a lack of medium-term guidance and stable earnings per share, with the lack of growth contrasting with other utilities and returns now below the cost of equity.
Elsewhere in London, ActiveOps plunged 52% as it warned financial 2028 revenue and earnings will be significantly below market expectations after the loss of a major contract.
The biggest risers on the FTSE 100 were ConvaTec Group, up 10.60p at 230.60p, Lion Finance Group, up 340.00p at 12,720.00p, Lloyds Banking Group, up 2.40p at 104.00p, HSBC Holdings, up 32.60p at 1,428.40p and Diageo, up 35.00p at 1,673.00p.
The biggest fallers on the FTSE 100 were Informa, down 21.60p at 874.00p, WPP, down 7.30p at 378.60p, IG Group Holdings, down 18.50p at 976.50p, Vodafone Group, down 1.65p at 116.70p and Polar Capital Technology Trust, down 9.00p at 693.00p.
Tuesday’s local corporate calendar has full-year results from housebuilder Bellway, and trading statements from recruiter Michael Page and convenience food manufacturer Greencore.
Tuesday’s global economic calendar has the minutes of the most recent Reserve Bank of Australia meeting overnight. In the UK, the British Retail Consortium publishes its retail sales monitor. In the US, existing home sales figures are released.
– Contributed by Alliance News