London close: Stocks finish mixed at start of busy week

29th Jul 2024 15:35

(Sharecast News) - London stocks closed with mixed results on Monday, reflecting a cautious market sentiment ahead of a busy week of earnings reports and crucial policy announcements from major central banks on both sides of the Atlantic.

The FTSE 100 inched up 0.08%, ending the trading session at 8,292.35 points, while the FTSE 250 fell 0.49%, closing at 21,252.07 points.

On the currency front, sterling was last down 0.15% on the dollar, trading at $1.2848, while it rose 0.2% against the euro to last change hands at €1.1878.

"Last week saw the FTSE 100 come storming back, as the index touched a three-month low and neared an almost two-month high in the space of 48 hours," said IG chief market analyst Chris Beauchamp.

"UK investors, like everyone around the globe this week, will be trying to keep on top of the plethora of earnings and economic events, so it's not surprising that the index has struggled to maintain momentum in today's session.

"Index heavyweights like BP, Shell and GSK report this week too, providing another reason for caution after the solid gains of Thursday and Friday."

Beauchamp said that while the FTSE 100 counted its gains, the VIX took a sharp tumble from last week's highs.

"Wall Street has rallied off its lows of the past week, but few traders will be willing to sound the all clear yet.

"Bank of Japan, Federal Reserve and Bank of England decisions, plus payrolls and earnings from the all-important tech sector, mean that it's far too early to jump in with both feet."

UK mortgage approvals decline slightly in June

In economic news, mortgage approvals in the UK experienced a slight decline in June, signalling a stabilisation in the housing market.

According to the Bank of England, net mortgage approvals for house purchases fell to 59,976 in June from 60,134 in May.

Although that marked a decrease from the peak of 61,080 in March, the June figure remained significantly higher than the 53,620 recorded a year ago.

Approvals for remortgaging also dropped, reaching 27,500 from May's 29,300.

Despite the dip, individuals borrowed a net £2.7bn for mortgages in June, nearly double the £1.3bn borrowed in May.

Commenting on the data, the EY ITEM Club said that while mortgage rates have edged down over recent months, it doesn't expect them to fall much further and a recovery in demand will likely be modest.

"Mortgage demand has remained broadly stable since February, with the impact of a gradual uptick in quoted mortgage rates largely offset by recovering household finances and confidence," said Peter Arnold, the UK chief economist at EY.

"With swap rates having drifted down in July, and some lenders lowering mortgage rates in response, approvals may edge up modestly in the coming months.

"But with market pricing already factoring in a gradual loosening of monetary policy over the coming year, the EY ITEM Club doesn't expect mortgage rates to fall much further."

Arnold added that with affordability "still very stretched", the chances of a strong recovery in activity looked low.

At the same time, the Bank of England reported a slight decline in net consumer credit borrowing, which fell to £1.2bn in June from £1.5bn in May.

The annual growth rate of consumer credit also eased, dropping to 8.0% from 8.4%.

Elsewhere, the UK job market saw a significant downturn in June, with job vacancies plummeting by 19.49%, according to data from job database operator Adzuna.

Despite the economic growth recorded in May, that had not yet translated into increased hiring.

The number of jobseekers per vacancy rose to 1.95 in June from 1.91 in May, the highest ratio in three years.

However, there were positive signs in specific sectors, with professional services, creative firms, and the IT sector showing increased hiring.

Additionally, average advertised salaries rose slightly to £38,843, marking a 0.2% increase from May and a 2.7% rise from the previous year.

Oil giants give up gains, Reckitt slides on baby formula concerns

On London's equity markets, BP and Shell saw late trading declines, with BP down 0.33% and Shell slipping 0.29%.

Earlier gains reversed as oil prices fell, with Brent crude futures dropping 1.68% to $79.77 per barrel.

Elsewhere, Reckitt Benckiser Group experienced a sharp decline, plunging 9.49%.

The drop came amid potential litigation concerns after a US jury found that infant formula made by Abbott Laboratories caused a serious bowel disease in a child, resulting in $495m in damages.

"Reckitt's shares have been severely depressed since March as the market worries about the scale of any potential liabilities if the company loses legal battles around the safety of its baby formula," said Dan Coatsworth, investment analyst at AJ Bell.

"A US court case has already awarded $60m in damages to a mother who said her baby died after consuming Reckitt's Enfamil baby formula.

"Several hundred similar claims have been filed in US courts targeting Reckitt and Abbott."

Coatsworth added that more setbacks for either baby formula maker meant things would become more complicated for Reckitt to sell its nutrition arm.

"Reckitt last week indicated it might be up for sale, saying it was considering all options for the business.

"Any potential buyer could be put off by the possibility of liabilities from the court cases, meaning the pressure is growing for Reckitt to find a way to ringfence a large amount of money in case it loses big time in the court battles."

Educational publisher Pearson dipped by 0.57%, despite reporting a solid first-half performance with underlying sales and profits surpassing last year's figures.

The company maintained its outlook for the next two years.

Entain slid 8.07% despite announcing that its US sports betting and iGaming operator BetMGM surpassed $1bn in revenues for the first half, having still reported a loss due to heavy investments.

IAG, the owner of British Airways and Iberia, decreased by 1.85%, as investors awaited the company's half-year results due later this week.

On the upside, AstraZeneca rose 1.51% after the pharmaceutical giant reported encouraging high-level results from a clinical trial of its Calquence treatment for adults with chronic lymphocytic leukaemia (CLL).

UK food producer Cranswick gained 2.23% after it held its annual guidance after reporting a 6.7% increase in first-quarter revenue, driven by strong volume growth.

Cranswick highlighted the strong performance of its premium product ranges and noted that easing input costs were reflected in selling prices.

On a like-for-like basis, revenue growth was 6.4%.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,292.35 0.08%

FTSE 250 (MCX) 21,252.07 -0.49%

techMARK (TASX) 4,813.60 -0.20%

FTSE 100 - Risers

JD Sports Fashion (JD.) 127.80p 4.01%

Airtel Africa (AAF) 113.00p 2.91%

NATWEST GROUP (NWG) 371.70p 2.63%

SEGRO (SGRO) 913.00p 2.04%

Prudential (PRU) 696.00p 1.61%

Barratt Developments (BDEV) 527.60p 1.50%

Legal & General Group (LGEN) 231.40p 1.45%

AstraZeneca (AZN) 12,364.00p 1.38%

Unite Group (UTG) 947.50p 1.34%

M&G (MNG) 210.10p 1.30%

FTSE 100 - Fallers

Reckitt Benckiser Group (RKT) 4,093.00p -8.76%

Entain (ENT) 596.60p -8.07%

Anglo American (AAL) 2,347.50p -1.99%

Flutter Entertainment (DI) (FLTR) 15,055.00p -1.92%

International Consolidated Airlines Group SA (CDI) (IAG) 164.05p -1.85%

Burberry Group (BRBY) 735.60p -1.55%

Whitbread (WTB) 2,854.00p -1.45%

Beazley (BEZ) 659.00p -1.42%

Glencore (GLEN) 427.45p -1.36%

Antofagasta (ANTO) 1,943.00p -1.22%

FTSE 250 - Risers

W.A.G Payment Solutions (WPS) 66.00p 2.80%

Direct Line Insurance Group (DLG) 189.00p 2.08%

Me Group International (MEGP) 189.20p 2.05%

SDCL Energy Efficiency Income Trust (SEIT) 65.70p 2.02%

Redrow (RDW) 743.00p 1.99%

AJ Bell (AJB) 449.50p 1.80%

HICL Infrastructure (HICL) 125.20p 1.79%

ICG Enterprise Trust (ICGT) 1,330.00p 1.53%

Spirent Communications (SPT) 176.60p 1.49%

Safestore Holdings (SAFE) 796.50p 1.46%

FTSE 250 - Fallers

Energean (ENOG) 993.00p -9.68%

Man Group (EMG) 246.40p -5.01%

Discoverie Group (DSCV) 674.00p -4.67%

Pagegroup (PAGE) 414.60p -4.16%

Genus (GNS) 1,774.00p -3.90%

Close Brothers Group (CBG) 520.00p -3.85%

Wood Group (John) (WG.) 204.60p -3.78%

Keller Group (KLR) 1,444.00p -3.22%

Ithaca Energy (ITH) 124.40p -3.12%

JTC (JTC) 1,046.00p -2.99%