London close: Stocks rebound from last week's losses

9th Sep 2024 16:02

(Sharecast News) - London's markets finished in a positive state on Monday, recovering from heavy losses at the end of last week after a disappointing US non-farm payrolls report.

The FTSE 100 closed up 1.09% at 8,270.84 points, and the FTSE 250 gained 0.77% to reach 20,650.88 points.

In currency markets, sterling was last down 0.34% on the dollar, trading at $1.3084, while it managed a modest uptick of 0.02% against the euro to change hands at €1.1847.

"Friday's selloff has been countered by a wave of buying from investors, while the VIX has dropped back sharply," said IG chief market analyst Chris Beauchamp.

"The drop in the chances of a 50 basis point rate hike suggests that a calmer attitude prevails among investors, despite the slew of weaker jobs data from the US.

"Much now hangs on the CPI report, especially since Friday's payroll report failed to provide much new information on the US economy."

Beauchamp added that the FTSE 100 put its best foot forward during the afternoon, rallying through Friday's highs thanks to a solid performance from HSBC.

"China's overnight inflation data has not dented enthusiasm for the bank's shares, while a recovering oil price helped Shell to make headway too."

UK businesses growing steadily, eurozone sentiment weakens further

In economic news, UK businesses were still experiencing steady growth, largely driven by a strong services sector, according to a fresh report from BDO.

The firm's Business Trends report highlighted that business confidence remained above historic growth levels for the fourth consecutive month, buoyed by expectations of further interest rate cuts.

It said the services sector saw a notable rise in output, reaching a two-year high of 99.03, thanks to a surge in new orders and increased tourism late in the summer.

Consumer and business spending also rose, with businesses expanding staffing to meet heightened seasonal demand.

Despite that, the overall optimism index dipped slightly to 100.33 in August but stayed positive, supported by the recent reduction of interest rates to 5%.

Inflationary pressures showed signs of easing, with BDO's Inflation Index falling to 96.79 for the first time in four months, indicating a slowdown in input and consumer price increases.

However, the UK labour market remained a concern, as BDO's Employment Index fell for the 14th consecutive month to 95.89, its lowest level since January 2013.

Rising unemployment and job vacancy concerns persist, with unemployment expected to peak in early 2025.

"Despite ongoing inflationary pressures, it is good to see that businesses remain largely optimistic, with the services sector in particular continuing to be the cornerstone of economic growth," said BDO partner Kaley Crossthwaite.

"The coming months will be crucial in determining whether the UK can maintain its recovery momentum and fight back against these headwinds.

"No doubt all eyes will be on the Autumn budget and the government's plans for helping businesses tackle persistent unemployment levels and the skills gap."

On the continent, investor sentiment in the eurozone continued to weaken in September, amid growing concerns over the German economy and political uncertainty.

The Sentix investor confidence index for the common currency area dropped to -15.4, marking its third consecutive decline and its lowest level since January.

Investor confidence in Germany reached a new low, with the sentiment index falling to -34.7, the weakest since October 2022.

"The eurozone is struggling with dangerous recessionary tendencies 'thanks to Germany'," said Sentix managing director Manfred Hubner.

In China, consumer inflation saw a modest uptick in August, with the consumer price index rising 0.6% year-on-year, slightly higher than July's 0.5% increase.

The rise was mainly driven by a 2.8% jump in food prices, exacerbated by extreme weather affecting agricultural production.

However, weak domestic demand persisted, as core inflation, which excludes food and fuel, fell to 0.3%, the lowest in over three years.

The producer price index also worsened, declining 1.8% year-on-year in August, reflecting a continued imbalance between production capacity and demand.

Entain jumps on revenue growth, Burberry in the red

On London's equity markets, Entain jumped 5.29% after reporting that its online net gaming revenue growth for the second half of the year had exceeded expectations.

"The spike in the price comes as something of a relief given that the shares have fallen by 45% over the last year, largely driven by regulatory threat and emerging competition in the US," said Richard Hunter, head of markets at Interactive Investor.

Flutter Entertainment followed with a 2.04% increase, continuing the positive momentum in the gaming sector.

Barratt Developments saw a modest rise of 0.61% after announcing a joint venture with Homes England and Lloyds Bank to develop large housing sites.

Meanwhile, property portal Rightmove gained 1.56%, buoyed by an upgrade from Jefferies to 'hold' from 'underperform', following news that Australia's REA Group might make a cash and share offer for the company.

Genus and Bakkavor Group also made notable gains, up 5.96% and 5.23%, respectively, after they both reported results last week.

On the downside, Burberry Group slid 4.86% after Barclays downgraded the stock to 'underweight' from 'equalweight,' citing concerns about structural brand weaknesses and the company's ability to maintain its status as a high-end luxury brand.

Barclays further warned of potential losses for Burberry in the first half of 2025.

Computacenter dropped 6.88% after reporting a decline in first-half profits.

The company attributed the fall to weaker-than-expected UK demand for hardware, as customers delayed purchasing decisions amid a cautious market environment.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,270.84 1.09%

FTSE 250 (MCX) 20,650.88 0.77%

techMARK (TASX) 4,855.54 0.80%

FTSE 100 - Risers

Entain (ENT) 675.00p 5.57%

Melrose Industries (MRO) 472.10p 4.15%

Flutter Entertainment (DI) (FLTR) 16,650.00p 3.84%

Diploma (DPLM) 4,424.00p 2.93%

Rolls-Royce Holdings (RR.) 475.60p 2.79%

Croda International (CRDA) 3,972.00p 2.69%

Smith (DS) (SMDS) 458.00p 2.42%

Experian (EXPN) 3,690.00p 2.39%

Whitbread (WTB) 3,050.00p 2.21%

Coca-Cola HBC AG (CDI) (CCH) 2,876.00p 2.13%

FTSE 100 - Fallers

Burberry Group (BRBY) 575.00p -4.86%

Pearson (PSON) 1,058.50p -1.40%

Reckitt Benckiser Group (RKT) 4,486.00p -1.15%

Associated British Foods (ABF) 2,180.00p -1.09%

Prudential (PRU) 613.60p -1.03%

Fresnillo (FRES) 504.00p -0.88%

Hikma Pharmaceuticals (HIK) 1,944.00p -0.61%

CRH (CDI) (CRH) 6,392.00p -0.53%

Unite Group (UTG) 951.00p -0.52%

Land Securities Group (LAND) 654.00p -0.46%

FTSE 250 - Risers

Genus (GNS) 1,812.00p 5.96%

Bakkavor Group (BAKK) 161.00p 5.23%

SDCL Energy Efficiency Income Trust (SEIT) 63.80p 4.08%

Babcock International Group (BAB) 484.60p 3.64%

Bloomsbury Publishing (BMY) 690.00p 3.60%

Alpha Group International (ALPH) 2,350.00p 3.52%

PZ Cussons (PZC) 103.80p 3.39%

Bridgepoint Group (Reg S) (BPT) 315.60p 3.07%

Foresight Group Holdings Limited NPV (FSG) 504.00p 3.07%

IntegraFin Holding (IHP) 375.00p 3.02%

FTSE 250 - Fallers

Computacenter (CCC) 2,410.00p -6.88%

Indivior (INDV) 775.00p -2.39%

Ithaca Energy (ITH) 107.20p -2.37%

Wood Group (John) (WG.) 122.50p -2.00%

Genuit Group (GEN) 448.50p -1.75%

Direct Line Insurance Group (DLG) 181.00p -1.68%

Savills (SVS) 1,138.00p -1.56%

Softcat (SCT) 1,472.00p -1.54%

BBGI Global Infrastructure S.A. NPV (DI) (BBGI) 133.00p -1.48%

British Land Company (BLND) 435.60p -1.45%