London close: Stocks buoyed by gains on Wall Street

Stocks traded slightly higher despite downbeat forecasts for the UK economy out of consultancy EY, thanks to increased speculation of a downshift in the speed of rate hikes in the US.

Hence the big gains seen early in the New York session.

By the end of trading, the FTSE 100 had edged up 0.18% to 7,784.67 while Sterling was off by 0.24% at 1.2367.

The US dollar index was up by 0.11% to 102.11 having come off its session lows, but after first having retested the prior week's lows at 101.59.

But many analysts were cautious, including JP Morgan chief investment officer Bob Michele, who according to Dow Jones Newswires thought that it was premature to assume that inflation in the States would extend its orderly drop throughout the remainder of 2023.

And other top number crunchers on Wall Street voiced similar views on Monday.

Meanwhile, inflation expectations derived from inflation-linked US Treasuries suggested that markets were anticipating that consumer price gains would average 2% over the next two years, as Berenberg Capital Markets noted.

Last Friday, Federal Reserve Governor, Christopher Waller, joined the ranks of top officials arguing for a downshift in the pace of rate hikes to 25 basis points per meeting, buoying investor sentiment.

Euro/dollar hit a high of 1.0927 in Asian trading, helped by hawkish remarks from European Central Bank governing council member Klaas Knot over the weekend, but was last at 1.0865.

Knot said the monetary authority should raise rates by 50bp at its next two meetings and that the time for a slower pace of hikes was "still far away".

EY's updated forecasts for the UK, published on Monday, were for a drop in UK gross domestic product of 0.7% in 2023, down from the 0.3% contraction it predicted in October, the Guardian reported.

Projections for 2024 and 2025 were revised lower as well, from 2.4% and 2.3% to 1.9% and 2.2%, respectively.

Most bourses in Asia remained closed overnight, in observance of the Lunar New Year holiday, although those that remained open generally performed well.

On Saturday, China's Center for Disease Control and Prevention said that the present wave of Covid-19 had already infected roughly four-fifths of the country's population, according to Reuters.

Richard Hunter, Head of Markets at Interactive Investor also noted early reports that travel demand in China during the new year had beaten expectations which "could augur well as a sign of recovery in both economic activity and consumption".

Overnight, Japan's finance minister, Shunichi Suzuki, warned of the increasingly precarious state of Japan's finances.

The week's key economic releases would come on Thursday and Friday, in the form of the latest inflation data out of the US. Investors were also awaiting quarterly earnings from roughly one quarter of the S&P 500's components.

Saga studies asset sales, National Express and Balfour Beatty clinch contracts

Saga, the specialist provider of products and services to those over 50 confirmed that it was in talks to potentially sell Acromas Insurance Company Limited with a view to reducing its debt pile. Its board has "concluded that a potential disposal of its Underwriting business is consistent with Group strategy and would crystalise value and enhance long-term returns for shareholders."

National Express Group said Its German business had won a €1bn contract to operate the RE1 and RE11 Rhein-Ruhr-Express (RRX) train lines to 2033. The company took over the operation of the two lines in February 2022 through an emergency contract award. National Express now operates all three asset light RRX lots under long term contracts, the company said on Monday.

Infrastructure group Balfour Beatty said it had been awarded a £1.2bn contract by Britain’s National Highways to deliver a package of works for the proposed Lower Thames Crossing. The company said it would be responsible for the design and delivery of more than 10 miles of new highway as part of the project to build a new tunnel under the River Thames aimed at easing traffic congestion in the south of England.

Shares of ABF were boosted by an upgrade out of Deutsche Bank to 'buy'. The investment bank said that the headwinds from energy costs and foreign exchange rates were reversing. It also noted the company's "robust" balance sheet and share buybacks.

Primary Health Properties bought Irish property management business Axis Technical Services and signed a long-term agreement providing access to a strong pipeline of future primary care projects in Ireland, the company said on Monday. Axis manages a portfolio of more than 30 properties, including the majority of PHP's Irish portfolio, it added. No financial details were disclosed.

Market Movers

FTSE 100 (UKX) 7,784.67 0.18%
FTSE 250 (MCX) 19,801.69 0.50%
techMARK (TASX) 4,458.70 0.05%

FTSE 100 - Risers

Ocado Group (OCDO) 735.60p 3.93%
Associated British Foods (ABF) 1,869.50p 2.35%
RS Group (RS1) 950.00p 2.10%
Antofagasta (ANTO) 1,760.50p 1.76%
Scottish Mortgage Inv Trust (SMT) 746.60p 1.72%
F&C Investment Trust (FCIT) 945.00p 1.61%
Persimmon (PSN) 1,395.00p 1.57%
Rolls-Royce Holdings (RR.) 108.20p 1.50%
Smith (DS) (SMDS) 351.40p 1.47%
Spirax-Sarco Engineering (SPX) 11,595.00p 1.44%

FTSE 100 - Fallers

Fresnillo (FRES) 871.40p -4.91%
Endeavour Mining (EDV) 1,929.00p -2.58%
St James's Place (STJ) 1,208.00p -2.19%
London Stock Exchange Group (LSEG) 7,328.00p -2.16%
Informa (INF) 654.80p -1.50%
AstraZeneca (AZN) 11,038.00p -1.45%
Croda International (CRDA) 6,954.00p -1.28%
Hiscox Limited (DI) (HSX) 1,109.50p -1.25%
Severn Trent (SVT) 2,783.00p -1.21%
SSE (SSE) 1,735.00p -0.89%

FTSE 250 - Risers

888 Holdings (DI) (888) 96.55p 5.06%
International Distributions Services (IDS) 232.00p 4.84%
Harbour Energy (HBR) 326.20p 4.62%
Bridgepoint Group (Reg S) (BPT) 228.00p 4.30%
Greencoat UK Wind (UKW) 158.70p 3.39%
RHI Magnesita N.V. (DI) (RHIM) 2,602.00p 3.34%
Allianz Technology Trust (ATT) 217.00p 3.09%
Keller Group (KLR) 788.00p 3.01%
Vesuvius (VSVS) 425.60p 2.90%
Wizz Air Holdings (WIZZ) 2,839.00p 2.79%

FTSE 250 - Fallers

ASOS (ASC) 743.50p -4.43%
Balanced Commercial Property Trust Limited (BCPT) 84.70p -3.64%
Bank of Georgia Group (BGEO) 2,605.00p -3.34%
Chemring Group (CHG) 275.50p -2.65%
Watches of Switzerland Group (WOSG) 930.00p -2.36%
AJ Bell (AJB) 336.00p -2.15%
Drax Group (DRX) 660.00p -2.15%
Lancashire Holdings Limited (LRE) 641.50p -2.06%
TBC Bank Group (TBCG) 2,235.00p -1.97%
PureTech Health (PRTC) 256.50p -1.72%