London close: Stocks finish flat ahead of key central bank meetings

London’s stock markets closed a quiet day in the green on Monday, with major indexes ending just above break-even point as investors prepared themselves for a significant week of interest rate decisions from a trio of the world's leading central banks.

The FTSE 100 closed 0.11% higher at 7,570.69 points, while the FTSE 250 posted slightly stronger gains, finishing the day ahead 0.52% at 19,190.81.

In the coming days, the US Federal Reserve, the European Central Bank, and the Bank of Japan are all set to hold interest rate meetings.

On the currency front, sterling was last down 0.64% on the dollar at $1.2492, while it weakened 0.62% against the euro to change hands at €1.1623.

“UK investors will certainly hope that the Fed delivers a ‘no change’ on Wednesday, given that commodity weakness has put the FTSE 100 on the back foot today,” said IG chief market analyst Chris Beauchamp.

“But OPEC’s recent production cut has fizzled out dramatically, and as oil demand estimates get revised down again the outlook for commodity stocks seems grim.”

UK to narrowly avoid recession, say reports

In economic news, both the Confederation of British Industry (CBI) and KPMG released relatively optimistic economic forecasts for the UK, suggesting the country would sidestep a recession thanks to a brighter global economic scenario and decreasing wholesale energy costs.

The CBI's most recent economic report suggested that the UK's economic performance in the first half of the year was better than anticipated, setting the country on course to avert a recession.

The trade body predicted growth of 0.4% for the current year, followed by an accelerated 1.8% in 2024, revising its prior estimates that foresaw a 0.4% shrinkage and 1.6% growth respectively.

According to the CBI, the "tailwinds to growth" have picked up since its last forecast in December, leading to an expectation of easing inflation as the year progressed.

Notably, food inflation was projected to drop from a significant 15.5% in 2023 to a more manageable 4.4% in 2024.

However, the body also warned of persistent inflationary risks, largely from domestic price pressures and wage growth, and was expecting two additional interest rate hikes by the Bank of England, reaching 5% by August.

“Business and consumers alike will be relieved that the UK economy has avoided recession and will re-enter growth territory in the second half,” said Rain Newton-Smith, CBI director general.

“But firms want to see growth and productivity pick up pace.”

Similarly, KPMG's UK economic update released on Monday projected the country would stave off a recession, thanks to reduced energy prices and an improving international economic outlook.

KPMG also reported the country's labour market as tight, which has assisted in maintaining unemployment levels.

The professional services firm now projected UK GDP to grow by a modest 0.3% this year and 1.1% in the next.

Nevertheless, KPMG cautioned that the growth pace remained "weak" compared to historical standards, and downside risks were still significant.

Those risks included stubborn inflation, currently at 8.7%, potential disruptions in the global banking system, and the ambiguous impact of higher interest rates on the economy.

Ocado jumps while real estate struggles on broker opinions

On London’s equity markets, online grocery firm Ocado Group was among the leading risers, climbing 3.62% after an upgrade to 'neutral' at BNP Paribas Exane.

Chemicals company Croda International also posted gains, its stock price increasing by 3.19% after a slump at the end of the last week, triggered by a profit warning.

Online electric retailer AO World rallied significantly, with its shares soaring by 7.84%.

That was propelled by news of Mike Ashley’s Frasers Group acquiring an 18.9% stake in the company.

Frasers Group, which owns several retail chains including Sports Direct and House of Fraser, purchased 109.4 million shares at 68p each.

Glencore, the Swiss mining and trading behemoth, saw a modest increase of 0.45% on the back of a proposal to acquire Teck Resources' steelmaking coal business as a standalone unit.

On the downside, mining companies fell in line with a dip in copper prices, leading to losses for Anglo American, Antofagasta and Rio Tinto Group.

In the real estate sector, both Segro and Great Portland Estates experienced drops following downgrades by Goldman Sachs.

Segro's shares plummeted by 2.65% after being downgraded to 'neutral', while Great Portland Estates' shares declined by 2.4% due to a 'sell' rating issued by the same firm.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,570.69 0.11%
FTSE 250 (MCX) 19,190.81 0.52%
techMARK (TASX) 4,575.54 0.47%

FTSE 100 - Risers

Ocado Group (OCDO) 400.60p 3.62%
Croda International (CRDA) 5,442.00p 3.19%
Auto Trader Group (AUTO) 637.00p 3.11%
Experian (EXPN) 2,949.00p 2.82%
Airtel Africa (AAF) 131.30p 2.50%
RS Group (RS1) 817.20p 2.15%
International Consolidated Airlines Group SA (CDI) (IAG) 163.05p 2.03%
CRH (CDI) (CRH) 3,930.00p 1.76%
InterContinental Hotels Group (IHG) 5,532.00p 1.65%
Whitbread (WTB) 3,427.00p 1.63%

FTSE 100 - Fallers

Fresnillo (FRES) 648.60p -4.22%
Vodafone Group (VOD) 72.85p -2.71%
SEGRO (SGRO) 779.40p -2.65%
BT Group (BT.A) 143.65p -2.28%
Anglo American (AAL) 2,416.50p -1.65%
Unite Group (UTG) 910.00p -1.41%
BP (BP.) 462.60p -1.34%
St James's Place (STJ) 1,146.00p -1.21%
DCC (CDI) (DCC) 4,680.00p -1.12%
Rio Tinto (RIO) 5,068.00p -1.11%

FTSE 250 - Risers

Carnival (CCL) 1,024.50p 12.66%
Kainos Group (KNOS) 1,361.00p 6.00%
Wizz Air Holdings (WIZZ) 2,842.00p 4.29%
Trainline (TRN) 275.60p 4.08%
Games Workshop Group (GAW) 9,660.00p 3.70%
TUI AG Reg Shs (DI) (TUI) 571.50p 3.63%
Renishaw (RSW) 4,166.00p 3.27%
Darktrace (DARK) 294.70p 2.97%
Baltic Classifieds Group (BCG) 169.40p 2.67%
Auction Technology Group (ATG) 752.00p 2.59%

FTSE 250 - Fallers

IWG (IWG) 160.40p -3.08%
Ibstock (IBST) 155.20p -2.94%
Tullow Oil (TLW) 25.02p -2.72%
Lancashire Holdings Limited (LRE) 570.50p -2.65%
Plus500 Ltd (DI) (PLUS) 1,390.00p -2.59%
Great Portland Estates (GPE) 472.40p -2.40%
Barr (A.G.) (BAG) 488.00p -2.31%
Hunting (HTG) 212.50p -2.30%
Energean (ENOG) 1,074.00p -2.27%
Harbour Energy (HBR) 245.20p -2.23%