London close: Stocks languish ahead of Wednesday's Budget

London's stock markets finished in the red on Monday, reflecting investor apprehension ahead of the impending Spring Budget.

The FTSE 100 recorded a decline of 0.55%, settling at 7,640.33 points, while the FTSE 250 followed suit with a decrease of 0.54%, closing at 19,249.08 points.

Investors were closing their wallets as chancellor Jeremy Hunt prepared to deliver the Spring Budget to Parliament on Wednesday at 1230 GMT, in what could be his last major economic update before the next general election.

In currency markets, sterling was last up 0.3% on the dollar, trading at $1.2693, while it edged up 0.14% against the euro to change hands at €1.1691.

“UK stocks slightly decreased as investors approached the domestic budget with caution, despite the limiting effect of BP's oil firm on further declines,” said TickMill market analyst Patrick Munnelly.

“Although indications of decreasing inflation have maintained positive investor sentiment, attention will shift to finance minister Jeremy Hunt's unveiling of the pre-election budget on Wednesday to gauge potential tax reductions and the state of the economy.

“Oil prices increased on Monday as OPEC+ members decided to prolong voluntary oil output cuts of 2.2 million barrels per day into the second quarter, in line with market expectations.”

Munnelly noted that BP's stock price surged earlier after Jefferies upgraded its rating from 'hold' to 'buy' and raised the price target to 570p from 520p.

“The bank anticipates that the company will narrow the valuation gap compared to its peers due to its increased focus on distributions, reduced capex risk, and relatively conservative consensus earnings growth expectations.

“Jefferies also highlighted BP's improved financial position, including a higher allocation of free cash flow to shareholder distributions, enhanced visibility for its buyback programme, and tightened capex guidance following its fourth-quarter results.

“On the negative side of the ledger, Ocado faced pressure once again after releasing its financial results last week.”

Investor confidence in the eurozone jumps higher

In economic news, investor confidence in the eurozone reached its highest level in nearly a year, buoyed by positive sentiment across the region, according to fresh data from Sentix.

The eurozone sentiment index for March climbed to -10.5, marking its fifth consecutive increase and a notable improvement from the -12.9 recorded in February and -15.8 in January.

That surge represented the highest reading since April 2023.

Sentix, in a statement, acknowledged the positive trend but tempered expectations, stating, “to speak of a spring revival would probably be an exaggeration”.

“However, the Sentix economic index for the eurozone has improved for the fifth time in a row, although it remains negative at -10.5 points.”

The current situation assessment also showed improvement, increasing by 1.5 points over the month, albeit remaining firmly negative at -18.5.

Notably, the expectations index experienced significant growth, rising by 3.2 points to -2.3, marking its highest level since February 2022.

Despite the overall optimism in the eurozone, weaknesses in Germany persisted, casting a shadow on the region's outlook.

The headline reading of investor sentiment in Germany declined by a further 0.8 points to -27.9 in March.

Both the expectations index and the current situation measure for Germany experienced declines, with the former dropping 0.3 points to -14.3 and the latter falling by 1.2 points to -40.5, the lowest score since July 2020.

Economist Morgan Ansell from Oxford Economics said recent datapoints indicated that “the worst is behind the eurozone for now”, pointing to quarter-on-quarter economic growth across the region of 0.2% in the first three months of 2024.

“However, the same cannot be said for Germany which is now single handedly becoming the main downside risk for eurozone growth,” Ansell said.

BP falls back by the close, Clarkson finishes in the green

On London’s equity markets, online grocery retailer Ocado closed flat, following an earlier decline attributed to disappointing results from last week and the looming prospect of a potential legal dispute with Marks & Spencer.

Hipgnosis Songs Fund declined 8.24%, as the value of its music portfolio decreased by over a quarter.

The company also announced its intention to use free cash to address debt obligations, leading to a decision to withhold dividends for the foreseeable future.

Oil giant BP recorded a slight dip of 0.4%, reversing earlier gains which came on the back of Jefferies' upgrade of its shares to 'buy' from 'hold', accompanied by an upward revision of the price target.

The investment firm said it expected BP's valuation to narrow the gap compared to its industry peers.

On the upside, insurance company Aviva managed to reverse earlier losses, edging up 0.18%.

The uptick followed the announcement of Aviva's entry into the Lloyd’s insurance market through the acquisition of underwriting syndicate Probitas for £242m.

Shipping broker Clarkson rose 3.13%, driven by the revelation of record full-year profits.

The company's robust revenue growth, particularly in its broking, support, and research divisions, fueled investor optimism and propelled the stock upward.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,640.33 -0.55%
FTSE 250 (MCX) 19,249.08 -0.54%
techMARK (TASX) 4,355.83 -0.49%

FTSE 100 - Risers

Endeavour Mining (EDV) 1,368.00p 3.32%
Fresnillo (FRES) 476.10p 2.70%
Melrose Industries (MRO) 640.00p 2.27%
Pearson (PSON) 1,035.00p 2.07%
BT Group (BT.A) 106.15p 1.43%
Antofagasta (ANTO) 1,838.00p 1.16%
Persimmon (PSN) 1,400.00p 0.97%
Hikma Pharmaceuticals (HIK) 1,951.00p 0.91%
BAE Systems (BA.) 1,260.00p 0.80%
Sage Group (SGE) 1,253.50p 0.72%

FTSE 100 - Fallers

Entain (ENT) 844.80p -7.85%
Ocado Group (OCDO) 445.00p -6.51%
St James's Place (STJ) 491.20p -4.03%
Anglo American (AAL) 1,702.40p -3.32%
Kingfisher (KGF) 226.10p -2.71%
Next (NXT) 8,184.00p -2.69%
Whitbread (WTB) 3,152.00p -2.66%
Burberry Group (BRBY) 1,256.00p -2.41%
Schroders (SDR) 385.00p -2.21%
Croda International (CRDA) 4,792.00p -2.16%

FTSE 250 - Risers

Hochschild Mining (HOC) 100.00p 5.26%
Clarkson (CKN) 3,790.00p 3.13%
ICG Enterprise Trust (ICGT) 1,262.00p 2.60%
Centamin (DI) (CEY) 95.80p 2.57%
Carnival (CCL) 1,154.50p 2.12%
TBC Bank Group (TBCG) 3,220.00p 1.74%
Rotork (ROR) 316.20p 1.74%
Aberforth Smaller Companies Trust (ASL) 1,336.00p 1.67%
Foresight Group Holdings Limited NPV (FSG) 440.00p 1.62%
Hargreaves Lansdown (HL.) 749.40p 1.52%

FTSE 250 - Fallers

Hipgnosis Songs Fund Limited NPV (SONG) 57.90p -8.24%
Aston Martin Lagonda Global Holdings (AML) 165.00p -6.62%
Genus (GNS) 1,637.00p -5.92%
ITV (ITV) 60.54p -5.35%
Darktrace (DARK) 341.60p -5.32%
Future (FUTR) 601.50p -5.13%
PZ Cussons (PZC) 97.50p -4.22%
Moonpig Group (MOON) 159.70p -4.20%
Quilter (QLT) 102.30p -4.03%
AO World (AO.) 91.40p -3.48%