London open: Stocks gain as investors mull Powell comments

London stocks rose in early trade on Monday, as investors mulled the latest comments from Federal Reserve chairman Jerome Powell, who poured cold water on hopes of a rate cut in March.

At 0850 GMT, the FTSE 100 was up 0.4% at 7,648.05.

In an interview with US TV show ’60 Minutes’, Powell reiterated comments from the press conference last Wednesday, that the FOMC would most likely not begin cutting rates in March.

Danske Bank said: "He also backed the dot plot released at the December meeting indicating FOMC members expect three rate cuts this year. This compares to markets currently pricing in five cuts for 2024.

"Powell emphasised the strength of the economy, underlining a strong jobs market, and saying how the economic pain he forewarned in Jackson Hole in August 2022 may come with the following rate hikes in large parts have not materialised."

Danske noted that the interview was filmed last Thursday, a day before the release of the surprisingly strong non-farm payrolls data.

On the macro front, a survey out earlier showed that activity in China’s services sector grew less than expected in January.

The Caixin services purchasing managers’ index to 52.7 from 52.9 in December, missing expectations for a jump to 53.0. A reading above 50.0 indicates expansion, while a reading below signals contraction.

"The economy contends with significant challenges marked by numerous uncertainties and adverse factors," said Wang Zhe, senior economist at Caixin Insight Group. "This status quo has yet to experience a fundamental reversal."

Julian Evans-Pritchard, head of China Economics at Capital Economics, said: "The Caixin services PMI edged down in January. But it remained more upbeat than its official counterpart, with the average of the two picking up slightly.

"Coupled with an improvement in the manufacturing PMIs, this adds to wider evidence that China’s economy is reaccelerating, albeit modestly. We think this recovery will continue in the near-term but go into reverse later in the year as the prop from stimulus wanes."

On the UK calendar, the S&P Global/CIPS services PMI for January is due at 0930 GMT.

In equity markets, spreadbetting and CFD trading group CMC Markets surged as it announced plans to axe 200 jobs following a cost-cutting programme expected to save £21m.

The headcount reduction, which represents 17% of the total global workforce, will see the company merge support functions across multiple business lines, streamlining reporting lines and automating processes. The move will result in a one-off cost of around £2.5m to be taken in the current financial year ending 31 March, with savings realised the following year.

Telecoms giant Vodafone was in the red after it held full-year guidance as it reported a fall in third-quarter service revenues. The company said service revenues fell 1.4% to €9.3bn on a reported basis. Vodafone still expects adjusted core earnings of around €13.3bn and adjusted free cash flow of €3.3bn.

B&Q and Castorama owner Kingfisher was down after JPMorgan Cazenove cut its price target on the shares to 180p from 190p and placed them on ‘negative catalyst watch’ ahead of full-year results on 25 March.

The bank said its analysis suggests that Kingfisher will struggle to achieve an opex decline in FY25, even accounting for lower volumes and cost savings.

"Combined with sales forecasts still overly ambitious in the UK, we do not think that consensus is capturing the combined risk to both top line and a higher opex ratio," it said.

Market Movers

FTSE 100 (UKX) 7,648.05 0.43%
FTSE 250 (MCX) 19,215.74 0.22%
techMARK (TASX) 4,386.59 0.47%

FTSE 100 - Risers

Ocado Group (OCDO) 524.80p 3.92%
Burberry Group (BRBY) 1,313.00p 2.38%
Rolls-Royce Holdings (RR.) 315.70p 1.77%
Land Securities Group (LAND) 660.60p 1.47%
GSK (GSK) 1,634.80p 1.46%
Marks & Spencer Group (MKS) 244.40p 1.45%
National Grid (NG.) 1,055.50p 1.44%
Hikma Pharmaceuticals (HIK) 1,900.50p 1.25%
Intermediate Capital Group (ICP) 1,799.50p 1.21%
Informa (INF) 784.40p 1.19%

FTSE 100 - Fallers

Airtel Africa (AAF) 110.00p -1.26%
Lloyds Banking Group (LLOY) 41.89p -1.00%
Kingfisher (KGF) 212.80p -0.84%
Vodafone Group (VOD) 68.05p -0.80%
Endeavour Mining (EDV) 1,348.00p -0.66%
United Utilities Group (UU.) 1,052.00p -0.47%
London Stock Exchange Group (LSEG) 8,838.00p -0.43%
Bunzl (BNZL) 3,196.00p -0.37%
Beazley (BEZ) 548.00p -0.36%
Fresnillo (FRES) 503.80p -0.36%

FTSE 250 - Risers

Watches of Switzerland Group (WOSG) 375.60p 4.45%
Trustpilot Group (TRST) 180.30p 2.27%
Close Brothers Group (CBG) 510.00p 1.80%
Mobico Group (MCG) 88.95p 1.77%
Indivior (INDV) 1,387.00p 1.76%
Pets at Home Group (PETS) 274.00p 1.71%
Wizz Air Holdings (WIZZ) 2,225.00p 1.69%
SThree (STEM) 425.00p 1.67%
Oxford Instruments (OXIG) 2,175.00p 1.64%
Helios Towers (HTWS) 74.90p 1.63%

FTSE 250 - Fallers

Bakkavor Group (BAKK) 91.20p -3.39%
Savills (SVS) 975.50p -2.74%
Fidelity Emerging Markets Limited Ptg NPV (FEML) 600.10p -2.60%
North Atlantic Smaller Companies Inv Trust (NAS) 3,660.00p -2.40%
Rathbones Group (RAT) 1,572.00p -2.36%
Apax Global Alpha Limited (APAX) 151.60p -2.19%
Tullow Oil (TLW) 29.94p -1.84%
Templeton Emerging Markets Inv Trust (TEM) 144.00p -1.77%
Syncona Limited NPV (SYNC) 114.00p -1.72%
PZ Cussons (PZC) 127.00p -1.70%