London close: Stocks take a breather after last week's surge

The FTSE 100 dipped 0.22% to settle at 8,414.99 points by the close of trading, while the FTSE 250 saw a decline of 0.41% to finish at 20,560.34 points.

In currency markets, sterling was last up 0.33% on the dollar to trade at $1.2566, while it saw a more modest uptick of 0.07% against the euro, changing hands at €1.1637.

“The FTSE 100 showed little change as increases in travel and leisure sectors were balanced out by declines in defence stocks,” said TickMill market analyst Patrick Munnelly.

“Investors are anticipating further corporate announcements and insights from Bank of England officials regarding the UK economy.

“The FTSE 100, which had recently reached record highs in 11 of the last 13 sessions, remained steady as the BoE adopted a cautious approach and a depreciating pound bolstered the market's overall performance.”

Munnelly said the focus for the week would be on labour market data scheduled for release on Tuesday, and comments from BoE chief economist Huw Pill and external member of the monetary policy panel Megan Greene, which could provide insight into the timing of policy easing.

“Additionally, investors will be analysing US inflation data to assess the Federal Reserve's interest-rate trajectory.

“Currently, money markets have priced in two rate cuts by 2024, with the easing cycle expected to commence in August.”

Markets take a breather after stellar week

An atmosphere of optimism enveloped European and UK markets last week, with indices such as the FTSE 100, DAX, CAC, and Stoxx 600 reaching unprecedented heights, although Monday saw a dearth of economic data to influence movements.

The surge was largely propelled by anticipations of accommodative monetary policies from central banks, fostering a dovish sentiment among investors.

However, recent remarks from Federal Reserve officials introduced a note of caution, particularly regarding the trajectory of inflation soon.

The divergence in approach between the Federal Reserve and its European counterparts was becoming increasingly apparent, with US policymakers signalling a willingness to maintain elevated interest rates for a prolonged period.

Eagerly-awaited US inflation figures, set to be unveiled on Wednesday, were poised to offer insights into the Federal Reserve's prospective actions in the months ahead.

Analysts' consensus forecasts anticipate a deceleration in price growth for April, with the core annual rate expected to moderate to 3.6% from the previous 3.8%.

On the other side of the globe, the National Bureau of Statistics drew attention to China following the release of fresh economic data over the weekend.

The figures revealed a faster-than-expected acceleration in Chinese inflation during April.

China’s consumer price index surged by 0.3% year-on-year, exceeding economists' projections of 0.2% as polled by Reuters.

The uptick marked a notable increase from the 0.1% recorded in March.

Diploma jumps on fresh guidance, defence stocks out of favour

On London’s equity markets, specialist distribution business Diploma rose 4.05% after upward revision of its annual guidance, prompted by a robust 17% rise in first-half adjusted earnings.

Diploma's optimistic outlook, driven by acquisitions, anticipates a constant currency revenue growth of approximately 16%.

British Airways owner IAG also registered an uptick of 2.7%, buoyed by positive remarks from JPMorgan.

The financial institution expressed confidence in the earnings trajectory of IAG, foreseeing continued momentum that could further elevate the company's shares.

Media company Future advanced 3.86% after Deutsche Bank initiated coverage with a 'buy' rating and set a target price of 2,120p.

Deutsche Bank highlighted the company's compelling valuation, particularly in light of its acquisition of GoCompare.

Additionally, Harbour Energy and John Wood Group capitalised on a rise in crude oil prices, with their shares climbing by 1.57% and 2.25%, respectively.

On the downside, Phoenix Group Holdings declined 1.92% after announcing its chief financial officer's impending departure later this year.

Similarly, Rio Tinto faced a setback of 0.71% after an automated iron ore train operated by the mining giant derailed in north-western Australia.

In the defence sector, Babcock International Group and BAE Systems were among the day's worst performers on the FTSE 350.

Babcock International Group witnessed a decline of 3.16%, while BAE Systems slipped by 3.08%.

The downturn in BAE Systems' shares was exacerbated by Bank of America Merrill Lynch's downgrade from 'buy' to 'neutral,' citing limited near-term valuation upside despite a strong year-to-date performance.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,414.99 -0.22%
FTSE 250 (MCX) 20,560.34 -0.41%
techMARK (TASX) 4,733.56 -0.35%

FTSE 100 - Risers

Diploma (DPLM) 4,060.00p 4.05%
BT Group (BT.A) 108.95p 3.37%
International Consolidated Airlines Group SA (CDI) (IAG) 186.45p 2.90%
3i Group (III) 2,919.00p 2.39%
Kingfisher (KGF) 265.40p 1.41%
Whitbread (WTB) 3,107.00p 1.24%
British American Tobacco (BATS) 2,460.00p 1.11%
Sainsbury (J) (SBRY) 279.00p 1.09%
Smith (DS) (SMDS) 367.40p 1.05%
JD Sports Fashion (JD.) 123.10p 0.98%

FTSE 100 - Fallers

BAE Systems (BA.) 1,349.00p -3.23%
CRH (CDI) (CRH) 6,578.00p -2.98%
Anglo American (AAL) 2,707.00p -2.40%
Phoenix Group Holdings (PHNX) 508.50p -2.31%
Admiral Group (ADM) 2,697.00p -1.93%
Spirax-Sarco Engineering (SPX) 9,175.00p -1.87%
RS Group (RS1) 814.50p -1.87%
Ocado Group (OCDO) 339.90p -1.81%
Frasers Group (FRAS) 817.50p -1.74%
Intertek Group (ITRK) 4,892.00p -1.68%

FTSE 250 - Risers

Future (FUTR) 862.00p 3.86%
Apax Global Alpha Limited (APAX) 156.00p 2.90%
IWG (IWG) 199.90p 2.57%
Aston Martin Lagonda Global Holdings (AML) 141.10p 2.54%
SDCL Energy Efficiency Income Trust (SEIT) 68.40p 2.26%
Wood Group (John) (WG.) 201.80p 2.25%
TUI AG Reg Shs (DI) (TUI) 594.00p 2.15%
Octopus Renewables Infrastructure Trust (ORIT) 76.00p 2.01%
Jupiter Fund Management (JUP) 86.60p 2.00%
TBC Bank Group (TBCG) 3,055.00p 1.83%

FTSE 250 - Fallers

Ferrexpo (FXPO) 46.60p -4.70%
Oxford Instruments (OXIG) 2,335.00p -3.71%
Trustpilot Group (TRST) 208.00p -3.69%
Babcock International Group (BAB) 504.00p -3.36%
Hochschild Mining (HOC) 157.40p -3.07%
OSB Group (OSB) 455.20p -2.80%
Vistry Group (VTY) 1,264.00p -2.39%
Barr (A.G.) (BAG) 571.00p -2.39%
Diversified Energy Company (DEC) 1,088.00p -2.33%
Just Group (JUST) 102.20p -2.29%