- FTSE 100 ends 123 points higher
- Wall Street rebounds after recent slump
- Commodity stocks lead in London
4.50pm: Big Monday rise for Footsie
The FTSE 100 index closed higher on Monday, tracking morning gains on Wall Street as global markets started the new week in more positive fashion following recent sharp falls.
The UK blue-chip index ended up 123.46 points, or 1.7% at 7,513.44, the session peak and well above the day's low of 7,389.98.
In New York, around London’s close, the Dow Jones Industrial Average was 654 points, or 2.1% higher at 31,916, while the broader S&P 500 index added 1.7%, and the Nasdaq Composite rose 1.1% as tech stocks lagged slightly.
Michael Hewson, chief market analyst at CMC Markets UK commented: “The FTSE 100 has continued to stand out as far as European markets are concerned, consolidating its position as a more defensive index”.
He noted: “Basic resources are doing well, along with the telecoms sector, with Vodafone posting its second successive day of strong gains after last week’s news that Etisalat had built a stake in the business.
“Housebuilders have edged higher after the latest Rightmove house price index for May showed a better-than-expected gain on both the monthly and annual measure. Once again, a lack of supply is helping to support prices despite concerns over higher rates, with Barratt Developments and Persimmon outperforming.”
Hewson added: “The bar was low heading into today’s Q1 trading update from B&Q owner Kingfisher, with the shares trading near to their lowest level in almost two years at the end of last week. Expectations were for like for like sales to decline by -8.1%, largely due to the tougher comparatives from a year ago.
“With the help of a decent performance from its Poland operation, which saw a 50% rise in sales, Q1 sales for the group saw a fall of -5.8%, a much better than expected outcome, at just shy of £3.25bn.”
3.50pm: Footsie breaks above 7,500
Egads! It’s done it. The FTSE 100 has risen above 7,500, albeit only just.
London’s index of heavyweight shares was up 112 points (1.5%) at 7,502 but if yesterday’s final day of the Premiers League season told us anything it is that it ain’t over ‘til its over.
Royal Mail PLC (LSE:RMG), up 5.0% at 331.2p, was the best performer heading into the last half-hour of trading. Mining companies such as Anglo America PLC, up 4.7% at 3,687.5p, and Rio Tinto PLC (LSE:RIO), up 2.5% at 5,586p, also lent heavy support.
With the risk-on mood back, defensive favourites such as United Utilities PLC and Imperial Brands PLC (LSE:IMB) got the brush-off but even those stocks were only down 0.1% or so.
Intertek PLC, the quality assurance company, was down 4.1% at 4,698p after being downgraded by broker Stifel.
3.00pm: FTSE 100 eyeing 7,500 (from a distance)
US stocks have opened higher although the tech-heavy Nasdaq Composite index has barely got out of the blocks.
The Dow Jones industrial average was up 234 points (0.8%) at 31,496 and the S&P 500 was 16 points (0.4%) heavier at 3,918.
The Nasdaq, however, is down 11 points (0.1%) at 11,344, having opened firmer.
“Among this week’s earnings, we are looking forward to Wednesday where the focus is earnings from Nvidia and Snowflake,” said Peter Garnry, Saxo bank’s head of equity strategy.
“Nvidia is expected to deliver FY23 Q1 (ending 30 April) revenue of $8.1bn up 43.1% y/y but, with cryptocurrencies declining, a lot from the highs we would expect capital expenditures from the crypto mining industry to decline as well – just like in 2018. This had a real negative impact on Nvidia’s revenue growth ... and investors must be prepared for the same abrupt change in growth rates. Snowflake is expected to deliver FY23 Q1 revenue (ending 30 April) of $414mn up 81% y/y and its first quarterly positive EBITDA result,” he added.
Later today, Zoom Video Communications Inc (NASDAQ:ZM) is scheduled to release its first-quarter earnings after the market closes. Analysts are expecting adjusted earnings per share of 88 cents.
In London, the FTSE 100 is peering from a distance at the 7,500 level; it is currently at 7,479, up 89 points (1.2%).
Among the small caps, Vast Resources PLC (AIM:VAST), up 39% at 1.225p, is the best-performing stock, for reasons unknown, just pipping JZ Capital Partners Ltd, which is up 37% at 140p after it said it is due to receive some money from assets it sold a little while back.
Driver Group (AIM:DRV) PLC was the third-best performer after it reached a deal for its underperforming Middle East business and said it is looking for ways to return surplus cash to shareholders.
The shares rose by just over a fifth to 33.5p.
1.35pm: The Footsie extends the morning's gains
London’s index of leading shares has extended the morning’s gains over the lunchtime session, with miner Anglo American PLC (LSE:AAL) leading the way.
The Footsie was up 85 points (1.1%) at 7,475, thanks in part to a 4.6% hike in the share price of Anglo American to 3,684p.
Mobile phone network operator Vodafone Group PLC (LSE:VOD) is up 4.8% at 125.88p, buoyed by Emirates Telecoms Group becoming the group’s largest shareholder last week.
Up for sale fallen glamour stock Ted Baker PLC (LSE:TED), its days as a FTSE 350 stalwart long behind it, shed 1.9% at 136.6p, taking its market capitalisation down to a mere £257mln, as it confirmed that Sycamore Partners Management is no longer participating in the formal sale process.
In other acquisition news, Sanne Group PLC (LSE:SNN) said the proposed takeover by Apex Group is unlikely to complete by the end of June as previously expected.
The US$2.1bn deal between the two financial services firm is being put under the magnifying glass by regulators in case there are competition issues. The takeover is now expected to take place in the third quarter of this year.
Shares in Sanne were unmoved.
12.15pm: US stocks to open higher
US stocks were expected to open higher on Monday, having narrowly avoided bear market territory last week, as bargain hunters emerge to pick up stocks at lower prices.
Markets are expected to remain volatile, however, as concerns about slowing economic growth, higher levels of inflation and rising interest rates continue to simmer in the background.
Futures for the Dow Jones Industrial Average were up 0.5% in pre-market trading, while those for the broader S&P 500 index rose 0.6%, and contracts for the tech-heavy Nasdaq-100 gained 0.4%.
“US futures are in the positive this Monday, as some investors see opportunity in the actual market dip. But the trading conditions will likely remain choppy, and gains may remain short-lived,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “In the medium run, there is a stronger case building for a further retreat in the S&P500 stocks. Investors now eye a return to the 3500/3600 range, according to the latest Bloomberg survey.”
Last week, the S&P 500 dipped 20% below its all-time high into so-called bear market territory but late buying helped take the edge off losses and shares ended Friday around 19% below its record. The S&P and Nasdaq each lost ground for the seventh consecutive week. The Dow, meanwhile, has dropped for eight-straight weeks.
The highlight for this week comes on Wednesday when the minutes from the US Federal Reserve's last rate-setting meeting are released.
“At this point, most of the Federal Reserve (Fed) hawkishness has already been broadly priced in - including a small chance of a 75bp hike in next meeting. Therefore, we should not see a significant, further erosion in the market mood post-minutes,” said Ozkardeskaya. “But again, that doesn’t mean that the mood is good enough for a sustained market recovery.”
In an indication that investors are still seeking the perceived safety of gold as a store of value at a time of uncertainty, the precious metal was up 1.2% at US$1,863.3 an ounce.
Elsewhere, oil prices were higher. WTI crude oil futures were up 1.3% at US$111.74 a barrel and Brent crude futures gained 1.5% at US$114.19.
Ozkardeskaya noted that the possibility of Shanghai’s COVID-19 related lockdowns ending along with reluctance in Europe to fully ban Russian oil are driving crude prices higher this morning.
In London, the FTSE 100 is up 74 points (1.0%) at 7,464.
11.05am: FTSE 250 puts the FTSE 100 in trhe shade
Things remain on the quiet side among FTSE 100 companies but there has been a bit of activity among the mid-caps.
The FTSE 100 is 71 points (1.0%) at 7,460 while the FTSE 250 is up 263 points (1.3%) at 20,098.
Kainos (LSE:KNOS) Group PLC and Moonpig Group PLC (LSE:MOON) are leading the mid-cap index’s charge.
Kainos shares were up 24% at 1,280p after the IT services provider boasted of its 12th consecutive year of growth across a wide range of key metrics.
Moonpig was 8.3% firmer at 254.6p after it announced plans to acquire Smartbox group, a gift experiences platform that owns brands Buyagift and Red Letter Days, for £124mln in cash.
The deal is expected to swell Moonpig's total revenue for fiscal 2023 to around £350mln, following the completion of the acquisition by end-July.
Shares in Moonpig rose more than 10% this morning after it said it was proposing to buy Smartbox Group UK Ltd. for £124m #MOONM | #Moonpig pic.twitter.com/ST4m6VcbMa
— IG (@IGcom) May 23, 2022
“Moonpig’s long-term growth plan is focused on selling gifts alongside greetings cards. It can make a lot more money bundling a teddy bear, box of chocolates and flowers with a birthday card than simply selling the latter on its own. It’s therefore logical to see it acquire to increase its presence in the gifting market and branch out into more expensive experiences,” surmised Russ Mould, the investment director at AJ Bell.
“The purchase of Buyagift includes Red Letter Days, a business previously owned by Dragon’s Den judge Rachel Elnaugh until it collapsed into administration in 2005, blamed on over-expansion. Fellow Dragon’s Den stars Peter Jones and Theo Paphitis rescued the business before selling it in 2017. Once again it passes to a new owner.
“Moonpig is paying just under nine times EBITDA (earnings before interest, tax, depreciation and amortisation) to acquire Buyagift which is not a bargain, but equally not excessive. Given Red Letter Days’ tarnished history, Moonpig shareholders will be hoping this is not a cursed business and one which the new owner will regret buying,” he added.
9.55am: Davos talking shop officially opens
After a bright start, London’s blue-chips have remembered it is Monday morning and calmed down a bit.
The FTSE has risen above 7,400 but having also cruised above 7,450 earlier this morning it is now back down to 7.444, up 54 points (0.7%).
Today sees the first day of the World Economic Forum (WEF) in Davos. The WEF claims to be an independent international organisation committed to improving the state of the world while others claim it is a fabulous networking event where the rich and powerful can work on their backslapping skills.
Sanctions, the war in Ukraine and the energy crisis are likely to figure prominently on the talking shop’s schedule.
World Economic Forum for the 'good & the great' started yesterday and finishes 26th May in Davos. Membership $52k, entry for this year $19k. What a waste of money & an insult to the millions who are suffering from inflation, supply chain & ravages in Ukraine. Virtually? Just OK!
— David Buik (@truemagic68) May 23, 2022
8.45am: Kingfisher leads the market higher
The FTSE 100 has got off to a positive start, led by DIY retailer Kingfisher PLC (LSE:KGF) after its first-quarter results.
London’s index of leading shares was up 61 points (0.8%) at 7,451.
“A note of resilience has struck the FTSE 100 and FTSE 250 as the flight away from more risky high growth stocks continues amid continued worries about high inflation. The fight being waged by central banks to limit the consequences of rampant inflation is playing on investors’ minds, and many are seeking out defensive positions in mining, energy and healthcare,” said Susannah Streeter at Hargreaves Lansdown.
“Kingfisher has raced to the top of the FTSE 100 leader board hammering out a strong performance as our demand for DIY stays strong. The booming interest in home improvements seen over lockdowns appears to be settling in as a source of longer-term customers for the B&Q and Screwfix owner. First-quarter sales were significantly ahead of its performance pre-pandemic, up 16.2% on a three year basis, although down 5.4% year on year. This shows that a sizeable chunk of customers that picked up a hammer for the first time have kept coming back, thanks to their new skills and a shortage of labour in the building trade. It’s also managed to deftly manage ongoing supply chain issues, with product availability improving even as the price of raw materials has stayed volatile. Investors are being rewarded with another share buyback programme with another £300 million being distributed,” she added.
6.20am: Flight to value expected to continue
The FTSE 100 looks set to benefit from a flight to value with investors largely ignoring the stuttering start to the week in Asia.
According to the spread betting firms, the UK blue-chips benchmark will open 43 points to the good at 7.439.98 – carrying where it left off on Friday.
Wall Street ended the week flat, while the MSCI Asia-Pacific opened with little fanfare. Chinese shares were hit with a flurry of selling, mainly across the technology sector.
Analysts said that inflation and higher interest charges with the added complication of the Ukraine war continue to haunt global equity markets.
“As we look ahead to another week the main debate continues to be over whether we’ve seen peak inflation, and if so, how quickly can it fall back from current levels,” said Michael Hewson of CMC Markets.
This week we’ll get a further insight into the state of the US economy with the publication of first-quarter gross domestic product data, the Federal Reserve minutes and April ‘print’ for personal spending and income.
Closer to home, the UK government will provide an insight on its finances for the year to April on Tuesday with higher rates of inflation likely to have pushed up the cost of interest payments on debt.
After a flurry of Footsie stocks, this week's news flow will come from the mid-caps with Marks & Spencer, Severn Trent and SSE the pick of an underwhelming bunch of corporate reporterts.
Around the markets
- Pound US$1.2544 (-0.51%)
- Bitcoin US$30,127.60 (-0.41%)
- Gold US$1,860.00 (+0.61%)
- Brent crude US$113.28 (+0.65%)
6.50am: Early Markets - Asia / Australia
Asian shares were mixed on Monday even as the S&P 500 in the US briefly fell into bear market territory (20% or more drop from recent high) on Friday’s session.
The Shanghai Composite in China gained 0.10% while Hong Kong’s Hang Seng index fell 1.08%.
Japan's Nikkei 225 was trading 1.12% higher and South Korea’s Kospi rose 0.17%.
Australia’s S&P/ASX200 lifted 0.10% as Anthony Albanese was sworn in as the country’s prime minister after his Labor Party defeated Scott Morrison's conservative government in an election on Saturday.