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(Alliance News) - Stock prices in London were outperforming its European peers at midday Monday, after investors digested some hawkish comments from US Federal Reserve officials.
The FTSE 100 index was up 44.87 points, 0.6%, at 7,621.23. The FTSE 250 was up 29.00 points, 0.2%, at 19,237.97, and the AIM All-Share was up 0.84 of a point, 0.1%, at 740.15.
The Cboe UK 100 was up 0.6% at 760.49, the Cboe UK 250 was up 0.2% at 16,692.22, and the Cboe Small Companies was up 0.5% at 14,361.15.
In European equities on Monday, the CAC 40 in Paris and the DAX 40 in Frankfurt was were both down 0.3%.
Stocks in New York were called higher. The Dow Jones Industrial Average and the S&P 500 index were both called up 0.2%, and the Nasdaq Composite up 0.1%.
"The FTSE 100 made an indifferent start to the final week of trading before Christmas as, having fired the starting gun on expectations for interest rate cuts at its latest meeting, the Federal Reserve attempted to walk that back at the end of last week," said AJ Bell investment director Russ Mould.
The mood has quickly changed from last week's optimism. On Wednesday, the US Federal Reserve left interest rates unchanged, but signalled for cuts in 2024.
However, some officials have now attempted to reign in market expectations.
New York Federal Reserve President John Williams told CNBC's "Squawk Box" that the central bank isn't "really talking about rate cuts right now." Separately, Atlanta Fed President Raphael Bostic, who votes on monetary policy next year, told Reuters that he expects two rate cuts in 2024 but not starting until the third quarter. Meanwhile, Loretta Mester, the president of Cleveland Fed, said markets are a "bit ahead" of central bank on rate cuts.
This has made made markets more downbeat, moving away from Christmas cheer.
Still to come this week, there are US gross domestic product readings, as well as core inflation figures. This may give stocks some direction to end the year. Until then, AJ Bell's Mould said the recent comments have left markets "somewhat in limbo."
The pound was quoted at USD1.2667 at midday on Monday in London, lower compared to USD1.2693 at the equities close on Friday. The euro stood at USD1.0909, lower against USD1.0912.
Against the yen, the dollar was trading at JPY142.71, higher compared to JPY141.75.
We still aren't done with interest rates for 2023, though. The Bank of Japan began its two-day monetary policy meeting and will announce its decision on Tuesday.
According to a Bloomberg report last Monday citing "people familiar with the matter", the BoJ is likely to keep its ultra-loose monetary policy in place, despite recent market speculation that the negative rate may be scrapped.
"The BoJ Governor Ueda's comments that the BoJ's policy would be hard to maintain from the year end, had triggered expectations that the BoJ will finally say goodbye to negative rates. There is nothing more than a slim probability for the BoJ to exit negative rates this week, but investors are eager to hear further details about how and when the BoJ will leave the negative rate territory," commented Swissquote Bank's Ipek Ozkardeskaya.
In the FTSE 100, Vodafone rose 6.3%, making it the best performer on the index on Monday morning.
It confirmed it is "exploring options with several parties" to combine or sell its telecommunications operations in Italy.
The announcement by Vodafone followed a statement by French peer Iliad SA earlier Monday saying it has submitted a proposal to the UK company to create a new joint venture company that combines Vodafone Italia and Iliad Italia. Reuters had reported on the plans late on Friday.
Entain rose 5.2%. Jefferies raised the stock to 'buy' from 'hold'.
On the other hand, Fresnillo plummeted 9.6%. Morgan Stanley cut the miner's stock to 'underweight' from 'equal-weight'. Housebuilders Berkeley Group and Barratt Developments were also stung by a broker downgrade, falling 1.6% and 1.1% respectively after UBS cut the stocks to 'neutral' from 'buy'.
Elsewhere in London, CAP-XX fell 55%.
The Sydney-based supercapacitor and energy management system manufacturer updated shareholders on its existing patent infringement action against Maxwell Technologies. Maxwell Technologies is a wholly owned subsidiary of Austin, Texas-based electric car maker Tesla.
CAP-XX said the US court for the district of Delaware has affirmed that CAP-XX patents were invalid. As a result, Maxwell is not liable to pay CAP-XX damages nor license fees.
"Whilst CAP-XX is disappointed with this decision, it is in discussions with its attorneys to agree the appropriate next steps. While the company cannot comment further at this time, we will provide an update in due course," CAP-XX said.
RBG Holdings lost 32%.
The legal and professional services firm warned the expected improvement in trading in its Legal Services division has not materialised over the second half, with trading broadly in line with the first.
It now expects annual revenue in 2023 to be below market expectations at around GBP41.9 million, falling year-on-year from GBP49.8 million. Adjusted earnings before interest, tax, depreciation and amortisation are expected to drop sharply to around GBP4.0 million from GBP15.8 million.
Brent oil was quoted at USD76.13 a barrel at midday in London on Monday, down from USD76.34 late Friday. Gold was quoted at USD2,020.54 an ounce, lower against USD2,034.62.
By Sophie Rose, Alliance News senior reporter
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