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(Alliance News) - Stock prices in London opened lower on Monday following declines in Asian equity markets and after cautious comments from the US Federal Reserve on the outlook for the US economy, on the first day of outdoor hospitality re-openings in England.
The FTSE 100 index was down 13.76 points, or 0.2%, at 6,901.99 early Monday. The mid-cap FTSE 250 was down 32.92 points, or 0.3%, at 6,901.99. The AIM All-Share index was flat at 1,236.41.
The Cboe UK 100 index was down 0.3% at 687.80. The Cboe 250 was down 0.1% at 19,827.30. The Cboe Small Companies was up 0.1% at 14,304.75.
In mainland Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt both were down 0.1%.
In Asia, the Japanese Nikkei 225 index closed down 0.7% on Monday. In China, the Shanghai Composite ended down 1.2%, while the Hang Seng index in Hong Kong was down 1.0%. The S&P-ASX 200 in Sydney closed down 0.4%.
US Federal Reserve Chair Jerome Powell over the weekend said the US economy was "at an inflection point" and that growth and employment would accelerate in the coming months. However, he once again insisted that the Covid-19 pandemic continued to present a risk and could impede the recovery.
"Europe is trading softer on the back of some consolidation in Asia to start the week. Fed Chair Jerome Powell’s interview with CBS last night saw a continued dovish policy stance and pointed to an 'inflexion point' for the US economy, although all reiterated cautious optimism," said Axi's Stephen Innes.
In the FTSE 100, M&G was up 0.5% after Morgan Stanley upgraded the fund manager to Equal Weight from Underweight.
Imperial Brands was up 0.3%. The tobacco firm said Lukas Paravicini, its new chief financial officer, will join the board with effect from May 1. Paravicini will be appointed CFO on May 19 a day after the company's interim results. Imperial Brands had said in February that Paravicini's start date would be on August 5.
At the other end of the large-caps, HSBC was the worst performer, down 1.5%, tracking falls in Asia. In Hong Kong, shares in the global lender also were lost 1.5%.
Defence contractor BAE Systems was down 1.2% after US President Joe Biden kept an effective lid on US military spending in his first budget draft Friday, proposing to spend USD715 billion, a marginal hike after sharp increases under predecessor Donald Trump.
Republican lawmakers quickly blasted the proposal as weakening the US military in the face of China's strong defence push, and demanded a larger budget.
For financial 2022, which starts October 1, Biden asked Congress to allot a total of USD753 billion for defence and national security.
Analysts at Jefferies explained: "If the US follows the UK example, there will be fewer armoured vehicles, soldiers and old platforms that cannot be upgraded to meet future needs. We believe the future front-line will include the former home front in what is dubbed the 'grey-zone', a nebulous area below open combat that includes Cyber.
"BAE may not be optimally positioned, nor does it look uniquely disadvantaged, but the transition phase could be challenging. We cannot lightly dismiss possible downgrades to consensus forecast sales and EBIT albeit we think the valuation already cautious."
In the FTSE 250, easyJet was the worst performer, down 2.5%, after HSBC downgraded the budget airline to Hold from Buy. In addition, Ryanair was 1.6% lower after HSBC also cut the Irish carrier to Hold from Buy.
Hammerson was 0.8% lower. The shopping centre operator confirmed a report in the Sunday Times that it is in discussions on terms of a possible disposal of its retail parks portfolio to Brookfield Asset Management.
The newspaper reported that Hammerson has agreed to sell its retail parks in the UK to Toronto-based property and private equity firm for GBP350 million, in order to pay down debt.
The seven retail parks in England, Scotland and Wales are in Falkirk, Didcot, Middlesbrough, St Helens, Telford, Merthyr Tydfil and Rugby, the newspaper said. Hammerson on Monday said there can be no certainty that a transaction will take place or what the terms may be.
Meanwhile, UK Prime Minister Boris Johnson urged the nation to "behave responsibly" as the latest stage of lockdown easing comes into effect.
From Monday, non-essential retail stores, hairdressers, pub gardens and restaurants with outdoor dining are among the businesses that can now reopen in England.
Covid-19 infections, hospitalisations and deaths have all fallen thanks to the lockdown and a mass vaccination rollout that has given at least one dose to more than 60% of the UK adult population.
However, the contrast in the UK's fortunes comes as other countries grapple with mounting cases and vaccine rollouts hampered by health, efficacy and as the global death toll tops 2.9 million.
Japan on Monday imposed new virus measures on Tokyo to bring down surging cases less than 100 days before the 2020 Olympic Games begin.
In addition, the number of Covid-19 infections in Germany crossed the three million mark, according to figures published Monday by the Robert Koch Institute disease control centre. Germany remains gripped by rising infection rates, despite cultural venues, restaurants and leisure facilities having been closed for months.
The pound was quoted at USD1.3732 early Monday, up from USD1.3723 at the London equities close on Friday.
The euro was priced at USD1.1887, flat from USD1.1886. Against the yen, the dollar was trading at JPY109.55, lower from JPY109.69.
Brent oil was quoted at USD62.64 a barrel Monday morning, down from USD63.13 late Friday. Gold was trading at USD1,741.37 an ounce, lower against USD1,743.30.
The international economics events calendar on Monday has eurozone retail sales at 1000 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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