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(Alliance News) - Stock prices in London opened lower on Monday as investors look ahead to a substantial interest rate hike from the US Federal Reserve, while Vesuvius rose on upbeat guidance.
The US central bank is widely expected to hike borrowing costs by 75 basis points on Wednesday. Investors will be poring over policymakers' views on the outlook for the world's biggest economy, as Fed officials try to rein in inflation while sustaining growth.
The FTSE 100 was down 19.52 points, or 0.3%, at 7,256.85 early Monday. The FTSE 250 index was down 101.85 points, or 0.5%, at 19,722.95. The AIM All-Share index was down 2.33 points, or 0.3%, at 902.76.
The Cboe UK 100 index was down 0.4% at 723.47. The Cboe 250 was down 0.4% at 17,207.12. The Cboe Small Companies was up 0.1% at 13,606.61.
In mainland Europe, the CAC 40 stock index in Paris was down 0.4%, while the DAX 40 in Frankfurt was 0.5% lower.
Markets.com analyst Neil Wilson commented: "The Fed won't back down until inflation goes below 5% at least, and we know from history that it will likely need to nudge rates up past 5%, implying 250bps worth of hikes beyond the 75bps expected this week. As inflation is not peaking and going back to normal, but rather plateauing, so too will central bank policy - higher for longer. Stocks won't like it.
"This a dangerous moment for bulls - the bull trap - more rate hikes are coming and markets will need to acknowledge that the Fed won't be cutting anything like as soon as expected."
In the FTSE 100, Airtel Africa was up 1.3% after the Africa-focused telecommunications firm's subsidiary Airtel Kenya Networks bought 60 megahertz of additional spectrum in Kenya for USD40 million. Kenya is one of Airtel's largest markets by revenue.
Conversely, Haleon was down 2.3% after Jefferies started coverage on the GSK consumer healthcare spin-off with a 'hold' rating.
In the FTSE 250, Vesuvius was the best performer, up 7.5%, after the molten metal flow engineer Vesuvius said trading for the months of May and June were stronger than anticipated.
As such, Vesuvius expects to report a trading profit for the first half of 2022 of GBP127.4 million. This would be sharply higher than the GBP73.3 million reported a year before.
The company said its outperformance in the first half was due to the successful implementation of pricing strategy to recover input costs as well as market share gains, supported by "technological differentiation".
Looking ahead, Vesuvius now expects its full-year trading profit to be towards the top end of the range of current analysts' expectations of GBP155 million and GBP199 million. This compares to GBP142.4 million in 2021.
Ferrexpo was up 6.1% after Credit Suisse raised the iron ore pellet producer to 'outperform' from 'neutral'.
Premier Foods was up 2.5% after the Kipling cakes owner agreed to acquire Indian and South East Asian meal kit brand Spice Tailor for an initial GBP43.8 million on a cash free and debt free basis. Premier Foods said Spice Tailor is expected to generate revenue of GBP17.3 million in financial 2023.
The dollar was higher across the board. The pound was quoted at USD1.1991 early Monday, down from USD1.2028 at the London equities close Friday.
The euro was priced at USD1.0210, down from USD1.0223. Against the yen, the dollar was trading at JPY136.31, up from JPY136.11.
Brent oil was quoted at USD102.11 a barrel on Monday morning, down from USD104.74 at the close Friday. Gold stood at USD1,727.21 an ounce, lower against USD1,731.12.
The economic events calendar on Monday has a Germany Ifo business climate index print at 0900 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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