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(Alliance News) - Stock prices in London started the week in the red on Monday, as a surprise UK GDP print failed to alleviate recession concerns, and investors looked ahead to the week's central bank decisions from the UK, the EU and the US.
The FTSE 100 index closed down 0.4%, or 30.66 points at 7,445.97. The FTSE 250 ended down 0.5%, or 96.56 points, at 18,819.44, and the AIM All-Share closed down 0.5%, or 4.02 points, at 830.57.
The Cboe UK 100 ended down 0.3% at 745.16, the Cboe UK 250 closed down 0.5% at 16,266.71, and the Cboe Small Companies ended down 0.4% at 12,818.77.
Monday's poor stock market performance came despite a surprise gross domestic product reading on Monday morning. According to figures from the Office for National Statistics, the UK economy grew in October and is now estimated to be 0.4% larger than its pre-pandemic size.
Monthly real gross domestic product is estimated to have grown by 0.5% in October from the month before, following a fall of 0.6% in September from August. Market consensus, as cited by FXStreet, had expected the UK economy to contract by 0.1% in October.
Despite the positive reading, markets remain convinced that the UK is heading into recession.
Berenberg Senior Economist Kallum Pickering commented: "The UK economy faces an unusual situation. It is heading into recession well before fundamentals are consistent with one. Instead, the near-term path of the economy will be decided by two severe headwinds: a major global energy shock and a sharp tightening of financial conditions.
"While the current situation is painful for households and businesses, healthy fundamentals suggest the hit to GDP will be short and sharp (1990s style) rather than deep and long (2008 style). Well-capitalised banks, firms with high cash balances and households with low consumer credit and a high stock of savings: these buffers provide insurance against a deep crisis and should act as a springboard for the recovery from summer 2023 once inflation rolls over and financial conditions are less restrictive," Pickering continued.
The Bank of England will announce its latest interest rate decision on Thursday, alongside the European Central Bank. The day prior, the US Federal Reserve will reveal its decision.
The pound was quoted at USD1.2267 at the close on Monday in London, lower compared to USD1.2301 at the stock-market close on Friday.
The euro stood at USD1.0538, lower against USD1.0542. Against the yen, the dollar was trading at JPY137.54 higher compared to JPY136.37.
In the FTSE 100, London Stock Exchange ended 1.9% higher.
The stock exchange operator launched a 10-year partnership with Microsoft for its data, analytics and cloud infrastructure.
LSEG committed to spend a minimum of USD2.8 billion over the term of the partnership, which will see Microsoft purchase a 4% stake in the firm through an acquisition of shares from the Blackstone/Thomson Reuters ownership consortium.
"This strategic partnership is a significant milestone on LSEG's journey towards becoming the leading global financial markets infrastructure and data business, and will transform the experience for our customers," said Chief Executive David Schwimmer.
"London Stock Exchange is going to use Microsoft technology to upgrade its data and analytical capabilities and it will also have a representative of the US firm on its board. There is lots of talk about improving capabilities but as with any large technology project it's easy to talk up the benefits and underestimate the challenges associated with execution," considered AJ Bell's Russ Mould.
"By owning a chunk of London Stock Exchange, Microsoft will share the upside if the project works and also the downside if it cannot deliver on time or to the desired effect," he added.
Near the other end of the bluechip index, Ocado finished 2.5% lower as HSBC cut its price target'.
Ryanair lost 0.4% over in Dublin.
The UK Civil Aviation Authority on Monday said Ryanair has decided not to appeal a Supreme Court decision on passenger compensation in the case of a pilot strike back in 2018.
The Dublin-based low-cost airline decided against an appeal after initially securing permission to appeal the decision by the Court of Appeal in January, according to the regulator, meaning affect passengers now can claim compensation.
The Court of Appeal found in favour of the UK CAA's action against Ryanair, deciding that strike action by airline staff did not absolve Ryanair of liability. As a result, the Court of Appeal said Ryanair should provide compensation to passengers affected by Ryanair pilot strike action in 2018.
Fellow airlines Wizz Air and easyJet also suffered, losing 2.9% and 1.2% respectively.
On AIM, Argentex ended 13% higher.
The foreign exchange provider said that revenue and earnings for 2022 are expected to be ahead of current market expectations.
In November, Argentex reported pretax profit of GBP6.2 million on revenue of GBP27.4 million in the first half of the year, up from GBP4.2 million profit on GBP15.7 million revenue a year before. In 2021, pretax profit was GBP7.4 million on revenue of GBP28.1 million.
Argentex said the strong results in recent months were a result of all products and geographies experiencing "robust trading" and its core FX offering "benefiting from market tailwinds, sustained outperformance from our new Amsterdam office, continued optimisation of product mix including structured solutions and growth in client numbers in the online platform".
In European equities on Monday, the CAC 40 in Paris ended down 0.3%, while the DAX 40 in Frankfurt ended down 0.4%.
Stocks in New York were higher at the London equities close, with the DJIA up 0.8%, the S&P 500 index up 0.5%, and the Nasdaq Composite up 0.3%.
Brent oil was quoted at USD78.33 a barrel at the close in London on Monday, up from USD77.10 late Friday. Gold was priced at USD1,782.67 an ounce, significantly lower against USD1,803.01.
In Tuesday's UK corporate calendar, Ocado release a trading statement while Chemring Group and RWS Holdings release full year results.
The economic calendar for Tuesday has German CPI and UK unemployment at 0700 GMT before US CPI at 1330 GMT.
By Chris Dorrell, Alliance News reporter
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