LONDON MARKET CLOSE: Stocks higher as investors eye central banks

(Alliance News) - Stocks in London ended higher on Monday with the fourth quarter getting off to a decent start as investors look ahead to meetings from the Federal Reserve and Bank of England this week.

The FTSE 100 index closed up 51.05 points, or 0.7%, at 7,288.62. The FTSE 250 ended up 104.61 points, or 0.5%, at 23,211.22, and the AIM All-Share closed up 5.73 points, or 0.5%, at 1,228.91.

The Cboe UK 100 ended up 0.8% at 723.50, the Cboe UK 250 closed up 0.3% at 20,808.00 and the Cboe Small Companies finished 0.5% higher at 15,603.80.

In Paris the CAC 40 stock index ended up 0.9%, while the DAX 40 in Frankfurt ended up 0.8%.

"European markets continued with the solid performance from this morning, as November gets off to a good start. Fears of a global supply crunch seem to have ebbed, and as noted before the strong performance of profit margins this earnings season has provided the key fundamental backdrop to the rally in equities over the past few weeks," said IG Group's Chris Beauchamp.

In the FTSE 100, BT Group ended the best performer, up 4.4%, after the telecommunications firm confirmed it has hit its savings target a year and a half early.

BT said it has delivered on its GBP1 billion of gross annualised cost savings 18 months ahead of the March 2023 target.

The company confirmed the savings performance following a media report by CityAM over the weekend. The newspaper noted the cost-cutting campaign comes in light of talks about a potential takeover by French telecoms tycoon Patrick Drahi.

Last Tuesday, BT's shares jumped after Sky News reported that it has hired advisory firm Robey Warshaw to help bolster its defences against the possible takeover bid.

International Consolidated Airlines Group closed up 1.8% after the airline operator said British Airways reached agreement for a five-year export development guarantee committed credit facility of GBP1.0 billion.

The deal was agreed with UK Export Finance and a syndicate of banks, IAG said. This is on top of a GBP2.0 billion UK Export Finance guaranteed facility that was announced in December 2020 and drawn in March 2021.

IAG highlighted that British Airways intends to draw down the new facility only "if and when required" and the facility will not be utilised upon signing.

At the other end of the large-caps, Darktrace ended the worst performer, down 15% at 681.50 pence, ahead of the end of a share lock-up on Wednesday.

The stock was hit hard by a negative research note from broker Peel Hunt and has been falling ever since, taking the gloss off its expedited promotion to the UK flagship index.

"Darktrace shares have continued to chop around in the aftermath of last week's rather bearish note from Peel Hunt which saw its share price plunge, before seeing a strong rebound in the back half of the week. Today's share price move has seen another sharp move to the downside as it looks to retest the lows of last week, amidst speculation that we could see some more share sales as a 180-day lock-up period expires later this week. While recent share price moves have been vertigo-inducing, the shares are still up over 170% since the shares came out of the blocks back in April," said CMC Markets analyst Michael Hewson.

Barclays lost 0.7% after the lender said Jes Staley agreed to leave as chief executive following a probe by UK regulators into his description of his relationship with Jeffery Epstein.

The London-based bank said Staley is stepping down as CEO in order to contest probes into his description of his relationship with the disgraced late financier.

In light of the UK Financial Conduct Authority and Prudential Regulation Authority's conclusions, and Staley's intention to contest them, he has agreed to part ways with the lender, Barclays said. The bank said it and Staley were made aware of the preliminary conclusions from the FCA and PRA on Friday evening.

Barclays said it was "disappointed" with the outcome, saying Staley has run the company "with real commitment and skill" since 2015.

Staley's successor will be CS Venkatakrishnan, known as Venkat, effective from Monday. Barclays said it has had succession planning in hand "for some time" and identified Venkat, head of Global Markets and co-president of Barclays Bank PLC, as its preferred candidate over a year ago.

Elsewhere in London, shares in U&I ended up 72% to 148.00p, after a takeover offer from FTSE 100-listed Land Securities worth GBP190 million. LandSec closed up 0.4%.

LandSec has offered 149p per U&I share, representing a 73% premium to Friday's closing price of 86p. The deal has been unanimously endorsed by U&I directors, LandSec said.

The company noted that U&I provides access to a pipeline of mixed-use development schemes, of which two are well-progressed through planning. LandSec said it believes that it can accelerate the pace of development of these two.

Ryanair Holdings finished 0.7% higher after the budget airline said its traffic surged in October. It carried 11.3 million passengers last month, up sharply from 4.1 million a year earlier. The load factor, meanwhile, improved to 84% from 73%.

In addition, Ryanair said it is "considering the merits" of its London Stock Exchange listing following Brexit.

Ryanair said trading of its in London-listed shares "has reduced materially during 2021". The company has a primary listing in the Euronext Dublin market and also has American depositary shares listed on the Nasdaq.

Sterling was lower ahead of Thursday's pivotal Bank of England interest rate decision. Over the past few months, policymakers on Threadneedle Street have talked up the prospect of hiking interest rates in order to combat rising inflation. The BoE could hike rates by 15 basis points on Thursday, a decision that has been anticipated by investors over the past month.

However, chances of a November hike have fallen over the duration of the last week, while the odds of a December increase have increased.

The pound was quoted at USD1.3675 at the London equities close, down from USD1.3697 at the close Friday.

Western Union analyst Joe Manimbo said: "Sterling fell to two-week lows against the US dollar, a sign of market doubts in the Bank of England raising interest rates as soon as this week with the UK economy still not out of the woods... A surprise rate hike Thursday or a hawkish hold in which policymakers drop strong signals of a possible rate hike in mid-December would suggest limited room to the downside for sterling."

On the economic front, the UK manufacturing sector expanded at a faster rate in October, but growth was held back by supply chain issues, according to survey results from IHS Markit.

The IHS Markit/Chartered Institute of Procurement & Supply purchasing managers' index for October was 57.8 points, up from 57.1 in September. The PMI moved further above the no-change line of 50.0 last month, indicating growth accelerated. The final reading also improved upon October's flash figure of 57.7.

The euro stood at USD1.1589 at the European equities close, up from USD1.1564 late Friday. Against the yen, the dollar was trading at JPY114.17, up from JPY114.02 late Friday.

Stocks in New York were starting the new month on a steady footing ahead of a raft of new economic data later this week, as the Dow Jones Industrial Average briefly jumped above 36,000 points for the first time.

Payroll services firm ADP will release private hiring data for October on Wednesday, while the government will release the all-important employment data on Friday with an update of the unemployment rate and the number of jobs added last month.

The DJIA was up 0.1%, the S&P 500 index up 0.1% and the Nasdaq Composite up 0.4%.

Investors were looking ahead to the US Federal Reserve which begins its two-day meet on Tuesday. The central bank is expected to unveil a timetable for tapering its vast bond-buying stimulus programme.

A statement by Fed Chair Jerome Powell following the monetary policy meeting will be closely followed for an idea about when the US central bank will start hiking interest rates.

Brent oil was priced at USD84.65 a barrel at the equities close, up from USD84.27 at the close Friday. Gold was quoted at USD1,790.75 an ounce at the close, higher against USD1,778.08 late Friday.

The economic events calendar on Tuesday has manufacturing PMI readings from Germany and the eurozone at 0855 GMT and 0900 GMT respectively.

The UK corporate calendar on Tuesday has third-quarter results from oil major BP, gambling firm Flutter Entertainment and emerging markets-focused bank Standard Chartered.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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