LONDON MARKET CLOSE: Strong start to week as US inflation data looms

(Alliance News) - Stocks in London sprang into the new week after Friday's US jobs data lessened recession fears.

However, the coming days could prove challenging for investors with a raft of inflation data due, including from the US, and UK economic growth figures to cap the week off.

The FTSE 100 index closed up 42.63 points, or 0.6%, at 7,482.37. The FTSE 250 ended up 66.96 points, or 0.3%, at 20,118.44, and the AIM All-Share closed down 0.47 points, or 0.1%, at 919.91.

The Cboe UK 100 ended up 0.8% at 747.49, the Cboe UK 250 closed up 0.4% at 17,437.63, and the Cboe Small Companies ended up 0.2% at 13,979.10.

In European equities on Monday, the CAC 40 in Paris ended up 0.8%, while the DAX 40 in Frankfurt ended up 0.8%.

"Everyone continues to look for the beginning of the next leg lower, but it stubbornly refuses to begin. Friday's jobs report seemed to provide the spark, but the new week has begun with gains as investors continue to take the positive view," said Chris Beauchamp, chief market analyst at online trading platform IG.

According to the latest nonfarm payrolls report from the Bureau of Labor Statistics on Friday, employment rose by 528,000 in July, more than double the FXStreet cited consensus of 250,000. In addition, the figure for June was upwardly revised to 398,000 from 372,000.

Job growth was "widespread", the bureau said, helping to dispel recession worries.

However, Monday's respite and a thin economic calendar on Tuesday are followed by key US inflation data on Wednesday, as well as the same from China and Germany.

"Lower gasoline prices point towards [US inflation] pressure easing to 0.3% m/m/8.8% y/y, but the focus will be on the development in the underlying core measures. Following last week's strong jobs report we continue to see risks tilted towards faster inflation and increasing pressure on Fed to continue with a third 75bp hike in September," said Danske Bank.

The latest Sentix economic index survey said recent US data "gives some hope", but its assessment of the eurozone was more downbeat.

The Sentix survey showed a slight improvement in August, registering minus 25.2 points from minus 26.4 points in July. However, Sentix said: "This does not mean that the all-clear has been given. A recession in the eurozone is still very likely."

The picture in Germany worsened, with the Sentix economic index there falling to its lowest level in almost two-and-a-half years.

Sentix expects recessions in the eurozone, Germany, eastern Europe, most of Asia and Latin America. It expects downturns in the US and Japan to fall short of recession.

Sentix added: "A look at the US economic data gives some hope on the surface. This is because investors' situation and expectations for the US economy improved in August."

The euro stood at USD1.0217 at the European equities close Monday, up against USD1.0165 at the same time on Friday.

Towards the end of the week, the focus will shift to the UK with GDP data out, a week after the Bank of England sounded the recession alarm. The pound was quoted at USD1.2114 at the London equities close Monday, up compared to USD1.2060 at the close on Friday.

Against the yen, the dollar was trading at JPY134.61, down compared to JPY135.20 late Friday.

Brent oil was quoted at USD96.22 a barrel at the London equities close Monday, unchanged from USD96.23 late Friday. Gold was quoted at USD1,789.50 an ounce at the close, up against USD1,776.71 at the close on Friday.

Stocks in New York were modestly higher at the London equities close, with the DJIA up 0.2%, the S&P 500 index up 0.1%, and the Nasdaq Composite up 0.1%.

Helping London's FTSE 100 start the week on the front foot was Hargreaves Lansdown, closing up 7.2% as the fund supermarket extended Friday's 5.0% rise.

On Friday, Hargreaves Lansdown reported a fall in managed assets over the course financial 2022, with market volatility denting investor sentiment, but was pleased with its ability to add 92,000 new clients.

At the bottom of the FTSE 250 was recruitment firm PageGroup, falling 7.2% as it flagged a "slight slowing" in its markets, though reported soaring interim profit.

Looking ahead, PageGroup said that outlook is unchanged, expecting full year operating profit to be in line with company-compiled consensus of GBP206 million, up from GBP168.5 million in 2021.

Chief Executive Steve Ingram said: "Looking forward, we recognise the heightened degree of global macro-economic and geo-political uncertainty, particularly with regards to increasing inflation around the world."

"In July, we noted a slight slowing in time to hire in some of our markets, and we continue to closely monitor our forward-looking key performance indicators," Ingham added.

For the six months to June 30, pretax profit jumped 80% to GBP114.5 million from GBP63.7 million last year. Revenue climbed 28% to GBP977.3 million from GBP766.4 million.

Peer Hays fell 4.9% in a negative read-across.

Elsewhere in London, shares in PureTech jumped 16% after saying that founded entity Karuna Therapeutics has reported positive phase III trial results from Emergent-2 trial for KarXT in schizophrenia.

KarXT, or xanomeline-trospium, met its primary endpoint in the trial, showing a significant 9.6 point reduction in Positive and Negative Syndrome Scale total score compared to a placebo. The PANSS scale measures the symptom severity of patients with schizophrenia. The trial also met key secondary endpoints.

On AIM, Joules shares jumped by a third after confirming a weekend press report that it is in discussions with FTSE 100-listed retailer Next about a potential equity investment.

The move, if it goes ahead, will see Next inject about GBP15 million into Joules, noting the price will be "at no less than Joules' current market price".

As a result, Joules said Next would become a "strategic minority shareholder" in the lifestyle brand, without confirming the size of the stake. The equity investment would be subject to approval by Joules' shareholders, it added.

At the weekend, Sky News reported Next was in talks to acquire a 25% stake in the 33-year old brand, founded by Tom Joule.

Shares in FTSE 100-listed Next rose 1.8%.

The UK corporate calendar on Tuesday has half-year results from Holiday Inn owner InterContinental Hotels Group, asset manager abrdn, financial services firm Legal & General and retirement financial services provider Just Group.

Tuesday's economic calendar is quiet, with Japanese machine tool orders due at 0700 BST.

By Lucy Heming; lucyheming@alliancenews.com

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