LONDON MARKET MIDDAY: FTSE 100 boosted by China-exposed stocks

(Alliance News) - London's FTSE 100 was higher at midday Monday, amid optimism towards China which helped boost mining stocks, and ahead of a busy week of economic data and monetary policy decisions.

In the week ahead, there will be a key interest rate decision from the European Central Bank on Thursday, as well as UK unemployment data on Tuesday and a US inflation print on Wednesday.

The FTSE 100 index was up 15.86 points, 0.2%, at 7,494.05. The FTSE 250 was up 65.57 points, 0.4%, at 18,528.76. The AIM All-Share was down 2.54 points, 0.3%, at 740.90.

The Cboe UK 100 was up 0.2% at 746.43, the Cboe UK 250 was up 0.7% at 16,184.08, and the Cboe Small Companies was down 0.6% at 13,487.03.

"US inflation numbers and the latest decision from the European Central Bank dominate the agenda over the remainder of the week, before the Bank of England and Federal Reserve take centre stage next week. This could be a defining period for stocks as we get some clarity on whether the rate hiking cycle is truly at or near its end or if there is more work to do in the battle against inflation," said AJ Bell's Russ Mould.

According to FXStreet, core US consumer price inflation - which excludes food and energy - is expected to edge up 0.2% month-on-month in August, unchanged from July's rise.

The next interest rate decision in the US is on Wednesday next week.

"The Fed will likely hold fire when it meets this month, but nothing is less sure for the November meeting. This week's inflation data will be played in terms of November expectations," Ipek Ozkardeskaya, senior analyst at Swissquote Bank explained.

Currently, markets see a 93% chance of interest rates standing pat at the Federal Reserve's next meeting, according to the CME FedWatch Tool.

At the following meeting in November, however, markets see a 42% chance of the Fed lifting rates by 25 basis points.

Before the US interest rate decision, the ECB will be deciding its own this Thursday. Lloyds said that the Frankfurt-based bank's decision on whether to pause or to hike for a tenth consecutive meeting is "on a knife-edge."

The Bank of England will make its own decision on Thursday next week.

There was some good news from China over the weekend, as consumer prices edged into positive territory.

The consumer price index was 0.1% higher annually in August, compared to a 0.3% deflation in July. This underperformed against FXStreet-cited expectations, which anticipated a 0.2% increase.

Month-on-month, consumer prices were 0.3% higher in August, accelerating from a 0.2% rise in July and in line with expectations.

"The reading, which emerged over the weekend, implies an improvement in the commodities demand picture and in turn provides a boost to the resources sector," Mould explained.

In response to the print, mining stocks, which are exposed to China, boosted the FTSE 100 index.

Fresnillo, Anglo American, Rio Tinto and Glencore were up 6.9%, 2.9%, 2.5% and 2.1%, respectively.

Asia-focused bank Standard Chartered was up 0.9%. Insurer Prudential, which is also Asia-focused, rose 1.0%.

In the FTSE 250, Vistry rose 12%.

The Kent-based housebuilder said it is revising its strategy to focus solely on building affordable homes through its "high return" Partnerships division, to help address the UK's "chronic shortage of affordable mixed tenure housing".

Vistry also said it intends to launch a buyback programme of up to GBP55 million in November.

In the first half of 2023, Vistry said statutory pretax profit increased 2.6% to GBP114.2 million from GBP111.3 million the prior year. Revenue increased 33% to GBP1.58 billion from GBP1.19 billion.

Barkby shares more than doubled to 8.79 pence.

Abingdon, England-based Barkby invests in roadside property and in consumer and life sciences companies. It also operates a pub chain.

It said subsidiary Cambridge Sleep Sciences is in advanced negotiations with "several household names" for multi-year enterprise licensing deals for its SleepEngine technology. At the same time, Barkby said it is considering options to sell CSS.

"We expect CSS to become a significant business in its own right and the purpose of the strategic review is to evaluate the most appropriate corporate setting and structure for the company to allow it to develop its full potential as well as what is in the best interests of Barkby's shareholders," Executive Chair Charles Dickson said.

Sportech plummeted 36%.

It said it wants to de-list from the AIM market in London, citing "significant burdens", both financial and non-financial, of maintaining a public listing, while the US-focused gambling operator also reported a narrowed half-year loss.

In European equities on Monday, the CAC 40 in Paris and the DAX 40 in Frankfurt were both up 0.5%.

Stocks in New York were called higher. The Dow Jones Industrial Average was called up 0.2%, the S&P 500 index up 0.3%, and the Nasdaq Composite up 0.5%.

The pound was quoted at USD1.2519 at midday on Monday in London, higher compared to USD1.2477 at the equities close on Friday. The euro stood at USD1.0730, up against USD1.0702. Against the yen, the dollar was trading at JPY146.88, lower compared to JPY147.64.

Brent oil was quoted at USD90.23 a barrel at midday in London on Monday, down from USD90.70 late Friday. Gold was quoted at USD1,925.21 an ounce, up against USD1,921.00.

By Sophie Rose, Alliance News reporter

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