LONDON MARKET MIDDAY: Gold shines amid interest rate cut hopes

Mon, 20th May 2024 11:55

(Alliance News) - Stock prices in London got a boost at midday on Monday, as investors eye a key UK inflation reading later in the week, which is expected to show cooling prices.

Amongst individual stocks, gold miner Fresnillo was the top performer of the morning on the FTSE 100 index, climbing with hopes of interest rate cuts. In the FTSE 250 index, Kainos jumped thanks to an increase in its dividend and a strong set of results.

The FTSE 100 index was up 22.82 points, 0.3%, at 8,443.08. The FTSE 250 was up 146.76 points, 0.7%, at 20,896.66, and the AIM All-Share was up 15.69 points, 2.0%, at 809.71.

The Cboe UK 100 was up 0.3% at 842.80, the Cboe UK 250 was up 0.7% at 18,271.57, and the Cboe Small Companies was up 0.7% at 16,513.75.

In European equities on Monday, the CAC 40 in Paris was up 0.4%, while the DAX 40 in Frankfurt was up 0.3%.

The pound was quoted at USD1.2700 at midday on Monday in London, higher compared to USD1.2696 at the equities close on Friday. The euro stood at USD1.0871, up against USD1.0866. Against the yen, the dollar was trading at JPY155.71, higher compared to JPY155.53.

"Equity bulls around the globe celebrated in style the softer-than-expected US CPI data last week. The global equity rally was further juiced by the expectation that a softer inflation in the US would not only allow the Federal Reserve (Fed) to start cutting the rates this year, but also allow the other major central banks, like the European Central Bank (ECB) and the Bank of England (BoE), to carry on with their plans to cut their own rates and – maybe – cut more than people think they could," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

As hopes for interest rate cuts climbed, gold hit a record high above USD2,450 an ounce earlier Monday. The precious metal was quoted at USD2,439.50 an ounce against USD2,407.63.

On the back of higher gold prices, gold miner Fresnillo rose 4.5%. It was the best FTSE 100 performer of the morning.

Investors this week are eyeing Wednesday inflation reading for the UK. It is expected to show that the rate of consumer price inflation moderated markedly to 2.1% in April, from 3.2% in March, according to FXStreet cited consensus.

If the reading comes in in line with expectations, hopes for an interest rate cut from the BoE will climb.

Elsewhere in the FTSE 100, AstraZeneca fell 0.4%.

It announced plans for a USD1.5 billion manufacturing facility in Singapore to produce antibody drug conjugates, treatments that deliver "highly potent cancer-killing agents".

The Cambridge-pharmaceutical firm aims to start design and construction of the facility by the end of 2024, with "targeted operational readiness from 2029".

In the FTSE 250, Kainos rose 12%.

The London-based IT service company said in the year ended March 31, statutory pretax profit rose 19% to GBP64.8 million from GBP54.3 million the year prior. Revenue increased 2.0% to GBP382.4 million from GBP374.8 million.

Kainos declared a final dividend of 19.1 pence per share, up 19% from 16.1p. Therefore, the total dividend paid for the year stands at 27.3p, up 14% from 23.9p.

Chief Executive Officer Russell Sloan commented: "Our latest results, record our 14th consecutive year of growth with disciplined execution in the current macro-economic climate."

On London's AIM, Keywords Studios rose 62%.

It announced it received private equity bid interest, with the possible cash bid representing a hefty 73% premium to its last closing price.

The AIM-listed provider of technical and creative services for video game production said the latest cash approach of 2,550p per share is a "significant increase from the initial proposal".

It values all of Dublin-based Keywords at around GBP2.03 billion. The proposed bid price is a chunky 73% premium to the firm's closing price of 1,470p on Friday.

Stocks in New York were called higher. The Dow Jones Industrial Average was called up 0.1%, the S&P 500 index up 0.2%, and the Nasdaq Composite up 0.3%.

Brent oil was quoted at USD83.82 a barrel at midday in London on Monday, up from USD83.61 late Friday.

By Sophie Rose, Alliance News senior reporter

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