LONDON MARKET MIDDAY: Stocks make cautious start to "defining" week

(Alliance News) - Blue-chip stock prices in Europe were on the back foot early Monday afternoon, with New York futures also lower in what was a downbeat start to a week set to be dominated by a deluge of corporate earnings and the latest US Federal Reserve interest rate decision.

"European markets have kicked off the week on a somewhat downbeat tone," IG analyst Joshua Mahony commented.

"That comes fresh off the back of a rather dramatic session in Asia, where the implementation of fresh regulatory crackdown from central government put further pressure on tech and education stocks."

London's large-cap index also was hurt by a stronger pound, while airline stocks and insurer Beazley added some impetus to the mid-cap index.

The FTSE 100 index was down 17.60 points, or 0.3%, at 7,009.98 midday Monday. The mid-cap FTSE 250 index edged up 12.32 points, or 0.1%, at 22,895.71. The AIM All-Share index was down just 0.1 of a point at 1,232.49.

The Cboe UK 100 index was down 0.3% at 698.06. The Cboe 250 was up 0.1% at 20,604.49, and the Cboe Small Companies was up 0.4% at 15,073.41.

The CAC 40 in Paris was 0.3% lower and the DAX 30 in Frankfurt shed 0.4%.

It was a "sluggish start" to a potentially "defining" week for equities, AJ Bell analyst Danni Hewson commented.

Markets face a deluge of corporate earnings alongside Wednesday's US Federal Reserve interest decision, as well as a US gross domestic product reading on Thursday.

"That meeting on Wednesday isn't expected to see any rate increase but could see at least the suggestion of a tapering of support for the economy as the Fed weighs inflation risks," Hewson added.

"Several big UK companies are set to report, including the banks. Expectations for the UK banking sector have been lifted in recent weeks by a strong showing from their American cousins and the decision to give them the green light to start paying dividends again. These heightened expectations could be tough to match."

In London, HSBC shares fell 0.6%, NatWest dropped 0.5% and Barclays was 0.1% lower.

London's blue-chip benchmark also was set back by a firm pound, a headwind for an index full of international earners.

"A stronger pound has done little to help a weaker FTSE 100, with a decline in daily Covid cases helping to lift sentiment around the currency," Mahony added.

Sterling was trading at USD1.3791 midday Monday in London, up from USD1.3754 late Friday. The euro fetched USD1.1795, up from USD1.1763. Against the yen, the dollar slipped to JPY110.27, from JPY110.53.

On the London Stock Exchange, Ryanair rose 4.3%. It posted a sharp revenue hike in its first quarter, as the budget airline carried 7.6 million more passengers than a year before.

In the three months ended June 30, revenue jumped to EUR371 million from EUR125 million a year before, but its pretax loss stretched to EUR324.5 million from EUR210.0 million.

Ryanair's customer numbers totalled 8.1 million, a sharp hike from 500,000 in the Covid-hit first quarter of financial 2021.

Among peers, British Airways-parent International Consolidated Airlines Group rose 3.4%, the best-performing FTSE 100 constituent. In the FTSE 250, easyJet added 4.4% and Wizz Air climbed 2.0%.

Insurer Beazley also was among the best performing mid-cap stock. It rose 3.2% after Berenberg raised it to Buy from Hold.

At the other end of the index, Fidelity China Special Situations fell 5.3% amid its exposure to Chinese technology companies. It holds stakes in Tencent and Alibaba.

The Hang Seng index in Hong Kong closed down 4.1%, while the Shanghai Composite ended off 2.3%, after China's market regulator ordered Tencent to relinquish its exclusive music label rights. Tencent lost 7.7% in Hong Kong.

In New York on Monday, the Dow Jones Industrial Average was called down 0.4%. The S&P 500 was pointed 0.2% lower and the Nasdaq Composite down 0.1%.

Amazon shares were up 0.3% in pre-market trade. The e-commerce firm added a job posting seeking a "Digital Currency & Blockchain Product Lead", lifting the price of ever-volatile cryptocurrency bitcoin.

"When a simple job ad appears to spark resurgence in the value of bitcoin, it shows how the crypto world is salivating for every nugget of news about the future use case for digital currencies," Hargreaves Lansdown analyst Susannah Streeter commented.

"Although Amazon has scores of openings for blockchain specialists, it was the listing for a digital currency and blockchain product lead that has led to heightened speculation that crypto currency payments could be integrated on its platforms. Given the might of Amazon Web Services, it isn't surprising that the tech giant wants to be at the cutting edge of new payments technology and establishing a new digital currency is likely to be on the agenda."

Bitcoin rose 10% to USD38,332.14 on Monday, though still some way off its all-time high of USD64,829.14.

Amazon reports quarterly numbers on Thursday, after Google-owner Alphabet and iPhone-maker Apple post results on Tuesday and Facebook on Wednesday.

Brent oil was trading at USD73.58 a barrel midday Monday in London, down slightly from USD73.64 at the London equity market close on Friday. Gold was trading at USD1,808.44 an ounce, up from USD1,800.34.

By Eric Cunha; ericcunha@alliancenews.com

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