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19/06/23 Briefing

Stock prices in Europe were lower during subdued trade on Monday, with a US holiday keeping a lid on trading volumes, and a downgraded outlook for China souring the mood.

Financial markets in New York are closed on Monday for the Juneteenth holiday, likely suppressing trading volumes across the globe.

The FTSE 100 index was down 30.96 points, 0.4%, at 7,611.76. The FTSE 250 was down 138.17 points, 0.7%, at 18,892.72, and the AIM All-Share was down 0.8 of a point, 0.1%, at 791.79.

The Cboe UK 100 was down 0.4% at 759.09, the Cboe UK 250 was down 0.6% at 16,527.05, and the Cboe Small Companies was down 0.4% at 13,893.67.

Sterling remained above the $1.28 mark on Monday, with investors expecting the Bank of England to enact a 25 basis point rate hike later this week.

There will be UK inflation data on Wednesday, before the interest rate decision on Thursday.

‘There is near unanimity that the MPC will hike rates by another 25bps on Thursday and signal that more hikes are likely on the way,’ said Matthew Ryan, head of Market Strategy at Ebury.

‘The combination of persistent inflation, signs of a wage-price spiral and economic resilience is boosting both expectations for the Bank of England terminal rate and the pound. Sterling has been one of our core bets this year, and we are happy to see it at the top of the G10 tables so far - we think it still has more room to run.’

The pound was quoted at $1.2811 at midday on Monday in London, slightly lower compared to $1.2819 at the equities close on Friday.

The euro stood at $1.0917, down against $1.0926. Against the yen, the dollar was trading at JP¥141.95, up compared to JP¥141.59.

There will also be interest rate decisions from the People’s Bank of China on Tuesday, and the Swiss National Bank on Thursday.

There was some disappointing news in China, with a cut to the country’s outlook.

Goldman Sachs cut its forecasts for Chinese economic growth to 5.4% from 6% previously.

The Nikkei 225 index in Tokyo closed down 1.0%. In China, the Shanghai Composite closed down 0.5%, while the Hang Seng index in Hong Kong lost 0.6%.

‘The post-Covid surge anticipated in China appears to be losing momentum and there is uncertainty around how the authorities in the country might look to get things moving in the right direction,’ said AJ Bell analyst Russ Mould.

London’s mining stocks, which have a footprint in China, were down on Monday on the back of the news. Antofagasta, Anglo American and Endeavour Mining were down 1.8%, 1.7%, and 1.6%, respectively.

Despite the glummer forecast for the Chinese economy, oil prices edged slightly higher at midday Monday. Brent oil was quoted at $76.32 a barrel at midday in London on Monday, from $75.62 late Friday.

In European equities on Monday, the CAC 40 in Paris was down 0.5%, while the DAX 40 in Frankfurt was down 0.6%.

UK house prices suffered a marginal fall this month, the first June decline since 2017, according to a Rightmove tracker.

Average new seller asking prices fell by just £82 in June to £372,812 from £372,894. Prices had risen 1.8% in May from April. Though fractional, June’s outturn was the first monthly drop in asking prices this year, and was the first June fall in house prices since 2017.

London-listed housebuilders struggled on the back of the update. Barratt Developments lost 1.0% and Taylor Wimpey shed 1.6%.

In the FTSE 250, Kainos lost 5.6%, after it said its chief executive officer of 22 years, Brendan Mooney, will finish his term in the role by the end of September.

Outgoing CEO Mooney, who has been at the company for a total of 34 years, will remain ‘actively engaged’ with the Belfast-based digital services provider to the public sector until next June, to ensure an orderly transition.

In his place, Kainos named Digital Services Director Russell Sloan as its new CEO.

Despite shares trading lower on Monday, Shore Capital’s Martin O’Sullivan said ‘the mood music for Kainos in both the public and commercial sectors remains extremely upbeat’.

On London’s AIM, Litigation Capital Management jumped 18%.

It said that a claimant backed in a London arbitration proceeding won an award in its favour. It added that findings and funding terms remain subject to confidentiality.

Abingdon Health was up 12%, after it said it has launched Salistick, the first-ever saliva pregnancy test, in the UK and Ireland.

Chief Executive Chris Yates said: ‘This novel technology provides women with an enhanced user-experience; offering the ability to test anywhere, anytime, and for the experience to be shared with a partner and other loved ones.’

Gold was quoted at $1,950.62 an ounce, down against $1,960.83.

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