Portfolio

London midday: Stocks maintain gains after dovish BoE comments

By Michele Maatouk

Date: Monday 20 May 2024

London midday: Stocks maintain gains after dovish BoE comments

(Sharecast News) - London stocks were still in the black by midday on Monday, with miners pacing the gains as gold and copper prices jumped, as investors mulled dovish comments from the Bank of England's Deputy Governor and looked ahead to key inflation data later in the week.
The FTSE 100 was 0.3% firmer at 8,443.10.

Investors were digesting comments from Bank of England Deputy Governor Ben Broadbent, who said in a speech earlier that UK rates could be cut this summer.

"If things continue to evolve with [Bank] forecasts - forecasts that suggest policy will have to become less restrictive at some point - then it's possible Bank Rate could be cut some time over the summer," he said.

Meanwhile, data released earlier by Rightmove showed that average house prices hit a new record of £375,131 in May, boosted by pent-up demand and momentum from the Spring selling season.

House prices pushed up 0.8% on the month following a 1.1% increase in April. On the year, prices were up 0.6% in May following a 1.7% jump the month before.

Rightmove said pent-up demand from would-be buyers who paused their plans last year was a key driver behind increased home-mover activity despite mortgage rates remaining elevated for longer than expected.

Tim Bannister, Rightmove's director of Property Science, said: "Some predicted that property prices would suffer sharp falls and take a while to recover following the Bank of England increasing the Base Rate up to 5.25%, where it has remained since August 2023. However, the momentum of the Spring selling season has exerted enough upwards price pressure to reach a new record asking price.

"The top-of-the-ladder sector is still leading the way, while from a regional perspective the North East, with the cheapest average prices in Great Britain, has seen the strongest price growth. However, it's important to remember that prices overall are still only 0.6% ahead of this time last year. The market remains price-sensitive, and with prices reaching new records in the majority of regions and mortgage rates remaining elevated, affordability for many home-buyers is still stretched."

Looking ahead to the rest of the week, attention will turn to UK inflation data on Wednesday.

Joshua Mahony, chief market analyst at Scope Markets, said: "All eyes turn to the UK inflation read-out on Wednesday, with a collapse in headline CPI looking likely to grab the attention of the markets given the potential impact that could have on rate cut expectations. Base effects bring expectation of a collapse in headline CPI inflation, with the 1.2% monthly figure from April 2023 dropping out of the annual metric.

"There are concerns over the speculated 0.7% monthly rise for core CPI, and the Bank of England look likely to have a tough time deciding their next step given the huge disparity that looks to grow between headline (2.3% expected) and core inflation (3.6% expected)."

In equity markets, precious metals miners Fresnillo and Hochschild shone as gold prices hit fresh record highs.

Neil Wilson, chief market analyst at Finalto, said: "Gold hit a fresh all-time high and silver jumped to $32, its highest in 11 years. Expectations the Fed will cut rates soon is helping but real rates are nothing like as low as they once were. There is a clear geopolitical premium since October 7th and the death of the Iranian president may have driven some news-flow-based trade - bound to be some of that involved overnight.

"More importantly perhaps China has been a big buyer as the PBOC cuts Treasury holdings in favour of gold. Silver - I wondered last week if the meme stock resurfacing would prompt a move as it did in 2021 - cannot discount it, or at least shorts closing out in fear. It's also because of the move in gold and closing the gap in the gold silver ratio."

Miners were also on the front foot, with Antofagasta and Glencore among the top performers as copper prices rose.

Kainos surged as it posted a rise in full-year profit and revenue and maintained a positive outlook.

Ryanair flew a little lower after the budget airline reported higher annual profits but warned that summer airfares would be softer than anticipated.

Profit after tax climbed 34%to €1.9bn in the 12 months to March 30 as demand rose 9% to 184 million passengers. Revenue jumped 25% to €13.4bn.

The company also said it would start a €700m share buyback as it had "surplus cash".

Elsewhere, Keywords Studios surged more than 60% after saying it was "minded to accept" a £2.2bn takeover proposal from Swedish private equity firm EQT Partners if it makes a firm offer.

Following press speculation over the weekend, Keywords confirmed it was in "advanced discussions" with a fund which is part of the EQT Group about a possible cash offer of 2,550p per share. This represents a 73% premium to the closing share price on Friday.

Market Movers

FTSE 100 (UKX) 8,443.10 0.27%
FTSE 250 (MCX) 20,897.23 0.71%
techMARK (TASX) 4,804.64 0.49%

FTSE 100 - Risers

Fresnillo (FRES) 643.00p 4.55%
Weir Group (WEIR) 2,210.00p 4.25%
Centrica (CNA) 148.45p 2.70%
Rolls-Royce Holdings (RR.) 429.00p 2.61%
Entain (ENT) 738.00p 2.22%
Kingfisher (KGF) 266.30p 2.19%
Ashtead Group (AHT) 5,890.00p 2.19%
JD Sports Fashion (JD.) 123.50p 1.65%
Glencore (GLEN) 505.10p 1.63%
Haleon (HLN) 334.30p 1.61%

FTSE 100 - Fallers

Burberry Group (BRBY) 1,075.00p -2.27%
Sage Group (SGE) 1,081.00p -2.26%
easyJet (EZJ) 481.10p -1.98%
Scottish Mortgage Inv Trust (SMT) 876.60p -1.22%
Frasers Group (FRAS) 819.50p -1.03%
Whitbread (WTB) 3,118.00p -0.86%
Prudential (PRU) 813.20p -0.73%
Reckitt Benckiser Group (RKT) 4,560.00p -0.72%
Compass Group (CPG) 2,240.00p -0.71%
Anglo American (AAL) 2,659.50p -0.67%

FTSE 250 - Risers

Kainos Group (KNOS) 1,182.00p 11.30%
Baltic Classifieds Group (BCG) 242.50p 5.66%
W.A.G Payment Solutions (WPS) 70.40p 4.45%
Spectris (SXS) 3,274.00p 4.13%
Rathbones Group (RAT) 1,818.00p 3.65%
Dr. Martens (DOCS) 88.00p 3.53%
PureTech Health (PRTC) 227.50p 3.41%
Bridgepoint Group (Reg S) (BPT) 242.80p 3.32%
Auction Technology Group (ATG) 603.00p 3.25%
Close Brothers Group (CBG) 498.00p 3.15%

FTSE 250 - Fallers

Ascential (ASCL) 344.20p -37.20%
Foresight Group Holdings Limited NPV (FSG) 440.00p -2.65%
Premier Foods (PFD) 173.00p -1.82%
AO World (AO.) 106.40p -1.12%
Energean (ENOG) 1,172.00p -1.10%
ICG Enterprise Trust (ICGT) 1,196.00p -0.99%
Coats Group (COA) 87.90p -0.90%
British Land Company (BLND) 399.80p -0.84%
Pacific Horizon Inv Trust (PHI) 637.00p -0.78%
TI Fluid Systems (TIFS) 140.40p -0.71%

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