2024-05-07 15:56:33
(Alliance News) – Shares in London closed higher on Tuesday, starting the week well, with US interest rate optimism supporting stocks.
Financial markets in London were closed on Monday for May 1.
The FTSE 100 index closed 100.18 points, or 1.2%, higher at 8,313.67. The FTSE 250 closed up 248.54 points or 1.2% to 20,413.08 and the AIM All-Share closed up 4.89 points or 0.6% to 776.42.
The Cboe UK 100 rose 1.3% to 830.26, the Cboe UK 250 rose 1.0% to 17,661.69 and the Cboe Small Companies rose 0.6% to 15,880.63.
On the European stock markets on Tuesday, the CAC 40 in Paris rose by 1.0% and the DAX 40 in Frankfurt by 1.4%.
“The FTSE 100 may be feeling unsettled due to ongoing concerns regarding the exodus of UK companies to other exchanges, a lack of new IPOs and calls for new initiatives to stimulate interest. But the main UK stock market index is still achieving new all-time highs, perhaps a echoing the saying that “you can have good news and cheap stocks, just not both at the same time,” comments AJ Bell analyst Russ Mould.
“Investors must now decide whether the UK is cheap because it deserves to be, or if times really are changing, because if that is the case, further welcome gains might be on the way.”
The FTSE 100 was supported on Tuesday by the interest-sensitive housing sector. Persimmon rose 3.5% while Barratt Developments gained 3.0%.
Friday’s US data dampened US interest rate expectations somewhat, which also affected UK interest rate forecasts.
Lloyds Bank analysts commented: “Global markets have continued to react with some relief following US Federal Reserve Chairman Powell last week eased fears that US interest rates might rise further and confirmed the latest positive surprises in data, including inflation, but suggested the Fed would respond by delaying the start of rate cuts and keeping them at current hawkish levels for a while.
“Unsurprisingly, changing expectations of the US interest rate outlook have also affected interest rate expectations in the UK.”
The pace of hiring in the US slowed more than expected in April and the unemployment rate rose, Friday’s figures showed.
Nonfarm payrolls rose by 175,000 in April, according to the Bureau of Labor Statistics. This was below the FXStreet consensus of 243,000 and below the average monthly gain of 242,000 over the past 12 months. The total in February was adjusted down by 34,000 to 236,000 from 270,000.
The Bank of England will announce its latest interest rate decision on Thursday. A press conference with Governor Andrew Bailey will follow.
ING analyst Chris Turner commented: “Had it not been for Bank of England Chief Economist Huw Pill’s comments, markets would have been much more excited if there was a dovish change in communication at Thursday’s BoE meeting. However, our UK economist James Smith remains believe that the BoE is more likely to cut interest rates in August than in June lowers.
“But the market has only priced in a 30% rate cut from the BoE in June, and we doubt sterling will need to rise too much if the BoE makes no changes on Thursday.”
Sterling was trading at $1.2542 late on Tuesday, down from $1.2549 at the London close on Friday. The euro traded at $1.0774, higher than $1.0769. Against the yen, the dollar was higher at JPY154.49, down from JPY152.89.
In London, easyJet fell 5.8%, while Wizz Air lost 7.1%. In Dublin, Ryanair fell by 6.2%.
Low-cost airlines have struggled following Ryanair chief Michael O’Leary warned that summer ticket prices were likely to be weaker than expected.
“Looking ahead to the summer… We thought prices would go up 5-10%. We expect a flat to 5% increase,” O’Leary told reporters in Brussels, according to Reuters.
Elsewhere in London, shares in Macfarlane fell 9.9% following the company reported a “difficult” start to the year.
“As expected, the start to 2024 was challenging, with sales and profits in the first quarter below the same period in 2023,” Macfarlane said in a trading report ahead of the annual general meeting on Tuesday.
Despite the slow start to the year, expectations for the full year remain unchanged, it added.
Macfarlane said first-quarter revenue fell 9.5% from a year earlier due to continued weak customer demand and price deflation.
In New York, the Dow Jones Industrial Average rose 0.2%, the S&P 500 rose 0.3%, while the Nasdaq Composite rose 0.1%.
Disney fell 9.8% despite raising its annual forecast and predicting a profit in its video streaming business in the final quarter of its fiscal year.
XTB analyst Kathleen Brooks said Tuesday’s results were “not a fairy tale” for House of Mouse.
“Disney delivered a decent earnings report for its latest quarter on Tuesday, but it fell short of lofty expectations,” Brooks said.
“The market may also be unsettled by Disney’s comments regarding entertainment results in the current quarter, which are expected to be weaker than previously expected. The company has said it expects the combined streaming business to be profitable in the fourth quarter” But that’s not soon enough for the market , even though Disney+ subscribers increased by six million last quarter.”
In Disney’s fiscal second quarter ended March 30, revenue rose 1.2% to $22.08 billion from $21.82 billion a year earlier.
However, net profit fell 85% from $1.49 billion to $216 million due to restructuring and impairment charges of $2.05 billion, mainly related to Star India. Disney had reached an agreement with Reliance Industries in February to combine their Indian operations to create an $8.5 billion media company.
Disney’s direct-to-consumer business, which includes streaming services Disney+ and Hulu, generated operating income of $47 million, following a loss of $587 million.
The entire direct-to-consumer business, including sports-focused service ESPN+, generated an operating loss of $18 million, down significantly from $659 million.
CEO Robert Iger added: “Importantly, streaming entertainment was profitable in the quarter and we remain on track to achieve profitability in our combined streaming business in the fourth quarter.
“Looking at our company as a whole, it’s clear that the turnaround and growth initiatives we’ve put in place over the past year continue to deliver positive results. We have a number of highly anticipated theatrical releases coming in the next few months to our TV programming is well received by both viewers and critics term strategic investments.”
Brent oil traded at $82.90 a barrel at the close in London on Tuesday, down from Friday’s $82.91. Gold traded at USD 2,315.72 an ounce, higher than USD 2,301.11.
German industrial production is on the economic calendar at 0700 BST Wednesday.
Fast fashion company Boohoo’s annual results and pub company JD Wetherspoons’ trading results are on the agenda for Wednesday.
By Eric Cunha, news editor at Alliance News
Comments and questions to newsroom@alliancenews.com
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