London midday: FTSE falls further as investors scale back rate cut expectations

(Sharecast News) - London stocks had fallen a little further by midday on Monday, with bond yields rising again as investors scaled back rate cut expectations. The FTSE 100 was down 0.5% at 8,211.48,while sterling dropped to a 14-month low against the dollar, trading down 0.6% at 1.2131.

Susannah Streeter head of money and markets at Hargreaves Lansdown, said: "Equity trading on the London market has got off to a subdued start as investors continue to assess the implications of turmoil on the bond markets and the outlook for the global economy. Friday's jobs figures showed the US economy is more resilient than expected, quashing hopes for multiple interest rate cuts from the Federal Reserve this year. With the dollar strengthening against a basket of currencies it also runs the risk of higher inflation being exported, due to the higher cost of imports, adding to headaches for other central banks.

"UK government borrowing costs have crept up even higher, with the yield on 10-year gilts nudging 4.9%, a highly unwelcome hurdle, levels not seen since the Great Financial Crisis. With the UK still in the eye of the storm of concern worrying bond markets, it's set to keep the rumour mill grinding about difficult tax and spending decisions ahead for Keir Starmer's government.

"The dollar is flexing more muscle amid expectations that borrowing costs will stay higher for longer, helping push down the pound to $1.21 levels not seen since October 2023. Sterling has also dipped against the euro to 1.18. It comes amid ongoing concerns about the outlook for the UK economy, with the spectre of stagflation hovering. Wednesday's CPI data will be closely watched especially given that the reading is set to show consumer prices will veer further away from the Bank of England's 2% target, making it less likely that policymakers will vote for a cut in February."

In equity markets, airlines were under the cosh as oil price rose on concerns about further US sanctions against Russia. BA and Iberia owner IAG, EasyJet and Wizz Air all flew lower.

PageGroup slumped as the recruitment firm said annual operating profit would be at the lower end of consensus expectations after fourth-quarter earnings fell 17% as market conditions worsened in Europe, with companies low-balling offers to potential job candidates.

GSK was a touch weaker as it announced the acquisition of US-based biopharmaceutical company IDRx for up to $1.15bn.

Fintech group Plus500 was also down despite saying that results for 2024 had beaten market forecasts, driven by a solid end to the year with customer numbers surging 45% over the final quarter.

On the upside, Ladbrokes owner Entain surged as it reiterated its guidance for FY24 EBITDA. The shares were hit last week after rival Flutter Entertainment downgraded its US guidance due to unfavourable sports results.

Flutter was also a high riser.

Oil giants Shell and BP gushed higher on the oil price increase.

Oxford Nanopore rallied after the DNA and RNA analysis firm reported an acceleration in momentum towards the end of the year, pointing to higher-than-expected margins.

Market Movers

FTSE 100 (UKX) 8,211.48 -0.45% FTSE 250 (MCX) 19,676.80 -0.29% techMARK (TASX) 4,560.24 -0.37%

FTSE 100 - Risers

Rentokil Initial (RTO) 390.00p 3.26% Entain (ENT) 637.40p 2.11% Flutter Entertainment (DI) (FLTR) 20,900.00p 2.10% Glencore (GLEN) 364.90p 1.73% SSE (SSE) 1,563.00p 1.43% Centrica (CNA) 135.45p 1.27% Intermediate Capital Group (ICG) 2,050.00p 1.18% Shell (SHEL) 2,651.50p 1.01% BP (BP.) 429.05p 0.93% Bunzl (BNZL) 3,312.00p 0.91%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 303.70p -3.86% Pearson (PSON) 1,250.00p -3.29% easyJet (EZJ) 492.60p -2.99% Fresnillo (FRES) 652.50p -2.32% Smith (DS) (SMDS) 557.00p -2.28% Rolls-Royce Holdings (RR.) 567.00p -2.24% M&G (MNG) 188.45p -2.13% Diageo (DGE) 2,397.00p -2.02% Standard Chartered (STAN) 1,007.00p -1.76% CRH (CDI) (CRH) 7,404.00p -1.67%

FTSE 250 - Risers

Oxford Nanopore Technologies (ONT) 148.60p 13.44% CMC Markets (CMCX) 239.50p 3.23% IP Group (IPO) 50.60p 3.05% NextEnergy Solar Fund Limited Red (NESF) 62.20p 2.30% Harbour Energy (HBR) 272.60p 1.83% Ithaca Energy (ITH) 131.70p 1.46% Energean (ENOG) 1,022.00p 1.29% Fidelity China Special Situations (FCSS) 213.50p 1.18% Vesuvius (VSVS) 400.50p 1.14% Ninety One (N91) 139.90p 1.08%

FTSE 250 - Fallers

Wizz Air Holdings (WIZZ) 1,182.00p -3.82% Pagegroup (PAGE) 299.80p -3.73% Currys (CURY) 84.10p -2.61% Ocado Group (OCDO) 271.60p -2.51% Bloomsbury Publishing (BMY) 606.00p -2.26% Discoverie Group (DSCV) 638.00p -2.15% Keller Group (KLR) 1,304.00p -2.10% Watches of Switzerland Group (WOSG) 493.80p -1.93% Greggs (GRG) 2,042.00p -1.92% Serco Group (SRP) 147.10p -1.87%