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London close: Stocks maintain gains on fresh UK optimism

(Sharecast News) - London markets finished with a positive performance on Monday, following the lead of Wall Street's strong gains towards the end of the previous week. An upbeat report on the UK economy from EY Item Club contributed to the optimistic sentiment.

The FTSE 100 index gained 0.35% to close at 7,487.71 points, while the FTSE 250 jumped 1.08% to finish at 19,075.64 points.

In currency markets, sterling was last up 0.17% on the dollar to trade at $1.2725, while it advanced 0.22% against the euro, changing hands at €1.1683.

"Last week's momentum has carried over into Monday's session, and investors appear unperturbed by the prospect of an avalanche of earnings heading their way," said IG chief market analyst Chris Beauchamp.

"Stocks have once again defied the doubters by moving higher, after their brief outbreak of worry about the path of interest rates in the US and elsewhere.

"A bigger test for the rally comes from tomorrow, thanks to the presence of key central bank meetings in Japan and the eurozone, and the full-on pace of earnings season in the next two weeks."

Beauchamp added that buyers were "slowly but surely" taking control of oil prices.

"After a wobbly start to the week crude is back on the up, following weekend reports that suggest the US is now committed to policing the Red Sea for an indefinite period.

"Tensions in the region remain high, and have the potential to drive more upside for oil."

EY Item Club makes positive revision to UK forecasts

In economic news, the EY Item Club revised its economic projections for the UK, citing a faster-than-anticipated decline in inflation.

According to its Winter forecast, the UK's long-standing economic stagnation was expected to see relief in the coming year, with factors such as decelerating inflation, reductions in interest rates, and tax cuts propelling economic growth in 2024 and 2025.

EY Item Club now anticipated a 0.9% increase in GDP for 2024, up from its previous estimate of 0.7%.

Moreover, its projection for 2025 was upgraded to 1.8%, compared to the earlier estimate of 1.7%.

A significant driver of optimism was the expected decline in inflation.

After averaging 7.3% in 2023, inflation was now forecast to average 2.4% in 2024, a more favourable figure than the previously-predicted 2.9% from the Autumn forecast.

Furthermore, the report indicated that inflation was on track to align with the Bank of England's 2% target by May.

As a result, the EY Item Club maintained its expectation that the Bank of England would start interest rate cuts as early as May, but the projection had been adjusted to include a range of 100 to 125 basis point cuts throughout the year, up from the prior forecast of 100 basis points.

"Although it remains possible that the UK may have slipped into a technical recession in the fourth quarter of 2023, the mood music around the economy is justifiably improving," said Martin Beck, EY Item Club's chief economic advisor.

"High inflation and expensive borrowing costs have been two of the biggest obstacles to growth recently and, with both showing encouraging signs of subsiding, prospects for late 2024 and beyond appear brighter."

However, he did highlight that there were risks, such as ongoing geopolitical tensions which could push up energy prices, while the timing and extent of interest-rate cuts "remain uncertain".

Gambling operators rise on deal news, Endeavour Mining slides

On London's equity markets, Ladbrokes owner Entain jumped 4.71% and 888 Holdings gained 3.28%, after La Francaise des Jeux announced a €2.45bn offer for Swedish online gambling firm Kindred.

Bodycote leapt 6.22% after the thermal processing specialist disclosed its intentions to start a $60m share buyback programme.

The decision followed a period during which the company spent less than originally planned on acquisitions.

In broker note action, Segro added 2.49% after an upgrade from 'neutral' to 'buy' from Citi, while Sage Group, despite a downgrade to 'underweight' from 'equalweight' by Barclays, managed to finish with a slight gain of 0.04%.

On the downside, Compass Group declined 0.18% after it announced its intent to acquire rival CH&CO in a £475m deal.

Elsewhere, Endeavour Mining faced a decrease of 3.33% after the company reported meeting its production guidance for 2023 but noted that costs were higher than anticipated.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,487.71 0.35% FTSE 250 (MCX) 19,075.64 1.08% techMARK (TASX) 4,343.95 0.35%

FTSE 100 - Risers

Entain (ENT) 946.40p 4.71% Persimmon (PSN) 1,480.50p 3.27% JD Sports Fashion (JD.) 114.80p 3.10% Barratt Developments (BDEV) 534.40p 2.94% Auto Trader Group (AUTO) 733.60p 2.92% Barclays (BARC) 144.64p 2.77% Pershing Square Holdings Ltd NPV (PSH) 3,692.00p 2.76% NATWEST GROUP (NWG) 213.60p 2.69% Taylor Wimpey (TW.) 146.70p 2.52% DCC (CDI) (DCC) 5,746.00p 2.49%

FTSE 100 - Fallers

Glencore (GLEN) 400.40p -3.49% Endeavour Mining (EDV) 1,337.00p -3.33% Rio Tinto (RIO) 5,278.00p -1.69% Haleon (HLN) 323.65p -1.37% Smurfit Kappa Group (CDI) (SKG) 2,880.00p -1.37% Anglo American (AAL) 1,749.40p -1.26% Antofagasta (ANTO) 1,570.00p -1.17% Reckitt Benckiser Group (RKT) 5,516.00p -0.79% SSE (SSE) 1,745.50p -0.65% BAE Systems (BA.) 1,167.50p -0.55%

FTSE 250 - Risers

Bodycote (BOY) 636.00p 6.71% Wood Group (John) (WG.) 176.40p 4.63% Dr. Martens (DOCS) 75.50p 4.27% OSB Group (OSB) 417.40p 4.21% Safestore Holdings (SAFE) 783.00p 4.18% Ibstock (IBST) 149.80p 3.81% Softcat (SCT) 1,389.00p 3.68% Indivior (INDV) 1,275.00p 3.66% Trustpilot Group (TRST) 170.10p 3.53% Mobico Group (MCG) 86.35p 3.48%

FTSE 250 - Fallers

Wizz Air Holdings (WIZZ) 1,818.50p -3.32% Fidelity China Special Situations (FCSS) 185.80p -2.41% Tullow Oil (TLW) 30.00p -1.64% Ithaca Energy (ITH) 137.70p -1.59% Telecom Plus (TEP) 1,510.00p -1.31% Centamin (DI) (CEY) 92.35p -1.07% Helios Towers (HTWS) 81.40p -0.91% Auction Technology Group (ATG) 450.50p -0.88% Templeton Emerging Markets Inv Trust (TEM) 142.40p -0.84% Me Group International (MEGP) 124.20p -0.82%

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Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

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