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London close: Stocks manage gains amid holiday slowdown

(Sharecast News) - London's financial markets showed resilience on Tuesday, maintaining positive momentum despite the usual holiday slowdown. Investor focus was on developments in the UK manufacturing sector and the final policy announcement for the year from the Bank of Japan.

The FTSE 100 recorded a gain of 0.31%, closing at 7,638.03 points, and the FTSE 250 posted an increase of 0.5%, finishing at 19,315.98.

In currency markets, sterling was last up 0.82% on the dollar to trade at $1.2752, while it advanced 0.32% against the euro, changing hands at €1.1615.

"It is a long way off its own record highs, but at least the FTSE 100 has managed to keep moving higher too this week," said IG chief market analyst Chris Beauchamp.

"Last week's attempt to break above 7,700 was knocked back, but it would be a good way to end the year if the index can manage a close above the summer highs.

"UK investors have endured another tough year compared to their US and European peers, but the prospect of a better outlook to 2024 does at least offer the prospect of more upside for the index's banks and miners."

Manufacturing sector shows signs of stability

In economic news, the UK manufacturing sector showed signs of stability in December, though it grappled with subdued orders, according to fresh survey data.

The Confederation of British Industry reported that the monthly order book balance improved, rising from -35 in November to -23.

While that exceeded consensus expectations, with a forecast of -29, it is still considered below the norm.

The order book balance represents the weighted percentage of companies reporting an increase minus those reporting a decrease in orders.

"UK manufacturers appear to have ended the year on a stable footing. with December's results only the second set this year to not show falling activity," said CBI deputy chief economist Anna Leach.

"Selling price expectations are the weakest they have been in two years, reflecting ongoing improvements in supply conditions and soft demand.

"The environment for UK manufacturing is likely to remain challenging, with global growth set to remain weak in the year ahead.

On the continent, the eurozone saw its inflation rate hold steady at 2.4% in November annually, aligning with expectations.

However, on a month-on-month basis, there was a more rapid decline of 0.6%, surpassing the anticipated 0.5% drop.

Core inflation, which excludes volatile components like energy and food, remained at 3.6% year-on-year.

"Looking ahead, base effects will push up energy inflation in December; energy prices plunged by 6.6% on the month in December last year due to a one-off fiscal subsidy in Germany," said Pantheon Macroeconomics chief eurozone economist Claus Vistesen.

"We think the energy HICP will fall on the month in December, but not by the same amount as it did last year, so energy inflation in year-over-year terms will snap back.

"We look for an increase to around -7%, but it's anybody's guess at this point given the possibility of further near-term volatility in oil and gas prices in response to tensions in the Red Sea."

Turning to Japan, the Bank of Japan (BoJ) decided to maintain short-term interest rates at -0.1% as part of its ongoing efforts to encourage banks to increase lending and stimulate economic recovery.

The central bank emphasised its vigilance concerning price and wage movements before considering any tightening of monetary policy.

In a unanimous decision that mirrored market expectations, BoJ policymakers pledged to continue purchasing government bonds without a preset upper limit.

They aim to ensure that 10-year bond yields hover around 0%, with an upper bound of 1.0%.

While inflation in Japan currently exceeds the BoJ's 2% target, it remains significantly lower than in other nations, and wage increases have yet to catch up with rising prices.

"With extremely high uncertainties surrounding economies and financial markets at home and abroad, the Bank will patiently continue with monetary easing while nimbly responding to developments in economic activity and prices as well as financial conditions," the BoJ said.

"By doing so, it will aim to achieve the price stability target of 2% in a sustainable and stable manner, accompanied by wage increases."

Ocado rises, Superdry and Diversified Energy slide

On London's equity markets, online grocery retailer and warehouse technology developer Ocado Group was a standout gainer, soaring 5.26%.

Flutter Entertainment was ahead 3.15% after a 'buy' upgrade from Peel Hunt.

Hipgnosis Songs Fund managed to recover from earlier losses, posting a modest gain of 0.14% despite a delay in its interim results, initially expected on Tuesday but now scheduled for the end of December.

The company's board expressed concerns about the value of its assets, with an independent valuation indicating a level significantly higher than that implied by proposed and recent sector transactions.

On the downside, clothing retailer Superdry tumbled 17.46% after it issued a profit warning, citing a challenging trading environment and unseasonably warm weather as contributing factors.

Diversified Energy slid 14.38% following inquiries from Democrat members of the US Congress regarding its efforts to mitigate methane leaks from its numerous mature gas wells.

The House Committee on Energy and Commerce expressed concerns about the adequacy of the company's well cleanup cost estimates.

Luxury brand Burberry Group dropped 3.31% after Jefferies reduced its price target on the stock from 1,800p to 1,600p.

Jefferies cited ongoing weaknesses in the US and European markets and a challenging environment in China as potential risks to the company's 2024 guidance.

Oil giant BP ended the day with a slight decline of 0.64% as it faced headwinds related to geopolitical events in the Red Sea, where vessel diversions due to a series of attacks raised concerns.

According to Russ Mould, investment director at AJ Bell, the developments could potentially contribute to renewed inflationary pressures, as disrupted supply chains may lead to higher costs of goods.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,638.03 0.31% FTSE 250 (MCX) 19,315.98 0.50% techMARK (TASX) 4,225.29 0.70%

FTSE 100 - Risers

Ocado Group (OCDO) 766.80p 5.33% Fresnillo (FRES) 576.80p 3.93% Anglo American (AAL) 1,891.60p 3.85% Entain (ENT) 1,012.00p 3.56% Flutter Entertainment (CDI) (FLTR) 13,920.00p 3.53% Antofagasta (ANTO) 1,685.00p 2.87% Spirax-Sarco Engineering (SPX) 10,340.00p 2.27% Airtel Africa (AAF) 127.60p 2.08% Endeavour Mining (EDV) 1,817.00p 1.91% Standard Chartered (STAN) 658.00p 1.89%

FTSE 100 - Fallers

Burberry Group (BRBY) 1,483.50p -2.05% Beazley (BEZ) 526.00p -1.31% St James's Place (STJ) 673.80p -1.03% BT Group (BT.A) 123.55p -0.88% Imperial Brands (IMB) 1,805.00p -0.80% GSK (GSK) 1,432.80p -0.68% Lloyds Banking Group (LLOY) 46.72p -0.59% Vodafone Group (VOD) 66.85p -0.57% Centrica (CNA) 141.35p -0.49% Aviva (AV.) 427.20p -0.47%

FTSE 250 - Risers

Helios Towers (HTWS) 81.00p 8.43% Wizz Air Holdings (WIZZ) 2,107.00p 6.39% FDM Group (Holdings) (FDM) 448.00p 5.41% Genus (GNS) 2,118.00p 3.42% Paragon Banking Group (PAG) 665.50p 3.34% Watches of Switzerland Group (WOSG) 709.50p 3.05% Trainline (TRN) 323.00p 2.87% Computacenter (CCC) 2,776.00p 2.74% IP Group (IPO) 56.90p 2.71% IWG (IWG) 173.50p 2.66%

FTSE 250 - Fallers

Diversified Energy Company (DEC) 1,111.00p -14.38% LondonMetric Property (LMP) 188.20p -3.98% W.A.G Payment Solutions (WPS) 88.00p -2.00% GCP Infrastructure Investments Ltd (GCP) 69.40p -1.98% Vietnam Enterprise Investments (DI) (VEIL) 538.00p -1.82% Syncona Limited NPV (SYNC) 120.40p -1.63% Currys (CURY) 49.38p -1.63% Direct Line Insurance Group (DLG) 185.85p -1.61% PPHE Hotel Group Ltd (PPH) 1,150.00p -1.29% Schroder Oriental Income Fund Ltd. (SOI) 243.00p -1.22%

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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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