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London open: Stocks edge lower as investors eye US inflation reading

(Sharecast News) - London stocks edged lower in early trade on Monday following a mostly downbeat Asian session, as investors eyed the release of the latest US inflation reading this week. At 0820 GMT, the FTSE 100 was down 0.2% at 7,673.98.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Wariness has returned at the start of the week, as investors assess the risks of geo-political conflict, amid fresh signs of global economic slowdown and uncertainty about the trajectory of inflation.

"Such are the risks of the Israel-Gaza conflict widening, US Secretary of State Antony Blinken has embarked on a whistlestop diplomatic tour, in an attempt to calm inflamed tensions. It comes after Israel's defence minister described the hostilities the country is facing as an axis rather than a single enemy. Concerns are rising that this could lead to fresh violence, particularly in Lebanon."

Looking ahead to the rest of the week, all eyes will be on the US consumer price index for December, due on Thursday.

CMC Markets analyst Michael Hewson said the numbers have the potential to put the speculation about a March rate cut "firmly back in its box".

Investors were also eyeing the start of the US fourth-quarter earnings season, which kicks off on Friday with big bank results.

On home shores, a survey out earlier from Make UK and PwC showed that manufacturers are more bullish about the sector's prospects than they were 12 months ago.

The survey, which featured responses from over 200 senior manufacturing executives, found that 44.4% of companies see a moderate to significant improvement in industry conditions in 2024, compared with just 20.5% that expect conditions to worsen.

However, executives weren't so rosy about economic conditions at home and abroad: 41% expect UK conditions to deteriorate, while 38% foresee a worsening of the landscape overseas.

Nevertheless, 53% said they see opportunities in new products in 2024, while 27% are expanding into new markets.

Manufacturers are also confident about the impact that digital technologies will have on productivity and operational efficiency, with 23% of leaders citing opportunities in net zero, digital tech, cloud and artificial intelligence.

"The last few years have been a rollercoaster of emotions for manufacturers, yet they have more than demonstrated their resilience time after time. We are now seeing some hope that conditions may be improving, amid a more supportive and stable policy environment, but this must be cemented within a long term industrial strategy," said Stephen Phipson, chief executive of Make UK.

"While undoubted challenges remain, the accelerating use of digital technologies, our strength in innovation and expansion into new markets sets the scene for manufacturing to be at the heart of efforts to boost growth."

In equity markets, energy giant Shell was weaker as it flagged fourth-quarter impairments of up to $4.5bn, primarily in its chemicals and products division. The oil major, updating on fourth-quarter trading, said non-cash post-tax impairments were expected to be between $2.5bn and $4.5bn.

On the upside, Plus500 rallied as it said that for the year ended 31 December 2023, it generated revenue of about $725m and EBITDA of $340m, both of which are "significantly" ahead of current market expectations.

Online trading platform CMC Markets surged after it lifted its full-year net operating income guidance as it hailed a strong performance in the third quarter. The company now expects FY24 net operating income of between £290m and £310m, up from previous guidance of £250m to £280m.

In broker note action, housebuilders were in focus as Barclays upped Bellway to 'overweight, but cut Barratt Developments and Berkeley to 'equalweight'.

Legal & General gained after an upgrade to 'buy' from 'hold' at Berenberg, while Ashtead fell after a downgrade to 'hold' at HSBC.

Market Movers

FTSE 100 (UKX) 7,673.98 -0.20% FTSE 250 (MCX) 19,221.83 0.06% techMARK (TASX) 4,256.62 -0.25%

FTSE 100 - Risers

Centrica (CNA) 153.70p 1.32% BT Group (BT.A) 122.35p 0.82% Smith & Nephew (SN.) 1,049.50p 0.72% Legal & General Group (LGEN) 245.50p 0.70% Relx plc (REL) 3,120.00p 0.65% St James's Place (STJ) 647.00p 0.59% Intermediate Capital Group (ICP) 1,599.50p 0.53% Whitbread (WTB) 3,578.00p 0.53% Experian (EXPN) 3,107.00p 0.49% B&M European Value Retail S.A. (DI) (BME) 547.20p 0.48%

FTSE 100 - Fallers

Ashtead Group (AHT) 5,018.00p -1.57% Endeavour Mining (EDV) 1,553.00p -1.52% Shell (SHEL) 2,538.50p -1.26% International Consolidated Airlines Group SA (CDI) (IAG) 150.60p -1.05% Berkeley Group Holdings (The) (BKG) 4,750.00p -1.02% Pershing Square Holdings Ltd NPV (PSH) 3,450.00p -0.86% Fresnillo (FRES) 539.60p -0.81% 3i Group (III) 2,275.00p -0.78% Barratt Developments (BDEV) 542.20p -0.77% Antofagasta (ANTO) 1,605.00p -0.71%

FTSE 250 - Risers

Plus500 Ltd (DI) (PLUS) 1,744.00p 5.06% Drax Group (DRX) 508.40p 3.82% Crest Nicholson Holdings (CRST) 221.80p 2.69% Marshalls (MSLH) 272.80p 2.48% Dunelm Group (DNLM) 1,082.00p 2.46% Lancashire Holdings Limited (LRE) 637.00p 2.41% Travis Perkins (TPK) 815.00p 2.39% IG Group Holdings (IGG) 769.00p 2.33% Wizz Air Holdings (WIZZ) 2,185.00p 2.25% Savills (SVS) 972.00p 2.21%

FTSE 250 - Fallers

Trustpilot Group (TRST) 133.40p -4.17% IWG (IWG) 170.40p -2.63% RHI Magnesita N.V. (DI) (RHIM) 3,272.00p -2.44% Morgan Sindall Group (MGNS) 2,115.00p -1.86% Volution Group (FAN) 404.20p -1.80% 4Imprint Group (FOUR) 4,400.00p -1.79% Fidelity China Special Situations (FCSS) 201.00p -1.71% Premier Foods (PFD) 132.00p -1.64% AO World (AO.) 90.40p -1.47% Virgin Money UK (VMUK) 157.45p -1.47%

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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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