FTSE Hugging The Flatline As Investors Eye U.S. Inflation Data -

FTSE Hugging The Flatline As Investors Eye U.S. Inflation Data

Mar 11, 2024Jeremy ParkinsonFinance0

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The UK stock market started the week on a sombre tone, with base metal miners causing losses, and traders being cautious before a major U.S. inflation report. The FTSE 100 index, which includes the top 100 companies in the UK, was down by 0.1%.The industrial metal mining sector experienced a 1.6% decline due to the continued drop in iron ore prices. This week, market attention will be on the U.S. consumer price reading and domestic labour market data, both scheduled for Tuesday, which will influence interest rate expectations from central banks. In a positive development for the Bank of England (BoE), a survey revealed a significant slowdown in Britain’s labour market in February, with recruitment firms reporting a substantial decrease in employer demand for staff compared to early 2021. Currently, money markets are anticipating approximately 67 basis points of interest rate cuts from the BoE within this year.Admiral Group, a UK-based insurer, saw a 4.1% increase in its stock price, making it the top percentage gainer on the FTSE 100 index after Berenberg raised its target price to 2,973p from 2,961p. Berenberg noted that investors did not fully appreciate Admiral’s advanced pricing strategy compared to the rest of the market. The company raised prices by 37% in FY23, surpassing the market average of 25%, providing room to reduce prices while maintaining strong margins. Despite strong results, investors were cautious about the potential fall in UK motor insurance prices. Admiral Group reported a 23% increase in annual pre-tax profit to 442.8 million stg ($568.51 million) on March 7, and the stock has risen by 38.4% in the last 12 months.Marks & Spencer’s stock rose by 2.1% to 247.9 pence following an upgrade by RBC Capital Markets, which cited a positive consumer outlook. The brokerage raised the British retailer’s rating to “outperform” from “sector perform” and increased its price target to 300p from 285p. RBC noted that the UK consumer outlook appears to be improving due to easing cost pressures and the likelihood of interest rates reaching their peak. While the stock may not currently reflect growth, M&S could counter this by implementing a progressive cash returns policy to attract long-term investors, according to RBC. The brokerage also anticipates that M&S will face challenges with comparables and cost headwinds this year, but believes that these can be mitigated through cost savings and productivity improvements. Despite a 9% decline year-to-date, M&S’s stock had seen a 121% increase in 2023.On the negative side of the ledger HSBC analysts have given a ‘Hold’ rating to the crisis-affected wealth manager St James’s Place after the company reduced its dividend and decreased its share buyback program leaving the firm at the bottom of the blue chip index today down over 3% on the session. Earlier this month, St James’s Place shares declined following the announcement that the company would allocate £426m for potential client compensation related to inadequate service and high fees. This provision was accompanied by a significant reduction in the dividend, resulting in St James’s Place shareholders receiving less than half of the previous year’s dividend. HSBC investigated if there were any additional significant issues yet to be revealed and determined that the major concerns have been identified. However, they indicated that there are still uncertainties regarding pricing, product variety, and distribution methods. In light of the uncertain situation, HSBC has reduced its price target for the stock to 550p from 740p and has assigned a hold rating.
FTSE Bias: Bullish Above Bearish below 7650