Stock prices in London ended lower on Monday, despite a strong start to the day, in the absence of new direction from Wall Street and as the initial boost from China stimulus news faded.
The FTSE 100 index closed down 11.78 points, or 0.2%, at 7,452.76. The FTSE 250 closed down 12.76 points, or 0.1%, at 18,524.14 and the AIM All-Share closed down 0.1%, or 0.84 points, at 740. 59.
The Cboe UK 100 closed 0.2% lower at 741.90, the Cboe UK 250 closed 0.2% lower at 16,170.0 and the Cboe Small Companies closed 0.2% lower. at 13,435.96.
London’s flagship index had risen 59 points earlier, boosted by the U.S. jobs report on Friday and better news about China’s struggling real estate sector.
The measures taken by Chinese authorities to support a declining real estate market appear to be paying off. Borrowing terms for homebuyers were lowered and lenders were encouraged to reduce interest rates.
Bloomberg reported that existing home transactions doubled on Saturday from the previous week in Beijing. In Shanghai, the number of new home transactions in a single day matched that seen for the entire month of August, the report said.
China’s flagging property sector has received a fresh boost from news developer Country Garden winning approval from creditors to extend the repayment deadline for a key bond. Country Garden shares closed up 15%.
But with US markets closed for Labor Day, early gains were eroded by the London close, amid low trading volumes.
In European stocks on Monday, the CAC 40 in Paris ended down 0.2%, while the DAX 40 in Frankfurt ended down 0.1%.
British property values sparked commentary on Monday.
Morgan Stanley has claimed UK property share prices are “oversold”.
“UK balance sheets appear adequately capitalized against the backdrop of modest asset valuations, while for many the net asset value valuation is near or at an all-time low,” the US investment bank said .
“We recognize that broader UK exposure and offices as a sub-sector are no longer valued, but at the current valuation the risk/reward is compelling in our view.” , did he declare.
Hammerson was upgraded from ‘equal weight’ to ‘overweight’ with an increased price target of 36p, up from 27p. Shares in Hammerson rose 2.4% to 24.52p.
The broker believes the company is making significant progress on restructuring and believes the shares are valuable at current levels.
Meanwhile, Land Securities was moved in the other direction, from ‘overweight’ to ‘equal weight’, with its price target reduced from 750p to 650p. Shares fell 1.0% to 585.60p.
Additionally, the target price for Derwent London was increased from 3,000p to 2,700p, Great Portland Estates to 545p from 640p and British Land to 405p from 450p.
The price target for Unite has been raised to 1,125p from 1,050p.
JP Morgan took a less positive view on British Land, lowering its rating from ‘overweight’ to ‘neutral’.
He estimates that the value of municipal offices could fall by as much as 20%. Even if the valuation is not exaggerated, JPM believes that “the catalysts for a stock-specific revaluation are preparing to wait for a turnaround in the city offices.”
Elsewhere in London, Watches of Switzerland rose 3.2% after its senior team bought almost £900,000 worth of shares on Friday last week, after the share price was hit by the acquisition of ‘a rival retailer by key supplier Rolex.
Finance director Anders Romberg bought 100,000 shares at £5.85, worth £584,700, while chairman Ian Carter bought 35,000 shares at prices ranging from 582.50p to 589.50p, worth a total of £205,690.
Ergomed soared 28% after accepting a £703.1m approach from private equity specialist Permira.
The offer for Ergomed, a pharmaceutical services company of 1,350 pence per share, was 28% higher than Friday’s closing price of 1,052 pence and was described by the company as “fair and reasonable”.
“We view the offering as an attractive opportunity to lock in returns,” Shore Capital analysts said.
On AIM, Advanced Medical Solutions plunged 26% after the surgical dressing company lowered its full-year outlook due to uncertainty over royalty income from its patent licensing deal with Organogenesis.
The company also warned that ongoing issues with Liquiband’s U.S. partners are taking longer to resolve.
Stifel analysts said: “Although the issue of Organogenesis has a particularly significant impact with the removal of 100% margin royalties, it is beyond AMS’s control. »
“Conversely, the US Liquiband issue is the responsibility of AMS and is therefore the more disappointing of the two updates.”
Brent oil was quoted at $89.01 a barrel at the close of trading in London on Monday, up from $88.00 on Friday evening. Gold was quoted at $1,938.92 an ounce, up from $1,938.09 on Friday.
Sterling was trading at $1.2620 at the London stock close on Monday, down from $1.2604 at Friday’s close. The euro settled at $1.0791, up from $1.0792. Against the yen, the dollar was trading at JP¥146.46, up from JP¥146.21 Friday evening.
Tuesday’s UK business calendar will see first quarter results from Ashtead, full-year results from Alumasc and a trading release from DS Smith.
Tuesday’s economic calendar features a UK Services Purchasing Managers’ Index at 09:30 BST and the BRC-KPMG Retail Sales Monitor will be released overnight.
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Publication date: September 4, 2023