London Stocks Start Week on Lacklustre Tone, Aerospace and Defence Weigh Down Market Optimism for Potential September Rate Cut in U.S. Limits Losses
London stocks opened the week with a lacklustre tone, as aerospace and defence shares dragged down the market. However, investor optimism over a potential rate cut in the United States in September helped limit losses. The blue-chip index was down 0.2% on Monday, following its best week since May. The mid-cap FTSE 250 remained flat.
Aerospace and defence stocks saw a 1.3% decline, in line with losses in European defence stocks after reports that the German federal government would reject new military aid requests for Ukraine due to spending cuts. Bae Systems shares fell 2%, while Rolls-Royce and Chemring were down over 1% each. Energy shares also dipped 0.2% on lower crude prices, while banks saw a 0.1% decrease.
On the other hand, precious and industrial metal miners rose by 0.7%, with gold prices near historic levels and copper gaining on reduced fears of a U.S. recession and Chinese demand concerns. Real estate and real estate investment trusts saw marginal gains after property website Rightmove reported increased buyer interest following the Bank of England's rate cut.
Investor sentiment remained positive amidst expectations of a U.S. rate cut, as recent data showed slowing inflation and alleviated fears of an economic slowdown. All eyes will be on commentary from U.S. Federal Reserve Chair Jerome Powell at the upcoming Jackson Hole event. Additionally, the purchasing managers index readings in the UK and U.S. are expected later this week, along with minutes from the Fed's last policy meeting.
In individual stock news, Plus500 gained 4.1%, leading the market after forecasting annual results above market expectations and reporting a 13% increase in new customers in the first half of the year.
Analysis:
- London stocks opened the week with a lacklustre tone, weighed down by aerospace and defence sectors.
- Investor optimism over a potential U.S. rate cut in September helped limit losses.
- Precious and industrial metal miners saw gains, while energy shares and banks dipped.
- Real estate and real estate investment trusts benefited from increased buyer interest post Bank of England's rate cut.
- All eyes are on Jerome Powell's commentary and upcoming economic data releases for further market direction.