London’s stock market remained elevated by midday on Monday, buoyed by promising UK services sector data and digesting the Federal Reserve Chairman Jerome Powell’s recent remarks.
Russ Mould from AJ Bell observed, “The FTSE 100 reached its highest in nearly a month, spurred by a universally strong performance across the index. This comes after a substantial US jobs report last Friday, dispelling hopes for imminent rate cuts.”
Investors closely followed Powell’s insights. In a ’60 Minutes’ interview, he forecasted no rate reductions in March, aligning with prior signals. He also supported the expectation of three rate reductions this year, outlined in December’s FOMC meeting, despite market anticipation of five cuts in 2024.
The interview, conducted before the release of unexpectedly robust non-farm payrolls data, spotlighted Powell’s confidence in the economy’s resilience, particularly within the job market.
On the macroeconomic front, the UK services sector demonstrated growth, marking its quickest pace in eight months as of January, according to a S&P Global survey. The services PMI rose to 54.3, indicating ongoing expansion and surpassing forecasts.
Further optimism was fueled by comments from Tim Moore of S&P Global, detailing a surge in service sector activity, attributing it to rising business and consumer spending. He noted, “Falling inflation and bolstering order books have notably uplifted business activity expectations.”
In the equity market, CMC Markets announced a job reduction plan as part of a cost-saving initiative, sending its shares soaring. Meanwhile, Vodafone reported a dip in service revenues yet maintained its full-year guidance.
JPMorgan Cazenove adjusted its stance on Kingfisher, citing upcoming full-year results, whereas Land Securities enjoyed an upgrade from Morgan Stanley, with British Land also receiving positive nods.
This dynamic landscape underscores a pivotal transition in the market’s outlook, where genuine economic progress is beginning to override the previously preferred scenario where bad news was embraced for its potential monetary easing implications.
