London close: Stocks finish Monday with small gains

(Sharecast News) - London's stock markets closed in positive territory on Monday, though gains were modest as investors navigated a backdrop of lackluster UK economic data.

The FTSE 100 index rose 0.31% to finish at 8,249.66 points, while the FTSE 250 managed a smaller gain of 0.1%, ending the session at 20,612.65 points.

In currency markets, sterling was last up 0.7% on the dollar to trade at $1.2510, while it slipped marginally against the euro, losing 0.07% to change hands at €1.2045.

"Stocks have made solid gains around the world today on hopes that the incoming US administration will look to take a more targeted approach on tariffs than previously feared," said IG chief market analyst Chris Beauchamp.

"Today's bounce is a reminder to investors that they are now living in a Trump-dominated world.

"Once the new president is installed on 20 January, we can expect a lot more days like today."

Beauchamp added that stocks were not the only markets reacting to the tariff reports.

"The euro, sterling and the Aussie all staged rebounds after weeks of heavy selling.

"These currencies have struggled to maintain any kind of bounce against the greenback since the election - while a recovery is overdue, the overall picture continues to point towards a rising dollar."

UK service sector growth still sluggish, as business confidence hits two-year low

In economic news, growth in the UK service sector remained sluggish in December, with the S&P Global services purchasing managers' index (PM) inching up to 51.1 from 50.8 in November, signalling marginal expansion.

The composite PMI, which combines manufacturing and services data, slipped to 50.4, its weakest reading since October 2023.

Employment in the service sector fell at its fastest pace in nearly four years, compounding concerns.

"The service sector ended last year with only a marginal upturn in business activity and a near-stalling of incoming new work," said Tim Moore, economics director at S&P Global Market Intelligence.

"Survey respondents suggested that falling business and consumer confidence, largely due to worries about domestic economic prospects in 2025, had led to a considerable loss of growth momentum.

"While most parts of the UK service economy noted weak demand and cutbacks to client budgets, there remained pockets of strong growth in areas such as technology services."

Meanwhile, business confidence hit a two-year low following tax changes announced in the Autumn Budget, according to the British Chambers of Commerce (BCC).

Over half of surveyed firms expected price increases in early 2025, driven by rising labour costs and new national insurance thresholds set for April 2025.

"The worrying reverberations of the Budget are clear to see in our survey data," said Shevaun Haviland, director general of the BCC.

"Business confidence has slumped in a pressure cooker of rising costs and taxes.

"Firms of all shapes and sizes are telling us the national insurance hike is particularly damaging."

On the continent, the eurozone's private-sector downturn was less severe than initially feared, with revised HCOB composite PMI data showing an uptick to 49.6 in December, compared to a preliminary 49.5.

While the manufacturing PMI fell slightly to 45.1, the services PMI rebounded to 51.6, driven by growth in Spain, Germany, and Italy.

However, inflationary pressures intensified, and growth expectations remain muted for 2025.

China's services sector meanwhile expanded at its fastest pace in seven months, with the Caixin/S&P Global services PMI climbing to 52.2 in December, supported by strong domestic demand.

However, foreign orders continued to decline, tempering overall optimism.

In the US, reports suggested president-elect Donald Trump's aides were reconsidering sweeping tariffs proposed during his campaign, instead exploring targeted duties on critical imports.

Discussions were reportedly focusing on industries such as defence, medical supplies and energy, reflecting a strategic shift to bolster domestic production.

Broker notes drive stocks on quiet day for corporate news

On London's equity markets, Rolls-Royce Holdings slid 2.19% after Citi downgraded the aerospace and engineering group to 'neutral' from 'buy', citing valuation concerns.

Similarly, Unilever dropped 2.92% following a downgrade by RBC Capital Markets to 'underperform' from 'sector perform', alongside a sharp price target cut to 4,000p from 4,800p.

On the upside, housebuilder Barratt Redrow climbed 1.28% after Redburn upgraded the stock to 'buy'.

In the gambling sector, Flutter Entertainment and Entain rose 2.01% and 2.42%, respectively, as Citi highlighted both companies among its top picks for 2025.

B&M European Value Retail jumped 3.14% after Citi designated it and Tesco as top buy-rated stocks in the retail sector, although Tesco edged down 0.43% by the close.

Elsewhere, Experian gained 1.74% after RBC Capital Markets upgraded the credit data company to 'outperform'.

Antofagasta surged 2.92% as Canaccord Genuity lifted the Chilean copper miner to 'buy' from 'hold'.

Precision instrumentation supplier Spectris also advanced, by 2.69%, following an upgrade to 'buy' from 'hold' at HSBC.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,249.66 0.31% FTSE 250 (MCX) 20,612.65 0.10% techMARK (TASX) 4,632.59 0.49%

FTSE 100 - Risers

JD Sports Fashion (JD.) 97.94p 4.01% Intermediate Capital Group (ICG) 2,132.00p 3.80% Antofagasta (ANTO) 1,642.50p 3.24% Lloyds Banking Group (LLOY) 55.76p 2.58% Entain (ENT) 692.80p 2.42% Barclays (BARC) 272.80p 2.38% Aviva (AV.) 485.80p 2.38% Melrose Industries (MRO) 554.20p 2.25% Diageo (DGE) 2,503.50p 2.25% Scottish Mortgage Inv Trust (SMT) 992.80p 2.20%

FTSE 100 - Fallers

WPP (WPP) 790.40p -2.90% Rolls-Royce Holdings (RR.) 570.00p -2.56% Unilever (ULVR) 4,448.00p -2.48% Marks & Spencer Group (MKS) 382.80p -1.97% Smurfit Westrock (DI) (SWR) 4,262.00p -1.25% Rightmove (RMV) 640.00p -1.23% Reckitt Benckiser Group (RKT) 4,809.00p -1.23% Rentokil Initial (RTO) 391.40p -1.11% National Grid (NG.) 942.20p -1.01% easyJet (EZJ) 535.20p -0.96%

FTSE 250 - Risers

Wood Group (John) (WG.) 68.00p 5.10% Bytes Technology Group (BYIT) 438.00p 4.43% Kainos Group (KNOS) 802.00p 3.89% Future (FUTR) 977.00p 3.55% Savills (SVS) 1,044.00p 3.15% Vistry Group (VTY) 572.00p 3.06% Renishaw (RSW) 3,365.00p 3.05% Johnson Matthey (JMAT) 1,351.00p 2.97% Spectris (SXS) 2,520.00p 2.69% Ferrexpo (FXPO) 107.60p 2.48%

FTSE 250 - Fallers

Raspberry PI Holdings (RPI) 608.00p -6.96% Ocado Group (OCDO) 308.00p -4.82% Harworth Group (HWG) 164.50p -4.64% Trustpilot Group (TRST) 290.00p -4.29% Indivior (INDV) 969.50p -4.10% Discoverie Group (DSCV) 678.00p -3.69% PayPoint (PAY) 757.00p -3.44% JPMorgan Indian Investment Trust (JII) 1,038.00p -2.99% Syncona Limited NPV (SYNC) 100.20p -2.72% Diversified Energy Company (DEC) 1,356.00p -2.66%