FTSE 100 storms ahead in strong start to the year

Proactive Investors - 8.15am: FTSE makes strong start to 2023

Trading in London has got off to a bright and breezy start in the first session of 2023 with the FTSE 100 posting gains of over 1% reflecting advances in European markets yesterday when UK equity markets were closed.

The advances came despite a report in the Financial Times which predicted the UK will experience one of the worst recessions and poorest recoveries among the G7 countries in the upcoming year.

At 8.15am the lead index was 92 points to the good at 7,544 while the more domestically focused FTSE 250 soared 224 points to 19,077.

“In the UK, the premier index opened the year on the front foot in early exchanges, driven by mark-ups across various sectors, such as oils and banks.”

“In addition, the possibility of increased Asian travel also boosted the likes of International Consolidated Airlines and Rolls-Royce (LON:RR), while the initial risk-on approach came at the slight expensive of the more defensive sectors” commented Richard Hunter, head of markets at interactive investor.

Rolls-Royce Holdings PLC (LON:RR) was also supported by an upgrade by Jefferies to buy with the share price up 4%.

But the New Year cheer was not extended to ailing cinema chain, Cineworld Holdings PLC, which warned of a “very significant dilution” to existing shareholders as it continued to explore its options to exit Chapter 11 bankruptcy.

It also said there had been no talks with AMC Entertainment Holdings (NYSE:AMC) Inc and shares slumped 9% in reaction.

7.45am: EUR loses ground against the greenback, Cable maintains a sideways trade

The forex markets kicked off the new year in a muted fashion.

Cable continued to trade sideways on Monday as we entered the first trading session of 2023, having opened at 1.208 and closed 28 pips down at 1.206, where it has stayed in this morning’s Asia hours.

Cable kicks off 2022 in muted fashion – Source: capital.com

Commencing trade on Tuesday, the US Dollar Index (DXY) remains on the weaker side at 103.36; a fair way below the 20-day moving average.

Yet the euro lost ground against the greenback too, with the EUR/USD pair dipping 0.3% on Monday and continuing to fall another 0.25% this morning, where it currently changes hands at 106.53.

Eurozone manufacturing data released yesterday indicated somewhat of an easing of the industry’s downturn, although output for the entire fourth quarter is likely to have been on the negative side.

Things were worse for manufacturing output in the UK, with today’s reading showing the weakest output since May 2020 for the month of December, spurred by lukewarm new business volumes and exports.

Get The App

Join the millions of people who stay on top of global financial markets with Investing.com.

Download Now

EUR/GBP fell a quarter of a percent to 88.29p in Tuesday’s Asia window, but the pair is still substantially above the 20-day moving average owing to a bullish December.

Things are quiet on the economic calendar today, but tomorrow will give us mortgage data on both sides of the Atlantic. Mortgage approvals in the UK are expected to gain slightly, with net lending expected to come in at £3.7bn.

7.35am: Cineworld warns of “very significant dilution of existing equity interests”

Cineworld Group PLC (LON:CINE), has said it has not held talks with AMC Entertainment Holdings Inc. regarding the sale of its cinema assets, as it warned that any transaction would result in a “very significant dilution of existing equity interests.”

The beleaguered cinema chain which filed for chapter 11 bankruptcy protection in September was responding to recent claims by AMC that it had held talks with its lenders with a view to buy some of Cineworld’s cinema assets.

Cineworld said talks continue with key stakeholders to develop a proposed plan that seeks to maximise value for the benefit of moviegoers and all other stakeholders and these discussions are ongoing.

Proposals are set to be made to potential suitors in January 2023, the group said.

But it warned any restructuring or sale transaction agreed with stakeholders will result in a “very significant dilution of existing equity interests in Cineworld and there is no guarantee of any recovery for holders of Cineworld's existing equity interests.”

7.00am: Bright start to 2023 in London forecast

London is set to start the year on the front foot after the extended New Year holiday after European markets made progress yesterday and the Hang Seng advanced strongly today.

Spread betting companies are calling the lead index up by around 20 points.

However, corporate news is likely to be thin on the ground but there will be a number of PMI releases for investors to digest after releases in the past couple of days showed further falls in manufacturing activity in China in Germany.

But as Ipek Ozkardeskaya, senior analyst at Swissquote Bank said “We will have more PMI data today, but don’t expect to see anything brilliant.”

Otherwise, investors will have one eye on the latest FOMC minutes and non-farm payrolls due for release later in the week.

Read more on Proactive Investors UK

Disclaimer