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Stocks in London opened in the red on Monday amid unwelcome domestic GDP and consumer sentiment releases, and in good news for Direct Line Insurance as Aviva finalises its cash offer.
British shoppers expect a ‘January spending squeeze’ according to the British Retail Consortium.
The personal financial situation index remained in negative territory, though steady, at minus 3 points. However, the index for the state of the economy fell to negative 27 points in December from negative 19 in November, and the overall personal spending index fell to negative 3 points from positive 3.
‘Public confidence in the state of the economy took a nosedive, falling 8pts to -27, BRC Chief Executive Helen Dickinson said. ’This created a widening gap between expectations of the economy and of people’s own finances, which remained unchanged...The public’s spending intentions both in retail and beyond dropped 6pts, with expectations of spending in nearly every retail category falling. If these expectations are realised, retailers could find themselves facing a New Year spending squeeze just as they unveil their January sales.‘
The UK economy showed no growth at all in the third quarter, the Office for National Statistics said on Monday in a revised estimate of gross domestic product.
The ONS said that in the three months ended September 30, real GDP growth is estimated to have stayed flat compared to the second quarter, revised down from the first estimate increase of 0.1% growth.
The FTSE 100 index opened down 18.52 points, 0.2%, at 8,066.09. The FTSE 250 was down 62.12 points, 0.3%, at 20,388.57, and the AIM All-Share was up 0.89 points, 0.1%, at 711.49.
The Cboe UK 100 was down 0.3% at 809.62, the Cboe UK 250 was down 0.4% at 17,877.33, and the Cboe Small Companies was down 0.6% at 10,269.53.
Aviva was 0.1% higher on the FTSE 100. On the FTSE 250, Direct Line was up 3.1%.
Aviva and Direct Line announced that they have agreed on a recommended cash and share offer for Direct Line, which values the insurer at approximately £3.7 billion or 275p per share.
Each Direct Line shareholder will be entitled to receive 0.2867 of a new Aviva share, 129.7 pence in cash, and up to 5p total in dividend payments due before the deal completes.
In smaller caps, boohoo was up 0.5%.
The fashion retailer on Friday said its shareholders ’overwhelmingly‘ voted against the resolutions, put forward by FTSE 100-listed Frasers in its general meeting, to appoint Frasers founder Mike Ashley and insolvency expert Mike Lennon to the board.
‘Frasers takes note of boohoo’s invitation to propose a board candidate other than Mr Ashley or Mr Lennon,’ Frasers said on Monday.
The Sports Direct owner was down 1.6%.
Chesnara was flat.
The insurance company and pension consolidator has agreed to buy a closed portfolio of unit-linked bonds and legacy pension business, with approximately 17,000 policies and assets under management of £1.5 billion at the end of 2023, from Canada Life UK.
In European equities on Monday, the CAC 40 in Paris was down 0.5%, while the DAX 40 in Frankfurt was down 0.3%.
The pound was quoted at $1.2563 early on Monday in London, compared to $1.2549 at the equities close on Friday. The euro stood at $1.0410, higher against $1.0399. Against the yen, the dollar was trading flat at JP¥156.55 compared to JP¥156.58.
In Asia on Monday, the Nikkei 225 index in Tokyo was up 1.2%. In China, the Shanghai Composite was down 0.5%, while the Hang Seng index in Hong Kong was up 1.0%. The S&P/ASX 200 in Sydney closed up 1.7%.
In the US on Friday, Wall Street ended higher, with the Dow Jones Industrial Average up 1.2%, the S&P 500 up 1.1% and the Nasdaq Composite up 1.0%.
Brent oil was quoted higher at $73.13 a barrel early in London on Monday from $72.71 late Friday.
Gold was quoted higher at $2,631.18 an ounce against $2,627.90.
Still to come on Monday’s economic calendar, there is consumer confidence and the Chicago Fed national activity index from the US.
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