London stocks muted ahead of more earnings, economic data

By Pranav Kashyap

(Reuters) – London’s FTSE 100 was flat on Monday as gains in travel and leisure were offset by losses in defence stocks as investors await more corporate updates and comments from the Bank of England (BoE) officials on the state of the British economy.

The blue-chip FTSE 100 was trading flat after hitting record highs in 11 out of the previous 13 sessions as the BoE took a dovish stance, while a weaker pound supported the overall rally.

The mid-cap FTSE 250 was also muted and the pound was little changed at $1.2524.

“The optimism is still there, but the fizz has been taken out of it a bit, they’re (investors) sort of waiting for the next bit of data, which can pop the next cork,” said Danni Hewson, head of financial analysis at AJ Bell.

BAE Systems fell 2.8% after BofA Global Research’s downgrade to “neutral” from “buy”. The stock weighed on the aerospace and defence sector, making it one of the top losers among the FTSE 350 sectors.

Focus this week will shift to labour market data due on Tuesday and on comments from BoE’s chief economist Huw Pill and external member of the monetary policy panel Megan Greene for clues on the timing of the policy easing. Investors will also parse U.S. inflation data to gauge the Federal Reserve’s interest-rate path.

“If we see another month where unemployment is up slightly, that will sort of push the narrative that the BoE might go for June cut as it has tantalizingly suggested,” Hewson added.

Money markets have currently priced in two rate cuts in 2024, with the easing cycle set to begin in August.

Diploma Plc surged 5.3%, hitting a record high and was among the top gainers of the FTSE 100 as the technical products and services provider gave an upbeat forecast.

Rio Tinto was among the bottom performers on the benchmark index, falling 1.2% after the miner said an autonomous train had derailed at its Western Australian iron ore operations overnight.

(Reporting by Pranav Kashyap in Bengaluru; Editing by Mrigank Dhaniwala and Eileen Soreng)