The FTSE 100 traded in a tight range on Monday with little impetus to move UK stocks in either direction.
London’s leading index traded positively for most of the session, gently undulating between flat and up around 20 points. At the time of writing, the index was 0.1% lower at 8,054.
Directionless trade is a symptom of investor uncertainty around Donald Trump’s second and the ramifications for different asset classes and geographies.
Indeed, even US asset classes are sending mixed messages, with the initial rally in stocks easing back and the bond market appearing to chase its tail.
“The US government bond market does not seem quite sure what to make of the prospect of a second Trump presidency, but the US stock market seems happy and so does the US dollar, using the trade-weighted DXY (or ‘Dixie’) index as a guide,” said AJ Bell investment director Russ Mould.
The market has also shifted focus back to interest rates after comments from US central bankers last week that shattered hopes of sustained cuts in interest rates.
This can explain the drop in US stocks, which is weighing on the global equity complex and taking some attention away from Donald Trump’s questionable cabinet appointments.
One would expect traders to hang on Fed officials’ every word in upcoming speeches for hints of whether borrowing costs will fall further or plateau.
Melrose
Melrose was the standout performer in an otherwise uninspiring trading session, with a 5% gain following the release of an encouraging trading statement.
“Melrose remains on the right flight path to meeting full-year guidance, which calls for underlying operating profits to rise around 33% to £560mn at the midpoint,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“In a short trading update, the aerospace business revealed that revenue in its Engines division continued to soar at double-digit rates over the four months ending 31 October.
“The Structures division, which deals with building the body and wings of planes, took some shine off performance with revenue only edging 1% higher. This side of the business has been held back by the planned exit of non-core work and customer destocking in the period. Production troubles at Airbus and quality issues at Boeing have also dented timelines. There’s not a great deal Melrose can do about this – supply chain issues have been a challenge for the whole industry and the problem’s likely to persist for some time.”