The FTSE 100 slipped on Monday as markets continued to consolidate after an almost euphoric rally inspired by interest rate hopes.
The downside in London’s leading index was driven by poor corporate updates from constituents, including Ashtead and Compass Group.
Ashtead warned profits would be lower than market expectations due to lower emergency response business after a quiet hurricane season and the ongoing reduction in the TV and film business amid the writers’ strike.
“It’s rare to see construction rental group Ashtead issue a profit warning so when one does come along, it’s natural for the share price to take a beating. That’s exactly what has happened today and why it has caused a considerable drag on the FTSE 100,” said Russ Mould, investment director at AJ Bell.
“Also weighing on the UK blue chip stock index was catering group Compass as its full year revenue and earnings per share were marginally below market expectations.”
The FTSE 100 was down 0.2% shortly before 3pm in London.
Mould looked forward to the rest of the week and events with the potential to cause fluctuations in the financial markets.
“Tomorrow’s session includes the latest minutes from the Federal Reserve regarding its decision to keep interest rates unchanged. That has the potential to move markets, so do results on the same day from chip specialist Nvidia which has been this year’s stock market darling. It’s been a major driver of US equity market performance in 2023 so the slightest bit of bad news from the company could send shockwaves across the market.”
NVIDIA opened up slightly higher as US trade got underway on Monday. The ‘Magnificent 7’ US technology shares have been responsible for a large proportion of global equity indices returns, and an upset could have broad-reaching implications for sentiment.
The S&P 500 was trading 0.17% higher at the time of writing.
Speciality goods and support services company Diploma isn’t the raciest of FTSE 100 companies but it stole the show on Monday with a 10% gain after releasing a trading update.
Diploma produced organic revenue growth of 8% amid a 19% jump in total revenue as the company integrated new acquisitions into their business.
“We’ve had an excellent year with strong, volume-led organic growth; great margin progression; and continued double-digit EPS growth, all at strong returns,” said Johnny Thomson, Diploma’s Chief Executive.
“We continue to diversify end-market exposures, penetrate core geographies; and expand addressable markets through product extension to drive organic growth. We welcomed 12 quality new businesses to the Group. And, we carefully develop our businesses for scale.”