London shares began the week in the red, with the FTSE 100 falling by 0.46% at Monday's close, as investors prepare for significant central bank meetings in the US and the UK. On Wednesday, the US Federal Reserve is anticipated to lower its key interest rate by 25 basis points to 4.5% before pausing.
The following day, the Bank of England is expected to maintain its main bank rate at 4.75% in a unanimous decision. In the private sector across Britain, business activity saw a slight uptick in December 2024, despite a decline in total new orders for the first time in 13 months, resulting from diminished business and consumer spending.
Staffing levels experienced the steepest drop since January 2021. "While the December PMI suggests the economy is somewhat stalled in the fourth quarter, the erosion of confidence and increased job reductions indicate potential challenges ahead as we enter the new year," commented Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.
"Policymakers at the Bank of England may proceed with caution regarding interest rate cuts, especially in light of the renewed inflation pressures, which could add to economic downturn risks in 2025." The UK economic calendar features labor market indicators set to release on Tuesday, alongside inflation data on Wednesday and retail sales figures later in the week. In corporate developments, an Australian government agency has commenced civil penalty proceedings in the Federal Court against an Entain ($ENT) unit, citing serious and systemic failures related to anti-money laundering and counter-terrorism financing regulations.
Shares of the online betting company recorded the largest decline among FTSE 100 constituents, plummeting by 6.28%. In contrast, Bunzl ($BNZL) experienced a gain of 1.08% after RBC Capital Markets elevated its rating of the distribution and services group from sector perform to outperform, increasing its price target from 33.5 pounds sterling to 40 pounds. "We view BNZL's increasingly optimistic earnings prospects, supported by organic margin growth, mergers and acquisitions, and share buybacks, as undervalued relative to its 'defensive growth' counterparts," stated RBC..