FTSE 100: London markets hope for better week after hawkish rhetoric spooks investors

London’s FTSE indexes opened on a brighter note after a difficult week in which both economic data and central bankers pushed back against the prospect of imminent rate cuts.

The bluechip index opened 0.27 per cent higher at 7,482.22, while London’s FTSE 250, which is more aligned with the health of the UK economy, rose 0.72 per cent to 19,007.00

Both London and European markets were weak last week thanks to higher than expected inflation in the UK and hawkish rhetoric from European central bankers.

In the US meanwhile, the S&P 500 rounded off the week at a record high, driven by gains made by the Magnificent Seven tech stocks as well as continued hopes of a soft landing.

Some of that optimism filtered through into European early trade on Monday morning with CMC Markets analyst Michael Hewson suggesting “Friday’s record finish in the US looks set to see markets in Europe open higher this morning”.

“The current divergence between US and European markets is probably down to the belief that the US economy is in much better shape than its European counterparts, a belief that is likely to be reinforced further this week by the latest US Q4 GDP numbers,” Hewson continued.

Entain topped the FTSE 100 in early trade, rising 4.1 per cent while Ocado added 3.4 per cent.

Endeavour Mining meanwhile lost 1.3 per cent, putting it near the bottom of the blue-chip index, after it reported that costs had risen more than expected in Q4. “Friday’s record finish in the US looks set to see markets in Europe open higher this morning”.

On the corporate front, contract caterer Compass Group has entered into a £475m takeover deal of rival firm CH&CO, which provides hospitality services for the likes of Kew Gardens and the Royal Opera House.

It is Compass’s largest acquisition since 2019, when it picked up the Nordic caterer Fazer Food Services for £407m. Shares in Compass remained largely flat.

Sir Martin Sorrell’s digital marketing giant S4 Capital said it does not expect to see any macro-economic improvements this year, as the firm trades in line with lowered expectations. Shares jumped 7 per cent.

Delivery giant Evri delivered a record number of parcels during the busy festive period, boosted by a late surge in the final Christmas week as bargain-hunting shoppers scrapped for late deals.

Parcel volumes surpassed 150m for the first time over the peak season, with a 21 per cent spike in the week leading up to Christmas.