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London open: Stocks edge higher in early trading
Stocks edged into the green in the early going with investors apparently opting to sit on their hands ahead of key economic data overseas due out after the close of trading in London.
Worth noting, most trading desks, both in the UK and across the Channel, were likely nearly empty ahead of the Christmas holidays, so trading volumes were expected to be low.
As of 0912 GMT, London’s top-flight index was up by 0.06% to 7,474.03, while the second-tier index was gaining 0.12% to 18,784.22.
Holidays notwithstanding, key US economic indicators were scheduled for release later in the day.
At 1330 GMT, the US Department of Commerce was expected to announce that the year-on-year rate of increase for the price deflator for core personal consumption expenditures slipped from 5.0% in October to 4.6% in November.
Shortly afterwards, at 1500 GMT, the University of Michigan was set to release the results for its closely followed consumer confidence survey covering the month of December.
Overnight, the annual rate of increase for Japanese consumer prices was reported at 3.8% for November, versus 3.7% for the month before (consensus: 3.9%).
Bluefield Solar goes shopping Stateside
UK renewables income fund Bluefield Solar has bought a 46.4 megawatt solar portfolio from North America’s Fengate Asset Management.
Bluefield said the enterprise value of the portfolio is £56m, including the economic benefit of all cashflows from May 2022. The portfolio contains £27.3m of long-term amortising debt provided by Australian private equity outfit Macquarie.
Auto distributor Inchcape said Peruvian authorities had cleared its planned £1.3bn takeover of Derco, with completion of the deal expected to take place by the end of the year.
Plastic technology group Symphony Environmental warned on Friday that full-year losses looked set to widen year-on-year as multiple issues weighed on revenues throughout the period. The company said full-year losses were pegged to have widened to £2.5m from £1.4m, with group revenue expected to be approximately £6.5m, down from £9.2m a year earlier, following a “soft first half of the year”.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Marks And Spencer Group Plc | +1.79% | +2.15 | 122.20 |
| 2 |  |
Bhp Group Limited | +1.34% | +34.00 | 2,571.50 |
| 3 |  |
Ocado Group Plc | +1.34% | +8.40 | 637.60 |
| 4 |  |
Easyjet Plc | +1.24% | +4.20 | 341.90 |
| 5 |  |
Smith & Nephew Plc | +1.09% | +12.00 | 1,109.50 |
| 6 |  |
Halma Plc | +1.03% | +20.50 | 2,015.00 |
| 7 |  |
Next Plc | +0.96% | +54.00 | 5,652.00 |
| 8 |  |
Ashtead Group Plc | +0.93% | +44.00 | 4,769.00 |
| 9 |  |
St. James’s Place Plc | +0.92% | +10.00 | 1,097.00 |
| 10 |  |
Admiral Group Plc | +0.91% | +19.00 | 2,097.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Hikma Pharmaceuticals Plc | -2.38% | -37.50 | 1,536.50 |
| 2 |  |
Bae Systems Plc | -1.09% | -9.40 | 852.20 |
| 3 |  |
Imperial Brands Plc | -0.67% | -14.00 | 2,076.00 |
| 4 |  |
Rightmove Plc | -0.50% | -2.60 | 514.20 |
| 5 |  |
Pearson Plc | -0.47% | -4.40 | 941.20 |
| 6 |  |
3i Group Plc | -0.45% | -6.00 | 1,315.00 |
| 7 |  |
Astrazeneca Plc | -0.44% | -50.00 | 11,256.00 |
| 8 |  |
Hsbc Holdings Plc | -0.43% | -2.20 | 510.10 |
| 9 |  |
Bp Plc | -0.39% | -1.85 | 476.05 |
| 10 |  |
Standard Chartered Plc | -0.32% | -2.00 | 623.00 |
US close: Stocks tumble amid renewed rate rise fears
Stocks tumbled on Wall Street on Thursday, reversing most of their gains made on Wednesday, as a raft of decent data replaced hopes of a pre-Christmas ‘Santa rally’ with renewed rate hike fears.
At the close, the Dow Jones Industrial Average was down 1.05% at 33,027.49, as the S&P 500 lost 1.45% to 3,822.39, and the Nasdaq Composite was off 2.18% at 10,476.12.
The Dow closed 348.99 points lower on Thursday, erasing most of the gains it made during a stellar session on Wednesday.
“The bears are back in charge today, as UK GDP data provided yet another warning that we may already be in a recession,” said IG senior market analyst Joshua Mahony earlier.
“Notably, we have seen US indices push lower despite an upward revision to the US third quarter growth rate.
“This likely reflects the growing feeling of concern that the Federal Reserve will continue pushing rates upwards in the absence of any major economic distress signal.”
On the macroeconomic front, final GDP growth came in higher than expected in the third quarter, with the United States economy expanding by 3.2% quarter-on-quarter.
That was above the prior estimate of 2.9% growth, and a reversal of the 0.6% contraction seen in the second quarter.
“The unexpected upward revision to third quarter GDP is encouraging but the economy will soon be tested by the recent tightening in financial market conditions and Fed rate hikes,” said Oren Klachkin, lead US economist at Oxford Economics.
“The revisions won’t require a major revision to our fourth quarter and 2023 forecasts, but it does support our recent decision to push back the start of the recession to the second quarter of 2023.”
Elsewhere, continuing jobless claims came in slightly lower than expected, and broadly in line with the prior week.
According to the Labor Department, continuing claims came in at 1.673 million for the week ended 10 December, just shy of expectations for 1.683 million.
The figure for the week ended 26 November, meanwhile, was revised to 1.678 million.
Initial jobless claims also came in below forecasts, with 216,000 Americans joining the jobless queue in the week ended 17 December.
That was below the 222,000 expected, but was a slight uptick on the revised 214,000 figure for the week ended 10 December.
“Initial claims data can be noisy around the holidays, but the low level of initial claims is a reminder that employers overall still aren’t laying off large numbers of workers even though the economy faces headwinds,” said Nancy Venden Houten at Oxford Economics.
“A higher level of continued claims, meanwhile, suggests that workers are collecting benefits for longer because finding a new job may be getting more difficult, if only slightly so.
“On balance, the claims data are consistent with a labour market that is still too tight for the Fed and leave the Fed on track to raise rates further in 2023, after last week’s 50-basis point rate hike.”
There was some good news on the inflation front, with the Department of Commerce reporting a fall in its personal consumption expenditure (PCE) measure for the third quarter.
It said the measure – which looks at the price of goods and services purchased by consumers specifically for consumption – rose 4.3% on the quarter, down from 7.3%.
Core PCE prices were up 4.7%, which was in line with the second quarter but slightly ahead of the 4.6% market watchers had pencilled in.
The GDP price index also showed some cooling of inflationary pressure, rising 4.4% in the third quarter – more than halving from the second quarter’s 9% print.
It was, however, above the 4.3% economists were expecting for the measure, which looks at the change in the price of final goods and services.
“Most of the emerging downshift in core inflation is in goods prices, notably new and used vehicles, thanks to margin recompression on the back of normalising supply chains,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
“Core PCE inflation was driven up largely by margin expansion and soaring rents, and both forces are now swinging decisively in the opposite direction.”
Shepherdson said the scope for a “very steep drop” in core PCE inflation was “clear”, adding Pantheon had “deep scepticism” over the Fed’s 3.5% forecast for the fourth quarter of next year.
“We’re expecting the Fed to revise down its forecasts as soon as March, though progress initially will be slow; policymakers appear to have been scarred by the experience of the past year-and-a-half, and will want to be sure they aren’t moving their numbers down prematurely.
“Markets won’t wait.”
In equities, chipmakers were among the leading losers as Advanced Micro Devices fell 5.64%, Applied Materials lost 7.84%, and Nvidia slid 7.04% by the close.
Elsewhere, used car dealer CarMax was 3.66% weaker after it reported third-quarter sales and profits that fell significantly short of expectations.
Cinema operator AMC Entertainment was off 7.36% after the supposed ‘meme stock’ announced a $110m equity raise.
Friday newspaper round-up: Border Force strike, FTX, Tesco litigation, recession forecasts
Border Force officials will on Friday join the wave of industrial action across Britain, starting the first of a series of strikes at airports, while Royal Mail workers walk out again for two days before Christmas. Passengers travelling into the UK have been warned to be prepared for longer queues at immigration in airports, while many letters and parcels will now go undelivered before Christmas, as staff take action over pay trailing behind inflation. – Guardian
Sam Bankman-Fried, the co-founder and former head of FTX, will be released on a $250 million bond while he awaits trial on fraud charges related to the collapse of the crypto exchange, a court in New York ruled yesterday. The 30-year-old appeared in the dock soon after his extradition from the Bahamas, where he lived and FTX was based, as two former associates pleaded guilty to defrauding investors. – The Times
The shopworkers union Usdaw has been given the green light by the supreme court to challenge Tesco’s controversial tactic of firing staff then rehiring them on less favourable contracts. The union was granted permission to proceed with a case after the appeal court overturned a high court ruling that banned Tesco from dismissing staff at its warehouses in Daventry and Litchfield and then seeking to re-employ them on lower pay. – Guardian
Britain is on course to suffer the deepest recession of any significant developed nation next year as stagnating wages and a slowdown in household spending hold back a recovery. The bleak forecast came yesterday as the Office for National Statistics released an analysis suggesting that the UK’s economy contracted more sharply than previously thought in the third quarter of 2022. It calculates that gross domestic product, the main measure of output, shrank by 0.3 per cent in three months to September, compared with a preliminary estimate of 0.2 per cent. Manufacturing and construction output declined more steeply than first thought, down by 2.8 per cent and 0.2 per cent, respectively, reflecting “a bigger impact of rising prices on energy consumption”. – The Times
Divorce rates will climb at the fastest pace since 1971 and unhappiness will reach the highest levels since record began next year, as British workers get poorer than the French. Real wages in France are set to overtake British counterparts even though most employees across the Channel work fewer hours, PwC predicts, as real wages in Britain will fall back to levels last seen in 2006 next year. – Telegraph
