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London open: Stocks fall as gold hits record high
London stocks fell in early trade on Monday following a downbeat session in Asia, as investors looked ahead to key US jobs data this week and as gold prices hit record highs.
At 0830 GMT, the FTSE 100 was down 0.3% at 7,504.50.
Derren Nathan, head of market research at Hargreaves Lansdown, said: “As we enter the final furlong for 2023, US markets are back to 12-month highs. But the optimism provided by Federal Reserve Bank Chairman Jerome Powell’s comments on Friday, that monetary policy is starting achieve its goals, hasn’t spread to Asian markets in overnight trading.
“So, it’s still too early to call if this was the starting gun for a Santa Rally. Despite strengthening hopes that rates have peaked, a recent string of poor output indicators for China are weighing on the region.
“The notion that monetary policy’s grip isn’t going to get any tighter has helped push bullion prices to record highs. An ounce of the shiny stuff will now set you back close to $2,100 and speculation is building that there could be more to come.”
On the macroeconomic front, investors were eyeing the US JOLTS job openings on Tuesday, the November ADP report on Wednesday and the all-important non-farm payrolls on Friday.
In equity markets, miners and energy stocks were the worst performers as oil and metals prices fell, with BP, Shell, Rio, Glencore, Anglo American and Antofagasta all down.
Petrofac tanked after saying it was looking to sell some assets as it warned on cash flow.
On the upside, William Hill owner 888 Holdings surged following a report that it rejected a £700m takeover approach by Playtech. According to The Sunday Times, Playtech made a written indicative approach to acquire 888 at 156p a share in July, only for it to be rejected as undervaluing the company.
Engine maker Rolls-Royce also gained after JPMorgan upgraded the shares to ‘overweight’ from ‘neutral’.
Capita rallied after saying it was selling its 75% stake in Fera Science Limited, the joint venture set up eight years ago with the government that specialise in environmental testing, research, and advisory and assurance services. The business process services group will receive cash proceeds of £62m from Bridgepoint Group, which will be used to strengthen the balance sheet and support investment.
Boohoo was in the black after Mike Ashley’s Frasers Group upped its stake in the fast fashion retailer again.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | +4.24% | +25.20 | 619.40 |
| 2 |  |
Rolls-royce Holdings Plc | +2.96% | +8.20 | 284.90 |
| 3 |  |
Carnival Plc | +2.87% | +31.00 | 1,112.50 |
| 4 |  |
Tui Ag | +2.75% | +13.40 | 501.00 |
| 5 |  |
Smith (ds) Plc | +1.92% | +5.70 | 302.20 |
| 6 |  |
Itv Plc | +1.57% | +0.94 | 60.70 |
| 7 |  |
St. James’s Place Plc | +1.31% | +8.60 | 666.80 |
| 8 |  |
Wpp Plc | +1.01% | +7.20 | 718.00 |
| 9 |  |
International Consolidated Airlines Group S.a. | +0.96% | +1.50 | 158.00 |
| 10 |  |
Rightmove Plc | +0.94% | +5.20 | 557.40 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Flutter Entertainment Plc | -3.53% | -445.00 | 12,150.00 |
| 2 |  |
Anglo American Plc | -3.16% | -73.00 | 2,238.00 |
| 3 |  |
Rio Tinto Plc | -2.80% | -157.00 | 5,442.00 |
| 4 |  |
Glencore Plc | -2.65% | -12.15 | 445.55 |
| 5 |  |
Bp Plc | -2.56% | -12.25 | 466.15 |
| 6 |  |
Shell Plc | -2.32% | -59.50 | 2,508.50 |
| 7 |  |
United Utilities Group Plc | -2.01% | -22.00 | 1,070.00 |
| 8 |  |
Antofagasta Plc | -1.94% | -29.00 | 1,466.50 |
| 9 |  |
Ferguson Plc | -1.73% | -235.00 | 13,320.00 |
| 10 |  |
Bhp Group Limited | -1.68% | -41.50 | 2,433.00 |
US close: Dow nears record high as bond yields continue to retreat
US stocks put in decent gains on Friday with the Dow rising to its highest in nearly two years as bond yields continued to slump on the back of rising hopes that the Federal Reserve may cut interest rates earlier than expected.
The Dow Jones Industrial Average gained 0.82%, the S&P 500 rose 0.59% while the Nasdaq was up 0.55%.
The Dow rose 2.4% for the week to finish at 36,245.50, its highest level in 23 months, and now sits within 1.5% of its record close of 36,799.65 set on 4 January 2022.
The 10-year US Treasury yield was down 12.2 basis points at 4.211%, its lowest since mid-September, after personal consumption expenditures data on Thursday showed that inflation had slowed more than expected in October, while consumer spending growth eased.
Fed chair Jerome Powell did his best to contain expectations on Friday, saying rate-cut chatter is too “premature” but said that monetary policy was “well into restrictive territory”. However, he did say that “the full effects of our tightening have likely not yet been felt”.
“Whatever additional Fed soundbites emerge over the next few weeks, the message is (or at least should be) clear: The Fed’s done. They’re not hiking again, barring a significant turn for the worse in the incoming inflation data,” said Stephen Innes, managing partner at SPI Asset Management.
“It is time to cut rates to avoid the consequence of real rate lagged effects; the question now should be how much deeper of a cut is needed beyond the insurance cuts to avoid passively tightening real rates as inflation falls.”
In other news, economic activity in the US manufacturing sector declined in November for the 13th straight month, according to the Institute for Supply Management’s latest purchasing managers’ index (PMI). The ISM manufacturing PMI was unchanged from October at 46.7, with figures under 50 representing a contraction in activity. The consensus forecast was for a slight improvement to 47.6.
“Demand remains soft, and production execution is slightly down compared to October as panelists’ companies continue to manage outputs, material inputs and — more aggressively — labour costs,” said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee.
US construction spending ticked up 0.6% in October, according to the Census Bureau, hitting a seasonally adjusted annual rate of $2.02bn, following a downwardly revised 0.2% increase in September and beating market estimates for a reading of 0.4%.
In company news, Pfizer shares were firmly lower after disappointing results from a trial of its weight loss drug. The company said it wouldn’t advance the drug into late-stage studies as a result.
Disney finished flat despite reinstating its dividend at 30 cents a share, while entertainment peer Paramount surged 10% on reports the company could bundle its streaming services with Apple.
Morgan Stanley was weighing on Alibaba after cutting its rating on the ecommerce giant to ‘equal weight’.
Monday newspaper round-up: Thames Water, British workers, petrol prices
The parent company of Thames Water has been warned by its auditors that it could run out of money by April if shareholders do not inject more cash into the debt-laden firm. In accounts signed off in July and published on the Companies House website last week, PricewaterhouseCoopers said there was “material uncertainty” about whether the main company behind the water supplier can continue as a going concern. – Guardian
British workers are missing out on £10,700 a year after more than a decade of weak economic growth and high inequality, according to a major report warning that UK living standards are falling behind comparable rich nations. In a damning report on the economy, the Resolution Foundation and the London School of Economics’ Centre for Economic Performance called for an urgent rethink of economic strategy after 15 years of relative decline. – Guardian
Drivers are being overcharged to fill up their car with petrol by £5 as forecourt operators fail to pass on fuel duty savings and cheaper wholesale costs, the RAC has said. Wholesale petrol and diesel prices have fallen this year, but petrol station operators have generated chunkier profit margins by reducing retail prices at a slower pace, it said. – Telegraph
About 300,000 backers of Neil Woodford’s collapsed investment fund have until 5pm today to register to vote on a compensation scheme that is dividing the City and infuriating many small investors. Critics of the offer of up to £230 million say it is much too small, has been misleadingly explained and has been designed to spare the blushes of the City establishment and prevent the wider financial services industry from having to pick up the tab. – The Times
The grip of Britain’s biggest airlines on lucrative UK take-off and landing slots could be loosened under government proposals intended to give travellers “smoother getaways and cheaper prices”. The Department for Transport is launching a consultation today on proposals to reform the way in which airlines book slots at airports. – The Times
