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ADVFN Morning London Market Report: Tuesday 5 December 2023

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London open: Stocks fall as investors eye services PMI; Barclays slumps

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London stocks fell in early trade Tuesday, taking their cue from downbeat US and Asian sessions, as investors mulled the latest retail sales data and looked ahead to the services PMI.

At 0825 GMT, the FTSE 100 was down 0.5% at 7,477.60.

The latest figures from KPMG and the British Retail Consortium showed that retail sales grew by an underwhelming amount in November despite shops stepping up their discounts leading up to Black Friday, as cautious consumers chose to delay their Christmas spending.

The BRC-KPMG retail sales monitor for November showed that total retail sales increased by 2.7% in November. This was above the three-month average growth rate of 2.6% but below the 12-month average of 4.1%. In November of 2022, sales were up 4.2% on the month before.

In the three months to November, food sales growth slowed to 7.6% from 7.9% a month earlier and under the 12-month average of 8.4%.

Meanwhile, non-food sales were down 1.6% in the three-month period, compared with an average of 0.5% over the past 12 months.

“Black Friday began earlier this year as many retailers tried to give sales a much-needed boost in November. While this had the desired effect initially, the momentum failed to hold throughout the month, as many households held back on Christmas spending,” said Helen Dickinson, chief executive of the BRC.

“Retailers are banking on a last-minute flurry of festive frivolity in December and will continue working hard to deliver an affordable Christmas for customers so everyone can enjoy some Christmas cheer.”

Dickinson painted a gloomy picture for retailers heading into 2024, as they have to deal with a rise in business rates and costs from other new regulations. “These combined with the biggest rise on record to the National Living Wage will mean retailers will have less capital to invest in lowering prices for their customers,” she said.

Still to come, the S&P Global/CIPS services PMI for November is due at 0930 GMT.

In equity markets, Barclays slumped after the Qatar Investment Authority, the bank’s second-largest shareholder, sold nearly half of its stake.

Auction Technology was knocked lower by a downgrade to ‘equalweight’ from ‘overweight’ at Barclays.

Equipment hire specialist Ashtead was weaker as it delivered flat second-quarter profits, but said demand in the US remained “robust”.

Outside the FTSE 350, Quiz shares tanked as the fashion retailer warned on full-year revenues after a disappointing Black Friday performance, and said it swung to a loss in the first half.

On the upside, Land Securities was boosted by an upgrade to ‘buy’ at Goldman Sachs.

Moonpig was also up as the online gifts and greeting cards retailer backed its full-year expectations and reported a jump in first-half profits.

SSP gained as the food and beverage travel outlet operator reinstated its dividend and reported a near doubling of annual core profits, driven by the continued resurgence in passenger numbers and workers returning to work in offices.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 British Land Company Plc +1.47% +5.30 366.30
2 Taylor Wimpey Plc +1.18% +1.55 133.30
3 Bt Group Plc +1.03% +1.30 127.40
4 Relx Plc +0.85% +26.00 3,073.00
5 Land Securities Group Plc +0.80% +5.00 632.80
6 Experian Plc +0.78% +23.00 2,958.00
7 Sage Group Plc +0.75% +8.50 1,138.50
8 Whitbread Plc +0.72% +23.00 3,203.00
9 Berkeley Group Holdings (the) Plc +0.72% +34.00 4,761.00
10 Tesco Plc +0.68% +1.90 283.10

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Ashtead Group Plc -3.62% -178.00 4,742.00
2 Barclays Plc -2.11% -3.02 139.96
3 Prudential Plc -1.87% -16.20 848.00
4 Anglo American Plc -1.80% -40.00 2,184.50
5 Easyjet Plc -1.71% -8.10 466.70
6 Johnson Matthey Plc -1.23% -19.00 1,525.50
7 British American Tobacco Plc -1.19% -30.00 2,493.50
8 International Consolidated Airlines Group S.a. -1.14% -1.80 156.45
9 Smith & Nephew Plc -0.97% -10.00 1,023.50
10 Burberry Group Plc -0.92% -13.50 1,455.00

 

US close: Stocks lower as investors look to jobs report

Wall Street stocks ended in negative territory on Monday, marking a departure from the Dow’s recent winning streak, which had extended for five consecutive weeks.

At the close, the Dow Jones Industrial Average was down 0.11% at 36,204.44.

The S&P 500 dropped 0.54% to finish at 4,569.78, while the Nasdaq Composite fell by 0.84% to settle at 14,185.49.

One of the factors influencing market sentiment was the rise in treasury yields during early trading hours.

The increase raised concerns among investors that expectations of future rate cuts might have been overly optimistic.

In currency markets, the dollar was last up 0.01% against both sterling and the euro, trading at 79.17p and 92.29 euro cents, respectively.

Meanwhile, the greenback remained unchanged on the yen, changing hands at JPY 147.21.

“After Friday’s positive finish US markets have started the week on the back foot, opening lower in response to the weak start to the week for European markets, and a rebound in bond yields which has seen the Nasdaq 100 slide,” said CMC Markets chief market analyst Michael Hewson.

“Alaska Air is sharply lower after the weekend announcement it had agreed to buy its rival Hawaiian for $1.9bn.

“Today’s surge in bitcoin has seen the likes of crypto-related shares surge … with the likes of Coinbase, MicroStrategy, Marathon Digital, and Riot Platforms all strongly higher.”

Factory orders take a hit in October

In economic news, factory orders took a notable hit in October, declining 3.6% on a month-on-month basis, according to the Census Bureau.

The downturn followed a revised 2.3% increase in September, marking the most significant drop since April 2020.

The industrial sector was grappling with the challenges of elevated interest rates and persistent inflation pressures.

Market expectations were for a 2.8% decline.

Factory orders were still down when excluding the transportation sector, registering a 1.2% decrease.

Furthermore, when defence-related orders were excluded from the equation, the decline was even more pronounced, with orders sinking by 4.2%.

Investors were meanwhile keeping a keen eye on November’s pivotal jobs report, slated for release on Friday.

The report could offer further insights into the Federal Reserve’s stance on its interest rate policies.

Comments from Fed chair Jerome Powell recently suggested that it might be “premature” to anticipate any shift in monetary policy, leaving traders seeking clarity on the central bank’s future actions.

Alaska Airlines flies lower on Hawaiian deal, crypto plays soar

In equity markets, Alaska Air Group tumbled 14.22% after the Seattle-based airline announced an agreement to acquire rival Hawaiian Airlines for $1.9bn.

The move was part of a strategic effort by both carriers to expand their presence along the West Coast.

However, it had a polar opposite effect on Hawaiian Holdings, which skyrocketed by 192.59% in response.

Several prominent tech giants saw declines as part of a sector-wide pullback, with Nvidia down 2.68%, Facebook owner Meta Platforms off 1.48%, and Google parent Alphabet losing 1.96%.

On the upside, notable gains were seen among cryptocurrency players, with Marathon Digital Holdings up 8.47%, Riot Platforms ahead 8.93%, Coinbase Global adding 5.48%, and MicroStrategy gaining 6.74%.

The positive movements were attributed to Bitcoin crossing the $41,000 mark to achieve a 19-month high.

 

Tuesday newspaper round-up: Sellafield, CBI, Barclays

Ministers are under pressure to explain the actions of the government and regulators over cybersecurity at Europe’s most hazardous nuclear site after a Guardian investigation revealed disturbing vulnerabilities in its networks. The shadow energy secretary, Ed Miliband, called on the government to urgently “provide assurances” about Sellafield, after the Guardian revealed it had been hacked by groups linked to Russia and China. – Guardian

The Confederation of British Industry has said it is suffering a “considerable level of financial stress” and there remains “material uncertainty” that it can continue operating in the long term after sexual misconduct allegations. The scandal-hit business lobby group said it was “emerging from an unprecedented situation” that had led to “exceptional costs”, warning there was also “material uncertainty arising from the CBI’s financial performance since the year end”. – Guardian

Barclays’ Qatari backers are to halve their stake in the lender in the biggest share sales since the Gulf state rescued the banks during the financial crisis. Qatar Investment Authority (QIA), Barclays second largest shareholder, on Monday launched plans to raise £510m through the sale of shares. – Telegraph

Lloyds Banking Group has scooped an estimated £700 million profit after unexpectedly getting back the entire £1.2 billion it lent to the Barclay family. Analysts are now re-examining their forecasts for the year after the bank was repaid far more than the £500 million at which it is thought to have valued the loan in its books. – The Times

The ownership of UK-listed shares by British pension funds and insurers has slumped to its lowest level since records began, according to official figures. The proportion of the overall London share market owned by those institutions had fallen to 4.2 per cent by the end of last year, from 4.3 per cent in 2020. That compares with 45.7 per cent in 1997 and a high point of 52.1 per cent in 1990. – The Times

 

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