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London open: Stocks fall after China data; house prices rise
London stocks fell in early trade on Thursday, taking their cue from downbeat sessions in the US and Asia, after disappointing Chinese trade data.
At 0915 GMT, the FTSE 100 was down 0.4% at 7,487.73.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “The FTSE 100 is struggling, following global markets downwards. Some of the pressure is coming from weaker than expected imports in China, which indicates a softening of demand and failed to offset optimism from better-than-forecast exports.
“A protracted period of demand malaise would send shivers through most markets, with the outlook from oil to luxury goods called into question.”
Data out earlier showed that China’s trade balance widened substantially more than expected in November as exports unexpectedly rose and imports registered a surprise decline.
The trade balance stood at $68.4bn last month, up from $56.5bn in October and well above the consensus forecast of $58.1bn.
Exports were up 0.5% year-on-year in November after a 6.4% annual drop the month before; analysts had expected a decline of 0.8%. Meanwhile, imports fell 0.6% after rising 3% previously, surprising analysts who had expected another 3% increase.
On home shores, figures from Halifax showed that house prices rose for the second month in a row in November, boosted by a shortage of properties.
House prices rose 0.5% on the month following a 1.2% jump in October and after six consecutive declines, leaving the price of a home at £283,615.
On a yearly basis, prices were down 1% in November, following a 3.1% drop in October.
Kim Kinnaird, director of Halifax Mortgages, said: “The resilience seen in house prices during 2023 continues to be underpinned by a shortage of properties available, rather than any significant strengthening of buyer demand. That said, recent figures for mortgage approvals suggest a slight uptick in activity levels, which is likely as a result of an improving picture on affordability for homebuyers. With mortgage rates starting to ease slightly, this may be leading to increased buyer confidence, seeing people more inclined to push ahead with their home purchases.
“However, the economic conditions remain uncertain, making it hard to assess the extent to which market activity will be maintained. Other pressures – like inflation, the broader cost of living, overall employment rates and affordability – mean we expect to see downward pressure on house prices into next year.”
In equity markets, BA and Iberia owner IAG flew lower after a downgrade to ‘underweight’ from ‘neutral’ at JPMorgan.
Burberry was also under the cosh after Deutsche Bank slashed its price target on the ‘hold’ rated shares to 1,600p from 1,950p.
Vodafone fell after Exane BNP cut the shares to ‘underperform’.
DS Smith lost ground as the packaging manufacturer said chief executive Miles Roberts would be retiring no later than the end of next November and unveiled a fall in interim profit.
Media group Future tumbled as it posted a decline in full-year profits and announced the departure of chief financial and strategy officer Penny Ladkin-Brand.
Games Workshop slid as the miniature wargames manufacturer said profit and revenue for the six months to 26 November were set to rise, but that it expects a fall in licensing revenue.
On the upside, Sports Direct owner Frasers Group gained as it posted an 8% rise in interim profits, driven by a strong jump in sales at its international division.
AJ Bell surged as the investment platform hailed a record full-year performance, with pre-tax profit up 50%.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Melrose Industries Plc | +1.44% | +7.80 | 549.20 |
| 2 |  |
Tui Ag | +1.19% | +7.00 | 595.00 |
| 3 |  |
Ferguson Plc | +1.01% | +140.00 | 13,975.00 |
| 4 |  |
Ocado Group Plc | +0.78% | +4.80 | 617.00 |
| 5 |  |
National Grid Plc | +0.76% | +8.00 | 1,059.50 |
| 6 |  |
Rio Tinto Plc | +0.67% | +37.00 | 5,529.00 |
| 7 |  |
Severn Trent Plc | +0.64% | +17.00 | 2,673.00 |
| 8 |  |
Rolls-royce Holdings Plc | +0.62% | +1.80 | 290.40 |
| 9 |  |
Sage Group Plc | +0.61% | +7.00 | 1,152.50 |
| 10 |  |
Taylor Wimpey Plc | +0.48% | +0.65 | 135.30 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
International Consolidated Airlines Group S.a. | -3.37% | -5.45 | 156.45 |
| 2 |  |
Rentokil Initial Plc | -1.87% | -7.90 | 413.70 |
| 3 |  |
Burberry Group Plc | -1.68% | -25.50 | 1,488.50 |
| 4 |  |
Vodafone Group Plc | -1.59% | -1.15 | 71.04 |
| 5 |  |
Bt Group Plc | -1.54% | -2.10 | 134.55 |
| 6 |  |
Flutter Entertainment Plc | -1.31% | -170.00 | 12,830.00 |
| 7 |  |
Barclays Plc | -1.28% | -1.80 | 138.44 |
| 8 |  |
St. James’s Place Plc | -1.28% | -8.80 | 680.00 |
| 9 |  |
Itv Plc | -1.27% | -0.78 | 60.46 |
| 10 |  |
Next Plc | -1.26% | -102.00 | 8,022.00 |
US close: Stocks extend losses another session
Wall Street stocks closed lower Wednesday as the blue-chip Dow Jones ended the day in the red for a third-straight session.
At the close, the Dow Jones Industrial Average was down 0.19% at 36,054.43, while the S&P 500 slipped 0.39% to 4,549.34 and the Nasdaq Composite saw out of the session 0.58% weaker at 14,146.71.
The Dow closed 70.13 points lower on Wednesday, extending losses recorded in the previous session.
The Bank of Canada was in focus on Wednesday after the central bank decided to keep its policy rate unchanged at 5% for a third consecutive meeting. However, the neighbouring bank acknowledged that there was evidence that the economy was no longer experiencing excess demand. The decision comes just one week before the US Federal Reserve meets for one final time this year.
On the macro front, private payrolls grew by 103,000 in November, according to payrolls processing firm ADP, below October’s downwardly revised reading of 106,000 and short of the 128,000 predicted by economists. Along with the modest job growth came a 5.6% increase in annual pay, the smallest gain seen since September 2021, positive news for the Federal Reserve in its fight against inflation. However, the increase in productivity indicated the potential for the economy to skirt a recession. Private payroll data from ADP offered the latest indication that the job market, long considered a pain point for the Federal Reserve, was easing.
Elsewhere, mortgage applications rose 2.8% in the week ended 1 December, with refinancing applications jumping 13.9% amid sliding interest rates, according to the Mortgage Bankers Association. Refinancing applications were also 10% higher year-on-year. The increase comes as the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances fell to 7.17% from 7.37% – the lowest level seen since August. New mortgage applications were down 0.3% on the week.
In the corporate space, Box was under pressure after reporting third-quarter results that came in below expectations, while Toll Brothers traded higher after exceeding expectations on both the top and bottom lines.
Thursday newspaper round-up: Corporate profiteering, Nationwide, THG
Profiteering has played a significant role in boosting inflation during 2022, according to a report that calls for a global corporation tax to curb excess profits. Analysis of the financial accounts of many of the UK’s biggest businesses found that profits far outpaced increases in costs, helping to push up inflation last year to levels not seen since the early 1980s. – Guardian
Nationwide has told the 13,000 staff it had said would not be forced to return to the office when Covid lockdowns ended that they must start coming in from early next year for at least two days a week for most. During the coronavirus crisis the UK’s biggest building society unveiled one of the most far-reaching flexible working policies, called “work anywhere”, telling all staff who did not work in its branches that it was “putting our employees in control of where they work from”. – Guardian
The world is in a new era of low growth and high interest rates, according to BlackRock, the world’s largest asset manager. It warned that inflation will be far more volatile than it has been in recent years – and economies can no longer grow as quickly as they have in the past without stoking price rises. – Telegraph
A New York-listed mortgage trust managed by the private equity giant Blackstone is at risk of a cash crunch, the hedge fund Muddy Waters has said. Carson Block, chief executive of Muddy Waters, revealed on Wednesday that it had begun shorting the stock, saying souring commercial loans could trigger a “liquidity crisis”. – Telegraph
THG’s activist investor has stepped up its campaign by urging the company to confirm break-up plans. Kelso Group has written to the business’s board calling for a stock market statement outlining proposals for a demerger of its three divisions. THG operates a beauty business, a nutrition business, and an e-commerce services platform, Ingenuity. The company first listed on the stock exchange in September 2020 with a valuation of about £5 billion, but its share price has since declined and the company is now worth around £1 billion. – The Times
