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London open: Stocks fall after US losses, UK borrowing figures
London stocks fell in early trade on Thursday following heavy losses on Wall Street, as UK borrowing figures came in higher than expected.
At 0830 GMT, the FTSE 100 was down 0.3% 7,696.24.
Derren Nathan, head of equity research at Hargreaves Lansdown, said UK markets are unlikely to take any comfort from news that November’s budget deficit was above consensus.
“This may also limit messrs Sunak and Hunt’s wiggle room to hand out further sweeteners ahead of elections expected next year. The FTSE 100 has opened back below 7,700 after posting a 1% gain yesterday,” he said.
“This follows the biggest day of losses since October for US indices. With broad based falls across all sectors there was little shelter for traders. Both the Nasdaq Composite and S&P 500 were down 1.5%. The move was driven by relatively light trading volumes. With the US markets still at close to record highs, this optimism is showing signs of fragility.”
Data released earlier by the Office for National Statistic showed that public sector net borrowing excluding public sector banks came in at £14.3bn. This was below November 2022’s £15.2bn but above consensus forecasts of £13bn. It also marked the fourth highest November borrowing since monthly records began in 1993.
Debt interest payments for November surpassed all monthly November figures on record since 1997, coming in at £7.7bn.
For the eight months to November, public sector net borrowing excluding banks was £116.4bn – up by £24.4bn on the same period a year earlier and the second highest financial year-to-November borrowing on record.
Ashley Webb, UK economist at Capital Economics, said he doubts the higher-than-expected borrowing figures will prevent the Chancellor from embarking on a pre-election fiscal splash in the Spring Budget.
Webb said the recent drop in market interest rate expectations supports CE’s view that interest rates will be lower in 2025 than the Office for Budget Responsibility predicted in November.
“As a result, we expect this to give the Chancellor more wiggle room to unveil a further pre-election splash at the Sprint Budget. But this would almost certainly be followed by hefty tax rises in 2025 after the election.”
Corporate news was scarce as we head into the Christmas break, but troubled music rights owner Hipgnosis Songs Fund fell as it reported wider interim losses. It also said dividends would be suspended for at least the end of the financial year to comply with loan covenants amid a row with its investment adviser over the valuation of assets.
Operating losses before tax for the six months to September 30 were $63.6m, compared with a loss of $17m a year earlier. Gross revenue from continuing operations for the period fell to $63.2m from $86.4m.
Elsewhere, Vodafone edged up following a report that Swisscom is weighing a possible offer for its Italian business next year.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Vodafone Group Plc | +1.88% | +1.27 | 68.75 |
| 2 |  |
Easyjet Plc | +1.50% | +7.60 | 515.80 |
| 3 |  |
Rio Tinto Plc | +1.35% | +78.00 | 5,861.00 |
| 4 |  |
Bhp Group Limited | +1.29% | +34.00 | 2,671.00 |
| 5 |  |
Anglo American Plc | +1.16% | +22.20 | 1,934.20 |
| 6 |  |
Hsbc Holdings Plc | +0.79% | +4.90 | 624.30 |
| 7 |  |
Bt Group Plc | +0.71% | +0.90 | 126.95 |
| 8 |  |
Centrica Plc | +0.63% | +0.90 | 143.10 |
| 9 |  |
Smurfit Kappa Group Plc | +0.63% | +20.00 | 3,202.00 |
| 10 |  |
Sage Group Plc | +0.38% | +4.50 | 1,178.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Burberry Group Plc | -2.85% | -42.50 | 1,449.00 |
| 2 |  |
Ocado Group Plc | -2.51% | -19.80 | 769.20 |
| 3 |  |
British American Tobacco Plc | -2.44% | -57.00 | 2,279.00 |
| 4 |  |
United Utilities Group Plc | -2.14% | -23.50 | 1,077.00 |
| 5 |  |
Carnival Plc | -1.62% | -21.50 | 1,309.50 |
| 6 |  |
Johnson Matthey Plc | -1.26% | -21.50 | 1,687.50 |
| 7 |  |
Kingfisher Plc | -1.05% | -2.60 | 245.00 |
| 8 |  |
Scottish Mortgage Investment Trust Plc | -1.01% | -8.00 | 786.60 |
| 9 |  |
Fresnillo Plc | -0.90% | -5.20 | 574.60 |
| 10 |  |
Direct Line Insurance Group Plc | -0.87% | -1.65 | 187.90 |
US close: Stocks sharply lower as investors look to take profits
Wall Street stocks closed sharply lower on Wednesday, snapping major averages’ recent positive run as investors took some profits.
At the close, the Dow Jones Industrial Average was down 1.27% at 37,082.00, while the S&P 500 slipped 1.47% to 4,698.35 and the Nasdaq Composite saw out the session 1.50% weaker at 14,777.94.
The Dow closed 475.92 points lower on Wednesday after registering its ninth-straight winning session a day earlier.
Even with the losses, all three major averages were in the green for December, and the year as a whole, as market participants continued to look ahead to multiple rate cuts from the Federal Reserve in 2024.
In focus on Wednesday, Red Sea concerns were still weighing on sentiment despite a US pledge to assemble a cross-country naval force in the region. Brent crude was 0.91% stronger at $79.95 a barrel, while West Texas Intermediate was changing hands 1.01% higher at $74.69 a barrel.
On the macro front, mortgage applications fell 1.5% in the week ended 15 December, according to the Mortgage Bankers Association of America, dropping from a 7.4% surge a week earlier and halting a six-week run of increased applications. Applications to refinance a home dropped by 2% but remained 18% higher year-on-year, while applications to purchase a home were 1% lower week-on-week but also remained 18% higher on an annualised basis.
Elsewhere, US existing home sales increased month-on-month in November for their first increase in five months. According to the National Association of Realtors, rose 0.8% month-on-month to a seasonally adjusted annualised rate of 3.82m units in November, rebounding from 3.79m in October – the lowest level since August 2010. The figures came in ahead of forecasts of 3.77m, principally due to a fall in mortgage rates.
Finally, consumer confidence in the US jumped in December, according to the Conference Board, as perceptions of current and future conditions turned more optimistic. The closely watched monthly release of the consumer confidence index rose to 110.7 this month, up from 101.0 in November, which was revised down from initial estimates. However, the consensus estimate was for a reading closer to 104.5.
In the corporate space, logistics firm FedEx was in the red on Wednesday after it cut revenue forecasts amid weaker demand, while General Mills also lowered its full-year sales forecasts as a result of softer demand, and recreation vehicle firm Winnebago beat on revenues with its latest quarterly figures but fell short on profits.
Thursday newspaper round-up: Greensill, BT, Dazn
The Premier League’s pledge to scrap betting adverts on football shirts will not protect children from a “bombardment” of gambling advertising, according to a report by MPs that also raises concerns about the pace of reform to the industry. MPs on the select committee for culture, media and sport criticised the government for failing to take a more “precautionary approach” to gambling promotion, setting out their concerns in a 76-page report published on Thursday. – Guardian
The Labour party has called on David Cameron to release all details of his involvement in the Greensill lobbying scandal. Sir Laurie Magnus, Rishi Sunak’s adviser on ministerial interests, has also been asked to explain whether investigations into the foreign secretary’s former employer will be formally declared. – Guardian
Warner Bros and Paramount have opened discussions about a $38bn (£30bn) merger that would bring together two of Hollywood’s “Big Five” studios. David Zaslaw, the chief executive of Warner Bros Discovery, met Bob Bakish, the boss of Paramount Global, in New York this week to discuss a possible combination of the two companies, online news website Axios reported. – Telegraph
BT is scrambling to rip Huawei equipment out of its network before the end of the year to avoid hefty fines. The telecoms giant still has not removed all kit made by the controversial Chinese company from its “core” network, with just 11 days left before a government-imposed deadline of December 31. – Telegraph
Heavy losses at Dazn have almost halved as the sports streaming provider battles to tip the balance between the enormous costs of sports rights and selling enough subscriptions. In latest results published at Companies House, Dazn reported a total loss of $1.26 billion for the year to the end of December 2022, sharply reduced from the $2.18 billion loss it made in 2021. – The Times
