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London open: FTSE nudges up but Frasers tumbles as it cuts profit outlook
London stocks nudged higher in early trade on Thursday as investors mulled political developments in France, with Frasers Group under the cosh after it cut its profit outlook.
At 0900 GMT, the FTSE 100 was up just 0.1% at 8,342.13.
Kathleen Brooks, research director at XTB, said: “France has been plunged into a political crisis, the question now is, will it trigger a crisis for financial markets? Late on Wednesday, the French government lost a no-confidence vote linked to its budget. This was widely expected, and it leaves France rudderless at the same time as its budget deficit has swelled to 6% of GDP.
“In the immediate term, the President will need to appoint a new PM, however, we could be in a situation where any new PM will face the same challenges as Barnier if they try to pass a budget that contains measures to bring down the budget deficit.
“The crisis is ostensibly over the Budget; however, it was precipitated by June’s election, which resulted in no clear winner and a fractured parliament. France cannot hold another parliamentary election until next summer, however, Marine Le Pen has made it clear that she is the Kingmaker. After the vote she said that her party will work with the new government to pass a budget. However, that will likely mean far fewer tax hikes and spending cuts, which may not do much to dent the budget deficit.”
On the UK macro front, the S&P Global construction PMI for November is due at 0930 GMT.
In equity markets, Shell gushed lower even as it said that it and Equinor were combining their British offshore oil and gas assets to create what they said would be the UK North Sea’s biggest independent oil and gas producer.
Frasers Group tumbled as it lowered the upper end of its full-year profit forecasts, citing weaker consumer confidence leading up to and after the government’s recent Budget and a tougher trading environment.
The company now expects adjusted pre-tax profit for the 2024/25 fiscal year of £550m to £600m down from prior guidance of £575m to £625m. Interim profits were down 1.5% to £299.1m on the same basis.
DS Smith was in the red as it posted a slide in half-year earnings, hit by “challenging” market conditions, including weaker prices and higher costs. The paper and packaging firm said revenues in the six months to 31 October fell 4% to £3.4bn, while adjusted operating profits slumped 39% to £221m. Like-for-like box volumes grew by 2%, however.
Housebuilder Taylor Wimpey was knocked lower by a downgrade to ‘neutral’ from ‘overweight’ at JPMorgan Cazenove.
On the upside, Vistry gained after saying it had agreed to build nearly 950 new homes near London’s Olympic Park as part of a 50:50 joint venture with the London Legacy Development Corporation.
Future surged to the top of the FTSE 250 after well-received full-year results, while Wood Group advanced as it secured three “major” agreements with BP to provide engineering and project delivery services for their capital projects worldwide.
Watches of Switzerland was also in the black as it reported a jump in first-half revenue amid solid US demand, but a dip in profit.
Balfour Beatty and AJ Bell rose after a trading update and final results, respectively.
Vodafone was also up after the Competition and Markets Authority cleared the proposed merger between it and Three on the proviso that the companies promise to invest billions to roll out a combined 5G network across the UK.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ck Infrastructure Holdings Limited | +2.49% | +13.70 | 563.70 |
| 2 |  |
Admiral Group Plc | +2.29% | +60.00 | 2,684.00 |
| 3 |  |
Banco Santander S.a. | +1.88% | +7.00 | 379.50 |
| 4 |  |
South32 Limited | +1.73% | +3.20 | 188.40 |
| 5 |  |
Crh Plc | +1.61% | +130.00 | 8,186.00 |
| 6 |  |
British American Tobacco Plc | +1.33% | +39.00 | 2,970.00 |
| 7 |  |
Barclays | +1.32% | +3.45 | 265.55 |
| 8 |  |
Intertek Group Plc | +1.22% | +58.00 | 4,814.00 |
| 9 |  |
Flutter Entertainment Plc | +1.10% | +240.00 | 22,050.00 |
| 10 |  |
Vodafone Group Plc | +1.09% | +0.76 | 70.56 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Gen.acc.8se.pf | -2.90% | -4.00 | 133.75 |
| 2 |  |
Wheaton Precious Metals Corp. | -2.55% | -130.00 | 4,970.00 |
| 3 |  |
Intermediate Capital Group Plc | -1.55% | -34.00 | 2,166.00 |
| 4 |  |
Melrose Industries Plc | -1.43% | -8.40 | 578.80 |
| 5 |  |
Prudential Plc | -1.29% | -8.40 | 641.00 |
| 6 |  |
Smith (ds) Plc | -1.21% | -7.00 | 570.00 |
| 7 |  |
Associated British Foods Plc | -1.09% | -25.00 | 2,279.00 |
| 8 |  |
Shell Plc | -1.05% | -26.50 | 2,504.00 |
| 9 |  |
Coca-cola Europacific Partners Plc | -0.97% | -60.00 | 6,100.00 |
| 10 |  |
Segro Plc | -0.96% | -7.40 | 767.40 |
US close: S&P 500 and Nasdaq hit fresh record highs
Major indices closed higher on Wednesday, with both the S&P 500 and Nasdaq Composite notching yet another record close.
At the close, the Dow Jones Industrial Average was up 0.69% at 45,014.04, while the S&P 500 advanced 0.61% to 6,086.49 and the Nasdaq Composite saw out the session 1.30% firmer at 19,735.12.
The Dow closed 308.51 points higher on Wednesday, more than reversing losses recorded in the previous session.
A number of data points were in focus throughout the session, with mortgage applications rising 2.8% in the week ended 29 November, according to the Mortgage Bankers Association, slowing from the previous week’s 6.3% surge. Applications to refinance a mortgage retreated, while applications to purchase a home surged.
Elsewhere on the macro front, Private sector employment in the US rose less than expected in November, according to ADP. Employment increased by 146,000 from October, versus expectations for a 163,000 jump. October’s gain was revised down from 233,000 to 184,000.
On another note, S&P Global’s composite PMI climbed to 54.9 in November, short of preliminary estimates for a reading of 55.3 despite being a 31-month high. S&P’s services PMI was downwardly revised from a preliminary reading of 57 to 56.1 in November but remained above October’s reading of 55.
Still on data, new orders for US manufactured goods increased by 0.2% to $586.7bn in October, according to the Census Bureau, in line with expectations and following September’s 0.2% month-on-month decrease.
Finally, the Institute for Supply Management‘s November services PMI declined to 52.1 in November, down from 56 in October and well and truly short of expectations for a reading of 55.5. Last month’s reading pointed to the slowest growth in the services sector in three months, driven by falling business activity, new orders, employment and supplier deliveries.
Comments from Federal Reserve chairman Jerome Powell also drew an amount of investor attention, with the head of the central bank stating he wasn’t worried about president-elect Donald Trump trying to politicising the Fed when he takes office next year. In terms of policy, Powell provided no insight into which way he was leaning when it comes to the near-term path for interest rates but he did state that the Federal Reserve can afford to be cautious.
In the corporate space, Salesforce shares traded higher on the back of Q3 revenues that came in ahead of expectations on the Street, while chipmaker Marvell also advanced after posting Q3 earnings that came in ahead of expectations and issuing strong Q4 guidance.
Discount retailer Dollar Tree beat earnings estimates, while Foot Locker was in the red after the sportswear retailer provided a disappointing holiday outlook.
On another note, UnitedHealth cancelled its investor day event on Wednesday after UnitedHealthcare chief executive Brian Thompson was fatally shot in the chest outside the Hilton Hotel in Midtown Manhattan.
Thursday newspaper round-up: Airbus, Boohoo, Home Reit
Ministers are considering renationalising British Steel in a last-ditch attempt to save thousands of jobs, amid a standoff between the government and the company’s Chinese owners over a £1bn investment. Jonathan Reynolds, the business secretary, is locked in talks with British Steel and its owner, Jingye, to agree how much each party should put into a rescue plan for its main Scunthorpe site. – Guardian
The Italian prime minister, Giorgia Meloni, has said her government will try to protect jobs as political tensions mount with Fiat maker Stellantis after the abrupt resignation of its chief executive. Meloni said she would attempt to “defend” employees in the carmaker’s Italian operations in the wake of the surprise exit of Carlos Tavares, its longstanding chief executive, who left after the company said “different views have emerged” between the executive and its board. – Guardian
Petrol car sales in Britain have plunged to an all-time low as manufacturers ration supplies to hit tough electric vehicle (EV) targets. Just 29pc of new cars sold in November were petrol vehicles, according to analysis of registration data by New Automotive, down from 42pc a year earlier. By contrast electric vehicles took a market share of 25pc, up from 16pc previously. – Telegraph
Airbus plans to axe almost 500 jobs in Britain as it shrinks a space division that has been haemorrhaging satellite orders to Elon Musk’s SpaceX. The company said that 477 positions will disappear in Britain as a result of a Europe-wide restructuring of its space and defence arm, though no compulsory dismissals are planned. – Telegraph
Police are investigating claims of stalking and “corporate espionage” made by executives at Boohoo Group, The Times can reveal. Police forces in Manchester and Kent are examining reports of stalking offences, including those involving “serious alarm and distress”, allegedly aimed at several Boohoo directors and senior executives. – The Times
Long-suffering shareholders in Home Reit, the scandal-hit “landlord for the homeless”, are being offered a way out by a little-known investor that specialises in distressed assets. Southey Capital has told Home Reit shareholders it will buy their shares for 4p apiece, although they only have until the end of December to accept the offer. – The Times
