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London open: Stocks drop, pound at 14-month low
London stocks fell in early trade on Monday as bond yields rose again, but oil majors gained in tandem with oil prices.
At 0830 GMT, the FTSE 100 was down 0.3% at 8,226.21,while sterling dropped to a 14-month low against the dollar, trading down 0.4% at 1.2156.
Richard Hunter, head of markets at Interactive Investor, said: “UK markets were unsurprisingly subject to skittish investor sentiment in early trade. Bucking the trend were the oil majors after the announcement of further US sanctions against Russia, which lifted the price of ‘black gold’ overnight, feeding through to gains of around 1.5% for both BP and Shell.
“Nonetheless, the general attitude was circumspect, especially with regards to an uncertain outlook for the UK economy which has already wiped 4.3% from the more domestically focused FTSE 250 in the month of January.
“In contrast to other indices, the FTSE100 has posted a marginal gain of 0.6% so far this year, although this is more likely to have been underpinned by the weakness of sterling as opposed to any flights to the UK as an investment destination.”
In equity markets, Ladbrokes owner Entain surged to the top of the FTSE 100 as it reiterated its guidance for FY24 EBITDA. The shares were hit last week after rival Flutter Entertainment downgraded its US guidance due to unfavourable sports results.
Flutter was also a high riser.
Richard Hunter said Entain had been expected to be hit by a series of consumer-friendly sports results over recent weeks.
Oxford Nanopore was in the black after a well-received full-year trading update.
GSK traded a little lower as it announced the acquisition of US-based biopharmaceutical company IDRx for up to $1.15bn. IDRx specialises in developing treatments for gastrointestinal stromal tumours (GIST). GSK will pay $1bn upfront with the potential for a further milestone payment of $150m.
Fintech group Plus500 lost ground despite saying that results for 2024 had beaten market forecasts, driven by a solid end to the year with customer numbers surging 45% over the final quarter.
PageGroup tumbled as the recruitment firm said annual operating profit would be at the lower end of consensus expectations after fourth-quarter earnings fell 17% as market conditions worsened in Europe, with companies low-balling offers to potential job candidates.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rentokil Initial Plc | +3.04% | +11.50 | 389.20 |
| 2 |  |
Flutter Entertainment Plc | +2.39% | +490.00 | 20,960.00 |
| 3 |  |
Glencore Plc | +1.80% | +6.45 | 365.15 |
| 4 |  |
Sse Plc | +1.78% | +27.50 | 1,568.50 |
| 5 |  |
Centrica Plc | +1.42% | +1.90 | 135.65 |
| 6 |  |
Shell Plc | +1.39% | +36.50 | 2,661.50 |
| 7 |  |
Bp Plc | +1.39% | +5.90 | 431.00 |
| 8 |  |
Mondi Plc | +1.04% | +12.00 | 1,171.00 |
| 9 |  |
Jd Sports Fashion Plc | +1.01% | +0.98 | 97.62 |
| 10 |  |
Bhp Group Limited | +1.01% | +20.00 | 2,008.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
International Consolidated Airlines Group S.a. | -3.58% | -11.30 | 304.60 |
| 2 |  |
Pearson Plc | -3.06% | -39.50 | 1,253.00 |
| 3 |  |
Rolls-royce | -2.83% | -16.40 | 563.60 |
| 4 |  |
Smith (ds) Plc | -2.54% | -14.50 | 555.50 |
| 5 |  |
Crh Plc | -2.23% | -168.00 | 7,362.00 |
| 6 |  |
Relx Plc | -2.20% | -84.00 | 3,727.00 |
| 7 |  |
Melrose Industries Plc | -2.20% | -12.40 | 550.80 |
| 8 |  |
Wise Plc | -2.03% | -22.00 | 1,062.00 |
| 9 |  |
Ferguson Enterprises Inc. | -1.93% | -270.00 | 13,720.00 |
| 10 |  |
Bae Systems Plc | -1.64% | -19.50 | 1,172.50 |
US close: Stocks slide as payrolls data comes in strong
US stocks closed sharply lower on Friday after a volatile session, as stronger-than-expected non-farm payrolls data reignited concerns about prolonged Federal Reserve interest rate hikes.
The Dow Jones Industrial Average fell 1.63%, ending at 41,938.45, while the broader S&P 500 dropped 1.54% to close at 5,827.04, and the tech-heavy Nasdaq Composite declined 1.63%, finishing at 19,161.63.
In currency markets, the dollar was last up 0.17% on sterling, trading at 82.06p, as it edged up 0.05% against the euro to 97.66 euro cents, but weakened slightly against the yen, slipping 0.14% to change hands at JPY 157.51.
“Friday’s US jobs report detonated like a financial bombshell, sending shockwaves across Wall Street as stocks tumbled and bonds buckled under the unexpected vigour of the American labour market,” said SPI Asset Management managing partner Stephen Innes.
“Nonfarm payrolls skyrocketed to a staggering 256,000, obliterating the forecasts and sending a clear signal: the US economy is not just alive; it’s kicking hard.
“This explosive revelation puts a firm pause on any whispers of imminent rate cuts, with the Federal Reserve now perched on a tightrope of robust economic indicators.”
Nonfarm payrolls end 2024 in better-than-expected state
In economic news, the US labour market ended 2024 with stronger-than-anticipated job growth, defying forecasts for a more modest gain.
The Department of Labor reported a seasonally adjusted increase of 256,000 non-farm payrolls in December, significantly outpacing the consensus estimate of 165,000.
Revisions to the prior two months’ data trimmed job growth by 8,000.
Average hourly earnings grew by 0.3% on a monthly basis, aligning with expectations, while the unemployment rate edged down to 4.1% from 4.2%.
The labour force participation rate held steady at 62.5%, signaling continued stability in workforce engagement.
Hiring was concentrated in the services sector, which added 231,000 jobs in December, up from 148,000 in November.
In contrast, goods-producing industries shed 8,000 positions, while government employment increased by 33,000.
Commenting after the latest data, Thomas Ryan at Capital Economics noted how the year-on-year rate of increase in earnings growth had dipped from 4.0% in November to 3.9%.
That, he said, would reassure the Fed after the high level of services inflation and the increase in the ISM services prices paid index seen during just the last week.
“Nevertheless, the odds have increased that the Fed is close to being finished with its loosening cycle, particularly if the incoming Trump administration pushes ahead with a stagflationary mix of tariffs and immigration curbs.”
Constellation Energy in the green, insurers under pressure amid wildfires
In equity markets, Constellation Energy Corporation soared 25.16% after announcing a $26.6bn merger with privately owned peer Calpine.
The deal was expected to create a major player in the power generation industry, boosting investor optimism.
Walgreens Boots Alliance surged 27.55% after beating first-quarter earnings expectations and reaffirming its full-year guidance.
In the airline sector, Delta Air Lines jumped 9% on heavy trading volume after surpassing fourth-quarter earnings and sales estimates.
The stock reached an all-time high, rebounding from recent dips.
Delta’s competitors also benefited, with United Airlines Holdings gaining 3.27% and hitting a record high, while American Airlines Group rose 4.43% to levels not seen since mid-2023.
On the downside, insurance stocks faced sharp declines, pressured by the growing costs of the ongoing wildfires in Los Angeles.
Allstate Corporation fell 5.64%, while American International Group and Chubb declined 1.3% and 3.35%, respectively.
Travelers Companies lost 4.26%, as concerns over rising claims weighed on the sector.
Monday newspaper round-up: Tax increases, Lloyds bankers, Virgin Group
Business leaders plan to cut costs and rein in hiring in response to government tax increases set out in the autumn budget, with employment expectations taking the sharpest tumble since the start of the coronavirus pandemic. A net two-thirds of finance directors said they did not expect to increase hiring levels this year, a four-year high, with a net 26% feeling more pessimistic about the prospects for their business than three months ago, the first time sentiment had slipped into negative territory in 18 months, according to the latest survey by the accountancy firm Deloitte. – Guardian
Senior bankers at Lloyds could be at risk of having their bonuses docked if they fail to follow company orders to be in the office at least two days a week. Lloyds Banking Group – which owns the Halifax, Lloyds and Bank of Scotland brands – has confirmed it is reviewing office attendance as part of performance-related bonus targets for its most senior employees. That includes hybrid staff who, in 2023, were ordered to be in the office at least 40% of the time, which typically amounts to two days a week for those on full-time contracts. – Guardian
Commuters are really kicking up a stink at my local train station, fed up with constant delays and cancellations as more of them are summoned back to the office. The local MP has been contacted on a daily basis by furious constituents, prompting her to tell rail bosses that their service in the area is “unacceptable”. It will be the same story across the country. My station isn’t even up there as a worst offender (for punctuality, rather than cancellations, it is actually slightly better than the national average). – Telegraph
Sir Richard Branson’s Virgin Group is preparing an order for a dozen high-speed trains as it bids to break Eurostar’s monopoly on services through the Channel Tunnel. Virgin aims to sign a contract for the trains as early as this quarter to get ahead of startup Evolyn, which is also putting together plans to run trains from London to the continent. – Telegraph
Britain’s chemicals industry is heading for “extinction”, Sir Jim Ratcliffe has warned as the petrochemicals tycoon blames high energy prices and carbon taxes for forcing the closure of Ineos’s synthetic ethanol plant at Grangemouth. The facility at the vast complex in Scotland, which mainly supplied the healthcare and pharmaceutical sectors, closed on Wednesday, resulting in a net loss of 80 jobs and affecting more than 500 indirect roles in the wider economy. – The Times
