- FTSE 100 up 15.53 points at 7,512.72
- London market improves after weak start
- Spotlight on the retail sector
4.45pm: FTSE 100 closes in positive territory
Britain's benchmark FTSE 100 index closed marginally higher thanks to basic resources and top retail stocks.
The blue-chip FTSE 100 made up of the largest companies listed on the London Stock Exchange, closed higher by 0.21%, or 15.53 points, to 7,512.72.
There was demand for top retail stocks as Next PLC gears up to get the new year kicked off when it releases its fourth-quarter trading update with all eyes on the outlook.
Meanwhile, gold is continuing to hover around $1,800 where it has traded roughly $30 on either side throughout the bulk of December.
US markets edge higher
US markets pushed higher on Thursday as expected, with the Dow Jones up 0.8%, while the S&P climbed 1.28%.
The tech-laden Nasdaq, featuring the likes of Apple and Netflix, was up by 1.77% on the open.
Aluminium futures still down
Aluminium futures were trading around $2,400 per tonne, with the meta; down more than 15% since the beginning of 2022.
Fears of a global recession triggered by an aggressive tightening campaign from major central banks have resulted in the price falling in 2022.
Earlier this year, Alcoa, the largest US aluminium producer, warned investors that high energy and raw material costs and a fall in aluminium prices are putting pressure on margins.
Century Aluminum, the second largest US producer, announced in June that it would close one of its US plants and lay off over 600 workers due to rising energy costs.
US preview
US stocks are looking to edge higher again at the open on Thursday, but having started positively in the previous session only to drop back sharply by the close, investors are likely to remain wary about a possible end-of-year recovery.
Futures for the Dow Jones Industrial Average (DJIA) were 0.2% higher in pre-market trading, while those for the S&P 500 were ahead 0.4%, and contracts for the Nasdaq 100 futures added 0.6%.
Wall Street's main indexes ended weaker on Wednesday, with the Nasdaq hitting a 2022 closing low, as investors grappled with mixed economic data, rising COVID-19 cases in China, and geopolitical tensions heading into 2023.
The DJIA ended down 1.1%, while the S&P 500 dropped 1.2%, and the Nasdaq Composite dived 1.4%.
Craig Erlam, senior market analyst, UK & EMEA, OANDA: "We continue to drift into year-end with investors having little to cling onto that's going to drive markets one way or another.
"That is so often the case this time of year and while 2022 could have been different, given how chaotic the rest of the year has been, it has proven to not be the case. Investors are going into 2023 with a cautious mindset, prepared for more rate hikes, and expecting recessions around the globe. The bar is low but arguably reasonably so."
He added: "While markets have remained choppy over the last couple of weeks, we haven't seen any major developments that have changed the narrative at all going into next year. Well, perhaps ex-Japan where the central bank's policy tweak may embolden those wanting to take it on more forcefully in the months ahead.
"Elsewhere, the focus will remain on terminal rates and just how forceful central banks will be in their bid to defeat inflation. The Fed in particular has remained very bullish on its rate intentions, so much so that it may have spooked investors a little at this month's meeting. But that could quickly change in Q1 if the data allows.
"And then there's China and its u-turn on Covid prevention. It's been quite the shift from fighting every case to living with the virus and that creates enormous uncertainty for the start of the year as case numbers surge and the health system is overwhelmed. How the leadership will respond is about as clear as the data itself so for investors it will be a case of learning as we go using what little data and anecdotal evidence we have. That creates challenges domestically and in all likelihood globally as well."
On the corporate front, Tesla shares are headed for their worst-ever year, under pressure on new demand concerns and a shutdown at its China factory. But Tesla stock regained some ground Wednesday and looked poised to extend that rally Thursday, adding 3.6% premarket.
Exxon Mobil was 0.7% lower pre-market after the oil giant filed a lawsuit contesting the European Union's windfall levy on high energy profits after Russia’s invasion of Ukraine.
FTSE's rally slows down
FTSE 100’s rally looks to have plateaued with eyes now turning to the US to see what happens when Wall Street opens after yesterday’s rollercoaster.
US markets ended the day heavily in the red and investors in London will be wary of a similar outcome today despite indications of an early jump when the bell goes.
Company news is very thin on the ground today and Russ Mould, investment director AJ Bell, has revisited his Footsie boss departures league table for what should be the final tally for 2022.
He likes the comparison with football managers as both are in the "results business" but says the stats suggest that a FTSE 100 berth is a lot more secure than the dugout.
“Thirteen FTSE 100 firms saw a change in chief executive, bang in line with the post-2000 average, while a new manager pitched up at no fewer than 53 of the 92 Premiership and Football League clubs in 2022, with eight of those 53 getting in a new man (and they were all men) on two occasions.
“In most cases, the change in FTSE 100 leaders was pretty smooth in 2022. Burberry, Anglo American and Taylor Wimpey had all announced the change in 2021 and the first two had already identified their new leaders, although JD Sports, Smith & Nephew and Reckitt Benckiser saw their CEOs leave in a hurry, albeit for differing reasons.
“As a result of all of these changes, the average tenure of a FTSE 100 CEO is now 69 months, or just under six years”
Mould adds that only twelve football bosses can point to three years in their position, although barring any unforeseen disasters West Ham United’s David Moyes will reach this milestone on 30 December to take the total to 13.
Fallers at lunchtime include British Airways owner IAG down 1.8% on US travel fears, Frasers also off 1.8%, Whitbread down 1.5% and Ocado 1.3% lower and all presumably on Christmas trading nerves.
Scottish Mortage still tops the risers, up 1%, with insurer Beazley rallying after US weather-related worries and Glencore up 0.6% also picking up some steam.
FTSE 100 edges towards parity
FTSE 100 was inching towards green numbers as miners gained ground on China’s releasing of Covid restrictions.
Stock picking ahead of 2023 also provided some support with Glencore, which has been recommended by both Deutsche Bank and JP Morgan as their top nap in the mining sector, appearing among the top risers.
Shares are up 0.4% at 642p with peer miner Rio Tinto doing slightly better with a 0.7% gain at 5,858p.
Coal is one of Glencore’s staples and has been a surprise winner in 2022 due to the global energy crisis, but there was some relief on that front today for consumers as European gas futures fell to €77 per megawatt hour or the lowest since the start of the Ukraine war.
Unlike the US, temperatures across Europe have been higher than normal with consumption lower.
UK gas prices were 155p per therm yesterday, compared with 200p/therm at the start of 2022 and over 600p/therm in August.
British Gas owner Centrica eased 0.3% to 96.7p.
FTSE 100 boosted by Scottish Mortgage
FTSE 100 has staged a modest rally from its early dip and now sits at 7,473, down 24 from the start of the day.
Scottish Mortgage Trust is leading the recovery adding 1.3% at 699p, comfortably putting it top of the big cap risers and a little surprising given its tech bias and the beating this week for some of the big sector names such as Apple,
Not that investors will be getting too carried away as year-to-date SMT shares are still down 47%, which will put it firmly on the bottom rung when the numbers for 2022 are finally added up.
FTSE 100 overall has not had too bad a year, even so, something that Ipek Ozkardeskaya, senior analyst at Swissquote Bank has been analysing.
FTSE 100 well ahead of S&P 500
"Britain’s 100 biggest companies are preparing to close the year with small gains, while the S&P500 has lost more than a fifth of its value.
"Why?" she asks before answering.
"First, British companies had to compensate for the weakening sterling this year – but that’s also true for the DAX, for example, but the DAX is also preparing to end the year around 15% lower. So, it’s not only an FX story.
"Second, and the most relevant, the fact that the FTSE 100 is heavily crowded in energy and mining stocks is what made the FTSE 100 perform so well this year.
"Among the biggest market caps, BP and Shell are up by more than 40% each ytd.
"Plus, British big caps make most of their revenues in terms of US dollars; a good thing for a year when sterling lost up to 23% against the greenback at some point and is still down around 10% right now.
"And I believe that the FTSE 100’s outperformance could stretch into the new year. If the Chinese reopening brings along another bump in inflation due to higher energy and commodity prices, the FTSE 100 could continue offering a good shelter to those willing to hedge against an energy-led global inflation to temper the negative effects.
"Of course, the biggest British companies do not reflect the underlying British economy, so the FTSE 100’s good performance won’t change the fact that smaller, and domestic-focused companies will likely continue to suffer from high inflation, recession and perhaps another year of political turmoil as a cherry on top."
FTSE 100 opens 54 points down
FTSE 100 reacted badly to the slide in US prices overnight, opening 54 points lower at 7,442 with BT Group the worst of the bunch.
Wall Street had a tough day Wednesday with Apple in the firing line on production concerns in China, but there were also sell-offs among oil shares and airlines as the US ‘bomb-cyclone’ continues.
Adding to the drift today was the almost complete absence of any significant corporate news bar Antofagasta, with the copper miner reporting that access to its Los Pelambres mine in Chile has been blocked by protestors. Shares dipped 1% to 1,568p.
Otherwise, brent crude continues to ease lower and was down a further 0.5% today to $82.83 per barrel, with BP and Shell following the trend and shedding 0.7% and 0.4% respectively.
Gold though is showing no signs of losing its appeal according to the World Gold Council, which reports demand for the metal is the highest it has been for 55 years with central banks buying almost 400 tonnes of gold in the third quarter of this year.
It reflects “reflective of the geopolitical uncertainty now weighing on global policy setters," said the trade body.
Among the small caps, Netscientific responded to more good news from its portfolio company PDS’s ongoing cancer treatment trial and rose 7% to 71.5p, but Allergy Therapeutics plummeted 56% on a delay to its accounts for the year to June.