- FTSE 100 closes down 16 points at 7,513.
- Rolls-Royce jumps as JPMorgan upgrades
- Gold price advances, oil price sinks
4:40pm: FTSE ends in the red, led by weak miners
The FTSE 100 ended a sluggish day in the red as a weak oil price weighed on index heavyweights, BP and Shell, and mining stocks fell back on concerns of weakening demand.
At the close, London's lead index was down 16.39 points, 0.2%, at 7,512.96 while the FTSE 250 was down 47.40 points, 0.3%, at 18,361.25.
Leading the risers was Rolls-Royce Holdings PLC (LSE:RR.) where long-term bear of the stock JPMorgan upgraded to 'overweight' from 'neutral' while BT Group PLC (LSE:BT.A) also benefited from positive words from JPM and Bank of America, rising 2.2%.
Lloyds Banking Group PLC (LSE:LLOY) rose 1.2% as analysts suggested it could use a possible windfall from the Telegraph sale to boost share buy-backs while DS Smith rose 1.2% after Barclays upgraded.
Heading the other way, were miners led by Anglo American, Glencore, Rio Tinto and Antofagasta while a Panorama probe unsettled Unitied Utilities
3:54pm: US factory orders dip in October
Some economic news from the US which suggests growth may be stalling.
US factory orders fell by 3.6% month-on-month in October, the Census Bureau reports, or by $21.8bn to $576.8bn. That follows two months of gains, and is larger than the 3% drop which was expected.
Orders for durable goods (long-lasting equipment and machinery) fell more sharply, by 5.4%.
3:28pm: Lloyds could boost buyback with Telegraph cash
Lloyds Banking Group PLC (LSE:LLOY) could use the windfall from a Telegtraph sale to support a larger-than-expected share buyback, according to Shore Capital analyst Gary Greenwood.
He notes Lloyds could be in line for a c.£0.7 billion write back which is not reflected in current forecasts and so would drive an upgrade of c.10% to pre-tax profit and c.11% to EPS in 2023.
Of course, this would represent a one-off release rather than recurring income, Greenwood noted
As such, the impact on valuation would be somewhat smaller, with the post-tax benefit of £0.5 billion equivalent to just under 2% of Lloyds current market capitalisation of £28.3 billion.
In addition, it would bolster capital generation and potentially support a larger than expected share buyback.
Greenwodd currently assumes £2 billion will be announced alongside the full-year 2023 results in February, but this could increase to £2.5 billion if all the net benefit was returned to shareholders.
3:16pm: Bitcoin powers past $42,000 mark
Bitcoin has continued its climb today, and has traded over $42,000 for the first time since last April.
Victoria Scholar, head of investment at interactive investor, said the “crypto winter” seems to be thawing with bitcoin up over 50% in the last six months.
She added: “A combination of growing expectations for SEC approval for a bitcoin ETF, a more dovish outlook for the Fed and the countdown to next year’s bitcoin halving have provided a tailwind to the most widely traded cryptocurrency.”
“Other cryptos are also staging gains like XRP, Litecoin, Bitcoin cash and Ethereum which is up almost 3% today and over 20% in the past month,” she noted
“The crypto winter is thawing with positive price action coming back into play since the lows around a year ago. However there’s still a long way to go to retest the pandemic fuelled highs from 2021.”
2:49pm: US stocks open lower but FTSE perks up
US stocks started the week on the back foot, consolidating recent gains, ahead of a week dominated by updates on the US jobs market.
Shortly after the opening bell, the Dow Jones Industrial Average was down 104.83 points, 0.3%, at 36,140.67, the S&P 500 was down 28.77 points, 0.6%, at 4,565.86 and the Nasdaq Composite was down 133.69 points, 0.9%, at 14,171.34.
Crypto-related assets surged after Bitcoin topped $40,000 for the first time this year. Coinbase jumped 7%, MicroStrategy gained 7% and Marathon Digital climbed 13%.
Elsewhere, shares in Uber rose 4% after S&P Dow Jones Indices on Friday said it will enter the S&P 500, along with Jabil and Builders FirstSource.
The three will replace Sealed Air, Alaska Air Group and SolarEdge Technologies.
Despite the weak start, the FTSE has perked up and is now trading little changed.
2:18pm: Entain US jv to deliver top-end revenue in 2023
Entain PLC (LSE:ENT), the owner of Ladbrokes and Coral, has updated investors on the performance of BetMGM, its US joint venture, ahead of a presentation to analysts and investors later today. .
The betting operator said the jv will deliver revenue in 2023 towards the upper end of the $1.8-$2.0 billion range and achieve EBITDA profitability in the second half.
The firm said key enhancements in both digital sports and market-leading iGaming product are presenting the opportunity to invest competitively behind the brand, driving accelerated player acquisition and aiding player retention.
The presentaion will also provide clarity on why 2024 is an investment year to drive enterprise value for shareholders and the setting of a target of approximately $500 million EBITDA in 2026.
The presentation will be hosted by BetMGM's CEO Adam Greenblatt and CFO Gary Deutsch.
Shares in Entain are down 1.3% at 797.80p.
1.36pm: Here’s a recap of the risers and fallers on the market today
Petrofac Limited (LSE:PFC) shares dropped 27% as it warned it will not meet its cash targets for this year due to advance payments on several contracts not coming through.
Shares in Fusion Antibodies PLC (AIM:FAB) fell 19% in the wake of interim results that confirmed client project delays, particularly from those in the venture capital-funded biotech sector.
Wishbone Gold PLC (AIM:WSBN, AQSE:WSBN) shares jumped 11% on a bullish update on its exploration at the Red Setter prospect in Paterson, Western Australia.
Argo Blockchain PLC (LSE:ARB, OTCQX:ARBKF, NASDAQ:ARBK, ETR:0XP) shares added 18% in early Monday trades following the London-listed bitcoin mining group’s November operational update.
Shares in William Hill-owner 888 Holdings leapt over 22% after The Sunday Times reported it was the target of a £700 million swoop by gambling tech provider Playtech PLC (LSE:PTEC).
1:05pm: United Utilities drops after sewage accusations
Shares in United Utilities fell 2.5% after it was accused by the BBC of downgrading sewage incidents to improve its performance on dumping.
In a Panorama documentary, the northwest utility is alleged to have downgraded 60 incidents so they did not count in official figures.
One of the sewage discharges reportedly downgraded was into the middle of Lake Windermere, a globally renowned beauty spot in the Lake District.
Originally believed to be a category 2 incident, United Utilities reportedly downgraded the incident.
In a statement, the company said: “Panorama has made a series of allegations about United Utilities, which we strongly reject.
12:36pm: Chancellor urges all politicians to make long-term decisions
The Chancellor Jeremy Hunt has urged politicians from both sides to base economic decisions around the long-term future of the country rather than short-term fixes.
Speaking at the Resolution Foundation conference Hunt said: “I think that what really matters is that despite all the political noise, Governments find the nerve to make long term changes - the really difficult changes - that will make a difference.”
Jeremy Hunt rejects @resfoundation's claim that UK economy is suffering from a "broken leg".
Chancellor says: "We’ve got a lot going for us, so if we’re going to go into dealing with the sprain, rather than the broken leg, then let’s do so from a perspective of positivity."
— Pippa Crerar (@PippaCrerar) December 4, 2023
He said the UK is not alone among western nations in suffering from a low-growth performance, the chancellor said, as he defended measures in his Autumn Statement aimed at boosting investment and productivity.
But asked if the UK economy was suffering from a broken leg, Hunt said the country had a “sprained ankle” but that his government was coming up with measures to improve its economic performance, including changes to the tax system to incentivise business investment.
Hunt also said he wanted to reverse the real-terms declines in public investment that was pencilled into the Autumn Statement when it was possible.
He said the UK could be the “most prosperous” economy this century because of its “untapped potential”.
“If I was going to choose one country in the world that had the most untapped potential to become the most prosperous 21st century economy, it would be Britain.”
Sir Keir Starmer, leader of the Labour Party, will address the conference this afternoon.
12:11pm: US markets expected to open lower
US markets are expected to open lower on Monday as investors look ahead to a busy week of data on the health of the jobs market.
In pre-market trading, futures for the Dow Jones Industrial Average were down 0.2%, while those for the S&P 500 0.3% lower and contracts for the Nasdaq 100 futures fell 0.4%.
Craig Erlam at Oanda thinks the next couple of weeks “could be massive for financial markets going into 2024, with a range of data from the US in the coming days setting us up nicely for the Fed meeting on the 13th.”
“The standout event is the jobs report on Friday, with the Fed still seemingly of the view that getting inflation back sustainably to target will require some more slack in the labor market.”
“Another weaker report, especially one paired with 0.2% monthly wage growth, could further fuel the belief that not only is the tightening cycle over but rate cuts may not be far away,” he suggested.
In company news, Spotify rose 1.3% in pre-market trading after announcing plans to axe a fifth of its workforce after warning that economic growth has slowed dramatically.
In a memo to staff on Monday, chief executive Daniel Ek said that Spotify would cut about 17% of its 9,000 strong global workforce.
Elsewhere, shares of Alaska Air Group dropped 8.6% in pre-market trading after the carrier said on Sunday it would acquire peer Hawaiian Holdings for $1.9 billion, including debt.
The news saw Hawaiian's shares nearly triple in value.
11:38am: BT share price coudl more than double, says JPMorgan
BT Group PLC (LSE:BT.A) is also bucking the weaker market supported by some upbeat broker commentary.
JP Morgan reckons the telco's share price could more than double and thinks 2024 could be a “break-out” year for European telcos.
The investment bank’s bullish sector stance is based on prices increases which implies upside risk to consensus, Ebitda growth, free cash flow increases, “best-in-class" EPS growth, falling interest rates and prospects for further consolidation in the sector.
BT is one of its top European-wide sector picks, rated ‘overweight’ with an increased share price target of 290p, up from 280p.
The broker notes BT’s share price has “aggressively yoyoed” between a low of 100p, and a high of 200p with a debate around growth prospects, the competitive landscape (the fibre altnet threat), and the resulting ROCE outlook.
But JPM highlights a a rich catalyst pipeline that “could see BT re-rate from 4.2x to 6.0x EV/ EBITDA, and implying a more than a doubling of the share price to 270p.”
Bank of America is also positive om BT today, lifting its price target to 195p from 187p and reiterating a 'buy' rating.
It said BT comprises one of the most established and constructive pricing mechanisms across Europe as an offset to macro pressures, while energy prices are set to ease.
It also likes BT’s fibre leadership while both fixed and mobile markets could consolidate in 2024.
11:14am: DS Smith to benefit from volume-led recovery
Heading the right way today are shares in DS Smith, up 2.3%, after analysts at Barclays upgraded the stock to ‘overweight’ from ‘equal weight’.
The broker said DS Smith is one the cheapest stocks in global packaging currently and it expects a volume recovery to drive a multiple re-rating.
With inflation cooling down, Barclays expects volumes to pick up next year by around 3-5%.
It also suggested that if the company cut back on growth capex, free cash flow would be significantly ahead of dividends and then it could consider share repurchases, especially at the current depressed multiple.
“We believe DS Smith should cut capex to maintenance capex levels and hope that DS Smith doesn't engage in expensive M&A and instead focuses on optimising its portfolio and operations,” analysts at Barclays said.
The bank has increased its share price target to 360p from 310p.
10:47am: Households with mortgages see higher inflation
Rising borrowing costs mean households with mortgages have suffered higher inflation over the past year than the national average, while those with children have also been hit harder, according to new figures.
We've published new analysis using national household expenditure data to investigate #CostOfLiving effects on households between Quarter 4 (Oct to Dec) 2021 and Quarter 2 (Apr to Jun) 2023????
➡️ https://t.co/ci8aqy3MSX https://t.co/67joP44LFk pic.twitter.com/xrbPkF8cwY
— Office for National Statistics (ONS) (@ONS) December 4, 2023
Consumer price inflation for households with mortgages was 9.3% in the year to September, above the headline national rate of 8.2%, the Office for National Statistics said.
For households that own their properties outright, the rate was 7.4%, the ONS said.
10:02am: Oil price down, gold price up
Keeping the FTSE 100 in check are falls in energy and commodity stocks.
BP and Shell are down 1.9% and 1.6% respectively as the oil price fell once more, with the price of Brent crude down 1.4% today to $77.81/barrel.
Derren Nathan, head of market research at Hargreaves Lansdown said: “Concerns about long-term demand are a constant factor in today’s oil market but for now its supply that is driving prices.”
“Scepticism over how tightly enforced the latest round of OPEC+ production cuts, as well as concerns about demand from China are keeping a lid on prices,” he added, noting the value of a barrel of Brent crude has fallen nearly 8% in just one week.
But it is a different story for the price of gold which hit a new record high this morning at US$2,111 an ounce with investors flocking to the metal as the US dollar continued its retreat.
Gold and the dollar have traditionally moved in opposite directions and since October when economists started to call an end to US interest rate hikes, the metal has been on a tear.
From US$1,820, the gold price has risen by 15%, helped by record buying of the metal by central banks, a trend that analysts expect to continue.
Bart Melek, head of commodity strategies at TD Securities, told CNBC he expects gold prices to average $2,100 in the second quarter of 2024, helped by central bank purchases.
The price has settled back a touch but is still trading around $2,071 an ounce.
9:32am: Rolls-Royce jumps as 'bear' JPMorgan upgrades
A bit more on the Rolls-Royce upgrade which has seen arch-bear JPMorgan upgrade the engineer to ‘overweight’ from ‘neutral' with a 400p share price target.
The investment bank said it has rated the FTSE 100-listed engineer at either 'underweight' or 'neutral' since April 2018 reflecting concerns that Rolls had far higher long-term service agreement customer advances (LTSA) on its balance sheet than it had previously disclosed.
JPM said its view was that these LTSA advances represent cash that will not fully accrue to the firm and its shareholders.
But whilst it has not changed its view that LTSA advances should be treated as a debt-like item, JPM now believes that a much higher percentage of the LTSA advances will convert into profit.
This is because of radical moves the new CEO has made in 2023, it explained.
These include raising the price the firm RR charges for its LTSAs (ie. the rate per “engine flying hour”) and the planned cost reduction of £400-500 million, as announced at the Capital Markets Day on November 28.
As a result, when the LTSA advances eventually become revenue the company should make a much better EBITA margin on those sales.
"In other words, a lot more of the customer advances will eventually accrue to RR (and thus its shareholders)," the bank said.
It is the latest bullish commentary from the City community since new chief executive Tufan Erginbilgic joined the firm at the start of the year and pledged to restore the ailing group's fortunes.
Shares are up 188% year-to-date, and up 3.6% today.
9:07am: William Hill owner jumps on reports it spurned Playtech bid
Shares in William Hill owner, 888 Holdings PLC (LSE:888), have surged 13% in early exchanges after The Sunday Times reported it was the target of a £700 million swoop by gambling tech provider Playtech.
Playtech made a written indicative approach to acquire William Hill owner 888 Holdings at a price of 156p a share in July, only for it to be rejected as undervaluing the company, the report said, citing City sources.
The report pointed out that since the board spurned Playtech’s approach, 888’s shares have fallen to 70.6p, valuing the business at little more than £300 million.
It noted the appointment in October of a new chief executive, the gambling industry veteran Per Widerström, has also failed to stop the rot with the company booted out of the FTSE 250 index last week.
8:37am: FTSE 100 lower but upgrades lift Rolls-Royce and DS Smith
The FTSE 100 remains on the back foot but there are pockets of green with Rolls-Royce Holdings leading the way, up 3.7%, after another broker upgrade.
Richard Hunter at interactive investor said: "In early exchanges the FTSE100 gave up some of its gains from Friday," with weakness across the oil and mining sectors as investors chose not to add to the momentum of a positive start to the month.
Rolls-Royce Holdings PLC (LSE:RR.) led the FTSE 100 risers as JPMorgan moved the engineering company to ‘overweight’ from ‘neutral’ and nearly doubled its price target to 400p from 235p.
The company has been in the spotlight after its recent Capital Markets Day at which it detailed plans to boost margins and disposals of up to £1.5 billion.
DS Smith is another riser, up 2.6%, after Barclays moved to ‘overweight’ from ‘equal weight’ while Marks & Spencer rose 0.4% as UBS raised its price target to 265p from 200p.
BT is also in positive territory as JPMorgan suggested its share price could more than double, setting a price target of 280p, compared to today’s 124.10p share price.
William Hill owner, 888 Holdings, jumped 17% after reports that it was the subject of an unsuccessful £700 million takeover offer in July but Petrofac has slumped 7.6%.
The firm warned it will not meet its cash targets for this year due to advance payments on several contracts not coming through.
8:15am: Blue-chips open lower but mid-caps thrive
The FTSE 100 opened lower on Monday as investors await a batch of data on the US jobs market this week.
At 8:15am, London’s blue-chip index was down 20.91 points, 0.3%, at 7,508.44 while the FTSE 250 rose 83.51 points, 0.5%, at 18,492.16.
“All roads this week point to payrolls on Friday with the usual build up via JOLTS (tomorrow) and ADP (Wednesday),” said Deutsche Bank’s Jim Reid.
Deutsche’s US economists expect headline and private payrolls to come in at 130,000 with consensus at 180,000 and 160,000 respectively.
The returning post-strike autoworkers will boost the data by around 30,000, Deutsche said.
Unemployment is expected to hold steady at 3.9%, Deutsche said, with the risks tilted to a 3.8% print.
On a quiet day for company news, Wizz Air fell 0.5% despite reporting an increase in passenger numbers, load factor and capacity in November.
Liberum’s Gerald Khoo said the acceleration in both passenger and capacity growth in November compared with the trend of recent months “surprised us.”
But Deutsche Bank moved the budget airline to ‘sell’ from ‘hold’ in a sector review.
Elsewhere Boohoo rose 2.9% after Frasers increased its stake oince more while Capita climbed 1.8% after it agreed to sell its 75% stake in Fera Science Limited to Bridgepoint for an enterprise value of £60 million on a cash-free, debt-free basis.
7:52am: More passengers take to the skies at Wizz and RyanAir
Wizz Air Holdings PLC (AIM:WIZZ) reported a strong increase in passenger numbers, capacity and load factor in November.
The budget airline operator said it carried 4,760,154 passengers, representing a 29.3% increase compared to November 2022, at a load factor of 88.4%.
Capacity was 28.8% higher at 5,384,679 seats.
On a rolling 12-month basis, capacity rose 27.6%, passenger numbers jumped 34.9% and the load factor increased 4.9 percentage point to 91.1%.
RyanAir has also posted its traffic numbers, rising 4% to 11.7 million passengers from 11.2 million last year with an unchanged load factor of 92%.
7:23am: Frasers bumps up holding in boohoo
As expected it is a quiet start to the day but item of note is news that Frasers Group PLC has continued to add to its holding in online retailer boohoo group PLC.
Mike Ashley’s acquisitive retailer has increased its stake to 17.22% from 16.50% before.
The group, which owns Sports Direct and House of Fraser, held just 7.8% of Boohoo’s issued shares in late August.
Its holding has since jumped through several purchases of ordinary shares in Boohoo, which reported a decline in profits for the half year in October, alongside a slip into an adjusted loss.
It continues Frasers’ acquisition spree which has seen it pick up stakes in electricals giant Currys PLC, its online counterpart AO World PLC and boohoo’s rival ASOS PLC.
It adds to other investments in German fashion designer Hugo Boss, Manchester-based clothing label N Brown Group PLC, luxury handbag brand Mulberry Group and even a sliver of Next PLC.
7:00am: FTSE 100 expected to consolidate recent gains
The FTSE 100 is expected to edge lower on Monday after a slow start to the week in Asia and as investors look ahead to key data on the US jobs market this week.
Spread betting companies are calling London’s lead index down by 13 points after closing up 75.60 points, 1.0%, at 7,529.35 on Friday.
Markets have been in an upbeat mood as traders believe interest rates cuts could come sooner than previously thought.
Machael Hewson at CMC Markets said: “As we head into the final month of 2023 it’s hard to see what will puncture this renewed enthusiasm for the idea that central banks are about to pivot when it comes to rate policy.”
“The catalyst could be a set of strong US jobs data, with the likes of October JOLTs job openings tomorrow, the November ADP payrolls report on Wednesday or Friday’s non-farm payrolls report. Strong numbers from any, or all three could prompt a modest rebound in US yields in the absence of any hawkish Fed commentary ahead of next week’s final meeting of 2023,” he added.
Back in London, and the corporate diary is looking fairly quiet.