- FTSE 100 closes down 23 points at 7,490
- Food price inflation drops to 9.1%, says Kantar
- Barclays slips as Qatar wealth fund cuts stake
4:40pm: FTSE 100 drops as miners weigh, mid-caps climb
The FTSE 100 languished once more as falls in mining and Asia-focused stocks after Moody’s cuts its outlook on China held the blue-chip index back.
At the close, London's blue-chip index was down 23.12 points, 0.3%, at 7,489.84 while the FTSE 250 was up 126.28 points, 0.7%, at 18,487.53.
Chris Beauchamp at IG Index said losses in commodity prices have sent the mining sector into retreat, weighing on the index.
“The year that started so well for the FTSE 100 has turned into yet another dismal period of underperformance.”
“International investors continue to avoid the UK, starving the FTSE 100 and its constituents of the flows needed to fuel a proper rally,” he suggested.
BT rose 3.6%, basking in the afterglow of positive comments from JPMorgan on Monday while news of an increased market share supported J Sainsbury.
But a retreat in the gold price hury Endeavour Mining, while worries over the health of the Chinese economy knocked mining stocks such Anglo American and Antofagasta.
Barclays fell back after Qatar’s wealth fund offloaded around half if its stake in the lender but it was a better day for British Land after Goldman Sachs (NYSE:GS) upgraded the stock.
3:53pm: Junior doctors to strike in December and January
Junior doctors in England are to stage the longest strike in NHS history after talks between their union and the government broke down.
Ministers and representatives from the British Medical Association have been locked in talks for five weeks, trying to find a resolution to the pay dispute.
But the BMA said the Department for Health and Social Care has not been able to put forward a credible offer to end the industrial action.
As a result, the BMA's junior doctors committee has voted unanimously for strikes in December and January, the union said.
Junior doctors in England will walk out from 7am on December 20 to 7am on December 23, 2023 and from 7am on January 3 to 7am on January 9, 2024.
The strike in January is six full days, thought to be the longest single period of industrial action in the history of the health service, the union said.
3:24pm: US job openings slump in October
Job openings across the US economy have fallen, a sign that America’s labour market could be weakening.
The number of job openings decreased to 8.7 million on the last business day of October, the US Bureau of Labor Statistics reported today.
This was well below expectations for a decrease to 9.3 million.
The number of US job openings fell the most in October since March 2021, according to the latest JOLTS data. Yields on 10-year Treasuries continue falling, down 80bp from the high less than a month ago to below 4.2%, the lowest since August. pic.twitter.com/Ti0tMC4RUm
— Lisa Abramowicz (@lisaabramowicz1) December 5, 2023
The BLS explained: "The job openings rate, at 5.3%, decreased by 0.3 percentage point over the month and 1.1 points over the year."
"Over the month, job openings decreased in health care and social assistance (-236,000), finance and insurance (-168,000), and real estate and rental and leasing (-49,000). Job openings increased in information (+39,000)."
In a separate release, the easonally adjusted final S&P Global US services purchasing managers' index posted 50.8 points in November, matching the earlier flash estimate and up slightly from 50.6 points in October.
2:46pm: FTSE 100 near session lows as Wall Street makes weak start
US stocks opened lower on Tuesday as investors updates and the jobs market and service sectors and investors questioned whether the recent rally had gone too far.
Shortly after the opening bell, the Dow Jones Average was down 94.92 points, 0.3%, at 36,109.52, the S&P 500 was down 15.27 points, 0.3%, at 4,554.51 and the Nasdaq Composite was down 48.47 points, 0.3%, at 14,137.02.
Mark Haefele at UBS suggested markets may now be pricing in “too much good news on monetary policy,” and may not benefit from falling Treasury yields the same as it had in November.
His 4,700 year-end S&P 500 forecast spells a 2% rise for the broader index.
“After such a strong rally in November, we think the potential size of US stock gains ahead look more modest—we forecast the S&P will end next year at around 4,700,” Haefele wrote.
Wells Fargo fell 1.2% after cheif executive Charlie Scharf said that low staff turnover means the company will likely book a large severance expense in the fourth quarter.
“We’re looking at something like $750 million to a little less than a billion dollars of severance in the fourth quarter that we weren’t anticipating, just because we want to continue to focus on efficiency,” Scharf told investors during a Goldman Sachs (NYSE:GS) conference, reported by CNBC.
2:21pm: US the key market for Ashtead
Ashtead Group PLC (LSE:AHT) shares top the FTSE 100 fallers following its results today which came on the back of a recent profit warning.
Russ Mould at AJ Bell said the catch today was that “earnings were flat in the second quarter, underlining why the company recently moved to warn on profit.”
“Some of the reasons for this warning – notably the writers’ strike which affected demand on film and TV sets – seemed genuinely one-off in nature but there will be concerns about how robust America’s construction and infrastructure markets are right now,” he suggested.
But he thinks Ashtead’s scale and know-how in the US market which remains highly fragmented should be enough to help it shake off its recent woes.
Matt Britzman, equity analyst, Hargreaves Lansdown noted that despite “some near-term headwinds, demand for Ashtead’s construction equipment remains strong.”
“Fresh off the back of a rare earnings downgrade, it’s good to see a continued upbeat tone about the longer-term demand dynamics,” he added.
While it was a little unnerving to see revenue and profit guidance get cut a couple of weeks ago, more reassurances today on the underlying demand dynamics “were welcomed.”
He agreed that the North American market is key where Ashtead’s scale and expertise are a winning formula in a fragmented industry.
“There’s still a general feeling of positivity around the group, and next year’s strategy update should be the next major catalyst for movement in the valuation,” he added.
1.45pm: Here’s a recap of the risers and fallers on the market today
Shares of ValiRx PLC (AIM:VAL) surged by 23% after it was revealed its subsidiary, ValiSeek, had entered into an exclusive option agreement to license its VAL401 asset to Ambrose Healthcare, a private UK pharmaceutical company focusing on rare diseases and specialist care.
On the Beach Group (LSE:OTB) shares jetted 16% higher after the online tour operator reported profits ahead of forecasts and a record forward order book.
The highlight of discoverIE Group's interims was the improvement in the operating margin, according to a note from Stifel, the US investment bank. The market also appeared to share the US investment bank's optimism, with the shares up 15%
Shares of tinyBuild Inc, the video games publisher and developer behind 'Hello Neighbor', have fallen 35% as it sounded the alarm over revenues and cash and it said it may raise fresh investment.
Quiz PLC (AIM:QUIZ) shares dipped 15% to 5.9p in response to the fashion brand’s interim results.
Chaarat Gold Holdings Ltd (AIM:CGH) shares fell more than 17% as the company had to slash the price of a new funding round to get it away, even with the gold price at record highs.
1:12pm: IWG climbs as announces resumption of dividends
Shares in IWG PLC (LSE:IWG) are up 1.6% after it announced a resumption of dividends ahead of an investor day in New York.
The workspace provider that owns Regus said it is planning to restart “its progressive dividend policy” with a final dividend, expected to be 1p per share to be announced alongside 2023 fulkl-year results.
The company said presentations from IWG's management team will outline strategic priorities and prospects for the medium term.
Alongsided the resumption of dividends these include a medium-term ambition of $1 billion run-rate Ebitda, committing to additional capital returns to shareholders once net financial debt / Ebitda falls below 1x and presenting the business as three divisions - Managed and franchised, Company-owned, Worka.
IWG also confimed it will be moving its functional currency to US dollars as of 1 January 2024.
Back in August, Reuters reported IWG was considering moving its listing from London to New York.
12:34pm: CBI names Rupert Soames as next President
City veteran Rupert Soames will be the next president of the CBI, the scandal-hit UK business lobby group has announced.
Soames, chair of medical technology firm Smith & Nephew, will take over from Brian McBride, who has led the CBI through a tumultuous year during which a significant number of large companies cut ties with the group after allegations of serious sexual misconduct by staff.
BREAKING: Crisis-hit CBI turns to Smith & Nephew’s Soames as next president
???? Read morehttps://t.co/ADN2y2s1bw
— Sky News (@SkyNews) December 5, 2023
The CBI said Soames, a grandson of Winston Churchill and former chief executive of outsourcer Serco, would take part in a leadership transition “early in the new year” and would be formally elected by members at its annual meeting in June 2024.
12:04pm: Wall Street called lower ahead of jobs data
US stocks are expected to open as markets continue to give back some of November’s stellar gains.
In pre-market trading, futures for the Dow Jones Industrial Average were down 0.3%, while those for the S&P 500 0.4% lower and contracts for the Nasdaq 100 futures fell 0.6%.
Sentiment was knocked a decision from Moody’s to cut the Chinese credit outlook which raised concerns over the sustainability of the country’s fiscal pathway.
Joshua Mahoney at Scope Markets noted while they opted to leave the long-term credit rating for Chinese sovereign bonds at A1, the shift onto a ‘negative’ outlook highlights concerns that their current fiscal spending habits pose a risk to the economy.
“With China faced by a real estate crisis that undermines the recovery from a zero-covid world, this critical assessment of recent fiscal spending levels does raise concerns that any additional stimulus will be limited in nature,” he said.
Tuesday also sees the first of a number of economic releases on the US jobs markets starting with Jolts jobs vacancy figures which are expected to edge down to 9.3 million in October from 9.5 million in September.
Elsewhere, activity in the services sector is expected to have expanded for the 11th consecutive month in November.
The Institute for Supply Management’s non-manufacturing index is forecast to edge up to 52 in November from 51.8 in October, according to economists.
11:36am: Goldman likes British Land and Land Secs retail exposure
British Land and Land Securities continue to perform well in London, up 2.3% and 1.2% respectively.
In a wide-ranging sector review, Goldman Sachs (NYSE:GS) has upgraded Land Securities to 'buy' from 'neutral' and British Land to 'neutral' from 'sell'.
"We become more positive on their retail exposure in particular, as we expect in-place rents to recover from here alongside a lower cost of capital vs. other asset classes," the investment bank said.
The bank explained its economists are looking for a soft landing in the UK and Europe in 2024, and with inflation falling faster than expected, they see rate cuts from the second quarter of 2024.
"This will help maintain resilient operating trends for landlords, in our view, albeit with falling indexation; yet, higher interest rates should remain a headwind for some time," Goldman said.
Goldman said should rates be cut more rapidly than expected or deeper then this could have a positive impact on the real estate sector performance.
Goldman has moved Land's price target to 690p from 580p and British Land's target to 350p from 290p.
It has kept Hammerson at 'sell' with a price target of 15p, up from 12p, Segro at 'sell' with an increased price target of 680p frok 580p and Supermarket Income Reit at 'buy' with a target of 90p up from 85p.
11:21am: Car sales jump despite EV drop
Car sales rose sharply in November although registrations of battery-powered vehicles fell back compared to a year ago, figures showed.
The Society of Motor Manufacturers and Traders said there were 156,525 new car registrations last month, which is 9.5% more than in November 2022.
The UK new car market grew by 9.5% in November to reach 156,525 units
In the market’s best November for four years, registrations almost returned to pre-pandemic levels, down just 96 units (-0.1%) on 2019
Here are the top ten models for the monthhttps://t.co/LcV2Ktr7Zl pic.twitter.com/OwFksBFDru
— SMMT (@SMMT) December 5, 2023
It’s the strongest November for car sales in four years, and just 0.1% lower than in 2019, before the pandemic, the SMMT said.
Growth was driven entirely by fleet sales, as companies invested in the latest vehicles, with fleet registrations up more than 25% year-on-year, while sales to private sellers fell by 5.9%.
But sales of battery electric vehicles fell by 17% compared with November 2022, to 24,359, with three-quarters of these vehicles snapped up by fleet and business buyers.
10:47am: Qatari sale in Barclays 'unexpected' and timing 'odd'
Steve Clayton head of equity funds at Hargreaves Lansdown thinks Barclays shares have coped “ reasonably well” after the Qatari wealth fund dumped 361.7 million shares in the bank onto the markets after last night’s close.
He noted shares dropped just 2.4% after the “unexpected” placing despite traders having to swallow over £500 million of stock in a single gulp.
“With an upcoming strategy report due from Barclays, many in the markets found the timing of the deal a little odd. and suggested the Qataris are not optimistic about the bank’s plans,” he added.
10:18am: Private sector rebound suggests recession will be avoided
Gabriella Dickens at Pantheon Macroeconomics thinks the rebound in November’s composite PMI adds credence to her view that a recession will be avoided this year.
Admittedly, it still is consistent with activity barely rising in the fourth quarter but the headline index is more likely to rise further in December than drop back below 50, given that the future activity index increased in November and was only just below its long-run average.
In addition, she continues to think that S&P Global’s bespoke seasonal adjustment methodology is excessively weighing down the services PMI.
She estimates that the services PMI would have printed at 54.4 in November, not 52.3, if S&P had simply used the standard procedure for seasonal adjustment and made no discretionary tweaks of its own.
10:04am: Trading in small caps to resume, says LSEG
An update on the trading issues - The London Stock Exchange is to resume trading in its smaller cap shares after a trading halt that lasted almost half an hour.
FTSE 100 and 250 stocks were unaffected by the halt.
"We are now resuming trading on impacted instruments" the London Stock Exchange said. "Instruments will go into auction at 09:55 with uncrossing beginning at 10:15."
London Stock Exchange Is Hit By Third Outage Since October pic.twitter.com/7AerZwb5Wk
— Baron Investments (@baroninvestment) December 5, 2023
9:59am: London Stock Exchange investigating trading problems
The London Stock Exchange is currently investigating an issue impacting its trading/information system.
Currently only FTSE 100, FTSE 250 and IOB (international order book) securities are available for trading.
*LSE INVESTIGATING ISSUE WITH ITS TRADING, INFORMATION SYSTEM pic.twitter.com/8b6ftNDxbz
— Michael Brown (@MrMBrown) December 5, 2023
9:51am: UK private sector returns to growth in November
The UK private sector expanded for the first time since July, helped by an improving service economy, according to a report on Tuesday.
The S&P Global/Chartered Institute of Procurement & Supply UK services PMI index rose to 50.9 points in November, from 49.5 in October, above an earlier flash estimate of 49.5 points.
UK S&P Global/CIPS Services PMI Nov F: 50.9 (est 50.5; prev 50.5)
- S&P Global/CIPS Composite PMI Nov F: 50.7 (est 50.1; prev 50.1)
— LiveSquawk (@LiveSquawk) December 5, 2023
“Rising output reflected a slight rise in new orders, but survey respondents continued to report subdued demand and low confidence among clients,” S&P said.
“Service providers experienced another sharp increase in their average cost burdens, largely due to rising staff wages and elevated inflationary pressures across the broader economy,” the report continued.
Dr John Glen, chief economist at the Chartered Institute of Procurement & Supply said: "After three months of continuous contraction, the services sector began to show signs of life.”
He highlighted “the biggest rise in new orders since July and export orders since August,” while a softening in the headline rate of inflation and improved raw material prices “set the scene for some clients to commit to new work while the remainder stayed mostly cautious until there were stronger improvements in the UK economy.”
The wider composite PMI reading, calculated using a weighted average of the services and manufacturing data, rose to 50.7 points in November, from 48.7 in October.
It was the first time since July that the composite PMI has risen above the 50.0 mark.
9:20am: Moody's cut on China hits Asia-focused London stocks
The Moody’s downgrade on China has pushed Asia-focused stocks lower in London with Prudential down 2.3%, HSBC down 1.2% and Standard Chartered down 1.4%.
Commodity stocks are also lower on fears of lower demand from the world’s second largest economy – Anglo American is down 2.5% and Antofagasta down 1.2%.
Victoria Scholar, head of investment, interactive investor said: “China has struggled with a bumpier than expected post covid recovery.”
“It has been grappling with weak demand, an embattled property sector, declining imports and exports, and heavy debts from long-term infrastructure spending.”
"While the authorities have been attempting to bolster demand through stimulus measures, more needs to be done,” she felt.
8:56am: Moody's cuts outlook on China credit to ‘negative’
Also weighing on markets today is news that Moody's Investors Service has cut its outlook on China’s sovereign credit rating to negative, citing growing risks of persistently lower medium-term economic growth and the overhang of a property sector crisis.
The news sent the Shanghai Composite down 1.7%, while the FTSE 100 is holding near session lows.
The credit rating agency changed the outlook to negative from stable while affirming China's A1 long-term local and foreign-currency issuer and senior unsecured ratings and the (P)A1 foreign-currency senior unsecured shelf rating.
⚠️BREAKING:
*SHANGHAI COMPOSITE TUMBLES AFTER MOODY'S DOWNGRADES CHINA CREDIT OUTLOOK
???????????????? pic.twitter.com/ENyoLP1zWQ
— Investing.com (@Investingcom) December 5, 2023
“The change to a negative outlook reflects rising evidence that financial support will be provided by the government and wider public sector to financially-stressed regional and local governments and State-Owned Enterprises, posing broad downside risks to China's fiscal, economic and institutional strength,” Moody’s said.
The outlook change also reflects the increased risks related to structurally and persistently lower medium-term economic growth and the ongoing downsizing of the property sector, it said.
8:31am: Food inflation drops more with record Xmas sales forecast
Food price inflation fell again in November while the cost of a Christmas dinner is rising by less than the headline rate, according to latest figures.
Market research firm Kantar reported annual grocery inflation dropped to 9.1% in the four weeks to November 26, down from 9.7% a month earlier.
“The retailers are also battling it out to offer value to consumers during this important month for trading and are doing what they can to keep prices low,” said Fraser McKevitt, head of retail and consumer insight at Kantar.
In better news for shoppers, McKevitt pointed out the average cost of a frozen turkey Christmas dinner for four with all the trimmings, Christmas pudding and sparkling wine was up 1.3% at £31.71 with the prices held down by cheaper Brussels sprouts and Christmas pudding than a year ago.
Kantar predicts take-home supermarket sales will surpass £13 billion for the first time ever this December, with Friday December 22 set to be the busiest day for festive grocery shopping.
McKevitt said the scene is set for “record-breaking spend through the supermarket tills this Christmas.”
The two biggest supermarkets continued their fightback in the battle for market share last month, McKevitt said.
“Sainsbury’s delivered its largest market share gain in over a decade this November, taking an additional 0.4 percentage points to reach 15.6%. The last time it made this big a jump was in March 2013.”
Its growth was driven by the continued success of its own-label offer, with sales of its popular ‘Taste the Difference’ range up by a whopping 23% year on year.
Tesco also put in a strong performance to increase its market share to 27.5% following a growth in sales of 8.6%, marking the fifth month in a row that Britain’s largest retailer has made gains.
Lidl was again the fastest growing grocer, boosting sales by 14.2% to take a record high share of 7.8%, while Aldi increased sales by 11.1% and now holds 9.6% of the market.
Sales at Asda and Morrisons were up by 2.6% and 3.7% respectively, giving them 13.4% and 8.7% of the market each respectively.
Co-op’s share stands at 5.8%, while Waitrose accounts for 4.4% of the market.
Frozen specialist Iceland saw an increase in sales of 3.0% and growing ahead of the market, Ocado’s sales jumped by 12.1%, holding its market share steady at 1.7%.
8:12am: FTSE 100 lower as market lose some of "recent poise"
The FTSE 100 made a weak start to the day as investors continue to lock in profits after recent gains.
At 8:12am, London's blue-chip index was down 37.94 points, 0.5%, at 7,475.02 while the FTSE 250 was little changed at 18,366.17.
Jim Reid at Deutsche Bank said markets have lost a “little of their recent poise” over the last 24 hours.
“There hasn't been a specific catalyst for the softness, but the astonishing rally in November and long positioning has led to some scepticism about how much further it’s able to run, at least until we get some more data that’s soft-landing friendly,” he said.
“After all, even though markets are fully pricing in a Fed rate cut by the May meeting in just 5 months’ time, this isn’t the first time this year that rate cut speculation has built up,” he pointed out.
In the UK, retailers were in the spotlight following mixed signals from two closely watched surveys.
The British Retail Consortium-KPMG report showed UK retail sales increased by just 2.7% in November, a significant weakening on last November's 4.2%.
Paul Martin, UK head of retail at KPMG, said: "With less than a month to go and sales growth limping along, the cost-of-living crisis has taken its toll on Christmas spending for many households, and the continued economic conditions are testing consumer resilience.
But separate figures from Barclays showed consumer card spending grew 2.9% year-on-year in November – just up on October's 2.6% – as confidence in spending on non-essential items reached its highest level since April.
In company news, Barclays fell 3.1% after reports that Qatar’s wealth fund has sold nearly half the shares it holds in the lender.
Elsewhere, Land Securities rose 1.2% as Goldman Sachs (NYSE:GS) upgraded to ‘buy’ from ‘hold’ and raised its price target to 690p from 580p while British Land jumped 1.7% as Goldman upgraded to ‘neutral’ from ‘sell’ and lifted its price target to 350p from 290p.
7:46am: Qatar slashes stake in Barclays - reports
Qatar’s sovereign wealth fund is slashing its stake in Barclays, the UK bank that is coming under pressure from investors to overhaul its strategy and improve its performance, according to reports.
Qatar Holding, a subsidiary of the Qatar Investment Authority that helped bail out Barclays during the global financial crisis, launched the sale on Monday of almost 362 million shares, worth about £510 million, the Financial Times reported.
Qatar cuts stake in Barclays with £510mn stock sale https://t.co/0Llc4YJJFi
— Financial Times (@FT) December 4, 2023
The QIA is Barclays’ second-biggest shareholder, according to Bloomberg data, and the stock sale is expected to reduce its stake from 5.3% to 2.9%.
The bank is under presure to improve performance and last week announced it was cutting 900 back office jobs.
Reports also suggested the lender was looking at axing less profitable clients in its investment banking arm.
7:41am: Marston's posts full-year loss but sales rise
Marston's PLC reported Christmas bookings are well ahead of last year as in unveiled a jump in full-year sales.
The pub operator said in the 52 weeks ended 30 September total revenue climbed 9.1% to £872.3 million from £799.6 million the year before although it was not enough to prevent a pre-tax loss of £20.7 million compared to profit of £163.4 million before.
On an underlying basis, pre-tax profit advanced to £35.5 million from £27.7 million.
Like-for-like sales rose 10.1% compared to last year with both drink and food sales encouraging, demonstrating the trading resilience of the group's predominantly community pub estate.
Underlying operating margin were flat at 14.3%, preserving margins in a high inflation environment, the company said.
Marstons said current trading was positive, with like-for-like sales since year end up 7.4% compared to last year with Christmas bookings tracking well and ahead of last year.
The firm said it is targeting margin improvement of at least 200bps in the medium term and will continue to find efficiencies to improve margin.
7:26am: Ashtead delivers record first half despte recent warning
First up on Tuesday, results from Ashtead Group PLC (LSE:AHT) which has reported a record first half performance despite its recent warning that full-year profits would be below expectations.
The international equipment rental company said in the half year ended 31 October group revenue advanced 16% to $5.57 billion from $4.80 billion the year prior with US revenue up 18% and rental revenue up 14%.
The firm said investment during the period is enabling it to take advantage of substantial structural growth opportunities.
Despite the recent warning, Ashtead said its end markets in North America remain robust with healthy demand, supported in the US by the increasing number of mega projects and recent legislative acts.
“We are in a position of strength, with the operational flexibility and financial capacity to capitalise on the opportunities arising from these market conditions and ongoing structural change,” the company said.
Pre-tax profit grew 5% to $1.25 billion from $1.19 billion, adjusted earnings per share increased 6% to 225.8 cents from 212.2 cents while the interim dividend was hiked 5% to 15.75 cents from 15.0 cents.
7:00am: FTSE 100 seen lower after subdued US and Asian trading
The FTSE 100 is expected to open lower on Tuesday after falls in US and Asian markets.
Spread betting companies are calling London’s lead index down by around 32 points after closing down 16.39 points, 0.2%, at 7,512.96 on Monday.
In Asia, the Nikkei 225 was down 1.3% in late trade in Tokyo, while in China, the Shanghai Composite was 0.9% lower, and the Hang Seng in Hong Kong was 1.7% lower.
In New York on Monday, the Dow Jones Industrial Average fell 0.1%, the S&P 500 fell 0.5% and the Nasdaq Composite declined 0.8%.
In London, Barclays will be in focus after reports that Qatar has offloaded almost its shares in the UK lender while the latest BRC retail sales monitor will be examined ahead of the key Christmas trading period.
Later in the trading session, service sector PMI readings are due in the UK, Europe and US while the first of a number of releases on the US jobs market are due with the Jolts job vacancy report.