- FTSE 100 closes up 41 points at 7,554
- Anglo American slides amid production cuts
- US non-farm payrolls stronger-than-expected
4:54pm: FTSE ends week on a high note
The FTSE 100 ended the week higher after US non-farm payrolls for November came in better than expected and the dollar gained ground against the pound.
At the close, the blue-chip index was up 40.75 points, 0.54%, at 7,554.47 while the FTSE 250 gained 83.25 points, 0.45%, to 18,701.99.
"Markets in Europe are seeing yet another positive week with the DAX up for the 6th week in a row, while the FTSE100 is back at its highest level since 19th October, after the latest US jobs report came in better than expected and unemployment unexpectedly fell to 3.7%," commented CMC Markets' Michael Hewson.
"The German DAX has once again made another record high today, while the FTSE100 is being helped by a rebound in oil prices from 5-month lows which is helping to boost BP and Shell."
By the London close, the Dow Jones Industrial Average was flat at 36,113.81, the S&P 500 was 1.8 points lower at 4,583.79 and the Nasdaq was down by the same margin at 14,338.84.
3:49pm: Car makers face over 1m claims from emissions defects
Car manufacturers are facing more than 1.2 million compensation claims following allegations that "defeat devices" were fitted to diesel vehicles to get round emissions tests, judges in London have been told.
Four judges overseeing a High Court hearing on Friday heard Mercedes-Benz was facing more than 300,000 claims – and that manufacturers including Opel, Nissan, Jaguar Land Rover, Ford, Volvo, Hyundai, Toyota and Mazda were also among defendants in a "group" legal action.
Dame Victoria Sharp, Mrs Justice Cockerill, Mr Justice Constable and Senior Master Jeremy Cook are hearing legal arguments at a pre-trial hearing in Court 4 at the Royal Courts of Justice in central London.
Judges are considering issues relating to the timetabling of further hearings.
A barrister representing some claimants told judges that there were about 1,500 defendants once dealerships were included.
3:12pm: Marex to float in US in further blow to London
UK commodities broker and clearer Marex has filed confidential paperwork to list in the US, snubbing London after pulling a plan two years ago to list on its home stock market, according to the Financial Times.
The group said on Friday it is aiming to go public in New York after submitting the filing to the US Securities and Exchange Commission.
The targeted valuation is set to be between $2.2 billion and $2.8 billion, approximately three to four times more than its previous goal when Marex attempted to list on the London Stock Exchange in 2021, the FT said, citing people with knowledge of the discussions said.
2:45pm: FTSE 100 jumps as pound slips amid strong US jobs report
The FTSE 100 has jumped to its best levels for the day as the pound fell back after the strong US jobs report - boosting the dollar earners in the index.
In the US, markets opened modestly lower after a strong jobs report although economists remain of the view that interest rates will be cut in the first half of 2024.
Shortly after the opening bell, the Dow Jones Industrial Average was down 8.48 points at 36,108.90, the S&P 500 was down 5.06 points, 0.1% at 4,580.53 and the Nasdaq fell 50.30 points, 0.4%, at 14,289.70.
Paul Ashworth, chief North America economist at Capital Economics explained the 199,000 increase in November’s payroll included 47,000 workers returning from strikes - 30,000 UAW members and 17,000 SAG Aftra members.
Stripping out that one-off boost, the 152,000 gain was roughly the same as the muted increase in October with 49,000 of that total government jobs and a further 77,000 in health care.
He said excluding those non-cyclical sectors, the economy added only 26,000 jobs, which adds to the evidence that, after a very strong third quarter, growth is slowing to a crawl in the fourth quarter.
Trend employment growth, particularly in cyclical sectors, continues to weaken, but there are few signs of any labour market capitulation, he said.
“We expect the economy to narrowly avoid a recession. But, with core inflation rapidly normalising, the Fed will pivot to rate cuts next spring,” he added.
Ian Shepherdon at Panthen Macccroeconomics said the report “won’t change the Fed’s decision next week; they’re done with raising rates.”
“But the dip in the unemployment rate makes it even more likely that Chair Powell will resist pressure to abandon his view that the Fed is prepared to hike again if necessary.”
“And he will again push back on the idea that the Fed will be easing soon, though we remain of the view that they will start cutting rates by May at the latest,” Shepherdon felt.
1:46pm: US jobs report stronger-than-expected
US stocks futures have slipped after a stronger-than-expected jobs report which showed the labour market remains robust despite high interest rates.
The US economy added 199,000 jobs in November, ahead of consensus expectations for a rise of 180,000, while the unemployment rate edged down to 3.7% compared to the 3.9% forecast, figures released showed.
US Change In Nonfarm Payrolls Nov: 199K (est 183K; prev 150K)
- Unemployment Rate Nov: 3.7% (est 3.9%; prev 3.9%)
- Avg Hourly Earnings (M/M) Nov: 0.4% (est 0.3%; prev 0.2%)
- Avg Hourly Earnings (Y/Y) Nov: 4.0% (est 4.0%; prev 4.1%)
— LiveSquawk (@LiveSquawk) December 8, 2023
The US Bureau of Labor Statistics reported job gains occurred in health care and government, and employment also increased in manufacturing, reflecting the return of workers from recent strikes.
Employment in retail trade declined.
The figure for October remained at 150,000 but September’s total was revised down by 35,000, from 297,000 to 262,000.
Average hourly earnings rose by 12 cents, or 0.4% percent, in November from October taking the increase over the past 12 months 4.0%.
Economists had predicted a 0.3% monthly increase.
1.30pm: Here’s a quick look at the risers and fallers on the market today
Anglo American remains the biggest faller in the FTSE 100, down 7.1% after forecasting a 4% cut in production in 2024 with a further 3% reduction in 2025.
Anglo also said it will reduce expenditure by another $500 million next year, doubling an existing target.
The Artisanal Spirits Company PLC (AIM:ART) tumbled 15% as the Scotch malt whisky supplier warned that sluggish sales in China and of a 50th-anniversary cask would mean revenues undershooting targets.
Landore Resources Ltd (AIM:LND) shares dived 40% after it pulled a C$5 million (£3 million) share issue, saying market conditions have led to "significant fundraising challenges" in the four weeks since it was announced, forcing it to postpone its proposed dual listing in Canada.
Sainsbury continues to forge ahead, up 3.4%, on the back of the upgrade by Goldman Sachs (NYSE:GS).
Analyst Richard Edwards has upgraded the food retailer to ‘buy’ from ‘neutral’ and increased its share price target to 350p from 305p.
Polarean Imaging PLC (AIM:POLX, OTC:PLLWF) added another 13% after hailing the receipt on Thursday of its first de novo order for its XENOVIEW polariser from a top-tier academic medical centre in the US north-east.
1:02pm: CMA to probe Microsoft's partnership with OpenAI
Britain’s competition watchdog has announced it is investigating the partnership between Microsoft and OpenAI, following the shake-up at the artificial intelligence pioneer.
The Competition and Markets Authority is considering whether Microsoft’s partnership with OpenAI is effectively a merger, and whether the situation could result in a substantial lessening of competition within the UK.
The CMA said:"There have recently been a number of developments in the governance of OpenAI, some of which involved Microsoft."
"In light of these developments, the CMA is now issuing an ITC to determine whether the Microsoft / OpenAI partnership, including recent developments, has resulted in a relevant merger situation and, if so, the potential impact on competition."
12:34pm: Bank of America sees FTSE 1,000 points lower by end-24
Bank of America predicts the FTSE 100 could slip by around 1,000 points by the end of 2024.
The investment bank made the claim in a European equity strategy update in which it remains underweight on the UK.
It takes this view given its projection of energy underperformance.
BofA pointed out the UK has been the weakest major country performer this year, underperforming the broader European market by 8%.
This has been driven by double-digit European energy sector underperformance in response to a fade in the oil price (with the sector a key overweight in the UK index) plus the strength of the pound on the back of UK inflation concerns (which weighs on the export-orientated UK equity market).
Despite the recent fall in oil prices, BofA expects 10% further energy underperformance by the middle of next year, given scope for further oil price weakness on softening global growth.
This points to 3% further downside for UK’s price relative over the coming months, even adjusting for the downside BofA sees for European cyclicals versus defensives (a boost for the UK, given its mildly defensive sector skew).
In combination with its expectations for 10% downside for Europe by the end of next year, this implies 13% downside for the FTSE 100 to 6,550 by end-2024.
BofA sees the DAX at 15,400 by end-2024 and is ‘equal weight’ on Germany as a whole, but is ‘underweight’ France, Spain and Italy.
It is ‘overweight’ on Switzerland.
12:07pm: US futures flat ahead of US jobs report
US futures suggest a subdued start to trading in New York but that could all change with the US jobs report to come before the opening bell.
In pre-market trading, futures for the Dow Jones Industrial Average were flat, while those for the S&P 500 were down 0.1% and contracts for the Nasdaq 100 futures declined 0.2%.
The US economy is expected to have added 180,000 jobs in November, up from 150,000 in October, although other indicators this week have pointed to a softening jobs market.
"The fact that the data released earlier this week hinted at a clear loosening in the US jobs market makes many investors think that today's official data will also follow the loosening trend. If the data is soft enough, the rally in the US bonds could continue," said Ipek Ozkardeskaya at Swissquote Bank.
ING explained payrolls day is usually “pivotal,” with this one “more than most.”
It pointed out that average payrolls in the past few decades have been 130,000 per month and anything below these numbers would be “weak”, as it would begin to signal a growth recession.
“Whatever happens, it will set the scene for the week ahead,” ING said, noting the Federal reserve meeting next week.
Goldman Sachs (NYSE:GS) has taken a more bullish view than consensus estimating non-farm payrolls will rise by 238,000 in November, above consensus and reflecting a 200,000 underlying gain plus a 38,000 boost from the return of striking workers after the end of the United Auto Workers and Screen Actors Guild strikes.
11:42am: Oil price close to six-month lows on demand nerves, bumper supply
Oil prices traded around six-month lows on Friday, with the talk of $100/barrel seeming a distant memory.
Brent crude is trading around $75/barrel while West Texas Intermediate has pushed back above $70/barrel after falling below earlier this week.
The reversal in fortunes has followed a marked change in both supply and demand expectations for oil as concerns over economic growth mount and US oil production hits record levels.
Opec had hoped that production cuts would support the oil price but the voluntary nature of the reductions left the market unsure whether they would happen.
Concerns over demand have risen as growth in China has stalled and looks set to slow in the US.
Moody’s this week lowered its outlook on China and nerves surrounding the country’s property sector continue to undermine sentiment.
Meanwhile, the US economy looks set to cool after its stellar growth in the third quarter suggesting demand for oil from the two biggest economies in the world could drop.
This comes at a time when US oil production has hit a fresh all-time high of 13.2 million barrels a day in September, according to figures from the US Energy Information Administration.
The falls have been pronounced since OPEC+ announced a combined 2.2 million barrels per day in voluntary output cuts for the first quarter of next year.
Fiona Cincotta, senior financial market Analyst at City Index said the “voluntary element of the deal left the markets questioning whether the supply reduction would actually come into effect.”
The oil price has seen support today after Saudi Arabia and Russia, the two biggest oil exporters, called for all OPEC+ members to join an agreement on output cuts for the good of the global economy.
Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman met on Wednesday to discuss further oil price cooperation, while OPEC+ member Algeria said it would not rule out extending or deepening oil supply cuts.
JPMorgan sees $70/barrel Brent as the lower end of the price range and believes OPEC unity remains intact.
It said that if Saudi Arabia were to return the 1 million barrels per day production cuts in 2024, “it won’t be due to group tensions but rather strong demand.”
Looking at oil major share prices, JPM said: “We believe periods of elevated volatility in 2024 offer long-term investors a unique buying opportunity.”
It estimated the oil majors share prices currently discount around $65/barrel Brent which makes “us buyers of dips led by OPEC policy and/or looser near-term balances on supply upside.”
Its key European picks Eni, Shell, Total and Neste – all rated ‘overweight’.
BP continues to be rated ‘underweight’.
10:52am: Anglo American production cuts mean lower earnings
Anglo American remains the biggest faller in the FTSE 100, down 7.1%.
Russ Mould at AJ Bell said the lower output also means lower earnings and cash flow and potentially less generous returns to shareholders too.
He thinks the scale of Anglo American’s cuts may also have come as a bit of a shock to the market, and they suggest incoming finance director John Heasley may look to keep a tight rein on the purse strings when he takes over from Stephen Pearce at the end of the year.
“The company also faces the challenge of a mounting debt pile and its somewhat patchy operational performance means it may not be awarded a huge amount of patience by the market,” Mould suggsted.
The silver lining, Mould said, was that a significant number of its peers have done the same – particularly for metals like platinum, rhodium and palladium.
He explained that so-called ‘PGM’ metals are used in diesel and petrol combustion engines to limit exhaust emissions and therefore face declining demand as the shift towards electric vehicles continues.
10:18am: Inflation expectation falls to two-year low, Bank of England
Expectations for price growth in the year ahead fell to the lowest level in two years last month, supporting the view that the Bank of England will not need to raise interest rates at its meeting next week
The average expectations of the rate of inflation over the next 12 months dropped to 3.3% in November, down from 3.6% in August, well below the 4.9% reported in the summer of last year, a survey from the bank showed on Friday.
It was also the lowest figure since November 2021, and comes ahead of the BoE’s monetary policy meeting on December 14, when markets expect the rate will be kept at 5.25%.
9:50am: Jobs market slows in November amid weak economic outlook
A weak economic outlook and greater caution among employers dampened recruitment during November, according to the latest KPMG and REC, UK Report on Jobs survey, compiled by S&P Global.
The report showed a sharper fall in permanent staff appointments combined with a fresh decline in temp billings, to signal a broad-based reduction in hiring activity, while vacancies fell slightly for the second time in the past three months.
#ReportonJobs signalled that starting salaries for permanent staff moderated again during November. The latest increase in permanent pay was the softest seen in 32 months and slipped below the series long-run average. Read the more here: https://t.co/a1LnayseOF pic.twitter.com/M8V8dvpOPj
— Recruitment & Employment Confederation (@RECmembers) December 8, 2023
Meanwhile, the numbers of job seekers rose at the quickest pace since December 2020, with recruiters widely linking this to redundancies and workers concerned over current job security.
At the same time, pay pressures receded again in November with rates of starting salary and temp pay inflation slipping to 32- and 33-month lows, respectively.
London recorded by far the steepest reduction in permanent placements of all four monitored English regions. The Midlands was the only area to see an increase, albeit one that was mild overall.
Claire Warnes, partner, Skills and Productivity at KPMG UK, said: “Employers are reining in hiring and continuing with redundancies in response to the sustained economic slowdown.”
9:25am: Rolls-Royce motors again, UBS and Deutsche target 400p
Rolls-Royce Holdings PLC (LSE:RR.) is enjoying another good day, with shares up 1.3% as two brokers, UBS and Deutsche Bank, raised their price target to 400p.
Deutsche's change came in a sector review, in which it also increased the share price target for BAE Systems - it rates both stocks at 'buy'.
UBS explained its move to 400p from 350p before reflected the 2027 guidance provided at the Capital Markets Day.
It noted the shares offer 6% free cash flow yield compared to Safran c4.5%, a valuation spread which "is narrow for such a turnaround story."
It sees longer term upside to cash flow estimates given 2027 civil margin guidance at 15-17% remains below peers at 18-22% and a clear series of positive catalysts in the coming months which could drive further performance.
9:02am: Sainsbury on Goldman's shopping list, ups to 'buy'
Sainsbury continues to forge ahead, up 3.4%, on the back of the upgrade by Goldman Sachs (NYSE:GS), with more details below.
Analyst Richard Edwards has upgraded the food retailer to ‘buy’ from ‘neutral’ and increased its share price target to 350p from 305p.
Edwards takes a constructive of the sector expecting a rational UK food market given discounters are still inflating above the market and investing internationally and Asda/Morrisons continue to “donate” share.
He explained Sainsbury’s has strengthened its positioning through the year, with Goldman’s proprietary price analysis indicating that it has closed the price gap versus Aldi, becoming the second of the Big 4 to do so.
“Consequently, Sainsbury’s has seen strongly improving market share momentum, with recent market share gains outpacing Aldi,” he noted.
A focus on cost efficiency and retail cashflow over the pandemic period has allowed Sainsbury’s to deleverage significantly, which potentially provides the opportunity for greater cash return going forward, Edwards thinks.
All this leads Goldman to raise its second half 2024 and first half 2025 grocery sales growth estimates to 6.5% and 4% (from 5%/3% previously) and its mid-term retail sales growth assumptions to 2% from 1.5%.
It also increased 2024 and 2025 retail free cash flow forecasts by 3% and 4% to £626 million and £548million respectively.
8:44am: Stocks climb, Anglo American down 7% amid production cuts
The FTSE has pushed higher, up 19 points at 7,533, despite a large fall in Anglo American.
The miner is down 7.0% after forecasting a 4% cut in production in 2024 with a further 3% reduction in 2025 before a 4% rebound in 2026.
Anglo also said it will reduce expenditure by another $500 million next year, doubling an existing target.
Berkeley’s results have dragged other housebuilders lower, with Barratt Developments and Taylor Wimpey down around 1.0%.
RBC has reduced its price targets across the board for the sector and cut estimates for site numbers.
“We continue to believe that the UK housing market will pick up, but our analysis suggests that when it does the housebuilders may not have enough sites in play to keep pace,” the broker said.
Imperial Brands was another stock in the red as RBC downgraded to ‘sector perform’ from ‘outperform’ and cuts its price target to 1,800p from 2,200p.
8:12am: Subdued start in London ahead of US jobs report
The FTSE 100 made a muted start to a trading session which will dominated by the US jobs report, a key indicator ahead of a raft of central bank meetings next week.
At 8:15am, London’s blue-chip index was up just 2.05 points at 7,515.77 and the FTSE 250 was little changed at 18,617.51.
The US economy is expected to have added 180,000 jobs in November, up from 150,000 in October, although other indicators this week have pointed to a softening jobs market.
"The fact that the data released earlier this week hinted at a clear loosening in the US jobs market makes many investors think that today's official data will also follow the loosening trend. If the data is soft enough, the rally in the US bonds could continue," said Ipek Ozkardeskaya at Swissquote Bank.
ING explained payrolls day is usually “pivotal,” with this one “more than most.”
It pointed out that average payrolls in the past few decades have been 130,000 per month and anything below these numbers would be “weak”, as it would begin to signal a growth recession.
“Whatever happens, it will set the scene for the week ahead,” ING said, noting the Federal reserve meeting next week.
In company news, Berkeley Group fell 1.5% after its half-year earnings which Peel Hunt said contained “no surprises.”
“With current consensus forecasts of nearly £1.6bn over the FY24-26 period and the new guidance, we expect to make limited changes to our forecasts post these figures”, the broker said.
Stocks on the move include J Sainsbury, up 2.5%, after Goldman Sachs (NYSE:GS) upgraded to ‘buy’ from ‘neutral’ and raised its price target to 350p from 305p.
Rolls-Royce was in demand once more, up 0.9%, after Deutsche Bank increased its price target to 400p and 310p and BAE Systems advanced 0.8% as the same broker lifted its price target to 1,290p from 1,220p and kept a ‘buy’ rating.
7:46am: IG names former Paddy Power and Betfair boss as new CEO
Talking of Paddy Power, IG Group Holdings Plc (LSE:IGG) has appointed former Paddy Power and Betfair boss, Breon Corcoran, as its new chief executive.
The spread betting outfit said Corcoran will join the group on January 29 2024 and will be a member of the board, concluding a “comprehensive global search process”.
Charlie Rozes remains as interim CEO and group CFO until Breon joins, at which point he will continue as group CFO and a member of the board.
IG said Corcoran has extensive experience leading multinational fintech companies and was CEO of payments company WorldRemit until 2022 and before that CEO of FTSE 100 company Paddy Power Betfair until 2018.
He began his career as a derivatives trader at Bankers Trust and JP Morgan.
IG Chair Mike McTighe said Corcoran is “a proven leader of high performing teams within multinational organisations, with an ability to deliver results for all stakeholders.”
7:37am: Flutter Entertainment confirms US listing date
Also this morning, Flutter Entertainment PLC (LSE:FLTR), the owner of Paddy Power and Betfair, said its shares will make their debut on the New York Stock Exchange on January 29 as part of its long-awaited US listing.
The move underlines the growing importance of its American asset base, specifically its sports book operation FanDuel.
It may also help raise the profile for the stock but also will likely enhance Flutter's valuation as new shareholders flock to invest.
It said its listing on the London Stock Exchange and membership of the FTSE 100 will remain unaltered
7:34am: Berkely Group on track amid softening market
Berkeley Group Holdings PLC (LSE:BKG) said it was on track to meet guidance for 2024 and 2025 despite softening market conditions.
But the housebuilder said that trading conditions and the operating environment remain “volatile and unsupportive of investment”, and it will focus on its existing sites as opposed to new investment.
It said it was not currently investing in new developments due to the planning and regulatory environment.
In the half-year to October 31, Berkeley said revenue was little changed at £1.19 billion, pre-tax profit rose 4.6% to £298.0 million from £284.4 million while EPS dipped 1.0% to 198.3p from 200.4p.
The dividend was more than doubled to 59p from 21p and the firm said it was on target to deliver £283 million (267p) of shareholder returns by end-September 2024.
The company said if it not recommence capital investment opportunities by April 30 2027, it anticipates returning around 100% of the profit after tax earned over this period to shareholders, while at the same time maintaining its 15% pre-tax return on equity ROE target.
Berkeley extended earnings guidance extended by a year to cover the three years ending 30 April 2026, over which period it is targeting to deliver at least £1.5 billion of pre-tax profit (previously £1.05 billion in two years to 30 April 2025).
It said the value of net reservations during the period is one third lower than the comparative financial year, reflecting the sharp increase in interest rates and the ongoing elevated political and macro volatility.
Sales pricing is firm and above business plan levels, with build cost inflation across most trades at negligible levels, it added.
7:00am: FTSE 100 called higher ahead of US jobs report
The FTSE 100 is expected to make a bright start on Friday ahead of a key print on the US jobs market.
Spread betting companies are calling London’s blue-chip index up by around 18 points after closing down marginally - 1.66 points at 7,513.72 on Thursday.
Investors are eyeing the US non-farm payroll report, which will give further clues ahead for the direction of interest rates ahead of next week’s Federal Reserve meeting.
Friday's jobs report is expected to show that non-farm payrolls rose to 180,000 last month, from 150,000 in October.
In the US on Thursday, markets made steady progress, closing in the green, although in Asia markets were mixed.
The Nikkei was 1.7% lower after data showed the Japanese economy contracted by 0.7% in the third quarter, revising a preliminary estimate that it shrank 0.5%.
Back in London, and the early focus will be half-year numbers from housebuilder Berkeley Group.