- FTSE 100 drops 18 points
- London stock market exodus worsens
- Rio Tinto faces activist pressure
4.05pm: FTSE still on its own in the red, as AZ weighs
The FTSE 100 is slipping lower as the session tails off.
With less than half an hour to go, the London benchmark is down 24 points at 8,335.
AstraZeneca, the biggest company on the index, is the biggest faller, down just under 3%.
The drugmaker flagged the appointed of a new 'executive vice president-international', a role that was previously occupied by Leon Wang, who also serves as the head of China and is currently in detention and under investigation in the country, with details of the inquiry remaining undisclosed.
Also today, HSBC reduced its target price for AZN from 14,070p to 13,720p, while still maintaining a 'buy' rating.
Meanwhile, the FTSE 250 is up 0.5%, which is slightly more in line with the gain seen on the continent, with France's CAC up 0.7% and Germany's DAX up 1%.
3.40pm: US services sector growth softens
Growth in the US services sector eased last month, according to the ISM survey, but price inflation remained elevated.
The ISM services index dropped to 52.1 for November from 56 the month before, and well below the 55.5 expected.
“Fourteen industries reported business activity growth, and 13 indicated new orders expansion; both figures are improvements compared to October,” said ISM survey chairman Steve Miller.
“This reinforces the view over the last several months that the services sector has returned to sustained growth,” he added in a statement.
Economist Ruben Gargallo Abargues at Capital Economics said the fall in the main index back to levels last seen in August is "not too concerning" as it was driven partly by a slump in the supplier deliveries index.
The prices paid index was little changed at 58.2, which Gargallo said was "still somewhat elevated reading is unlikely to be welcomed by the Fed, as it is potentially another sign that the downward trend in PCE supercore inflation has stalled".
US stocks are continuing to march higher, led by the Nasdaq, which is up another 0.9%
2.49pm: Wall Street opens higher
US stocks have started higher, led by big tech.
The S&P 500 has gained 0.3% in early trades, while the Nasdaq Composite is up 0.6%.
The Dow Jones is up 0.6% too, while the Russell 2000 is down 0.4%.
Back in Europe, the FTSE 100 is down 0.2% and the FTSE 250 is up 0.5%, with Germany's DAX and France's CAC rising 1% and 0.9% respectively.
1.50pm: OECD tweaks forecasts as global inflation expected to linger
Global interest rates, including in the UK, are likely to fall more slowly than expected, the OECD said today.
It warned central banks against cutting interest rates too fast due to the threat from persistent services sector price inflation.
The Paris-based body forecast that the UK's Autumn Budget will boost the economy in the short-term, but tax and spending measures will likely to lead to the Bank of England being slower in cutting interest rates, though it forecasts over the coming year the base rate will ease to 3.5% by early 2026 from 4.75% now.
This is pretty much what other economists have been saying.
The OECD changed its forecast for the UK economy, cutting its 2024 growth expectations to 0.9% from 1.1%, but upped its prediction for 2025 to 1.7% from 1.2%.
Chancellor Rachel Reeves said "growth is our number one priority" and noted that the UK is forecast to be the "fastest-growing European economy in the G7 over the next three years".
1.17pm: PMI survey showed 'overreaction' of firms
The earlier PMI survey is likely to be painting a gloomier picture of the reality for Britain's private sector, says Matt Swannell, chief economic advisor to the EY ITEM Club.
The survey signalled a much weaker pace of services sector activity growth than in October, with the PMI falling to 50.8, down from 52.0, but well above the 'flash' preliminary survey from midway through the month.
"The survey data can be volatile and has been a relatively questionable leading indicator of GDP growth," says Swannell, adding that PMI results can be "heavily affected by swings in business sentiment, and don't always show genuine trends in activity".
With November's survey being the first since the Autumn Budget, he says the EY ITEM Club view is that "sentiment is likely to have played an outsized role in driving today's results" and there "is still a good chance that quarterly GDP growth is a bit stronger in Q4 than Q3".
However, the reported further increases in costs and prices growth, the historical correlation with official data for services inflation is "relatively poor" but the club still expects no changes from the Bank of England in two weeks' time.
Rob Wood at Pantheon Macroeconomics agreed that the PMI surveys tends to "overreact to political events and uncertainty", and he said worries about Donald Trump’s tariff hikes are also likely to have affected the mood.
He took encouragement from the 0.6-point upward revision since the flash release, "which suggests firms responding to the survey after November 20 were more positive than those answering earlier".
Wood expects the BoE to "look through" but remain cautious, "cutting interest rates only gradually next year as they try to complete the job of returning inflation sustainably to target". We expect three 25bp rate cuts from the MPC next year, with the first in February.
12.32pm: Nasdaq, S&P 500 set to climb again after closing records
Wall Street looked set for a bright start to the day after both the S&P 500 and Nasdaq notched up record closing values on Tuesday.
Futures had the Nasdaq and S&P 500 adding 0.6% and 0.3% respectively to build on the record highs, while the Dow Jones was seen up 0.5%.
Figures on Tuesday had shown an increase in job openings through October, with Wednesday’s ADP payrolls data set to bring further focus on the jobs market.
“Markets will be looking for signs of economic strength to build on the perception that the country is moving into a phase that will see businesses boom under Trump’s Presidency,” Scope Markets analyst Joshua Mahony commented.
Company-wise, GameStop Corp and Synopsys Inc were among those in line to report on Wednesday.
12.02pm: LSE faces most exits in 14 years as Rio Tinto faces pressure to depart
The exodus of companies leaving the London Stock Exchange has hit a 14-year high as Rio Tinto PLC became the latest to face pressure from investors over a move.
Some 45 firms have ditched their listings in London this year, marking the highest level since 2010, according to Bloomberg compiled figures.
FTSE 100-listed Rio Tinto is the latest to face pressure from activists to abandon its primary London listing, while there has been a string of departures for various reasons as London struggles to cling to its position as an attractive destination for companies.
Along with several small and micro-cap firms that say the costs outweigh the benefits, takeovers have also seen gaming firm Keywords Studios, cybersecurity business Darktrace and Virgin Money delist this year, with Royal Mail owner IDS’ and Britvic’s takeovers being others heading for the exit door.
Rio Tinto’s departure would mark a major blow for London, with the miner’s £84.1 billion market capitalisation placing it among London’s largest companies.
Rio Tinto climbed 0.9% on Wednesday.
10.59am: Private sector avoids contraction but suffers worst performance in 13 months
Britain’s private sector suffered its worst performance in 13 months in November, revised figures on Wednesday showed.
S&P Global’s composite purchasing managers index (PMI) fell from 51.8 to 50.5 between October and November.
Though an improvement on the initial flash reading of 49.9, which, at below 50.0, signalled contraction, the figure still suggested the weakest month for firms in over a year.
S&P economics director Tim Moore noted concern around growing employment costs in the wake of October’s Budget had largely led the a “gloomier” outlook among businesses.
Analysts added the revised figure, based on responses taken later in the month, were “encouraging” though.
“[It] suggests firms responding to the survey after November 20 were more positive than those answering earlier,” Pantheon Macro said.
“The PMI tends to overreact to political events and uncertainty [...] and consistent with that, the further we get from the Budget and US election the less firms’ sentiment is hit.”
10.44am: Vodafone exits stake in Indus Towers to cut debt
Vodafone PLC has announced the sale of its remaining stake in India’s Indus Towers.
Some 79.2 million shares in the telecommunications infrastructure firm, equating to 3% of Indus’ issued capital, will be offloaded through a placing, Vodafone said on Wednesday.
Proceeds will be used to pay off around $101 million (£79.7 million) worth of debt secured against Vodafone’s Indian assets to existing lenders.
Residual proceeds are then to go to a capital raise, with which Vodafone said outstanding master services agreements owed to Indus would be paid off.
10.04am: Festive petrol prices stoop to three-year low
Petrol and diesel prices have hit their lowest since in three years in the run-up to Christmas, figures showed on Wednesday.
According to the RAC, average petrol prices last month were 10.5p cheaper than a year ago at 136.5p a litre, while diesel was down 12p at 142.25p in the meantime.
Fuel prices had stooped to their lowest since the lockdowns of the Covid-19 pandemic as a result, the RAC noted.
“Heading up to the most expensive time of year for families, it’s good to see that this Christmas is set to be the cheapest for fuel since the pandemic,” RAC policy head Simon Williams commented.
“This is great news for people making long festive journeys to visit friends and families as it should save them around £6 on a tank of fuel compared to last year”... Read more
9.05am: Blue chips down, mid-caps up
While the FTSE 100 is down, the mid-cap FTSE 250 has climbed 50 points or 0.2% to 20,943.
Top of the leaderboard there are Victrex and SSP, on the back of updates from earlier in the week.
Notable fallers include Zigup PLC, the former Redde Northgate corporate vehicle hire group, which reports first-half profits down 17% due to disposals.
Analysts at Peel Hunt this this is "in line and as expected" , with "no major surprises in the segmental detail" and the outlook remains unchanged, with management's tone "slightly more confident, with demand remaining robust across the business and normalising vehicle supply".
Me Group International PLC, the former Photo Me that has branched out into laundry machines, is down 5.8% after saying it expects PBT to be up 10% to record levels this year, having installed 1,111 laundry units.
8.41am: Rio Tinto faces pressure to abandon dual listing
Shares in Rio Tinto PLC are down and so are other big miners.
But there is a report on the FT that activist investor Palliser Capital has written a letter to the board, calling for the company to abandon its primary London listing.
Following up on demands it first made earlier this year, the hedge fund is pushing for dual-listed Rio to follow rival BHP Group Ltd (LSE:BHP, ASX:BHP) and unify its corporate structure in Australia, as it has been an "unmitigated failure" that has deprived shareholders of $50 billion in value.
Rio has put out three RNS releases this morning, one of which is to flag its investor seminar in London, where it will provide "updates on its strategy of investing for a stronger, more diversified and growing portfolio to ensure the long-term delivery of attractive shareholder returns".
CEO Jakob Stausholm said: "We have all the building blocks we need to become a global leader in energy transition materials, and we have a clear plan for a decade of profitable growth."
7.15am: FTSE opens in red
The FTSE 100 has opened in the red, the only one of the major European indices.
In early trades, the London index has dropped 20 points or 0.2% to 8,339.
Drug giants AstraZeneca and GSK are among the main fallers, with National Grid and other utilities too.
Legal & General Group PLC (LSE:LGEN) is top riser, up 2% on the back of an announcement on bulk annuities.
7.59am: Global markets summary
"If anyone thought that political risk would settle down in the final weeks of 2024, they were wrong," says Kathleen Brooks, research director at XTB, summing up a strange 24 hours in South Korea.
As mentioned here yesterday, the president declared martial law to to avoid impeachment from the opposition, then following a tussle with special forces, Korean MPs entered parliament and voted to lift the martial law and all restrictions imposed, then the President issued a decree to end the martial law that he had imposed only a few hours earlier.
The Korean won fell more than 1.7% versus the US dollar overnight, electronics behemoth Samsung fell 1% and the Kospi index fell nearly 1.5%, while defence stocks in Japan rose this morning.
"Analysts are also pointing out that events in South Korea are a problem for the US. South Korea is a staunch US ally and a key democracy in the Asia region. However, after Tuesday’s subversion of the democratic process, can the US rely on South Korea at the same time as China is flexing its muscles in the region, and propping up North Korea?" wonders Brooks.
While the diplomatic ramifications could be wide ranging, she notes that the market reaction "could be mild, as investors have become adept at pricing in political risk", as shown by the won clawing back earlier losses.
Brooks notes that France is now in focus again, with "crunch day" for Michel Barnier’s government, as the no-confidence vote is expected to take place later.
On US stocks, Brooks says the ADP private sector payrolls report later not have a strong correlation with Friday's all-important non-farm payrolls report.
"As we lead up to the crucial payrolls report, the mid-cap stock market rally in the US has taken second fiddle to the larger blur chip index. The Russell 2000 fell 0.7% on Tuesday.
"We think that this is a sign that risk aversion is creeping in as we lead up to the crucial payrolls report and as fresh geopolitical risks arise in the East."
7.48am: Costain wins £400m HS2 contract
Costain Group PLC (LSE:COST) has won a new seven-year contract for the HS2 rail project that it said will be worth a minimum of £400 million and starting in the first quarter of next year.
This contract has the option for additional contract extensions after the seven-year period.
The construction group will be the sole supplier of tunnel and lineside mechanical and electrical (M&E) systems for HS2, designing, suppling, manufacturing, installating, testing and commissioning the systems during construction.
7.29am: EDF and Centrica and EF
British Gas owner Centrica PLC (LSE:CNA), whose shares were up yesterday on no apparent news, says around nine terawatt hours (TWh) will be added to its electricity generation volumes between 2026 and 2030 after the decommissioning of four EDF-run nuclear power stations was pushed back.
The advanced gas-cooled reactor (AGR) power stations, which EDF runs but Centrica has a 20% stake, have been given lifetime extensions following a review process to see if they could continue providing energy without compromising safety.
Two, Heysham 1 and Hartlepool, have been given one-year extensions to March 2027, with two extra years for Heysham 2 and Torness out to March 2030.
7.16am: FTSE expected to start lower
The FTSE 100 is expected to fall sharply on Wednesday morning, though market worries about Korea seemed to dim overnight, and Wall Street finished higher.
Futures for the London benchmark point to a 36-point decline at the open, after the index gained 46.5 points to close at 8,359.4 yesterday.
US stocks were mixed overnight, with the Nasdaq rising 0.4%, the S&P 500 finishing just above flat and the Dow Jones dropping 0.2%.
Asian markets are also mixed, with India's Sensex, Japan's Nikkei and Hong Kong's Hang Seng all up between 0.1% and 0.2%, but the Shanghai Composite down 0.4%.
Oil prices are creeping higher, with Brent nearing $74 a barrel on news that the US will impose more restrictions on Iranian oil exports and on chatter that OPEC is getting closer to delaying its plans to restore production by another three months.
"The decision announcement is due tomorrow. The short-term risks remain tilted to the upside, but delaying production will only prevent global oil glut from getting worse, but won’t reverse it. As such, once the geopolitical news and OPEC decision are absorbed, the bears will be happy to return to the field," said market analyst Ipek Ozkardeskaya.
5am: Today's diary
Legal & General's institutional retirement business update will be in focus on Wednesday... Read more
Macroeconomic news will be led by services PMI data for the UK, EU and other major economies in the morning, with the ADP jobs report in the US later, along with factory orders and mortgages.
Announcements due:
Trading updates: Me Group International PLC, Legal & General Group PLC (LSE:LGEN)
Interims: SDCL Energy Efficiency Income Trust PLC
Finals: Tritax Eurobox PLC, Premier Miton Group PLC, Treatt PLC
US earnings: GameStop Corp, Synopsys Inc
AGMs: Supermarket Income REIT PLC, VinaCapital Vietnam Opportunity Fund Ltd
Economic announcements: PMI Composite (UK), PMI Services (UK), MBA Mortgage Applications (US), PMI Composite (US), Factory Orders (US), Crude Oil Inventories (US)