- FTSE 100 down 23 points
- UK economy slows
- Boohoo-Frasers spat goes on
3.58pm: FTSE 100 heads lower as economic downturn dampens mood
London’s blue chip index approached the weekend on the back foot, having dropped by 23 points to 8,288.
The decline meant the FTSE 100 was on course for a drop over the course of the week after Friday brought news that the UK economy contracted for a second successive month in October.
Rentokil Initial PLC (LSE:RTO) led risers after recouping on a drop seen on Thursday, while Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF) headed the fallers alongside a string of mining companies.
Endeavour’s drop coincided with a decline in the price of gold by 0.72% to US$$2,661 an ounce on Friday, while the likes of Anglo American PLC (LSE:AAL) and Glencore PLC (LSE:GLEN) dropped after a volatile week as markets mulled China’s latest promises for economic stimulus.
Tickmill Group partner Patrick Munnelly noted Friday’s economic data would unlikely be enough to prompt an interest rate cut by the Bank of England next week.
“Nevertheless, the data may lead traders to consider a higher likelihood of quicker rate reductions next year,” he said.
3.37pm: Goldman continues to see motor finance uncertainty for Lloyds
Lloyds Banking Group PLC (LSE:LLOY) share price target has been lowered by Goldman Sachs analysts as uncertainty around motor finance mis-selling continues to loom.
Despite news this week that the Supreme Court would hear an appeal against cases around hidden commissions in motor finance deals, Goldman said it was unclear how the issues would play out.
“Altogether, we see a marginally slower timeline and greater range of uncertainties compared with our previous update in November,” analysts said in a note.
Lloyds 12-month share price target was moved from 64p to 63p as a result... Read more
3.00pm: US markets open higher as Broadcom sparks tech rally
Wall Street got off to a positive start on Friday as stocks recouped from declines seen on Thursday.
The Nasdaq opened 0.7% higher, while the S&P 500 gained 0.4% and Dow Jones moved just above the mark.
Broadcom Inc (NASDAQ:AVGO, ETR:1YD) surged 21.8% on Friday morning, sparking a wider rally among technology companies in the wake of results on Thursday evening.
A profit beat by the chip maker was coupled with bullish commentary around artificial intelligence demand ahead.
“We see an opportunity over the next three years in AI,” chief executive Hock Tan told investors in an earnings call.
“Massive specific hyperscalers have begun their respective journeys to develop their own custom AI accelerators.”
2.19pm: Government signals onshore wind projects will be given special planning powers
Government proposals will see onshore wind projects allowed to bypass local planning processes.
Energy secretary Ed Miliband on Friday said onshore wind would be brought back into the Nationally Significant Infrastructure Project (NSIP) regime in England.
Ministers would get the final say as a result, after onshore wind has faced a de facto ban since 2015 under rules bought in by David Cameron’s government.
“At the moment we have nationally significant infrastructure projects, which are decided by me,” Miliband explained on BBC Breakfast on Friday.
“We don’t have that for onshore wind because it was banned from 2015 to 2024 - until this government came to office - by the last government, leaving us vulnerable.”
New onshore wind projects have slumped by 94% since 2015, when the new rules meaning plans could be effectively blocked by just a few local objections emerged.
Miliband’s plans come under wider aims to power the UK with 95% clean power by 2030... Read more
13:52pm: Tougher times at Trafigura
Tough times have continued at secretive Swiss commodities trading giant Trafigura, where profits hit a four-year low after a $1.1bn fraud in its Mongolian oil division.
Trafigura also made a killing when the energy prices spiked after the Ukraine invasion but new chief executive Richard Holtum, who takes over on 1 January, said trading had now ‘normalised’.
Net profit dropped to US$2.8 billion in the year to September from US$7.3bn a year ago, while bonuses to its 1,400 staff/owners have been slashed.
FTSE 100 up 3 at 8,315.
13.20pm: New tower to rival Shard approved for City
A new tower in the City of London to match the height of the Shard (see picture) was given the go-ahead today by the organisation that runs London’s financial district.
Known as 1 Undershaft, the tower will have a height of 306.9 metres (1008ft) and be built opposite the Shard on the City side of the Thames.
Approval comes five years after the first application, with completion expected on the project early in the 2030s.
Some 150,000 sqm of office space will be inside the building along with 1,000 sqm for free-access public space.
Designed by Eric Parry Architects for Singapore’s Aroland, 1 Undershaft will be close to the Gherkin. Stanhope is the developer.
Shravan Joshi, chairman of the City of London Corporation’s planning and transportation committee, said: “1 Undershaft is a truly remarkable building that will not only help to deliver on the demands for economic growth...but also contribute to the City’s growing cultural offer and tourist appeal."
FTSE 100 up 4 at 8,316
12.38pm: Fees paid by BT, Vodafone could be slashed by £40mln
Regulator Ofcom has proposed slashing fees it charges mobile network operators, such as BT and Vodafone, to the tune of £40 million.
Fees, paid to use certain radio frequencies, could be slashed by as much as 21%, Ofcom said Friday.
Operators collectively pay around £320 million in the fees, which go to the Treasury.
Those paid to use the 900 megahertz (MHz) and 1800 MHz spectrums would be cut by 21%, Ofcom proposed, with cuts of 12% floated for the 2100 MHz spectrum.
“The amount of the reduction varies by operator because they hold different amounts of spectrum in each of the bands,” Ofcom said.
Ofcom’s review of the charges follows calls by BT over “possible material misalignment” between the fees and underlying market values of the spectrums.
BT shares gained 0.3% on Friday, while Vodafone moved 0.4% higher.
12.03pm: Nasdaq to jump as Wall Street seen bouncing back on Friday
Wall Street looked set to recoup some of Thursday’s declines ahead of trading on Friday.
Futures had the Nasdaq jumping 0.7% prior to the opening bell and recovering from a drop on Thursday.
The Dow Jones and S&P 500 were seen 0.2% and 0.3% higher respectively in the meantime after both also fell over the course of Thursday.
Thursday’s news that producer price inflation climbed ahead of expectations in November had weighed on sentiment after an in-line consumer price index reading on Wednesday boosted hopes for a Federal Reserve rate cut next week.
“While the markets still anticipate a rate cut from the Federal Reserve next week, the likelihood of a move in January has dropped to just 20%,” Tickmill Group partner Patrick Munnelly said.
“A major factor influencing the market outlook is US president-elect Donald Trump, who will be back in the Oval Office by the next Fed meeting and may have issued numerous executive orders with significant trade and policy consequences.”
11.47am: Economic contraction sparks recession fears
News the UK economy contracted for a second month running in October has prompted alarm bells over a potential slip into recession ahead.
Institute of Economic Affairs fellow Julian Jessop noted the drop “should put the UK firmly on recession watch”.
ONS estimates showed a 0.1% decline in gross domestic product (GDP) through October as production and construction output contracted and service sector growth stagnated.
GDP had also fallen by 0.1% in September, leaving questions over the path of the economy heading into the end of the year.
“Indeed, output per head may already be falling for the second quarter in a row,” Jessop said.
Issues were not confined to the UK though, Jessop pointed out, pointing to struggles across Euopre and in France and Germany in particular.
“Nonetheless, the new government’s negative rhetoric over the summer and the anticipation of a tight Budget have damaged sentiment and encouraged many households and businesses to put spending, hiring and investment on hold.”
11.30am: Mortgage rates fall for another week
Mortgage rates across the UK fell this week once again as the likes of Barclays PLC (LSE:BARC) and Banco Santander (LSE:BNC) cut.
According to Moneyfacts, typical interest on a two-year fixed-rate mortgage declined from 5.4894% to 5.4685% between Monday and Friday.
Average rates fell every day of the week consecutively, meaning mortgage costs had fallen for a third week in a row.
Santander on Thursday detailed plans to reduce rates across more than 70 of its mortgage products by up to 0.23%.
Barclays had also signalled cuts on Tuesday, alongside TSB Bank, as lenders continued to reverse on hikes made since early October... Read more
10.58am: Ofcom fine adds to Royal Mail’s cashflow woes, says Peel Hunt
Today’s £10.5 million fine given to Royal Mail from communications regulator Ofcom has done no favours for the International Distribution Services PLC (LSE:IDS)-owned delivery service’s cashflow worries.
According to Peel Hunt analysts, Royal Mail is expected to suffer cash outflows in both the 2025 and 2026 financial years.
This fine will only increase those and make it harder for much-needed investment to take place,” said Peel Hunt.
Peel Hunt also stated that it expects Czech billionaire Daniel Kretinsky’s £3.6 billion IDS acquisition to take place in the first quarter of 2025.
IDS shares were flat at 357.8p each on Friday.
10.37am: St James’s Place nets upgrade, shares surge
FTSE 250-listed wealth manager St James’s Place plc has added 4% to its share price, aligning with a share rating upgrade from Deutsche Bank.
“We have identified new information and produced some further analysis which we believe is relevant to both the ongoing advice issue and the new charging structure,” said Deutsche analyst David McCann.
SJP is facing hundreds of millions of pounds in potential compensation claims arising from a lack of transparency in its fee structure.
Having assessed complaints data, Deutsche said the issue “should be well contained to the existing (£426 million) provision”.
Analysts added: “In addition, Citywire recently published some incremental information on the new initial charge tiers.
“Whilst this was not comprehensive… we were encouraged that the new information suggests client charges could be lower than the high-level guidance from Oct-23 suggested.
“Despite this, we think SJP can maintain shareholder margin guidance and with minimal impact on adviser pay.”
SJP’s ditching of Impax Asset Management (AIM:IPX)’s £5.2 billion ESG mandate has likely contributed to today’s buoyant share price.
Deutsche upgraded SJP to a 'buy', with the share price target upgraded from 775p to 1,150p.
9.51am: Bitcoin sticks above $100,000
In the cryptocurrency markets, bitcoin (BTC) has managed to keep its head above the $100,000 price point for the better part of the last 24 hours.
Despite the world’s largest cryptocurrency falling more than a percentage point on the spot markets yesterday, Wednesday’s 4.7% rally has kept the BTC/USD pair in good shape.
A combination of political tailwinds and jumbo exchange-traded fund inflows has supported bitcoin in recent months.
Traders anticipate an era of pro-crypto policies when president-elect Donald Trump takes office, while the cache of bitcoin held in ETFs has surged to a record $35.1 billion.
At the time of writing, the BTC/USD pair was swapping for $100,120.
9.42am: Quarterly GDP contraction warning
Following today’s unwelcome surprise of a 0.1% gross domestic product contraction in October, some analysts have warned that the entire fourth quarter could see a contraction.
Following the latest print from the ONS, chief UK economist of Capital Economics Paul Dales it is unlikely that quarterly GDP will match the research firm’s 0.2% growth target, thus naturally not the Bank of England’s 0.3% target either.
“That said, with the Bank still worrying that inflation is too high, we don’t think the economy is weak enough to prompt the Bank to follow November’s 0.25% rate cut with another cut at next Thursday’s December meeting,” he added.
The concerning economic trend presents a major problem for Labour leader Keir Starmer, although Daniels surmised that “it’s not just the Budget that is holding the economy back… Instead, the drag from higher interest rates may be lasting longer than we thought”.
9.08am: Avanti workers push Christmas rail strikes
Avanti West Coast workers have suspended plans to strike around Christmas on the back of a new offer from the train company.
Rail, Maritime and Transport (RMT) union members had planned to strike on December 22, 23 and 29.
RMT noted key elements of the offer including “revised and enhanced Rest Day Working payments, discussions on a new technology agreement and the creation of a rest day working allocation agreement”.
Members would not vote on the new deal ahead of a deadline on December 17, it added.
8.51am: Diageo leads risers again
Diageo PLC (LSE:DGE) topped the FTSE 100’s early risers once again on Friday as the drinks maker extended gains in the wake of Thursday’s double upgrade by UBS analysts.
Shares climbed 1.4%, placing Diageo top of the day’s winners in the absence of any major movers.
British Airways owner International Consolidated Airlines Group SA (LSE:IAG) also climbed by 1.0%.
Anglo American PLC (LSE:AAL) and Rio Tinto PLC topped the fallers in the meantime, down 0.9% and 0.8% respectively.
Overall, the FTSE 100 moved 10 points higher to 8,322.
8.37am: UK economic ‘fragility’ on full show as more bad news ahead likely - analysts
News UK gross domestic product unexpectedly contracted in October highlights the fragile nature of the economy, commentators have said.
The ONS on Friday reported that the economy contracted by 0.1% over the month, following a decline in September.
“The fragility of the UK economy is starkly evident in October's data, which highlights the underlying challenges that must be addressed,” Secure Trust Bank head David McCreadie said.
He added the outlook remained weak after tax increases in October’s Budget had prompted alarm bells from businesses over soaring costs and hampered growth ahead.
“A seasonal uptick in consumer spending ahead of Christmas may offer a temporary boost to the economy, but that should be seen as a temporary impact,” McCreadie added.
“Relying on consumer spending to sustain the economy in the long term is unsustainable.”
Deutsche Bank analysts echoed the view, warning there was “probably more bad news on the horizon”.
“Budget uncertainty has hit demand and sentiment,” Deutsche said, pointing to a string of more recent economic data, while poor weather ahead of Christmas was also likely to weigh.
“Storm Bert and Storm Darragh will have likely disrupted output meaningfully in November and early December with both storms bringing strong winds, floods, snow, and precipitation that will hit activity.”
8.25am: Consumer confidence edges up but ‘far from strong’ pre-Christmas
Consumer confidence edged higher this month but remains “far from strong” ahead of the key Christmas period for companies.
Gfk reported on Friday that its consumer confidence indicator moved to -17 this month in a one-point rise from November.
Outlook for the UK economy over the coming year remained unchanged at -26, while sentiment around personal finances improved.
“Consumer confidence is still far from strong, but there is some room for optimism,” Gfk consumer insights director Neil Bellamy said.
“We need to see robust improvements in these perceptions before we can start talking about sustained improvements in the consumer mood.”
8.14am Royal Mail slapped with £10.5mln fine over delivery failures
Royal Mail has been slapped with a £10.5 million fine by regulator Ofcom for failing to meet delivery targets last year.
This is the second financial penalty in just over a year, following a £5.6 million fine in November 2023.
According to Ofcom, Royal Mail delivered 74.7% of First Class mail and 92.7% of Second Class mail on time, falling short of the regulator’s annual benchmarks of 93% and 98.5%, respectively… Read more
Shares in owner International Distributions Services PLC were flat on Friday morning.
8.11am: Index just above the mark
The FTSE 100 edged up on Friday morning despite news the UK economy unexpectedly contracted for a second month running in October.
London’s blue-chip index added eight points to reach 8,320 as trading got underway.
Marks & Spencer Group PLC was among early risers in the absence of any major movers, while banks and insurers also moved above the mark.
The pound also lost ground to the dollar on the back of the GDP reading, falling by 0.36% to US$1.2627.
8.03am: Boohoo lays into Frasers once again
Boohoo Group PLC (AIM:BOO) has said it would not agree to Frasers Group PLC (LSE:FRAS) boss Mike Ashley joining its board “in any circumstances”.
In the latest heated exchange between the two, Boohoo said it would be willing to recommend an “appropriate” candidate put forward by Frasers, but not those already suggested.
Boohoo’s largest shareholder Frasers has sought to get founder Ashley and restructuring specialist Mike Lennon on the struggling retailer’s board in protest against a business review launched by the struggling retailer earlier this year.
Sports Direct owner Frasers has since cautioned against prospective sales of Boohoo’s Debenhams, PrettyLittleThings or Karen Millen this could bring.
Boohoo on Thursday reiterated “irreconcilable conflicts of interest” in appointing Ashley and Lennon to its board, “given their embedded relationship with Frasers”... Read more
7.38am: Food and drink sector slumped in October
Pubs and restaurants faced a tough October, with the ONS’ figures showing output across the sector down 2.0% over the month.
Food and beverage service activities were the largest contributor to the 0.6% decrease across the consumer-facing sub-sector as a result, the ONS noted.
Overall, the service sector faced a second consecutive month of stagnant growth in October, as wider gross domestic product declined by 0.1%.
The Institute of Economic and Social Research pointed to both geopolitical issues and the likes of uncertainty around October’s Autumn Budget as playing a part across the economy.
“A weakening export climate amid rising global policy uncertainties and declining business confidence, exacerbated by the impact of recently announced budget measures, raises concerns about sustaining the growth momentum,” it said.
“The economy is in limbo, and there’s an overall ‘wait and see’ feeling, neither upbeat nor downbeat, ahead of trade developments in the next few months,” Forvis Mazars economist George Lagarias added.
7.15am: GDP unexpectedly falls in October
The UK economy unexpectedly contracted over the course of October as production and construction output slowed.
Gross domestic product (GDP) dropped by 0.1% month on month, according to estimates by the Office for National Statistics, following a 0.1% fall in September.
Production output declined by 0.6% in October, driven by “falls in manufacturing, and mining and quarrying output,” the ONS said, and after a 0.5% drop a month earlier.
Construction declined by 0.4% in the meantime, on the back of a 0.1% uptick through September, while service sector growth remained stagnant.
GDP was up 0.1% over the three months to October and increased by 1.3% year on year.
7.12am: Stocks seen higher
Futures had the FTSE 100 gaining a further 20 points to reach 8,315 on Friday, after Thursday's 10-point gain.
Asian markets saw a mixed showing overnight on the back of declines on Wall Street.
Back in London, focus was on news that the economy unexpectedly shrunk in October for a second month running.
5.00am: Friday's schedule
Friday brings gross domestic product data for October, after the economy unexpectedly contracted by 0.1% in September.
According to Trading Economics, forecasts are for growth of 0.2% over the month, reflecting a 1.6% uptick on an annual basis.
“We expect services activity to inch higher in October - but only just,” Deutsche Bank said, “and we see some modest gains in industrial production and construction output”.
Announcements due:
AGMs: Crystal Amber Fund Ltd, Gcm Resources PLC, Grit Real Estate Income Group Ltd, Kromek Group PLC, Nanoco Group PLC, Atrato Onsite Energy PLC
Economic announcements: Gross Domestic Product (UK), Consumer confidence (UK)