- FTSE 100 closes 3.5 points lower
- US stocks maintain progress
- Inmarsat accepts £5.4bn bid by Viasat
5.00pm: Mundane Monday for the Footsie
The FTSE 100 put in a dull showing on Monday, ending marginally below opening levels in spite of morning progress on Wall Street as investors sought fresh direction after last week's strong US jobs data and batch of central bank monetary policy decisions.
At the close, the UK blue-chip index was 3.56 points, or 0.05% lower at 7,300.40, below the day’s peak of 7,316.54 but above the session low of 7,293.50.
On Wall Street around London’s close, the Dow Jones Industrials Average was 80 points, or 0.2% higher at 36,408, with the broader S&P 500 index and the tech-laden Nasdaq Composite both ahead 0.1%.
Danni Hewson, AJ Bell financial analyst, commented: “There were one trillion reasons for US markets to bounce into Monday and they didn’t disappoint with big gains by industrials propelling the Dow Jones to a new high, construction equipment giant Caterpillar rather unsurprisingly topping the gainers. Investors are still digesting the passing of President Biden’s infrastructure bill and there’s some chopping and changing going on today as the market figures out what the “once in a generation” investment plan will actually mean for all those companies looking to get in on the action. Generally, the weather is set fair off the back of decent jobs figures and a rather upbeat earnings season but investors know it’s never a good idea to get too complacent.
“This week brings Goldilocks back to the table and she’ll be dipping her spoon into the bowl of inflation goodness and deciding if last month’s temperature in the United States was more to her liking. The US Fed has certainly indicated it would prefer a slightly cooler morsel but its intention to begin tapering has pretty much been priced in by investors, so unless there is a major upward shock markets should take the figures in their stride."
Hewson added: “In London, it’s been a rather muted start to the week despite a rebound from cyber security darling Darktrace. The FTSE 250 has struggled to find any cheer and it’s telling that many consumer-facing businesses are among the day’s fallers following some rather downbeat consumer confidence data. Households are wary, people are worried about how their finances are going to stack up as prices rise further, finances that already beginning to feel the squeeze.”
3.00pm: Clinging on to gains
Share prices are higher in most markets around the world, with London's blue chips put in the shade by their US cousins.
But sentiment towards equities is likely to remain positive, says market analyst Fawad Razaqzada.
"Investors are realising that major central banks are unwilling to be very aggressive in reducing monetary support or afraid of doing so, despite strong inflationary pressures. This is music to the ears of stock market participants, who are happy to keep buying those dips. Sentiment also remains optimistic owing to a positive earnings season."
FTSE 100 shares are in fact, according to analysts at JPMorgan, trading at record discounts compared to the world’s other financial centres on a price/earnings and price-to-book basis.
London stocks have lagged those listed in the US by around 50% since the referendum in 2016, and over the same period trailed some 24% behind the Eurozone, the analysts calculated.
The analysts today lifted their broad rating on the London market to ‘overweight’, saying they think "the FTSE 100 could perform better" than the FTSE 250, reversing its long-held preference for the more domestic focused mid-cap index over the larger exporters.
“A traditional inverse correlation to GBP has weakened, but should still hold. Our FX team expects GBP to move lower, which would be a tailwind for exporters.”
On the FTSE the gains for the likes of Darktrace, Abrdn and Fresnillo are being offset by fallers including consumer-facing, travel and leisure names, including ITV, InterContinental Hotels, Entain, Flutter, IAG and Whitbread after their gains in recent weeks.
Among the risers are CRH PLC (LSE:CRH) and Ashtead PLC, which are being carried by a wave of positive sentiment for the US construction sector on the back of Biden's infrastructure spending bill.
With US$550bn of spending over a five-year period, the single largest allocation, which matters most for the building materials companies such as CRH, is the US$110bn allocation to roads and bridges. Ashtead, as a rental supplier of diggers, lifters and other site machinery, should also do very well.
The FTSE is up 4 points at 7,307.93.
2.55pm: US stocks open higher
The FTSE 100 was back in the green on Monday afternoon, given a lift as US stocks opened higher.
London’s leading index had added 10 points to 7,314, while Dow Jones Industrial Average in New York was up around 190 points at 36,518.
The S&P 500 gained over 16 points to stand at 4,714 and the tech-laden Nasdaq exchange added over 65 points at 16,037.
Wall Street shares raced out of the gate, building on Friday's record gains, and as Congress passed a new infrastructure spending package worth over US$1trn late on Friday.
The bill was passed by the House of Representatives and now just needs President Joe Biden's signature. The package would provide new funding for transportation, utilities and broadband, among others.
Last week, positive sentiment won over the equity markets as employment data and earnings were stronger than expected, while the Federal Reserve did announce that it will finally begin tapering its pandemic-era economic aid by the end of this month.
"US capital markets only want to hear one story at the moment as that's what suits its buy-everything narrative," said Jeffrey Halley, senior market analyst, Asia Pacific, at Forex firm OANDA.
"That's an economic recovery reinforced by total belief in Jerome Powell's promises that post-the-Fed-taper, interest rates hikes will not be on the horizon."
While most of the big names are on the up, fallers include Tesla, after boss Elon Musk flagged a likely large share sale via his usual medium of Twitter.
2.05pm: UK satellite firm Inmarsat to be acquired by US competitor Viasat for £5.4bn
The FTSE 100 was treading water in the early afternoon, down by 1 point to 7,303.
UK satellite firm Inmarsat has accepted a US$7.3bn (£5.4bn) by US competitor Viasat, as the sector continues to consolidate.
Inmarsat is owned by private equity firms, including Warburg Pincus and Apax Partners, after being taken private for US$3.4bn two years ago.
Viasat will pay US$850mln in cash, US$3.1bn in shares and the assumption of US$3.4bn of net debt.
"This is a transformative combination that advances our common ambitions to connect the world. The unique fusion of teams, technologies and resources provides the ingredients and scale needed for profitable growth through the creation and delivery of innovative broadband and IoT services in new and existing fast-growing segments and geographies," said Viasat's executive chairman Mark Dankberg.
1.10pm: Bitcoin, Ethereum buoyed by strong investor interest
The FTSE 100 was still in the red at lunchtime, down 4 points to 7,299.
Conversely, cryptocurrencies have been on a strong rally as investors have been piling in.
According to Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, many people see the digital coins as a hedge against inflation.
“Some appear to have been enticed by the argument that the huge monetary stimulus programmes unleashed by central bank is fuelling inflation which will see the value of money decrease over time, whereas Bitcoin has a fixed limit on the number of coins which can be created,” she said.
“It’s a highly risky strategy given just how volatile the crypto currency is, amid other pressures on its valuation like clampdowns by authorities and even comments on social media.”
Bitcoin has risen 4% to US$65,955 on Monday, with Ethereum touching all-time highs of US$4,768.
The second largest cryptocurrency is up nearly 59% since the start of October, with its continued strength coming as blockchain technology becoming increasingly accepted by banks and organisations.
12pm: US set for positive open
US stocks are expected to open mostly higher, building on new records set last week after a better-than-expected employment report for October and as corporate earnings also continue to surprise to the upside.
Futures for the Dow Jones Industrial Average rose 0.22% in Monday pre-market trading, while the broader S&P 500 index added 0.07% and those for the tech-heavy Nasdaq 100 shed 0.02%.
US stocks closed higher on Friday after October non-farm payrolls data showed employment gains of 531,000, beating consensus estimates for 450,000 new jobs.
Also driving positive sentiment was Pfizer which said that its coronavirus (COVID-19) drug, used with an HIV drug, cut the risk of hospitalization by 89%.
On the day, the Dow Jones increased by 204 points, or 0.56%, to 36,328 and the S&P rose 0.37% to 4,698 while the Nasdaq gained 0.2% to 15,972.
“US futures are steady after another round of all-time highs on Friday,” commented Neil Wilson, chief market analyst at markets.com.
“Earnings are better than were expected, jobs growth is picking up and the Fed’s carried off the taper without undue alarm. Pfizer’s antiviral announcement on Friday is a major positive: Dr Scott Gottlieb said the US is ‘close to the end of the pandemic phase’.
“After last week’s round of policy meetings, this week we get a lot of jawboning from the likes of Powell, Bailey and Macklem on equality and diversity. We’ll also be watching the US CPI numbers on Tuesday, and UK growth numbers for the third quarter on Thursday.”
Meanwhile, the FTSE 100 dropped 10 points to 7,293 at noon.
11am: The Hut Group founder speaks of regret for London IPO
The FTSE 100 dipped in the red in late morning, albeit by just 1 point to 7,302.
THG PLC (LSE:THG) founder and chief executive Matt Moulding has said listing in London “just sucked from start to finish” and he wished to have chosen New York for a flotation.
The retailer has halved in value since the IPO in September 2020, but Moulding said that the business is “in better shape than it’s ever been” and “it’s just operating in this environment [that] sucks.”
No statement from THG so far this morning after those extraordinary comments from Matt Moulding. Shares up 4.4% to 212.8p, maybe on take private hopes? Maybe camp THG thought it was a good interview.. https://t.co/HsmsILnZwY
— Ashley Armstrong (@AArmstrong_says) November 8, 2021
When asked if he would IPO again, in an interview with GQ at the GQ Heroes conference, he said: “Shit, no. No. I wouldn't… There are scenarios where if you're not an individual leading a big company, then I think the UK market can work really well. But there aren't any examples, I don't believe, where an individual brings a big company to a public market and it can go well, certainly as you get to a certain scale anyway.”
Last month, the firm committed to appointing a non-executive chair.
Shares were flat at 204.18p in the late morning, having risen as much as 6% earlier on Monday.
9.40am: JD Sports responds to allegations over meeting with Footasylum boss
The FTSE 100 was nearing the flatline in mid-morning, up a mere 2 points to 7,306.
JD Sports Fashion PLC (LSE:JD.) dipped 1% to 1,107p after publishing a response to media reports on a meeting between executive chairman Peter Cowgill and Barry Bown, his counterpart at Footasylum.
The Sunday Times obtained a video that was secretly filmed by an unnamed competitor of the FTSE 100 group who opposed the JD’s £90mln takeover of Footasylum.
It is understood that the Competition and Markets Authority (CMA) has launched an investigation into this meeting, since it happened while it was examining the deal.
According to City rules, the two sides were allowed to hold business meetings but “no business secrets, know-how, commercially sensitive information, intellectual property or any other information of a confidential or proprietary nature” can be shared while a verdict is awaited.
The athleisure retailer said that the CMA has already been fully apprised of the content of the meeting, adding that it “firmly believes” that it does not represent wrongdoing or a breach of rules.
8.35am: Darktrace claws back losses
The FTSE 100 had a lukewarm start to the trading week, up only 7 points to 7,311.
Asian markets have taken a circumspect stance as traders worry recovery won’t be plain sailing, hampered by the rise in Covid-19 cases, power shortages and a shadow over the property sector.
Despite China’s exports beating forecasts and resulting in a record trade surplus, imports missed estimates, suggesting a slowdown of domestic demand.
“Further strength in the oil price boosted the majors, miners crept into positive territory and airline-related stocks were also in demand in the face of potentially recovering international travel. Less positively, there was some pressure on banking stocks as the Bank of England’s inaction last week on interest rates undid some of the optimism which had been building on a potential boost to earnings,” said Richard Hunter, head of markets at interactive investor.
Darktrace PLC (LSE:DARK) was the top riser, up nearly 4% to 599.5p as it clawed back last week’s losses.
This might be being helped by some positive analysts opinions, with Berenberg saying, following a visit to Darktrace's HQ in Cambridge, the recent share price capitulation "is a result of fear not fact".
CRH PLC (LSE:CRH), Polymetal International PLC (LSE:POLY) and Fresnillo PLC (LSE:FRES) followed suit.
Fallers were topped by ITV PLC (LSE:ITV), Standard Chartered PLC (LSE:STAN) and Informa PLC (LSE:INF), retracing gains made last week.
6.55am: FTSE 100 to see quiet start
The FTSE 100 is expected to open 3 points higher at 7,307 on Monday morning.
It’s not going to be a busy week in terms of economic data releases. The key numbers will be Wednesday’s US CPI for October and consensus looks for a slight uptick given the ongoing wage pressures and supply shortages.
“Global equities higher Friday once again driven by DM and not least US stocks while EM lagged driven by Chinese stocks. US stocks have had an impressive run with S&P500 higher in 16 out of the last 18 trading days and are now 3% above the peak early September,” analysts at Danske Bank said.
“The positive tone from Friday on Wall Street has not carried over to EM where markets are lower this morning. Futures in Europe and US are also lower as we head into a new week.”
6.50am: Early Markets - Asia / Australia
Stocks in the Asia-Pacific region were mostly lower on Monday as China’s exports rose 27.1% in October compared with a year ago.
That was higher than the 24.5% growth forecast in a Reuters poll.
In Japan, the Nikkei 225 slipped 0.35% and South Korea’s Kospi dipped 0.31%.
China’s Shanghai Composite rose 0.17% while Hong Kong’s Hang Seng index declined 0.66%
Australia’s S&P/ASX200 fell 0.06% to 7,452.20 points on Monday following its best week since May mostly due to positive sentiment surrounding central banks and their outlooks over the coming months.
Gold stocks in Australia benefitted last week from the RBA, the US Federal Reserve and the Bank of England indicating they are in no hurry to increase interest rates.