- FTSE 100 down 15 points
- US stocks drop as rate cut bets axed
- Pound slumps further, oil climbs
4.00pm: FTSE 100 off the mark late on
London’s blue chips headed into late trading on the back foot on Monday, with the FTSE 100 having dropped 15 points to sit at 8,233.
Precious metals miner Fresnillo PLC (LON:FRES) continued to lead the day’s fallers, down 3.5%, in line with a drop for gold as speculation built that higher bond and dollar yields would limit the yellow metal ahead.
British Airways owner International Consolidated Airlines Group (LON:ICAG) SA followed among the losers as oil’s latest surge also saw easyJet (LON:EZJ) PLC drop on fears around fuel cost pressure.
Another climb for bond yields on Monday also looked to stretch to property sector stocks, with Rightmove PLC (LON:RMV) and Persimmon (LON:PSN) PLC among the day’s fallers too.
Internatiate Group Capital PLC led risers in the absence of any major positive movers in the meantime, while miners and oil firms were among those to rack up gains.
3.52pm: Gilt yields steady into afternoon
Gilt yields receded slightly on Monday after rates on long-term bonds had once again tested levels last seen in 1998 earlier on in the day.
Come the afternoon, 30-year gilt yields were at 4.43%, against the day’s peak of 5.47%, while rates on 10-year gilts sat at 4.88%, compared to 4.90% earlier on.
This meant yields were up by 0.03% and 0.04% for 30 and 10-year bonds respectively, but that further aggressive increases had been pared back.
Pressure has built on the government following the latest jump in borrowing costs, prompting warnings last week that chancellor Rachel Reeves could be forced to ditch Budget spending plans.
Prime minister Keir Starmer on Monday did not rule out future cuts but doubled down on the government’s commitment to stick to its fiscal rules.
“In terms of the ruthless approach when it comes to finances and spending, yes, we will be ruthless, as we have been ruthless in the decisions that we’ve taken so far,” he told reporters.
“We’ve got clear fiscal rules, and we’re going to keep to those fiscal rules.”
3.23pm: Petrol prices rising as oil surges - AA
Petrol prices are back on the rise in line with an uptick in oil since December, the AA has reported.
Come Friday, wholesale petrol costs had climbed by 3p a litre since Christmas, while diesel rose by 5p, the motor group said.
Petrol prices averaged 137.2p per litre at the weekend, having sat as low as 134p in October, with diesel prices at 143.7p, against their low of 138.4p.
“Freezing temperatures and rising pump prices are a bad start to 2025 for drivers,” AA spokesperson Luke Bosdet commented.
The rise has coincided with a rebound in oil prices, driven by fresh US sanctions against Russia most recently, which saw benchmark Brent crude top US$80 a barrel on Monday.
“Any weakness in the pound won’t help because oil and fuel commodities are traded in dollars,” Bosdet added, after sterling hit a 14-month low against the dollar on Monday.
“We will be watching carefully to see the extent the fuel trade takes advantage of upward costs. What happened heading into winter didn’t fill drivers with confidence.”
3.07pm: Gold slides as bond yield surge catches up
Gold prices dipped on Monday as the recent surge in bond yields looked to finally catch up with the yellow metal.
Having racked up two consecutive weekly gains, gold shed 0.65% to sit at US$2,672 an ounce on Monday.
The rise coincided with a steepening sell-off for bonds globally, alongside growing strength for the dollar, which City Index Fawad Razaqzada noted would usually be bearish for gold.
“It looks like investors have been buying gold to hedge against inflation risks more than anything else,” Razaqzada said.
However, strong US economic data and reduced expectations for Federal Reserve rate cuts this year are likely to limit gold ahead “until something changes fundamentally,” Razaqzada added, pointing to Wednesday’s inflation reading.
In London, precious metals miner Fresnillo PLC came to top the day’s fallers come the afternoon, having dropped 3.7%.
2.40pm: Wall Street suffers at open
Wall Street faced a tough start to the week as trading got underway on Monday following axed expectations for Federal Reserve rate cuts this year.
The Nasdaq shed 1.4% following the opening bell, while the S&P 500 dropped 0.9% and Dow Jones moved just below the mark.
Following Friday’s expectation-beating job figures, markets had stopped fully pricing in a further interest rate by the Fed this year come Monday.
“Markets are likely to navigate several potentially unexpected developments this week,” Tickmill Group partner Patrick Munnelly said.
“As the final week before President-elect Trump’s inauguration on January 20, there is a high chance he will quickly implement executive orders on various policy issues, potentially including tariffs. Meanwhile, this period marks a relative lull in activity from major central banks, which are set to resume decisions toward the end of the month.”
Monday’s early drop for stocks coincided with another slight uptick in US Treasury yields, while the dollar jumped 0.57% against the pound on reduced rate cut bets.
1.55pm: Green funds hit by rising gilt yields
Among the sectors weighed down by the recent surge in bond yields, renewable energy firms have come under pressure in recent days.
Having been tipped to benefit from central bank rate cutting, the prospect of higher debt costs has threatened to take its toll on the capital-intensive industry.
Indeed, Renewables Infrastructure Group Ltd faced a roughly 6% drop in its share price on the back of last week’s steepening bond market sell-off.
A string of factors had sparked the sell-off, which has seen long-term UK gilt yields hit their highest since 1998, including jitters around government spending plans and wider fears of inflationary pressure under incoming US president Donald Trump.
Within the renewables sector, companies rely heavily on upfront investment, leaving project margins under threat from higher borrowing costs.
Valuations also depend on future cash flows, meaning growing borrowing costs prompt investors to apply steeper discounts on such stocks.
Rival sector players, such as SSE (LON:SSE) PLC and RWE AG (ETR:RWEG), also tumbled over the course of last week in response to the global jump in gilt yields.
Monday has brought a slight rebound for both, alongside Renewables Infrastructure Group, though analysts have warned that gilt yields may have a way to go before peaking yet… Read more
1.04pm: Bitcoin hits lowest since November
Bitcoin has fallen to its lowest level in almost two months as traders look to cut down on riskier assets in response to a surge in bond yields.
Come Monday afternoon, Bitcoin was down almost 4% for the day at US$90,779.
This reflected the cryptocurrency’s lowest level since mid-November and marked a steep reverse from its all-time peak of US$108,316, seen in December.
Recent strong economic data from the US has hampered hopes for Federal Reserve rate cuts this year, prompting bond yields to surge further on Monday.
The dollar surged in the meantime on Monday as a result, by 0.78% to £0.8255, with Saxo Strategy analysts attributing profit-taking to Bitcoin’s latest drop.
12.45pm: British Airways owner, easyJet remain under pressure
British Airways owner IAG and easyJet PLC remained under pressure on Monday in response to growing oil prices.
Though airlines buy some fuel in advance to hedge against potential increases, oil’s latest rise comes after a new wave of US sanctions against Russian oil last week which have threatened to wipe off the impact of an expected supply surplus this year.
easyJet reported in November that it was 80% hedged on fuel for the first half of 2025, with this set to fall to 24% come early 2026.
IAG highlighted a similar strategy to hedge “a proportion” of its fuel consumption for up to two years.
According to the airline, the fair value of such contracts was €121 million (£102 million) over the first half of the year as buying in advance paid off.
IAG shares fell by 3.5% to 304.9p, while easyJet dipped by 2.7% to 494.2p on the back of the climb.
Come Monday afternoon, Brent was up 1.7% and 5.6% for the day and week respectively at US$81.13 and trading at its highest level since August.
12.01pm: Bond yields ‘far from’ peaking - Deutsche
Bond yields have further to go before peaking despite a surge in recent days, Deutsche Bank (ETR:DBKGn) analysts have said.
According to the bank, traders had been speculating that yields would look attractive once the Federal Reserve cut interest rates further.
However, expectations for any such cuts in 2025 have effectively been wiped after strong US jobs data last week.
This has left rates with further to climb to match historic risk premiums against cash yields, Deutsche said in a note, adding “the great yield adjustment is still underway”.
US 10 and 30-year Treasury yields have jumped by 38 and 35 basis points over the past month respectively, fueled most recently by Friday’s non-farm payrolls report.
“Very low recession odds [and] a Fed unlikely to hike implies the next move higher in yields should still be led by steeper Treasury curves,” analysts noted.
Yields on 10 and 30-year US bonds could be up to 60 and 90 basis points too low currently against historic metrics as a result, the bank added.
European bonds have also faced a sharp sell-off in recent days, which BCA Mathieu Savary attributed to higher US rates “sucking capital” away.
“European yields will only stop their ascent once the US bond market calms down.”
“This will demand lower equity prices and an abnegation of profligacy by the incoming Trump administration.”
11.27am: Nasdaq to tumble as traders wipe Fed rate cut bets
Wall Street appeared on course for another grim day on Monday as traders wiped off bets for Federal Reserve rate cuts this year in response to Friday’s strong job market data.
Futures had the Nasdaq off 1.2% ahead of the opening bell, while the S&P 500 and Dow Jones were seen 0.8% and 0.4% lower respectively.
Each had faced steep declines on Friday as stronger-than-expected non-farm payroll figures hampered hopes for rate cuts.
Some 256,000 jobs had been added across the US economy in December, against the 155,000 anticipated, while unemployment unexpectedly fell from 4.2% to 4.1%.
Given the implied strength within the US economy, traders were no longer fully pricing in a Fed rate cut this year in response come Monday.
Inflation figures for December on Wednesday will be in focus as a result, with markets expecting the headline rate to have inched up from 2.7% to 2.8% and core inflation to have remained at 3.3%.
11.10am: European markets a sea of red
Negative sentiment swept across Europe on Monday, as the ongoing global bond sell-off continued to weigh.
France’s CAC shed 0.7% over the course of the morning, while Germany’s DAX dropped 0.6%, as Portugal’s PSI20 marked the only index on the continent to rise, by 0.5%.
Declines coincided with further increases in bond yields, including in both Germany and France, as jitters around the global economy continued into Monday.
“The sell off is global, and it appears to be about more than just inflation,” XTB analyst Kathleen Brooks noted.
“The increase in bond yields is due to multiple factors: inflation fears, public sector deficits and economic policy uncertainty, which are all driving yields higher and draining risk sentiment from financial markets.”
Sentiment had been hit on the back of expectation-beating US job market data last week, which saw bets for Federal Reserve rate cuts this year effectively wiped off.
“The Fed do not even have room to talk about rate cuts right now, which could aggravate risk aversion even more,” Brooks added.
10.51am: GSK (LON:GSK), J&J bids mark big day for pharma deals
Monday marked a big day for pharmaceutical sector deals, with GSK PLC and Johnson & Johnson both having emerged in the spotlight.
GSK announced plans to acquire the US biotech company IDRx for up to US$1.15 billion, including US$1 billion upfront, in a bid to expand its portfolio of cancer therapies… Read more
J&J was said to be in talks to acquire neuroscience-focused biotech firm Intra-Cellular Therapies for US$10 billion in the meantime… Read more
Shares in the former, which is set to acquire promising gastrointestinal stromal tumours drug IDRX-42, fell by 0.6% on Monday.
10.04am: British Airways owner tops fallers as FTSE slides
British Airways owner International Consolidated Airlines Group SA topped Monday’s fallers as a further surge in oil prices looked to add to pressure on airlines ahead.
IAG shares dropped 3.5% early on, with easyJet PLC also among the FTSE 100’s fallers as rivals Wizz Air Holdings PLC (LON:WIZZ) and Ryanair (LON:0RYA) Holdings PLC also slipped.
The declines coincided with a further rise for oil on Monday, as benchmark Brent crude topped the US$80 a barrel mark for the first time since October.
Analysts have previously pointed to mounting headwinds from higher fuel prices for airlines as a result of the rise.
Hargreaves (LON:HRGV) Lansdown’s Susannah Streeter added that Heathrow’s forecast for 84.2 million passengers this year, despite marking another record, pointed to slowing growth.
“With consumer-focused firms, especially in retail, forecasting uncertain times ahead, pessimism appears to be seeping into the travel industry too,” she said.
Pearson PLC (LON:PSON), DS Smith PLC (LON:SMDS), M&G PLC and Rolls-Royce (LON:RR) Holdings PLC were also among the fallers on Monday, while Rentokil Initial (LON:RTO) PLC, up 2.9%, headed the risers.
Overall, the FTSE 100 dipped 38 points to 8,210.
9.44am: Fed rate cut no longer fully priced in
Markets are no longer fully anticipating an interest rate cut by the Federal Reserve this year after bumper job market figures on Friday.
According to Fed fund futures, a reduction over the course of 2025 was no longer being fully priced in by traders come Monday.
Figures on Friday had shown the addition of 256,000 jobs across the US economy in December, against 155,000 expected, alongside a surprise drop in unemployment from 4.2% to 4.1%.
Though the data signalled strength within the US economy, fears over stubborn inflation have also hampered hopes for interest rate cuts ahead.
Investec (LON:INVP) economist Philip Shaw highlighted concern around “disappointing” core inflation trends recently in last week’s Fed Open Market Committee minutes, which also showed “several members feared that the disinflation process might have stalled”.
Inflation figures for December on Wednesday will be in focus as a result, with markets expecting the headline rate to have inched up from 2.7% to 2.8% and core inflation to have remained at 3.3%.
9.26am: Heathrow trounces pre-pandemic passenger record
Heathrow Airport has confirmed that 2024 was a record year after enjoying its busiest-ever December.
Some 38.9 million passengers departed from the airport over the year, marking an increase of three million on the previous record in 2019.
Demand for Christmas and New Year getaways also pushed passenger numbers above the seven million mark in December, Heathrow added in a statement.
Christmas Day itself also saw a record 160,000 departures, reflecting another record, while 2025 was said to have got off well.
“With grey Mondays encouraging holiday bookings, 2025 is off to a strong start,” Heathrow said, forecasting 84.2 million passengers would pass through the airport over the year.
9.07am: Borrowing costs continue climb into new week
Borrowing costs remained on an upward trajectory as the new week of trading got underway on Monday.
Having hit their highest since 1998 last week on a sell-off sparked by fears around UK fiscal woes, 30-year gilt yields added another five basis points to reach 5.45% on Monday.
Yields on 10-year UK gilts climbed by a further six basis points to 4.89% in the meantime.
Concerns around slowing growth across the UK economy had prompted the sell-off, with the coinciding increase in government borrowing costs sparking fears that chancellor Rachel Reeves could be forced to row back on spending plans.
“That slowdown has been a direct reaction to government missteps,” Panmure Liberum analysts noted.
“Tax increases in the October Budget - however well-intentioned - have knocked the stuffing out of business confidence with insufficient countervailing enthusiasm.
“Investors in UK government debt now suspect higher inflation and a weaker pound will be the near-term result of this policy mix. This makes UK government debt less attractive for a given interest rate.”
8.47am: PageGroup slides as hiring slowdown sees further cost-cutting
PageGroup PLC (LSE:LON:PAGE) tumbled over 4% on Monday after signalling further cost cutting on another sharp drop in hiring over its latest quarter.
UK revenues fell by 13.6% in the quarter, in line with previous quarters, though Europe and Asia Pacific saw the biggest drops at 19.1% and 17.4% respectively.
Total (EPA:TTEF) gross profit (revenue) fell by 17.2% to £196.7 million for the quarter and for the year so far is down by 16.4% at $842.5 million.
PageGropup said it will continue to review its headcount to help cope with the current conditions… Read more
Shares in the FTSE 250-listed recruiter dropped by 4.4% to 297.6p.
8.38am: Pound continues to fall
Sterling tumbled further on Monday as a sell-off sparked by fears around the UK’s fiscal woes continued to hit.
Against the dollar, the pound fell by 0.58% to US$1.2138 on Monday to hit its lowest level since early November 2023.
Demand for options-trades that would pay out if the pound fell as low as US$1.12 had also topped that seen during the mini-Budget turmoil of 2022, according to Bloomberg.
Last week saw the pound sink 1.8% as borrowing costs surged, with 30-year gilt yields hitting their highest level since 1998.
Fears had built that chancellor Rachel Reeves would be forced to scale back on spending pledges with cuts or tax raises as a result.
Expectations for Bank of England rate cuts have also dropped recently over concerns around stubborn inflation, with markets pricing in 44 basis points of reductions for 2025 on Monday, against 50 basis points last Friday... Read more
8.09am: Entain (LON:ENT) surges but FTSE 100 drops
London’s blue chips kicked off the week in poor form, dropping 21 points to 8,227 at Monday’s open and almost fully wiping off last week’s gain.
M&G PLC (LSE:MNG) led the early fallers, down 3.4%, ahead of Melrose Industries (LON:MRON) PLC (LSE:MRO, OTC:MLSPF) and Rolls-Royce Holdings PLC (LSE:RR.).
Entain PLC (LSE:ENT) rallied by 8.7% in the meantime, after having come out to defence itself on the back of a 10% drop last week after rival warnings over customer-friendly sports results.
The Ladbrokes, Coral and Foxy Bingo owner said its financial outlook for 2024 was unchanged from its last update, which is for group earnings (EBITDA) to be towards the top end of its £1,040-1,090 million guidance range… Read more
Elsewhere, BP PLC (LSE:NYSE:BP (LON:BP).) and Shell PLC (LSE:LON:SHEL, NYSE:SHEL) ticked higher as trading got underway, in line with further gains for oil early on.
8.00am: Oil rallies further as US strengthens sanctions on Russia
Oil topped a four-month high on Monday as fears built around a new wave of US sanctions against Russian exports.
Benchmark Brent crude climbed as high as US$81.47 a barrel on Monday, before receding slightly to US$80.90 for a 1.5% gain over the day.
At Monday’s peak, oil was trading at its highest level since late August, taking gains to around 6% since midway through last week.
The US Treasury on Friday unveiled wider sanctions against Russia’s oil industry, targeting producers Gazprom (MCX:GAZP) Neft and Surgutneftegas, alongside some 183 vessels.
Exports to major partners China and India are set to be significantly hit, with the wider sanctions doubling the number of targeted Russian oil tankers.
“The latest actions are expected to counter the one million barrel per day oil surplus forecasted by the International Energy Agency this year,” Swissquote Bank analyst Ipek Ozkardeskaya commented.
7.44am: Sosandar flags strong Christmas and eyes road to profit
Sosandar Plc (AIM:SOS) has flagged strong Christmas trading and said it remains on course to turn a profit this year.
Third quarter revenue came in at £12.2 million, Sosandar reported on Monday, which was off the £14.3 million seen a year earlier, but up 50% on the first and second quarters.
Gross margins climbed from 58.3% to 64.7% year on year, driving a “continued positive swing in profit before tax trajectory”.
Partywear, alongside core knitwear and denim sales had been strong in the run up to Christmas, with Sosandar flagging positive traffic across its four stores and online.
Sosandar said it remained on course to match expectations for a full-year £1.0 million pre-tax profit, against a £0.3 million loss in 2023, “despite the well-publicised challenging macro-environment”... Read more
7.12am: Stocks to drop
Futures had London’s blue chips reversing on last week’s gains ahead on Monday’s open, with the FTSE 100 seen 19 points lower at 8,238.
The index had racked up a 24-point gain over the course of last week, despite a 71-point drop on Friday as expectation-beating US job data hit hopes for Federal Reserve rate cuts.
US markets took a beating on Friday as a result, with Asian markets also falling across the board overnight.
Back in London, FTSE 250-listed recruitment firm PageGroup PLC (LSE:PAGE) was set to be in focus on Monday.
5.00am: Monday's schedule
PageGroup's update kicks off a busy week of earnings on Monday, with the recruiter, alongside peer hays, set to offer clarity on job market conditions.
PageGroup and Hays (LON:HAYS)' updates are expected to reflect unease across the job market... Read more
Announcements due:
Trading updates: PageGroup PLC (LSE:PAGE)
Finals: Hercules Site Services PLC (LON:HERC)
AGMs: 80 Mile PLC, Taylor Maritime Inc, Cap-XX Ltd