- FTSE 100 down 67 at 8,195
- US markets tipped to open lower
- UK wages rise but unemployment steady
12.30pm: LSEG buoyed by upgrade as new matched bargain platform inches forward
LSEG, the operator of the London Stock Exchange (LON:LSEG), was one of the few risers on a couple of bits of news.
Swiss bank UBS upgraded the data group to buy (from neutral) based on its relative undervaluation compared to data service peers with a new price target of 13,500p.
UBS notes that is 20% upside with the new target “driven by earnings growth” with that upside potential 20-25% higher if LSEG can narrow a valuation gap with Info Services peers.”
Separately, the FCA said it is starting consultations on how to implement a new matched bargain platform called Pisces on the LSE
Simon Walls, interim executive director of markets at the FCA, said: “ Next (LON:NXT) year we will ring the bell on a new private stock market that could transform how private companies access funds and grow.
“It will offer investors more access and a greater confidence to invest in private companies and could act as a stepping stone to public markets for those firms.
“We want to work with industry and ensure we have the right building blocks in place to support investment in growing companies.”
Aimed at institutions, professionals and high net worths, retail investors will not be allowed to participate.
The current junior market AIM has struggled to justify its billing as the place for new companies to raise new money with many small firms choosing private funding or to list in the US if they are large enough.
But investors with long memories will recall AIM was set up to meet a gap in the market that matched bargain platforms at that time weren’t filling.
FTSE 100 down 67 at 8,195.
12.05pm: US stocks to fall as rate call draws closer
Caution looked to sweep across Wall Street ahead of Tuesday’s trading as this week’s Federal Reserve interest rate call drew closer.
Futures had the Dow Jones down 0.4% before the opening bell, while the S&P 500 and Nasdaq were seen 0.3% and 0.1% lower respectively.
Attention this week has been on Wednesday’s interest rate decision by the Fed, with markets widely anticipating a 25 basis point cut.
Retail sales figures for November on Tuesday could provide some colour as to consumer spending ahead of the rate call though, interactive investor analyst Richard Hunter noted.
Expectations are for a 0.5% increase over the month, against October’s 0.4% uptick, with sales seen 3.8% higher on an annual basis.
On Wednesday’s rate decision, Hunter added: “The near certainty of a cut has seen speculation moving on to the accompanying comments, where the Fed’s outlook next year could be market moving.
“Previously, four small cuts had been expected, but the residue of a strong economy and some potentially inflationary actions by the new administration could lead to the central bank sitting on its hands as it surveys the new economic scene.”
11.25am: Barclays (LON:BARC) hit by adverse motor finance ruling
Barclays was under pressure after the High Court rejected its appeal over a decision by the Financial Ombudsman related to a car finance loan.
The bank said it intends to appeal the decision which ruled it unfairly added £1,300 commission to a car loan arranged in 2018.
“This challenge related to a single, specific case on which we disagreed with the Financial Ombudsman Service’s decision,” Barclays said. “We are disappointed in the court’s ruling and will be appealing.”
Car finance has become a huge headache for UK banks with Lloyds (LON:LLOY) and Close Bros facing potentially huge bills following a ruling by the Court of Appeal over whether commission payments should have been disclosed to borrowers.
Shares in Barclays fell by 0.8% while Lloyds dropped 1.1% and Close Bros 1.6% even though those two banks were not directly involved in today's ruling.
FTSE 100 down 59 at 8,202.
10.55m: No respite in FTSE 250
London’s second-tier index, the FTSE 250, was mirroring its larger cousin, dropping 0.88% to 20,630 with Chemring (LON:CHG), down 10%, and Hollywood Bowl, 8% lower, the chief culprits.
Weapons maker Chemring was harder to explain as it reported an 8% revenue increase to £510.4 million for the year to October 31, driven by strong performances at its Roke division, which posted top-line growth of 17%.
Underlying operating earnings (EBITDA) were up 6% at £93.7 million, but the mood today is unforgiving with the shares down 36.5p at 325p.
10.35am: Pound edges higher as rate cuts pushed out
This morning’s jobs numbers have put the cat among the pigeons ahead of inflation numbers and the Bank of England rate decision later this week.
The pound edged up against the dollar on talk that the rise in wages has ended any chance of a rate cut on Thursday, though hiring stats suggest that is just what the country needs according to some economists.
The number of job vacancies in the UK fell by 31,000 to a three-year low of 818,000 in the UK in the three months to November, adding to a run of declines that now totals 29 months.
Hopes for the next rate cut have been pushed out until May 2025 according to one economist.
Rob Wood, at Pantheon Macroeconomics, said: “Facing this renewed trade-off between weaker growth and still strong inflation pressures the Monetary Policy Committee will keep interest rates on hold this week and will have to proceed cautiously.”
Pantheon expects three 25 basis point cuts (0.25%) next year.
Sterling rose to US$1.27 against the US dollar.
FTSE 100 down 66 at 8,195.
10.05am: Rolls-Royce (LON:RR) gets upgrade on bullish outlook
Also on the up today is Rolls-Royce, helped by a bullish write-up from Deutsche Bank (ETR:DBKGn), which has increased its share price target to reflect free cash flow and earnings estimates, as well as updated sector assumptions.
Analyst Christophe Menard noted that a potential catalyst could be an update of Rolls-Royce’s 2027 targets in February 2025, as consensus figures already surpass the company’s existing guidance.
Menard reckons Rolls-Royce's current valuation looks low though the aerospace company “must advance its transformation programme to align its valuation metrics with competitors like General Electric (NYSE:GE)”.
Deutsche maintained a ‘buy’ rating on the stock with a share price target upgraded from 555p to 630p against 583p .
FTSE 100 down 54 at 8,207
9.45am: Technology Minerals (LON:TM1) rockets on Glencore (LON:GLEN) deal
Enough of the gloom this morning, time for some good news.
Technology Minerals shares jumped 150% as it unveiled an offtake deal with FTSE 100 mining and trading giant Glencore.
Under the agreement, Recyclus (Tech Min’s 48%-owned associate) will supply black mass, produced at its industrial-scale lithium-ion facility in Wolverhampton, to Glencore’s European operations.
Black mass is the stuff recycled from used lithium-ion batteries that is then processed to retrieve lithium, nickel, manganese, and cobalt that can be used again to make new batteries.
Glencore has been spending a fortune setting up new facilities to deal in bulk with this problem of unwanted Li-ion batteries and this is a clear endorsement of TM’s processes said Robin Brundle, TM's chair.
It also marks its second major agreement, with a group in India also trialling the process.
“Commercial traction for our recycling solutions continues to increase,” said Brundle (read more).
Shares in TM jumped 0.17p to 0.28p while Glencore eased 1.5% to 362,4p on China economic concerns.
9.20am: Surprise rate cut hopes diminish after job stats, say commentators
More on the unemployment numbers this morning and more critically the jump in wages for the first time in a year ahead of the Bank of England rate decision on Thursday.
Capital Economics said the rise in regular private sector pay growth in October will add to the Bank of England’s worries about a resurgence in inflation.
Adding it had expected public sector pay deals to drive up wage growth in October, it was private sector pay deals that were mostly the reason average earnings rose to 5.2%.
“That said, the Bank can take some comfort from the further gradual loosening in the labour market.
"The reliability issues of the Labour Force Survey mean that the Bank won’t read too much into the unemployment rate staying at 4.3%.
“But it will put more weight on the 35,000 decline in the PAYE measure of employment in November and the further fall in the number of job vacancies, from 828,000 in October to 818,000 in November, which is now broadly back in line with its pre-pandemic level.”
Danni Hewson, AJ Bell’s head of financial analysis, added: “There is still a giant question mark hanging over official jobs figures as the ONS battles to increase the number of people responding to its Labour Force Survey.
“But even with that caveat it’s impossible to ignore the cracks that have been widening in the labour market, with vacancy numbers dropping off month after month.
“Today’s official figures do have a few bright spots, including a slight fall in the economic inactivity rate. Wage growth also rose for the first time in over a year up to 5.2% and busting inflation by 3%.
“For workers, getting a bit more in their pockets will be welcome, but it has pushed the door even further closed on the slim chance that the Bank of England might deliver a surprise cut to interest rates later this week.”
Consensus is still for rates to remain at 4.75%.
FTSE 100 down 46 at 8,215.
8.55am: Good news in short supply as Footsie drops 60
Good news is at a premium this morning with Footsie’s fall reflecting a string of downbeat updates and warnings.
Capita and Hollywood Bowl have joined Bunzl (LON:BNZL) in the doghouse with cautious trading updates.
Outsource specialist Capita reported an 8% decline in adjusted revenue for the eleven months ending November 30, driven by exiting lower-margin service lines and lingering headwinds from the prior year. Shares fell 9% to 15.8p response (read more).
Bowling alley operator Hollywood meanwhile posted record revenues but warned that the rise in national insurance announced by Chancellor Rachel Reeves would see costs per average employee rise to £1,115 from £400.
The FTSE 250 group is working to mitigate the impact said chief executive Stephen Burns. Shares dropped 7% to 310p (read more)
FTSE 100 down 62 at 8,199.
8.20am: Footsie tumbles 50 points as Bunzl takes a beating
FTSE 100 has opened sharply lower with Bunzl leading the fallers on a cautious trading update.
The plastics distributor shed more than 5% at the open on a warning that profits are being hit by stickier than expected price deflation.
Revenues on an actual basis will also be lower this year, said the FTSE 100 group.
Hopes that interest rates will fall rapidly also took a dent as wages in the UK rose for the first time in a year.
Unemployment stayed steady at 4.3%, but wages including bonuses were up by 5.2%.
Oil groups were also a drag on the index with BP (LON:BP) and Shell (LON:SHEL) down by 1.4% and 1.8% respectively as the price of Brent flirted with the US$73 a barrel mark.
LSE is the best of the risers so notching up a 1% gain.
FTSE 100 down 50 at 8,211.
8.05am: Bunzl prices lower than expected but volumes 'robust'
Bunzl said expects underlying revenues this year to be 3% higher than a year ago, though will be flat or down slightly on an actual basis.
Acquisitions will be the driver, added the plastics distributables group with organic revenues seeing volumes pick up but prices are still being affected by deflation being stickier than expected.
“This is expected to have a slight impact on group adjusted operating profit in 2024, driven by Continental Europe,” said the statement.
Group adjusted operating profit in 2024 will rise strongly over 2023, said the statement with margins higher than the previous year.
In 2025, Bunzl said expects "robust" revenue growth in 2025, helped by recent acquisitions ( read more....).
7.35am: Wages rise, unemployment steady
Wages have risen for the first time in more than a year casting more doubt on potential interest rate cuts in the UK.
Unemployment was unchanged at 4.3% in the three months to October, said the Office for National Statistics, but pay including bonuses rose to 5.2%.
Job vacancies fell again and the number of employees on the payroll fell by 22,000 (0.1%), though employment is still up 160,000.
The ONS has admitted there have been issues with the reliability of its numbers, but said its estimate for November is for a 35,000 fall in payrolled employees.
7.15am : Poor start expected in London
FTSE 100 was tipped to open lower again after yesterday’s 38 point fall.
Financial spread betters were pencilling in a similar fall when markets open today with hopes for a significant Santa Clause rally looking a little forlorn.
Plastics distributables giant Bunzl is among the early reporters and confirmed a £200 million buyback for 2025 when it also expects robust revenue growth, said the trading update.
Elsewhere, Bitcoin’s rise continues, with the price topping US$107,000 as Donald Trump reiterated plans to create a US strategic reserve for crypto similar to its oil holdings.
Bitcoin specialist MicroStrategy being added to the Nasdaq 100 index also helped sentiment for the cryptocurrency said commentators.
5.00am: Unemployment, Bunzl and Hollywood Bowl on agenda
UK unemployment figures are due on Tuesday, while Hollywood Bowl and Bunzl will be among those to update.
Can Hollywood Bowl remain an unlikely bright spot... Read more
Further buybacks are expected by analysts from Bunzl... Read more
Announcements due:
Finals: Hollywood Bowl Group PLC (LON:BOWL)
Trading updates: Dunedin Enterprise Investment Trust, Bunzl PLC, Capita PLC (LON:CPI)
Finals: Chemring Group PLC
AGMs: Gfinity, GS Chain, Netcall
Economic news: Unemployment (UK), Retail Sales (US), Industrial Production (US)