Proactive Investors -
- FTSE 100 rises 1 point
- UK house prices rebound more than expected
- Big news for motor insurers as Odgen rate changed
10.36am: Germany's DAX hits new high
You wouldn't know it from the headlines about the German economy and political scene in recent months, but the DAX benchmark has just risen to a new record high.
The index is up 0.55% to 19,734 this morning, up over 17% so far this year.
Manufacturing PMI data from Germany and France and the wider EU has come in higher than expected, which seems to be the spark for this today.
France's CAC has seen losses pared, now down 0.4% compared to around 1% earlier.
New record high in the #DAX, #CAC continues to weaken. Quite the divergence since April: pic.twitter.com/QtW1GiKwZI— Chris Beauchamp (@ChrisB_IG) December 2, 2024
10.05am: Gloomy economic data
A deluge of economic data is pouring out this week as we start a new month, with more in the past half hour.
The UK manufacturing PMI fell below expectations reading to a nine-month low amid falling orders and rising costs.
Last month saw the sharpest retrenchment in new order intakes since February, while concerns about the economic outlook, costs and weak demand led to cutbacks in hiring, purchasing and inventory holdings.
Elsewhere, the CBI says private sector firms expect activity to fall over the next three months, the first time this year that expectations for growth have been negative.
High street retailers have suffered their worst slump in sales since Covid, according to BDO, who says fears over the economy have put pressure on shoppers.
Sales last month fekk 5.8% on a year ago, with less spent both online and in stores in what the accountancy group says is the worst retail performance since January 2021.
9.40am: UK manufacturing PMI disappoints
The UK manufacturing PMI dropped to 48.0 in November, falling below th 48.6 preliminary reading to a nine-month low amid falling orders and rising costs.
This was down from 49.9 in October, with the manufacturing PMI coming in below the neutral 50.0 mark in each of the past two months.
9.33am: Stellantis (LON:0QXR) situation 'unprecedented'
Vauxhall, Peugeot and Fiat (BIT:STLAM) maker Stellantis NV (NYSE:STLA, EPA:STLA) announced the resignation of chief executive Carlos Tavares with immediate effect this morning, following a rift emerging with the rest of the board.
Finance chief Richard Palmer also left this summer.
"Stellantis’ success since its creation has been rooted in a perfect alignment between the reference shareholders, the board and the CEO," a statement from senior independent director Henri de Castries read.
"However, in recent weeks different views have emerged which have resulted in the Board and the CEO coming to today’s decision."
The process to appoint the new permanent CEO is well underway, and will be concluded within the first half of 2025, with a new interim executive committee being established as an interim measure.
"We don’t recall a time when we have seen both CEO and CFO leaving in such a short period," says JPMorgan (NYSE:JPM) analyst Jose Asumendi.
"This sets an unprecedented challenge for investors looking to invest in a firm with such volatility in the management team."
Stellantis shares are down 8.3% in Milan.
9.16am: Markets not in festive mood at start of December
The FTSE 100 and FTSE 250 have barely moved after an hour and a quarter of trading in December, as buyers and sellers battle it out.
Housebuilders are bottom of the blue-chip movers, led by Persimmon (LON:PSN) and Vistry, despite positive house price data from Nationwide, which showed UK prices rebounded in November at the fastest pace for two years.
Looking at the largest constituents of the index, share price falls for oil giants (despite a 1% rise for crude oil prices this morning) and banks, is being offset by gains for miners and defence names like BAE Systems (LON:BAES).
Top risers are Spirax (LON:SPX) Group, continuing its momentum from last week, and home improvement names like Howden Joinery and Kingfisher (LON:KGF).
Across the Channel, European markets are mostly lower, led by the CAC 40 in Paris, down 0.9% amid political tension in France.
The right-wing Rassemblement National (National Rally) said it would not hesitate to bring down the minority government led by premier Michel Barnier over the recent budget announcement, with compromise negotiations having stalled ahead of a key vote this afternoon.
Newspapers report risks that the government could fall as early as this week.
Germany's DAX is down 0.1%, Italy's FTSE MIB down 0.8% and Spain's IBEX 35 up 0.3%
On the Stoxx 600, which is down 0.1%, Stellantis is the biggest faller, down 8.3% after chief executive Carlos Tavares resigned with immediate effect.
8.49am: Later data, please
UK financial regulators and the Office for National Statistics are mulling whether to start releasing economic data later in the morning, after a request from concerned traders and investors.
A decision on ending the release of data before the market opens at 8am will be given in the first few months of 2025, according to a Bloomberg report this morning.
The Bank of England's Prudential (LON:PRU) Regulation Authority is consulting with the ONS on the matter, as institutional investors apparently believe the practice of pre-market releasing sparks unnecessary volatility that affects the real economy
8.28am: Supreme deal?
Supreme PLC (AIM:SUP) shares are up 5% after it snapped up Typhoo Tea from administrators.
The vapes, batteries and lightbulbs distributor said on Friday it was in talks.
Under the deal, Supreme will pay a total cash consideration of £10.2 million to take Typhoo out of administration.
8.13am: FTSE opens lower
The FTSE 100 has started lower, in contrast to stock markets on the continent.
London's benchmark has dropped five points to 8,282
Housebuilders are notable fallers, with Persimmon PLC, Vistry Group (LON:VTYV) PLC and Taylor Wimpey (LON:TW) PLC are down 3.1%, 2,8% and 1.3% respectively.
Precious metals miners Fresnillo PLC (LSE:LON:FRES) and Endeavour Mining PLC (LON:EDV) (LSE:EDV, TSX:EDV, OTCQX:EDVMF) are also in the mix, with insurers, banks and other financial stocks also dragging.
7.56am: Ogden rate change for motor insurers
Important news for motor insurers, the personal injury lump sum discount rate (also known as the Odgen rate) will be increased to 0.5% from mid-January - meaning insurers will have to pay out less to crash victims than they would under the current rate.
Labour's new Lord Chancellor, Shabana Mahmood, has been reviewing the rate since she was appointed, as it is required to be reviewed at least every five years, having been changed to 0.25% from 0.75% in 2019
This discount rate is what courts must consider when awarding compensation for future financial losses in the form of a lump sum in personal injury cases in England and Wales.
Mahmood said she considered evidence from two rounds of evidence, consulted the statutory consultees, HM Treasury and an independent expert panel, as well as considering advice from officials.
7.46am: Topps Tiles fights back at chippy investor
Topps Tiles PLC (LSE:LON:TPT) has issues a statement to fight back and defended its strategy after its biggest shareholder called for an overhaul of senior management and strategy due to their “complete failure” to adapt to a challenging market.
The Sunday Times got to see a copy of a letter that Austrian investment company MS Galleon, which owns almost a 30% stake, wrote to the UK chain’s chairman Paul Forman last week to argue that management made a series of “costly blunders”.
Criticism included that Tiopps has not developing a larger ecommerce operation and calling the acquisition of CTD Tiles “irrational” and “highly detrimental”.
Forman said in the statement that the strategy was reviewed in April and presented to shareholders in May, with further updates in last week’s results announcement...read more here
7.29am: Housing market remaining resilient
House prices rising 1.2% month on month in November, after taking account of seasonal effects, puts house prices just 1% below the all-time high recorded in the summer of 2022, says Robert Gardner, Nationwide's chief economist
"The acceleration in house price growth is surprising, since affordability remains stretched by historic standards, with house prices still high relative to average incomes and interest rates well above pre-Covid levels," he says.
The upcoming changes to stamp duty are not the likely cause, he believes, since the majority of mortgage applications began before Rachel Reeves' Budget announcement.
Gardner says housing market activity has "remained relatively resilient in recent months", with mortgage approvals approaching levels seen pre-pandemic, despite the higher interest rate environment.
"Solid labour market conditions, with low levels of unemployment and strong income gains, even after taking account of inflation, have helped underpin a steady rise in activity and house prices since the start of the year.
"Household balance sheets are also in good shape with debt levels at their lowest levels relative to household income since the mid-2000s."
He sees the upcoming stamp duty changes as providing an incentive for buyers to bring forward house purchases to avoid paying additional tax, which is "likely" to lead to a jump in transactions in the first three months of 2025, especially in March, and a corresponding period of weakness in the following through to June or even September, as occurred in the wake of previous stamp duty changes.
"But, providing the economy continues to recover steadily, as we expect, the underlying pace of housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth."
7.22am: House prices up 3.7%
Fresh house price data may grease the wheels of certain sectors in the first trading day in December, with the fastest rate of annual growth in two years.
UK house prices rose 1.2% in November compared to the month before, according to Nationwide figures, helping the annual growth rate rebound to 3.7% from 2.4% in October.
House prices are now just 1% below their all-time peak.
7.14am: Stocks seen edging up
Futures had the FTSE 100 climbing just above the mark by two points to 8,303 ahead of trading on Monday.
London’s blue chip’s had gained 25 points over the course of last week, aiding the index to a 103 point, or 1.3% gain for November.
Overnight, Asian markets largely gained, led by China’s Shenzhen index which ticked up 1.4%.
Back in London, attention was on house price data from Nationwide, alongside manufacturing purchasing managers index data.
5.00am: House prices in focus
Monday kicks off with house price data from Nationwide for November after Zoopla reported a 1.5% increase through October last week.
Announcements due:
Finals: SRT Marine Systems PLC (LON:SORA)
US earnings: Zscaler Inc (NASDAQ:ZS)
AGMs: R8 Capital Investments PLC
Economic announcements: Nationwide House Prices (UK), PMI Manufacturing (UK), PMI Manufacturing(US), Construction Spending (US), ISM Manufacturing (US)