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London open: FTSE takes cues from Wall Street ‘Santa rally’
London’s stocks returned from the Christmas break in the green on Wednesday, boosted by a late Santa rally on Wall Street overnight.
At 0831 GMT, the FTSE 100 was up 0.5% at 7,736.01.
The positive momentum came after the Dow Jones Industrial Average tacked on 159.36 points overnight on its return from Christmas.
Stephen Innes, managing partner at SPI Asset Management, said US equities were “at or above” an overbought state, although that might not have significant implications if economic data did not warrant a rebuttal.
“Especially as the current market juncture coincides with the onset of the ‘Santa rally’ window, this officially-designated period spans seven sessions, covering the final five sessions of the year and the first two sessions of the new calendar.
“But really, the unofficial Santa Rally window opened in November when Fed Waller dropped the front-end rates anchor.
“Irrespective of the developments this week and early next, 2023 has already witnessed a Santa rally.”
Innes noted that the S&P showed a “remarkable” 16% increase from late October lows through Christmas.
“This robust market performance during the specified period underscores the presence of a Santa rally, leaving little room for doubt.
“Aside from the customary Santa seasonality, any gains witnessed for the remainder of this week may be attributed to the notable increase in the probability of a soft landing, as indicated by the latest round of high-impact macroeconomic data from the United States.”
Boxing day footfall shows some improvement, China industrial profits rise
In a very quiet day for economic news, fresh retail data showed Boxing Day foot traffic saw a slight uptick, with a 1.4% increase in the number of shoppers compared to the last year.
However, when compared to 2019 before the onset of the Covid-19 pandemic and lockdowns, footfall on Boxing Day was still down by about 30%, according to the data from MRI Software, formerly known as Springboard.
Elsewhere, China’s industrial profits saw substantial growth in November, marking a double-digit increase of 29.5%, following a 2.7% rise in October.
The surge in profits was underpinned by an overall improvement in manufacturing and a notable upturn in industrial output during the same month.
However, some sectors of the Chinese economy failed to meet expectations due to persistently weak demand.
Despite the positive momentum in November, data from the National Bureau of Statistics (NBS) in Beijing showed that industrial earnings in the first 11 months of 2023 still showed a year-on-year contraction of 4.4%.
This decline, though significant, was still an improvement from the 7.8% drop reported from January to October.
Anglo American up on reports of partial Woodsmith sale
On London’s equity markets, Anglo American was among the top risers amid reports that it was preparing to sell a minority stake in Britain’s biggest mining project.
According to the Times, the mining giant was looking to share the cost of the $9bn Woodsmith fertiliser mine in North Yorkshire, with chief executive Duncan Wanblad reportedly telling City analysts it was moving “at pace to find a partner”.
Elsewhere, AstraZeneca was in the green after it said it was buying Gracell Biotechnologies, a global clinical-stage biopharmaceutical company developing cell therapies for the treatment of cancer and autoimmune diseases, for $1.2bn.
AstraZeneca said it would acquire all of Gracell’s shares at $2 per share in cash, plus a non-tradable contingent value right of 30 cents per ordinary share payable upon achievement of a specified regulatory milestone.
The upfront cash portion represented a 62% premium to Gracell’s closing market price on 22 December.
HgCapital Trust was also moving higher after it announced a partial sale of IRIS Software Group (IRIS) to LGP, a private equity firm based in Los Angeles.
The terms of the transaction were not disclosed, but the transaction valued its investment in IRIS at £99.8m.
HGT said it would receive a net distribution of £42.1m after reinvesting a portion of its proceeds in the business alongside other institutional clients of Hg investing through Hg Saturn.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Anglo American Plc | +3.66% | +70.70 | 2,002.50 |
| 2 |  |
Ocado Group Plc | +2.62% | +19.00 | 744.00 |
| 3 |  |
Rentokil Initial Plc | +2.08% | +9.00 | 442.30 |
| 4 |  |
Intertek Group Plc | +1.91% | +80.00 | 4,268.00 |
| 5 |  |
Glencore Plc | +1.70% | +7.95 | 474.30 |
| 6 |  |
Scottish Mortgage Investment Trust Plc | +1.58% | +12.40 | 798.40 |
| 7 |  |
Ashtead Group Plc | +1.56% | +84.00 | 5,458.00 |
| 8 |  |
Standard Chartered Plc | +1.38% | +9.00 | 661.00 |
| 9 |  |
Croda International Plc | +1.31% | +66.00 | 5,120.00 |
| 10 |  |
Spirax-sarco Engineering Plc | +1.30% | +135.00 | 10,500.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Carnival Plc | -4.79% | -65.50 | 1,301.00 |
| 2 |  |
Vodafone Group Plc | -1.45% | -1.00 | 68.16 |
| 3 |  |
Easyjet Plc | -1.39% | -7.20 | 510.80 |
| 4 |  |
Pearson Plc | -1.12% | -10.80 | 952.80 |
| 5 |  |
Bt Group Plc | -1.02% | -1.30 | 126.00 |
| 6 |  |
Imperial Brands Plc | -0.93% | -17.00 | 1,802.00 |
| 7 |  |
Rolls-royce Holdings Plc | -0.73% | -2.20 | 300.20 |
| 8 |  |
Next Plc | -0.68% | -56.00 | 8,154.00 |
| 9 |  |
Taylor Wimpey Plc | -0.38% | -0.55 | 144.65 |
| 10 |  |
Melrose Industries Plc | -0.35% | -2.00 | 564.60 |
US close: Traders return from Christmas break in positive mood
Wall Street stocks closed higher on Tuesday as traders returned from the Christmas break in a jolly mood.
At the close, the Dow Jones Industrial Average was up 0.43% at 37,545.33, while the S&P 500 advanced 0.42% to 4,774.75 and the Nasdaq Composite saw out the session 0.54% firmer at 15,074.57.
The Dow closed 159.36 points higher on Tuesday, extending gains recorded on Friday as market participants cheered recent a surprise reading of the Federal Reserve’s favourite inflation gauge. Markets were closed for Christmas Day celebrations on Monday.
As for Tuesday, stocks started the final week of 2023 with some early gains, with Intel picking up roughly 3% as a result of the Israeli government awarding the chipmaker a $3.2bn grant for the erection of a $25.0bn plant – the largest ever investment by a company in Israel.
With Israel in mind, residents of the occupied West Bank woke up to an attack on Jenin on Christmas day, commonly viewed as a symbol of Palestinian resistance. Bethlehem, the biblical birthplace of Jesus Christ, was also raided overnight by Israeli forces as violence in the West Bank surged and arrests increased as a result of Israel’s war on Gaza, which has claimed the lives of more than 20,000 Palestinians.
A bit closer to home, US home prices posted their biggest gain of 2023 in October, according to S&P/Case-Shiller, which revealed home prices rose 4.8% nationally last month – up from a 4% annual increase seen in September and the strongest annual gain of the year. Home price growth comes despite a sharp rise in mortgage interest rates in October, with the average rate on a 30-year fixed loan passing 8% on 19 October.
On another note, the Chicago Fed national activity index rose to +0.03 in November, an increase from a revised -0.66 in a month earlier. The index suggests that economic activity rose in November, with all four broad categories increasing month-on-month and two categories making positive contributions last month.
Elsewhere, former Dallas Fed president Robert Kaplan said he expects the central bank to start lowering rates soon as it looks to seeks to avoid a recession amid cooling levels of inflation.
Also from the Lone Star state, the Federal Reserve Bank of Dallas‘ manufacturing general business activity index deteriorated for a third straight month, hitting -19.9 in November – its lowest since July. The production index, a critical gauge of state manufacturing conditions, moved into negative territory, falling to -7.2 in November, from +5.2 in the prior month.
Wednesday newspaper round-up: First-time buyers, inheritance tax, Man U, Anglo American
The Conservatives will promise to cut the up-front cost of a home for first-time buyers as a pre-election giveaway to win over younger voters. In what is expected to be a central element of the party’s campaign, Michael Gove told The Times that it would “definitely” have a new offer in place before polling day. – The Times
Downing Street is considering axing inheritance tax in three months’ time in a pre-election giveaway to boost Rishi Sunak’s chances of victory. The move is one of a handful of major tax cuts that have been discussed by senior figures in Number 10. – Telegraph
Sir Jim Ratcliffe is expected to ask an external auditor to assess Manchester United’s structure and expenditure with a view to a major streamlining exercise, meaning as many as 300 jobs are potentially under threat. Ineos executives have been in discussions with United over the past weeks regarding Ratcliffe’s plans before his purchase of 25% of the club becoming official on Christmas Eve, with the club’s management already having been reminded to curb rising costs to ensure maximum funds for transfers within the strictures of financial fair play. – Guardian
Anglo American is gearing up to sell a minority stake in Britain’s biggest mining project as it seeks to share the cost of the $9 billion development in North Yorkshire. Duncan Wanblad, chief executive of the FTSE 100 miner, told City analysts that it was moving “at pace to find a partner” for the Woodsmith fertiliser mine. – The Times
Retailers have recorded a small pickup in Boxing Day footfall, but visits to stores remained well below pre-pandemic levels as several high street chains stayed shut. Retailers have been braced for weak spending over the Christmas period as the UK economy stagnates amid the cost of living crisis. – Guardian
