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London open: Stocks rally as investors eye jobs data; Croda, Burberry gain
London stocks rose in early trade on Monday as investors eyed the release of key jobs data later in the week.
At 0830 GMT, the FTSE 100 was up 0.7% at 8,129.91.
Kathleen Brooks, research director at XTB, said: “In the UK, labor market data will be scrutinised to see whether wage prices have moderated. Monthly payrolls are expected to have declined by 13k in October, the 3-month-on-month unemployment rate is expected to rise a notch to 4.1% from 4% in August. Average weekly earnings are expected to rise a touch to a 3.9% quarterly rate, while excluding bonus, weekly earnings are expected to moderate to 4.7% from 4.9%.
“This data is expected to show that wage pressures remain stubborn in the UK. The unemployment rate may be rising, but at a slow pace that is not enough to weaken wages.
“The interest rate futures market has mostly priced out the chance of a December rate cut from the BOE, instead there is a 74% probability of a cut in February. We doubt that an upward surprise to labour market data or wage growth will move the dial on a February rate cut, however, it could help boost the pound. GBP/USD fell last week along with other G7 currencies, however, it had lower volatility than its peers, and is currently hovering around $1.2920.
“The election of Trump makes it hard for the pound to stage a sustained rally in the medium term, in our view, although it may be more protected from a sharp selloff compared to other G7 currencies.”
In equity markets, Croda shot higher as the specialty chemicals group left full-year constant-currency profit guidance unchanged after a solid third quarter, but said a stronger pound will hit the bottom-line results more than previously expected.
Kainos was also a high riser as the software group unveiled a £30m share buyback and reported a rise in interim profit, although it remained cautious on full-year prospects.
Burberry rallied following a report the luxury brand is on the brink of being taken over by Italy’s Moncler.
According to correspondence seen by The Mail on Sunday, staff at one of Burberry’s flagship London stores have already been told about the takeover.
Speculation about a potential takeover first emerged early this month when industry website Miss Tweed said Moncler was considering a buyout.
A source told The Mail that Burberry has paused discussions with business affiliates who sell its merchandise until more details of the Moncler bid have been confirmed.
They added that staff had been told not to discuss the offer with outsiders “until an official statement has come out”.
Trustpilot was also in the black after an initiation at ‘buy’ at Deutsche Bank.
Direct Line was in the red after saying it plans to axe 550 jobs as part of a turnaround plan as its motor insurance arm continues to struggle amid tough trading conditions. The insurer reported a fall in third-quarter gross written premiums and associated fees to £836m compared with £1.28bn a year ago.
Direct Line said it was targeting £50m gross costs savings in 2025.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said Direct Line continues to battle “with internal demons and a tough trading environment”.
“Cutting costs is one angle of attack to try and bring performance back on track, the other angle must come from stabilising the customer base, especially in the all-important motor division,” he said.
“Another 71,000 own-brand motor customers were lost over the third quarter as premiums were 3% higher than last year on average. The good news is that the rate of decline in customer numbers is slowing, as insurance prices are now starting to come down after some mammoth hikes were put through earlier in the year.
“It’s no secret that Direct Line has struggled over the past few years to deal with a challenging motor insurance market, and operational missteps have weighed on performance. But armed with a new leadership team, a more refined strategy, and new growth angles like the relaunch on price comparison sites, this looks like the best version of Direct Line for some time. Whether it’s able to deliver all that’s promised remains to be seen.”
Elsewhere, NatWest was in focus as it repurchased £1bn of shares from the HM Treasury, taking the government’s stake in the banking group to 11.4%.
DS Smith was lower after a downgrade to ‘equalweight’ at Barclays.
Outside the FTSE 350, Aquis Exchange flew higher after agreeing to be taken over by Swiss stock exchange operator Six Exchange Group in a £225m deal.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rolls-royce Holdings Plc | +2.86% | +15.80 | 569.00 |
| 2 |  |
Smith & Nephew Plc | +2.18% | +20.00 | 937.60 |
| 3 |  |
Diploma Plc | +2.13% | +94.00 | 4,514.00 |
| 4 |  |
Barclays Plc | +2.03% | +5.10 | 256.60 |
| 5 |  |
Crh Plc | +1.93% | +150.00 | 7,932.00 |
| 6 |  |
Melrose Industries Plc | +1.90% | +9.60 | 515.80 |
| 7 |  |
Natwest Group Plc | +1.76% | +6.70 | 387.50 |
| 8 |  |
Wise Plc | +1.71% | +14.00 | 835.00 |
| 9 |  |
Auto Trader Group Plc | +1.70% | +13.20 | 790.80 |
| 10 |  |
3i Group Plc | +1.59% | +54.00 | 3,441.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bhp Group Limited | -2.01% | -43.00 | 2,092.00 |
| 2 |  |
South32 Limited | -1.05% | -2.00 | 187.60 |
| 3 |  |
Sainsbury (j) Plc | -1.04% | -2.60 | 246.60 |
| 4 |  |
Rio Tinto Plc | -0.80% | -39.50 | 4,906.50 |
| 5 |  |
Glencore Plc | -0.61% | -2.40 | 392.40 |
| 6 |  |
Flutter Entertainment Plc | -0.58% | -110.00 | 19,015.00 |
| 7 |  |
Investec Plc | -0.56% | -3.50 | 619.50 |
| 8 |  |
Tesco Plc | -0.52% | -1.80 | 343.40 |
| 9 |  |
Banco Santander S.a. | -0.40% | -1.50 | 371.00 |
| 10 |  |
British American Tobacco Plc | -0.37% | -10.00 | 2,723.00 |
US close: Stocks hit more records as post-election rally continues
US stocks registered mild gains on Friday but still managed to hit new records as the post-election rally continued, with the Dow and S&P 500 putting in their best weekly performance of the year so far.
The Dow was up 0.6% at 43,988.99, putting it on a 4.9% gain for the week, while the S&P 500 rose 0.4% to 5,995.54, finishing 4.7% higher than last Friday.
Meanwhile the Nasdaq only gained 0.1% to 19,286.78, held back by heavy falls from Chinese companies as Beijing’s latest stimulus measures underwhelmed. Nevertheless the index still rose 5.9% on the week.
“With the election out of the way investors have rushed back to US stocks, cheered both by the removal of political uncertainty and by the promise of more earnings growth. Worries about higher inflation and an end to rate cuts have been cast aside, for now,” said Chris Beauchamp, chief market analyst at IG.
The Federal Reserve’s decision to lower interest rates was still drawing an amount of investor attention on Friday, as were comments from Jerome Powell. The Fed chair said he was “feeling good” about the state of the US economy during his post-meeting presser, but did warn that the US was on an unsustainable path as far as fiscal policy was concerned.
In economic news, US consumer confidence hit a six-month high heading into the elections in November, the results of a closely followed survey revealed. On a preliminary basis, the University of Michigan’s consumer confidence index edged up from a reading of 70.5 for October to 73.0 in November. Economists had pencilled in a print of 71.0.
In other news, global financial markets were reacting to China’s latest stimulus package announced on Friday, as it looked to tackle surging levels of local government debt and revive the country’s flagging economy. Beijing approved a Rm10trn (£1.1bn) plan to help heavily-indebted local governments refinance. The funds will go towards reducing off-balance, or hidden, debts. However, many say the measures don’t get far enough.
“The problem with China’s stimulus measures is that they are not stimulus. They are essentially a debt swap to shore up local government’s finances. The market reaction shows that traders do not see these measures as boosting consumption, and instead they are designed to stop a financial crisis domestically in China,” said Kathleen Brooks, research director at XTB.
Market movers
Electric car giant Tesla continued to surge following the election, finishing up 8% on the day and 29% on the week, on hopes that founder Elon Musk’s heavily publicised support of Donald Trump will benefit the company and wider industry.
Trump’s own company, Trump Media & Technology, finished firmly higher after the president elect quashed speculation that he is planning to sell stock in the social media group.
Airbnb’s stock fell sharply after the travel bookings marketplace beat revenue estimates but missed profit forecasts in its third quarter.
US-listed shares in Chinese companies tanked as investors gave Beijing’s latest stimulus measures a negative reaction. JD.com, NetEase, Baidu and Trip.com were among the worst performers on the Nasdaq.
Monday newspaper round-up: Hospitality, wind generation, Vertical Aerospace
Great Britain “lags behind” Europe on measures to restrict betting adverts, according to a report released days after official data showed a sharp increase in the number of children with a gambling problem. Restrictions on ads by bookmakers and casinos are increasingly becoming “the norm” across Europe in response to public health concerns, according to a report commissioned by GambleAware, the UK’s leading gambling charity. – Guardian
Hospitality businesses will be forced to close while others will have to slash jobs and investment as a result of changes to national insurance announced in the budget, according to a letter to the chancellor signed by the bosses of more than 200 of the UK’s largest restaurant, pub and hotel businesses. The letter – with signatories including the Premier Inn owner Whitbread and pub and restaurant group Mitchells & Butlers – comes as reports suggested Tesco would face an additional £1bn in costs over the course of the current parliament as the result of the increase in employers’ national insurance contributions (NICs). – Guardian
Britain’s wind generation is set to plummet to virtually zero this week as Ed Miliband presses ahead with plans to increase the nation’s reliance on renewable energy. Much of the UK has seen zero hours of sunshine this month, and the first part of this week will see already-light winds hit fresh lows in many areas, according to Met Office forecasters. – Telegraph
A City grandee, business groups and a staff union have urged MPs to intervene to ensure the publication of a long-delayed report on a £1 billion fraud at Lloyds Banking Group. Lord Tyrie, former chairman of the Treasury committee, said the handling of the Dame Linda Dobbs review into whether Lloyds covered up a fraud at HBOS, the lender it rescued in 2009, was “itself becoming a scandal”. – The Times
Vertical Aerospace is in advanced negotiations with creditors over a rescue deal that will probably result in its founder ceding control of the Bristol-based would-be manufacturer of electric flying taxis. Vertical could announce a deal as early as Tuesday with Jason Mudrick, an American distressed debt investor, based on the conversion of $200 million of loans from his Mudrick Capital into a big equity stake, significantly diluting the Ovo Energy tycoon Stephen Fitzpatrick’s 70 per cent control of the company. – The Times
