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London open: FTSE nudges down as housebuilders slide
London stocks nudged lower in early trade on Monday, with housebuilders under the cosh.
At 0840 GMT, the FTSE 100 was down 0.1% at 7,481.30.
Richard Hunter, head of markets at Interactive Investor, said: “The initial exuberance of the New Year was soon replaced by a more wary outlook, as the impact of earlier than expected rate hikes were being priced in.
“The non-farm payrolls figure was much lighter than expected, coming in at 199000 jobs added versus a consensus of 400000, suggesting a lack of available workers. That being said, over the course of last year around 6.5 million jobs were added, and unemployment now stands at 3.9%. This would tend to play into the Federal Reserve’s more recent view that full employment may already have been reached, which in turn could lead to wage pressure.
“This additional inflationary factor points to the Fed sticking to a course of monetary tightening, which now seems likely to lead to an initial rate hike in March.”
Hunter said the UK’s premier index was “cautiously bucking the trend” in the early part of the year, having so far added 1.3%.
“Perhaps less impacted by rate hike timing concerns as evidenced in the US, the index is rather being bolstered by the nature of its constituents. An initial 5% hike in the oil price has lifted the majors, with Shell regaining its place as the largest FTSE 100 company by capitalisation.
“The banks are also being boosted on the possibility of a rising interest rate environment. Equally, the sector has more recently come into vogue on valuation grounds, with investors considering the banks to be sitting on relatively cheap valuations, and with the currently preferred picks being Barclays and Lloyds.”
In equity markets, housebuilders slumped on news the government will seek an extra £4bn from property developers to fund cladding repairs on low-rise flats. Persimmon, Berkeley, Barratt, Taylor Wimpey, Bellway, Countryside, Vistry, Crest Nicholson and Redrow all fell.
On the upside, Coca-Cola HBC was the standout gainer on the FTSE 100, boosted by an upgrade to ‘buy’ at Bank of America Merrill Lynch.
ITV also rose after an upgrade to ‘outperform’ at Exane, while Tate & Lyle benefited from the same rating upgrade.
Plus500 rallied after saying it had delivered an “outstanding” operational and financial performance throughout FY2021, ahead of market expectations.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Easyjet Plc | +2.44% | +15.20 | 637.00 |
| 2 |  |
Coca-cola Hbc Ag | +2.22% | +58.00 | 2,672.00 |
| 3 |  |
Marks And Spencer Group Plc | +1.95% | +5.00 | 261.60 |
| 4 |  |
Itv Plc | +1.75% | +2.00 | 116.30 |
| 5 |  |
Tui Ag | +1.74% | +4.50 | 263.40 |
| 6 |  |
International Consolidated Airlines Group S.a. | +1.71% | +2.76 | 163.78 |
| 7 |  |
Associated British Foods Plc | +1.46% | +30.00 | 2,081.00 |
| 8 |  |
Vodafone Group Plc | +1.31% | +1.50 | 116.10 |
| 9 |  |
Rolls-royce Holdings Plc | +1.31% | +1.66 | 128.80 |
| 10 |  |
Standard Chartered Plc | +1.21% | +5.90 | 492.90 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Persimmon Plc | -2.72% | -76.00 | 2,718.00 |
| 2 |  |
Barratt Developments Plc | -2.69% | -19.80 | 715.60 |
| 3 |  |
Taylor Wimpey Plc | -2.49% | -4.30 | 168.65 |
| 4 |  |
Berkeley Group Holdings (the) Plc | -2.44% | -116.00 | 4,647.00 |
| 5 |  |
Experian Plc | -1.79% | -61.00 | 3,353.00 |
| 6 |  |
Croda International Plc | -1.78% | -168.00 | 9,290.00 |
| 7 |  |
Segro Plc | -1.71% | -23.00 | 1,320.00 |
| 8 |  |
Burberry Group Plc | -1.40% | -25.00 | 1,761.50 |
| 9 |  |
Ferguson Plc | -1.25% | -160.00 | 12,680.00 |
| 10 |  |
Ocado Group Plc | -1.22% | -19.00 | 1,541.00 |
Europe open: Shares lower as UK housebuilders hit with cladding bill
European shares started the week in subdued mood, with UK house building stocks lower on news the UK government was ordering firms to pay £4bn for the removal of dangerous cladding.
The pan-European Stoxx 600 index was down 0.28% in early deals, with all regional bourses lower.
Investors will be eyeing US inflation numbers later in the week and testimony from US Federal Reserve Chairman Jerome Powell at his Senate nomination hearing.
“The (inflation) data is important as investors are closely watching for signs of whether inflation is still at a point where it can be controlled with monetary policy tools or whether the Fed has lagged behind in tackling higher consumer prices,” said Avatrade analyst Naeem Aslem.
In equity news, housebuilders were out of favour after the British government finally moved to help apartment owners who were potentially liable for massive bills to take down dangerous cladding from their buildings in the wake of a 2017 tower fire in London that killed 72 residents.
The discovery that apartment buildings around the country were covered in flammable cladding led to a row between the government, developers and owners over who should foot the bill for removal.
It was widely expected that the government would on Monday order companies to pay for cladding removal on buildings between 11 and 18 metres high. Owners had previously been expected to meet costs running to tens of thousands of pounds.
Shares in Barratt Developments, Bellway, Taylor Wimpey and cladding maker Kingspan were all lower on the news.
Elsewhere, shares in Swiss drugmaker Idorsia soared said after the company said it had received US Food and Drug Administration approval for its treatment for insomnia in adult patients.
French technology consulting company Atos slumped to the bottom of the Stoxx with a 16.6% fall after the company issued its second profit warning in seven months.
US close: Stocks end session in the red following non farm payrolls miss
Wall Street stocks were all in the red at the end of trading on Friday after December’s all-important non farm payrolls figures came in well and truly short of expectations.
At the close, the Dow Jones Industrial Average was down 0.01% at 36,231.66, while the S&P 500 was 0.41% softer at 4,677.03 and the Nasdaq Composite saw out the session 0.96% weaker at 14,935.90.
The Dow closed 4.81 points lower on Friday after recording heavy losses in the previous session as fears over tighter monetary policy remained in focus and investors digested a number of key data points.
Friday’s primary focus was December’s non farm payrolls and unemployment rate reports, with the data revealing that the US added 199,000 new jobs in December, according to the Bureau of Labor Statistics, well and truly short of the 400,000 expected by analysts.
However, November’s non farm payrolls figure was revised up to show that 249,000 jobs were created, up from 210,000, while October’s print was also lifted to 648,000 from 546,000. The US unemployment rate also dropped to 3.9%, down from 4.2% in November as employment continued to trend up in leisure and hospitality, professional and business services, manufacturing, construction and transportation and warehousing.
In the corporate space, GameStop shares closed higher after news broke that the company planned to venture into the crypto universe with investments in a marketplace for nonfungible tokens and digital currency partnership, while Starbucks shares lost ground after analysts at both RBC Capital Markets and Oppenheimer downgraded the coffee maker.
No major earnings were released on Friday.
Monday newspaper round-up: Household bills, housebuilding, NMCM creditors
Manufacturers have warned that Brexit will add to soaring costs facing British industry, amid concerns that customs delays and red tape will rank among the biggest challenges for firms this year. ake UK, the industry body representing 20,000 manufacturing firms of all sizes from across the country, said that while optimism among its members had grown, it was being undermined by the after-effects of the UK’s departure from the EU. – Guardian
Britain faces a housing crisis in the wake of the pandemic as confusion about planning rules and shortages of staff undermine government targets to build 300,000 homes a year, according to a House of Lords committee. A retreat from housebuilding by smaller companies must be tackled by ministers to reduce the shortage of homes, the cross-party group of peers said. – Guardian
Mike Ashley has launched legal action against the City investor Amanda Staveley after she oversaw a £305m takeover of Newcastle United Football Club. Mr Ashley, who controls the Sports Direct retail chain, has issued a claim via his company St James Holdings in the High Court against Ms Staveley and her husband Mehrdad Ghodoussi. – Telegraph
A powerful French arms company is facing allegations that it used a secret and illicit system of paying middlemen to secure lucrative international contracts. The claims against Thales, raised by a lawsuit filed in a commercial court near Paris, could jeopardise a much-needed French defence deal to India. – Telegraph
The economy will receive a much-needed boost from business investment this year with a record proportion of finance directors ready to prioritise funds for expansion, a survey says. Thirty-seven per cent of chief financial officers surveyed by Deloitte said that increasing capital expenditure, the money used to buy fixed assets such as land, machinery or buildings, was a priority for 2022. It is the highest figure recorded by the accounting firm in its quarterly survey since it first asked the question in 2009. – The Times
Unsecured creditors of NMCN are facing losses of £115 million from the collapse of the 75-year-old UK listed construction group, whose demise has triggered a regulatory investigation. Debts to unsecured creditors have almost doubled from an estimate of £60 million in October, shortly after the company appointed administrators at Grant Thornton, which has sold off NMCN’s core units in pre-pack deals. – The Times
