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London open: Stocks in the red as investors mull jobs data
London stocks fell in early trade on Tuesday following strong gains in the previous session, as investor digested the latest UK jobs data.
At 0835 GMT, the FTSE 100 was down 0.6% at 7,569.21.
Victoria Scholar, head of Investment at Interactive Investor, said: “European markets have opened lower with technology underperforming amid concerns about faster tightening from the Fed and rising yields as Britain’s 10-year gilt yield hits a three-month high and Germany’s 10-year government bond yield rises to the highest since May 2019. US markets get set to reopen after Monday’s holiday with futures pointing to a softer open.
“The FTSE 100 is trading lower amid some profit taking after a strong start to the week, closing Monday’s session at the highest level since January 2020. BP and Shell are trading near the top of the index as surging oil prices provide a tailwind for the sector.”
On the macro front, data released earlier by the Office for National Statistics showed the unemployment rate has eased, as companies continued to hire more staff despite the emergence of the Omicron variant.
There were 29.5m payrolled employees in the UK in December, up 184,000 on November’s revised figure, and 409,000 higher than in February 2020. Analysts had been looking for an increase closer to 125,000.
The broader unemployment rate for September to November eased by 0.4 percentage points to 4.1%, marginally below consensus for 4.2%. The rate is now just 0.1 percentage points higher than before the pandemic.
The employment rate remains 1.1 percentage points below pandemic, however, at 75.5%, in part because of a rise in the economic inactivity rate, which is now estimated at 21.3%, 1.0 percentage point higher than before the pandemic and 0.2 percentage points higher than the previous three-month period.
Economic activity is defined as people who are not actively looking for work and/or are not available to start work immediately.
Job vacancies also remained high, rising to a new record in October to December of 1,247,000, up 462,000 on the pre-pandemic level seen in January to March 2020.
Regular pay in the three months to November fell to 3.8% year-on-year from 4.3% in the previous month.
In equity markets, 888 Holdings lost ground even as the online betting and gaming company said full-year revenues had grown year-on-year despite a drop in the final quarter of 2021.
On the upside, oil giants BP and Shell gushed higher as oil prices surged.
Just Group gained after it posted a 25% jump in full-year retirement income sales to £2.7bn.
Alternative asset management firm Petershill Partners advanced after saying it made $458m in acquisitions in the fourth quarter, which are expected to be immediately accretive to consensus earnings forecasts.
Marshalls was also on the front foot as the landscaping specialist lifted full-year guidance after a strong final quarter of the last fiscal year which helped drive a 26% increase in annual revenue.
Qinetiq rose as the defence technology firm said it was on track to meet its full-year expectations after “strong” progress in the third quarter.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bt Group Plc | +1.27% | +2.30 | 183.35 |
| 2 |  |
Bp Plc | +0.91% | +3.60 | 397.35 |
| 3 |  |
Johnson Matthey Plc | +0.72% | +14.00 | 1,964.00 |
| 4 |  |
Royal Dutch Shell Plc | +0.64% | +11.80 | 1,854.60 |
| 5 |  |
Royal Dutch Shell Plc | +0.60% | +11.00 | 1,856.40 |
| 6 |  |
Vodafone Group Plc | +0.49% | +0.58 | 119.46 |
| 7 |  |
Pearson Plc | +0.32% | +2.00 | 618.00 |
| 8 |  |
Bae Systems Plc | +0.27% | +1.60 | 592.00 |
| 9 |  |
Hiscox Ltd | +0.19% | +1.80 | 972.40 |
| 10 |  |
Sainsbury (j) Plc | +0.14% | +0.40 | 293.00 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rightmove Plc | -3.13% | -21.60 | 668.60 |
| 2 |  |
Unilever Plc | -2.66% | -97.50 | 3,564.50 |
| 3 |  |
Micro Focus International Plc | -2.57% | -11.60 | 440.00 |
| 4 |  |
Scottish Mortgage Investment Trust Plc | -2.48% | -28.50 | 1,121.00 |
| 5 |  |
Flutter Entertainment Plc | -2.29% | -255.00 | 10,870.00 |
| 6 |  |
Ferguson Plc | -2.23% | -280.00 | 12,250.00 |
| 7 |  |
Informa Plc | -2.19% | -12.60 | 564.00 |
| 8 |  |
Auto Trader Group Plc | -2.11% | -14.60 | 677.40 |
| 9 |  |
Halma Plc | -2.10% | -56.00 | 2,614.00 |
| 10 |  |
Ashtead Group Plc | -2.09% | -120.00 | 5,620.00 |
Europe open: Shares fall as traders bet on rate rises
European shares were sharply lower at the opening on Tuesday with rising bond yields putting equities under pressure as traders punted on an early rise in US interest rates.
The pan-European Stoxx 600 index fell 1.10% as tech stocks came under pressure. Meanwhile, oil prices rose to a seven-year high on worries about possible supply disruptions after Yemen’s Houthi group attacked the United Arab Emirates.
Investors now expect the US Federal Reserve to start lifting interest rates from March in an attempt to tame inflation while UK labour data on Tuesday beat expectations, making a rate rise in early February extremely likely.
Data released earlier by the UK’s Office for National Statistics showed the unemployment rate had eased, as companies continued to hire more staff despite the emergence of the Omicron variant.
There were 29.5m payrolled employees in the UK in December, up 184,000 on November’s revised figure, and 409,000 higher than in February 2020. Analysts had been looking for an increase closer to 125,000.
The broader unemployment rate for September to November eased by 0.4 percentage points to 4.1%, marginally below consensus for 4.2%. The rate is now just 0.1 percentage points higher than before the pandemic.
“European markets have opened lower with technology underperforming amid concerns about faster tightening from the Fed and rising yields as Britain’s 10-year gilt yield hits a three-month high and Germany’s 10-year government bond yield rises to the highest since May 2019. US markets get set to reopen after Monday’s holiday with futures pointing to a softer open,” said Victoria Scholar, head of investment at Interactive Investor.
In equity news, Vivendi shares were lower after the company said it was investing in digital communication group Progressif Media through the purchase of an 8.5% stake from ZeWatchers.
French food caterer Sodexo jumped on reports Bain Capital was looking to bid for a stake in its benefits and rewards services unit.
THG shares slumped to the bottom of the Stoxx after the UK online retail platform reported a 29.7% rise in fourth-quarter revenue, but said its adjusted core earnings margin would fall short of market expectations due to adverse currency movements.
US close: Stocks mixed as Q4 earnings begin to roll in
Wall Street stocks put on a mixed performance on Friday as market participants digested earnings from some of the country’s biggest banks.
At the close, the Dow Jones Industrial Average was down 0.56% at 35,911.81, while the S&P 500 was 0.08% firmer at 4,662.85 and the Nasdaq Composite saw out the session 0.59% stronger at 14,893.75.
The Dow Jones closed 201.81 points in the red on Friday, extending losses recorded in the previous session as big tech names were on the slide as investors digested December’s producer price index and this week’s jobless claims figures.
Friday’s primary focus, however, was the beginning of fourth-quarter earnings season, with banking several giants reporting earnings earlier in the day.
Money manager BlackRock posted a jump in fourth-quarter profit on Friday as assets under management hit fresh highs, while US banking behemoth JPMorgan Chase posted record full-year profits on Friday despite revealing fourth-quarter earnings had come in lower year-on-year as a weaker performance in its trading unit somewhat offset a boom in its investment banking division.
Citigroup posted better-than-expected fourth-quarter earnings and revenues despite meagre top-line growth as its fixed-income operations underperformed, while financial services giant Wells Fargo reported fourth-quarter earnings on Friday that easily topped expectations on the Street.
On the macro front, US retail sales unexpectedly slumped in December amid rising prices, according to figures released on Friday by the Commerce Department. Retail sales fell 1.9% on the month following a 0.2% increase in November. This marked the biggest decline in 10 months and was well short of expectations for a flat reading. Excluding motor vehicles and parts and gasoline stations, retail sales were down 2.5%.
Elsewhere, industrial output underwhelmed at the end of December amid a decline in automobile manufacturing and in the output of gas utilities due to warmer-than-normal temperatures. According to the Department of Commerce, industrial production dipped at a month-on-month pace of 0.1% in December. Economists had pencilled-in a rise of 0.3%.
Still on data, US consumer confidence slipped to its second-lowest reading ever amid increasing worries over inflation, the results of a very closely-followed survey revealed. The University of Michigan‘s consumer confidence index for early January came in at 68.8, which was down slightly from its end of December level of 70.6 and economists’ forecasts for a reading of 70.2.
Lastly, business inventories rose 1.3% in November, bang in line with estimates to put inventories up 8.7% when compared to November 2020. Prior month business inventories were revised to 1.3% from 1.2%.
Tuesday newspaper round-up: Energy crisis, gambling, Collecting Cars
Soaring energy bills could eat up more than half of some UK households’ incomes, a leading poverty charity has said, amid warnings that vulnerable people will be left unable to eat regularly or could even be at risk of death from the cold. The Joseph Rowntree Foundation (JRF) said that while households across the board faced bill increases of 40% to 47% from April, there would be huge variations in the ability of families to cope. – Guardian
Thousands of student gambling addicts are spending an average of £30 a week on betting, racking up debts and missing out on university life to fund their habit, research has found. In a survey of 2,000 students, 80% said they gambled, with 35% of those who did admitting using their student loan, bank overdrafts, borrowing from friends or taking out payday loans. – Guardian
A British start-up is preparing to make driverless food deliveries for Ocado and Asda this year after raising $200m (£147m) from investors including Sir Richard Branson. Wayve’s fundraising, which also included investment from Microsoft and Baillie Gifford, brings its total backing to $258m, making it Britain’s best-funded start-up developing autonomous vehicles. – Telegraph
Collecting Cars, the online car auction service, tripled sales last year as high-end buyers raced to snap up new toys, sometimes without even viewing them first, and its founder threw down the gauntlet to “dinosaur” competitors. Its sales included a 1991 Porsche 911 modified by Singer Vehicle Design with 664 miles on the clock that went for £800,000 and a 2015 McLaren P1 sold in the US for $1.6m. – Telegraph
A former KPMG partner responsible for auditing Carillion has accused his junior colleagues of lying and making fantasy claims over his alleged role in forging documents to mislead the accounting regulator. Peter Meehan, 60, told a disciplinary tribunal that he was deliberately deceived by his team working on the audit of the collapsed outsourcer as they went behind his back to backdate documents during an inspection by the Financial Reporting Council. – The Times
