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London open: FTSE edges higher ahead of payrolls
London stocks edged higher in early trade on Friday as investors eyed the latest US non-farm payrolls report.
At 0820 GMT, the FTSE 100 was 0.3% firmer at 7,654.45.
The payrolls report is due at 1330 GMT, along with the unemployment rate and average earnings. Investors will also be eyeing the S&P Global UK construction PMI for December at 0930 GMT and the latest eurozone inflation data at 1000 GMT.
CMC Markets analyst Michael Hewson said: “Today’s December number is expected to show a slowdown to 203k; however, this could be understating things given that most of the estimates in recent months have come in below the actual numbers.
“What is slightly more worrying is the inability of the participation rate to show any signs of increasing, falling back to its lows of the year at 62.1%, while unemployment rose to 3.7%. No changes are expected to either of these.
“Nonetheless, the attention today will be less on the headline numbers but on how many services jobs are added, as well as the pace of any wage gains, as some FOMC members fret about the prospect of a wage price spiral.”
On home shores, the latest figures from Halifax showed that house prices fell in December for the fourth month in a row amid rising interest rates.
House prices declined by 1.5% on the month following a 2.4% drop in November. On the year, meanwhile, house prices rose 2% in December following a 4.6% increase the month before, with the rate of growth slowing in all nations and regions.
The price of a house now stands at £281,272, down from £285,425 in November.
Kim Kinnaird, director at Halifax, said: “As we’ve seen over the past few months, uncertainties about the extent to which cost of living increases will impact household bills, alongside rising interest rates, is leading to an overall slowing of the market.
“The housing market was a mixed picture in 2022. We saw rapid house price growth during the first six months, followed by a plateau in the summer before prices began to fall from September, as the impact of cost-of-living pressures, coupled with a rising rates environment, began to take effect on household finances and demand.”
Looking ahead, Kinnaird said prices were expected to fall 8% over the course of this year.
“As we enter 2023, the housing market will continue to be impacted by the wider economic environment and, as buyers and sellers remain cautious, we expect there will be a reduction in both supply and demand overall,” she said.
“It’s important to recognise that a drop of 8% would mean the cost of the average property returning to April 2021 prices, which still remains significantly above pre-pandemic levels.”
In equity markets, miners were among the top performers as metals prices rose, with Anglo American, Glencore, Rio and Antofagasta all higher.
Shell ticked up as the oil giant said it expects to pay around $2bn in windfall tax for the final quarter of 2022.
The company said that fourth-quarter results from the integrated gas segment were set to be “significantly higher” than in Q3. It also said that liquefied natural gas production will take a hit from longer-than-expected plant outages in Australia.
Elsewhere, shipping services firm Clarkson surged as it said results for the year to the end of December were set to be ahead of current market expectations.
In a very brief statement, the company hailed strong trading throughout the final quarter, particularly from the broking division. It now expects underlying pre-tax profit of no less than £98m.
Components maker Essentra was in the red after saying it expects annual profits to be in line with expectations despite economic headwinds globally.
In broker note action, Next was knocked lower by a downgrade to ‘underperform’ at Credit Suisse, while easyJet was hit by a downgrade to ‘neutral’ at Goldman Sachs.
Rentokil was sharply lower after an initiation at ‘underperform’ by Exane.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ferguson Plc | +2.17% | +240.00 | 11,310.00 |
| 2 |  |
Bt Group Plc | +1.98% | +2.45 | 126.25 |
| 3 |  |
Anglo American Plc | +1.81% | +60.00 | 3,379.00 |
| 4 |  |
Mondi Plc | +1.64% | +24.00 | 1,483.00 |
| 5 |  |
Smurfit Kappa Group Plc | +1.63% | +53.00 | 3,303.00 |
| 6 |  |
Bhp Group Limited | +1.60% | +42.50 | 2,695.50 |
| 7 |  |
Rio Tinto Plc | +1.41% | +84.00 | 6,024.00 |
| 8 |  |
Ocado Group Plc | +1.32% | +9.40 | 722.00 |
| 9 |  |
Melrose Industries Plc | +1.28% | +1.80 | 142.95 |
| 10 |  |
Direct Line Insurance Group Plc | +1.20% | +2.80 | 236.10 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rentokil Initial Plc | -4.52% | -23.50 | 496.90 |
| 2 |  |
Standard Chartered Plc | -1.82% | -12.80 | 692.40 |
| 3 |  |
Diageo Plc | -1.74% | -63.50 | 3,589.00 |
| 4 |  |
Segro Plc | -1.61% | -12.60 | 769.40 |
| 5 |  |
Marks And Spencer Group Plc | -1.51% | -2.05 | 134.10 |
| 6 |  |
Next Plc | -1.35% | -88.00 | 6,430.00 |
| 7 |  |
Centrica Plc | -1.26% | -1.14 | 89.46 |
| 8 |  |
Compass Group Plc | -1.24% | -24.00 | 1,910.50 |
| 9 |  |
Spirax-sarco Engineering Plc | -1.17% | -125.00 | 10,585.00 |
| 10 |  |
Halma Plc | -1.17% | -24.00 | 2,033.00 |
US close: Stocks fall despite better-than-expected jobs data
US stocks were in the red by the close on Thursday, as investors continued to digest hawkish minutes from the Federal Reserve and sifted through a number of labour market reports.
The Dow Jones Industrial Average ended the session down 1.02% at 32,930.08, as the S&P 500 lost 1.16% to 3,808.10 and the Nasdaq Composite was off 1.47% at 10,305.24.
“US markets have slipped back after the latest ADP employment numbers and weekly jobless claims came in better than expected,” said CMC Markets chief market analyst Michael Hewson.
“The resilience of these numbers has lent support to the idea that we will probably see the Fed hike rates by another 50-basis points at the start of February pushing the funds rate up to 5%.
“Despite today’s resilience in the jobs data, we’ve seen further announcements of job losses in the tech sector, although they remain small when compared to their hiring seen since the start of the pandemic.”
In economic news, unemployment claims were stronger than expected in the US during the final week of 2022, reflecting lower layoffs and only slightly decreased hiring over holidays.
According to the US Department of Labor, initial jobless claims fell by a seasonally-adjusted 19,000 to 204,000 over the week ended 31 December.
Economists had been expecting a reading of 223,000.
Private sector employment in the US rose more than expected in December, however, according to the latest data from ADP.
Employment increased by 235,000 from November, versus expectations for a 150,000 jump, with the figures also showing that annual pay was up 7.3% on the year.
Small businesses with fewer than 50 employees added 195,000 jobs, while medium businesses with between 50 and 499 employees added 191,000 jobs.
Large businesses with more than 500 employees shed 151,000 jobs.
Still on data, US job cut announcements fell at the end of 2022 closing off a year that saw the second-lowest total tally since 1993, according to a closely-followed employment survey.
Challenger, Gray and Christmas said lay-off announcements dropped by 43% month-on-month in December to reach 43,651.
In the same month one year earlier they rose by 19,000.
On the corporate front, Amazon fell 2.37% after the e-commerce and cloud computing giant said it would axe 18,000 jobs in a bid to cut costs.
“The biggest reduction in Amazon’s workforce in its history is worth keeping in perspective for several reasons,” said Russ Mould, investment director at AJ Bell.
“While 18,000 job cuts sound like a lot, in the context of a workforce of more than 1.5 million it is a drop in the ocean.
“It’s also important to consider where the cuts are being made – they are mostly in areas like human resources as well as its Amazon Go and Amazon Fresh physical stores, and the latter represent something of an experiment for the company.”
Mould said Amazon often “tested the waters” in different markets, but probably felt that in the current climate, its focus should be on core e-commerce and Amazon Web Services cloud operations.
“Still, these job cuts represent a significant increase on previously outlined levels.
“It shows Amazon is taking the current economic challenges seriously.
“As is often the case, the news was pleasing to shareholders who will prize any efficiencies which can increase their slice of the returns generated by the business.”
Elsewhere, transatlantic pharmacy giant Walgreens Boots Alliance tumbled 6.13% after it reported a first quarter loss of $4.31, swinging from earnings of $4.13 per share year-on-year.
The Nasdaq-traded company said that reflected a $6.5bn pre-tax charge in connection with its previously-announced opioid litigation settlement, and other “opioid-related” matters.
It said adjusted earnings per share decreased 30.8% to $1.16, or by 29.9% on a constant currency basis, against “strong growth” of 53.1% in the year-ago quarter, reflecting higher Covid-19 vaccine volumes at the time.
That was, however, still better than the $1.14 adjusted earnings per share analysts had pencilled in.
First quarter sales decreased 1.55% year-on-year to $33.4bn, but was up 1.1% on a constant currency basis, and was well ahead of the $32.9bn markets were expecting.
Friday newspaper round-up: Fuel prices, Microsoft, Aviva
Pressure is mounting on petrol station owners to slash fuel prices after accusations of not passing on falling wholesale costs to drivers. The average price of petrol in the UK fell by 8p a litre in December to 151p and diesel by 9p to 174p, according to the RAC. But the motoring group accused retailers, including the largest supermarkets, of not cutting prices quickly or significantly enough compared with the falls in wholesale costs. – Guardian
Microsoft is reportedly in the works to launch a version of its search engine Bing using the artificial intelligence behind ChatGPT, launched by OpenAI. The Information reported the news on Tuesday, citing two people with direct knowledge of the plans. – Guardian
Margaret Thatcher’s efforts to turn Britain into a “property-owning democracy” appear to have been reversed after the census revealed that home ownership had plummeted to its lowest level since 1983. The proportion of homes owned in England fell from 64.1pc to 62.3pc between 2011 and 2021, data shows. This is the lowest level since 40 years ago, when the figure was 61.4pc. – Telegraph
Ireland plans to sue the EU for “overreach”, as a row between Dublin and Brussels over how to regulate Big Tech escalates. Ireland’s Data Protection Commission (DPC) has announced plans to take the European Data Protection Supervision Board (EDPB) to the EU Court of Justice, accusing the Brussels-based body of overstepping its authority. – Telegraph
Manchester’s grade II-listed Corn Exchange has been sold to a wealthy Middle Eastern businessman for about £40 million. It had been owned since 2005 by Aviva who paid about £67 million. The insurer also spent £30 million clearing out the old retail units and converting the interior to a hotel, bar and restaurants, including Pizza Express and Zizzi’s. – The Times
