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London open: Stocks fall after record high; US-China tensions in focus
London stocks fell in early trade on Monday after hitting a new all-time high at the end of last week, and as Sino-US tensions dented the mood.
At 0830 GMT, the FTSE 100 was down 0.5% at 7,865.37, having closed at a record high of 7,901.80 on Friday.
Victoria Scholar, head of investment at Interactive Investor, said: “The FTSE 100 is giving back some of Friday’s gains after the US downed an alleged Chinese spying balloon, putting a strain on US-China relations, and raising concerns about geopolitical instability.
“Plus, a strong US jobs report on Friday has indicated that the Federal Reserve may have more work to do on interest rates, pressurising global equity markets.
“The FTSE 100 closed at a record high on Friday driven by expectations of a dovish tilt from the Bank of England, a weaker pound after a very strong US jobs report and its favourable sectoral mix which provided a tailwind to the index over the last year.”
In equity markets, Hargreaves Lansdown was the worst performer on the FTSE 100 after a rating downgrade by Credit Suisse.
Asia-focused Prudential was also on the back foot, along with luxury fashion brand Burberry, which is heavily dependent on demand from China.
Virgin Money slumped after a downgrade to ‘equalweight’ at Barclays.
Elsewhere, molten metal flow engineering and technology firm Vesuvius lost ground after saying it had been hit by a cyber attack involving “unauthorised access” to its systems.
On the upside, Lloyds was boosted by an upgrade to ‘overweight’ at Barclays.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
British American Tobacco Plc | +0.62% | +19.50 | 3,145.00 |
| 2 |  |
Imperial Brands Plc | +0.39% | +8.00 | 2,052.00 |
| 3 |  |
Admiral Group Plc | +0.31% | +7.00 | 2,287.00 |
| 4 |  |
Morrison (wm) Supermarkets Plc | +0.00% | +0.00 | 286.40 |
| 5 |  |
Evraz Plc | +0.00% | +0.00 | 82.68 |
| 6 |  |
Micro Focus International Plc | +0.00% | +0.00 | 532.00 |
| 7 |  |
London Stock Exchange Group Plc | +0.00% | +0.00 | 8,620.00 |
| 8 |  |
Standard Life Aberdeen Plc | +0.00% | +0.00 | 274.10 |
| 9 |  |
Royal Bank Of Scotland Group Plc | +0.00% | +0.00 | 120.90 |
| 10 |  |
Reckitt Benckiser Group Plc | +0.00% | +0.00 | 6,498.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Prudential Plc | -3.29% | -44.50 | 1,309.50 |
| 2 |  |
Segro Plc | -3.19% | -28.20 | 856.80 |
| 3 |  |
Hargreaves Lansdown Plc | -3.03% | -28.80 | 920.80 |
| 4 |  |
Carnival Plc | -2.92% | -26.00 | 864.00 |
| 5 |  |
Tui Ag | -2.61% | -4.75 | 177.10 |
| 6 |  |
British Land Company Plc | -2.57% | -12.00 | 454.90 |
| 7 |  |
Land Securities Group Plc | -2.53% | -18.80 | 723.00 |
| 8 |  |
Easyjet Plc | -2.50% | -12.40 | 483.80 |
| 9 |  |
Scottish Mortgage Investment Trust Plc | -2.48% | -20.00 | 785.20 |
| 10 |  |
Rolls-royce Holdings Plc | -2.29% | -2.50 | 106.58 |
US close: Stocks mixed following earnings onslaught
Wall Street stocks turned in a mixed performance on Thursday as digested a slew of corporate earnings and some key data points.
At the close, the Dow Jones Industrial Average was down 0.11% at 34,053.94, while the S&P 500 advanced 1.47% to 4,179.76 and the Nasdaq Composite saw out the session 3.25% firmer at 12,200.82.
The Dow closed 39.02 points lower on Thursday, easily reversing the previous session’s small gain.
Corporate earnings were firmly in focus on Thursday, with Eli Lilly posting quarterly revenues that fell short of estimates, Stanley Black & Decker outlining an 11% full-year revenue growth, and Bristol-Myers Squibb reporting earnings and revenue that topped expectations.
Hershey delivered an earnings beat and issued an outlook that topped expectations, while Estée Lauder issued a disappointing sales outlook, Merck & Co topped quarterly earnings estimates, Harley-Davidson delivered a strong earnings beat, and Honeywell turned in earnings that topped estimates despite delivering revenues that missed.
After the close, tech giants Alphabet, Amazon, and Apple all posted disappointing results.
Investors also continued to digest news that the US central bank raised the range for its benchmark interest rate by 25 basis points to 4.5-4.75% and said it foresaw further hikes. In his press briefing following the Federal Open Market Committee‘s meeting, chairman Jerome Powell explained that with inflation running at multi-decade highs the job was “not yet fully done”. At one point during the question and answer session, he also said that it was “very difficult” to manage the risk of doing too little, to then only see inflation spring back a few quarters down the road.
On the macro front, Challenger Gray & Christmas revealed US employers announced 102,943 cuts in January, a marked 136% increase from the 43,651 cuts announced in December and 44% higher than the same time a year earlier.
Elsewhere, US unemployment claims continued to run below forecasts over the preceding week, defying expectations for a post-Christmas rebound. According to the Department of Labor, initial jobless claims fell 3,000 over the week ended 28 January to 183,000. Meanwhile, the four-week moving average, which aims to smooth out the volatility in the data from one week to the next, dropped by 5,750 to 191,750.
On another note, fourth-quarter labour productivity in the US was higher than expected, helping to limit unit labour cost growth. According to the Department of Labor, non-farm labor productivity increased at a quarterly annualised clip of 3.0% over the three months to December.
Finally, new orders for US-made goods increased 1.8% month-on-month in December, according to the Census Bureau, rebounding from an upwardly revised 1.9% fall in November but short of market forecasts of 2.2%.
Monday newspaper round-up: Rail fares, Amazon, working from home
Return tickets will be scrapped and new digital ticketing introduced under reforms of the British rail system expected to be announced this week. The two-way tickets, which offer a discounted rate, will be replaced by “single-leg pricing” which will mean that the price of two singles will be the same as the current return fare, according to the Telegraph. The idea was trialled by London North East Railway (LNER) in 2020. – Guardian
The City watchdog is considering easing rules in an attempt to win the $40bn (£34bn) listing of Cambridge-based technology firm Arm Holdings, it has been reported. Officials are said to be locked in talks in a last-ditch attempt to persuade the semiconductor chip-maker’s Japanese owner SoftBank to consider a dual listing on the London Stock Exchange alongside New York’s Nasdaq technology market, according to the Sunday Times. – Guardian
Amazon is aiming to shed empty warehouses across Britain as it slams the brakes on growth plans after falling to its worst annual loss on record. Amazon is understood to have kicked off work to sublet unused big-box sites in Britain, following years of swooping for more warehouse space across the country. It is estimated to have opened hundreds of warehouses globally during the pandemic, in a bid to make the most of the boom in online spending. – Telegraph
Working from home is fuelling a fraud epidemic, with a growing number of staff falling victim to scams related to their employers. Research by accountants BDO found almost nine in 10 of mid-sized businesses it surveyed had become victims of fraud in 2022, with average losses totalling £219,000 per firm. More than one quarter of these firms also fell victim to fraud at least twice. – Telegraph
The UK is losing out on investment from AstraZeneca to more competitive countries, the head of one of the country’s biggest and most valuable companies has warned. Tom Keith-Roach told The Times that AstraZeneca has not made new research and development capital investments in Britain since 2021 and its wider R&D spending in the country could also now be at risk due to the uncompetitive fiscal environment. – The Times
