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London open: FTSE edges up as Entain, Vodafone rally
London stocks edged higher in early trade on Monday, helped along by strong performances from Entain and Vodafone, as investors mulled the latest comments from Federal Reserve officials.
At 0850 GMT, the FTSE 100 was up 0.2% at 7,588.18.
Steve Clayton, head of equity funds at Hargreaves Lansdown, said: “It is too early to be talking of rate cuts said John Williams, President of the New York Fed. That burst a few traders’ bubbles, coming after a week which saw US bond yields tumbling in anticipation of rate cuts in 2024.
“Markets will be thinning out this week, ahead of the Xmas holidays and there is a relatively light corporate reporting schedule.”
In equity markets, Vodafone shot higher after Iliad said it had submitted a proposal to merge their Italian businesses.
Ladbrokes owner Entain rallied after an upgrade to ‘buy’ at Jefferies, but British Gas owner Centrica was hit by a downgrade to ‘hold’ by the same outfit.
Bulmers and Magners owner C&C Group gained after saying it has appointed Andrew Andrea as chief financial officer with effect from 1 March 2024.
Games Workshop advanced as it struck an exclusive rights deal with Amazon to develop its Warhammer 40,000 game into films and television series, together with associated merchandising rights.
Speciality chemicals company Croda fell as it announced that chief financial officer Louisa Burdett will leave the group next year to join Spirax-Sarco Engineering, and said full-year pre-tax profit was set to be at the lower end of its guided £300m to £320m range.
Precious metals miner Fresnillo lost its shine after a downgrade to ‘underweight’ at Morgan Stanley.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Vodafone Group Plc | +6.29% | +4.07 | 68.79 |
| 2 |  |
Flutter Entertainment Plc | +1.75% | +235.00 | 13,640.00 |
| 3 |  |
Standard Chartered Plc | +1.31% | +8.40 | 651.00 |
| 4 |  |
Rolls-royce Holdings Plc | +1.28% | +3.70 | 293.80 |
| 5 |  |
Severn Trent Plc | +1.26% | +33.00 | 2,652.00 |
| 6 |  |
Bt Group Plc | +1.20% | +1.50 | 126.50 |
| 7 |  |
Gsk Plc | +1.00% | +14.20 | 1,433.40 |
| 8 |  |
Anglo American Plc | +0.90% | +16.40 | 1,840.40 |
| 9 |  |
Bp Plc | +0.86% | +3.95 | 461.80 |
| 10 |  |
St. James’s Place Plc | +0.86% | +5.80 | 683.40 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Fresnillo Plc | -6.25% | -36.60 | 549.00 |
| 2 |  |
Spirax-sarco Engineering Plc | -1.89% | -195.00 | 10,105.00 |
| 3 |  |
Croda International Plc | -1.66% | -84.00 | 4,976.00 |
| 4 |  |
Ocado Group Plc | -1.66% | -12.00 | 711.00 |
| 5 |  |
Berkeley Group Holdings (the) Plc | -1.60% | -78.00 | 4,791.00 |
| 6 |  |
Rentokil Initial Plc | -1.45% | -6.20 | 420.80 |
| 7 |  |
Centrica Plc | -1.30% | -1.85 | 139.95 |
| 8 |  |
Wpp Plc | -1.17% | -8.80 | 741.80 |
| 9 |  |
Mondi Plc | -1.01% | -15.50 | 1,519.00 |
| 10 |  |
Prudential Plc | -0.98% | -8.60 | 867.40 |
US close: Stocks rise but Fed’s Williams dampens rate-cut hopes
US stocks finished mostly higher on Friday, with the Dow scoring its third record close in a row, though gains were modest as earlier optimism surrounding future interest-rate cuts was dampened by New York Fed Bank president John Williams.
In an interview with CNBC, Williams said that policymakers “aren’t really talking about rate cuts right now”. He said: “I just think it’s just premature to be even thinking about that.”
The Dow Jones Industrial Average closed up 0.15% at a new all-time closing high of 37,305.16, while the S&P 500 slipped 0.01% and the Nasdaq gained 0.35%.
Markets had risen strongly over the past two sessions after the Federal Open Market Committee’s so-called dotplot graph pointed to rates ending 2024 at the 4.625%, down from the current 5.25-5.5% level. That implies three separate 25 basis-point cuts before the end of next year, compared to just two cuts in September’s dotplot.
US Treasuries have surged over recent weeks, with bond-buying intensifying over the past two days after the FOMC meeting, pushing the yield on a 10-year note below the 4% mark for the first time since August. Yields finished down 0.9 basis points at 3.913% by the close.
“Given the sharp move in bond markets since Wednesday it was perhaps felt necessary to pour a little cold water on the moves of the last 48 hours, with Williams sent out to say it was premature to be thinking in terms of rate cuts,” said analyst Michael Hewson from CMC Markets.
“That’s not to say they wouldn’t happen next year but to be pricing in between five to six rate cuts next year as markets appeared to be doing seems to be a case of getting a little carried away.”
In economic data on Friday, a flash reading of S&P Global’s US manufacturing PMI fell to 48.2 in December, the lowest level seen in four months, compared to 49.4 in November and forecasts of 49.3. The services PMI rose to 51.3 in December, up from 50.8 in the previous month and beating expectations for a reading of 50.8,
Meanwhile, US industrial production rose by just 0.2% in December, missing the consensus estimate of 0.3%, as October’s data was revised lower to show a 0.9% decline in output, compared with the initial estimate of -0.6%.
Citigroup finished in the red on reports it is to shut down its municipal bond-trading business. In an internal memo seen by the Wall Street Journal, the bank said it was closing the unit down by the end of March 2024, saying operations were “no longer viable given our commitment to increase the firm’s overall returns”.
Wholesale retail giant Costco was a standout performer, gaining over 4% after beating forecasts with its first-quarter figures, helped by a better-than-expected Black Friday and Cyber Monday performance. The company declared a special dividend of $15 per share as it reported a 6% rise in revenues to $57.8bn.
Streaming group Roku fell nearly 7% after analysts at MoffettNathanson cut their rating on the stock from ‘neutral’ to ‘sell, while STMicroelectronics was given a lift by UBS which upgraded the chip group from ‘neutral’ to ‘buy’.
Monday newspaper round-up: Retailers, John Lewis, Rolls-Royce
Retailers are facing a tough new year as weak consumer demand is expected to combine with a barrage of increased costs, including the higher minimum wage. Shoppers are likely to keep their spending on pause during the first months of 2024, according to forecasts published today by the Retail Think Tank, a group of industry experts who analyse the health of the sector, as mounting mortgage and rental costs weigh on consumer confidence. – Guardian
One of the largest UK pension and insurance firms has opened the door to backing US-style mega-bonuses for London listed companies despite fears that executive pay is fuelling inequality and encouraging “short-term risk taking”. Legal & General Investment Management has updated its pay policy to say there is room for the “necessary flexibility” needed to attract the best talent. It acknowledges “an increased push” by UK companies towards “remunerations structures that are more closely aligned to US-style pay”. – Guardian
John Lewis has been forced to deny that its plans to build a 24-storey building in the suburbs of London will “loom” over nearby houses in a row over a project dubbed the “Waitrose Tower”. Property experts hired by the department store have argued that the design of the proposed residential tower on top of its Waitrose supermarket in Bromley, south east London, means visibility would be “often fleeting and the buildings only glimpsed”. – Telegraph
Rolls-Royce is in talks with Ukraine’s biggest private power company to build a string of mini nuclear power plants in the country, The Telegraph can reveal. DTEK, which is part of billionaire businessman Rinat Akhmetov’s industrial group, has held early discussions with Rolls about developing small modular reactors (SMRs) at sites currently operated by coal power stations. – Telegraph
Sir Tom Hunter has reiterated his backing for THG, calling it “world-class” even as activist investors call for the company to be broken up. The Scottish entrepreneur said he had added to his holding in the fitness and beauty group, led by Matt Moulding, when its share price dipped below 50p nearly a year ago. THG shares have since risen by more than 50 per cent and were trading at more than 86p last week, although they were floated at 500p in 2020. – The Times
