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London open: FTSE falls as investors eye US CPI; Currys tumbles
London stocks fell in early trade on Monday following a mostly weaker session in Asia, as investors eyed this week’s US consumer price inflation data.
At 0830 GMT, the FTSE 100 was down 0.2% at 7,648.08.
Richard Hunter, head of markets at Interactive Investor, said the non-farm payrolls report on Friday was initially well received, “but on reflection the details of the release were enough to muddy the waters”.
“A headline number of 275000 jobs having been added in February was well ahead of the consensus of around 200000 and suggested that the labour market could still be running hot,” he said.
“However, the January figure was revised down from the previous blockbuster number of 353000 to 229000, while in terms of this release, unemployment rose from 3.7% to 3.9% and wage growth was lower than expected. The numbers have not changed the dial for an expected interest rate cut from the Fed in June, even if this set of data was inconclusive.
“This week could help clarify the position somewhat after the release of consumer and producer price reports which will give a further indication of the inflationary picture. The previous January numbers were higher than anticipated, stoking fears of renewed inflation pressure on the upside, while also seemingly confirming that the final mile of achieving the 2% target is proving to be the most difficult.”
In equity markets, heavily-weighted miners were the worst performers on the FTSE 100, with Rio Tinto, Anglo American, Antofagasta and Glencore all sharply lower.
Currys tumbled as US private equity firm Elliott Advisors pulled from the race to take over the electricals retailer rafter “multiple attempts” to engage with UK electrical retail chain’s board, all of which were rejected.
Vanquis Banking Group – formerly Provident Financial – tumbled as it warned on full-year profits as it continues to be redevelop its customer proposition and reset pricing, and due to costs associated with reviewing complaints related to motor finance deals.
Iron ore producer Ferrexpo fell after saying it needs to extend the payment terms on a $58,000 bill from a supplier for its Ukrainian operations as the business’s accounts continue to be frozen.
On the upside, Imperial Brands rallied as it launched the second £550m tranche of its share buyback.
Marks & Spencer was also in the black after an upgrade to ‘outperform’ from ‘sector perform’ at RBC Capital Markets.
“The M&S share price has come in 17% from recent highs, due to investor repositioning and concerns over the UK consumer and costs outlook,” the bank said. “But there has been no great change in its strong fundamentals in our view. At 10x CY24E P/E, the shares appear to be pricing no growth, but we think M&S can deliver this with a progressive cash returns policy, thus broadening its appeal to long term investors.”
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Admiral Group Plc | +4.08% | +105.00 | 2,678.00 |
| 2 |  |
Ocado Group Plc | +3.43% | +15.40 | 463.80 |
| 3 |  |
Imperial Brands Plc | +2.90% | +49.00 | 1,741.50 |
| 4 |  |
Marks And Spencer Group Plc | +2.14% | +5.20 | 248.00 |
| 5 |  |
Smith & Nephew Plc | +1.58% | +17.00 | 1,095.00 |
| 6 |  |
Rightmove Plc | +1.55% | +8.80 | 576.40 |
| 7 |  |
Whitbread Plc | +1.52% | +49.00 | 3,275.00 |
| 8 |  |
Astrazeneca Plc | +1.45% | +148.00 | 10,344.00 |
| 9 |  |
Carnival Plc | +1.18% | +13.50 | 1,160.50 |
| 10 |  |
Easyjet Plc | +0.88% | +4.80 | 548.40 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rio Tinto Plc | -2.66% | -129.50 | 4,740.00 |
| 2 |  |
Informa Plc | -2.28% | -18.40 | 789.80 |
| 3 |  |
Bhp Group Limited | -2.15% | -48.00 | 2,187.50 |
| 4 |  |
Glencore Plc | -1.86% | -7.45 | 393.30 |
| 5 |  |
St. James’s Place Plc | -1.72% | -8.10 | 462.30 |
| 6 |  |
Crh Plc | -1.40% | -90.00 | 6,336.00 |
| 7 |  |
Anglo American Plc | -1.31% | -24.20 | 1,826.40 |
| 8 |  |
Experian Plc | -1.15% | -39.00 | 3,363.00 |
| 9 |  |
Melrose Industries Plc | -1.10% | -6.60 | 595.40 |
| 10 |  |
Legal & General Group Plc | -1.08% | -2.70 | 246.90 |
US close: Stocks lower after mixed non-farm payroll report
US stocks declined on Friday, with the S&P 500 pulling back from record highs, after mixed jobs data that showed a big gain in non-farm payrolls, but downward revisions to previous figures, a slowdown in wage growth and a jump in the jobless rate.
The S&P 500 declined 0.65% from Thursday’s fresh closing peak of 5,157.36, while the Dow fell 0.18% and the Nasdaq tumbled 1.16% – with the latter having risen particularly strongly the previous session.
February’s non-farm payrolls report showed a 275,000-person gain, well ahead of the consensus forecast of 195,000, albeit with large downwards revisions to previous months’ data. Readings for December and January were revised down by a combined -167,000 to 290,000 and 229,000, respectively.
The unemployment rate, meanwhile, which was derived from a different survey than the one that generates the payrolls figures, increased by two-tenths of a percentage point to 3.7%. Meanwhile, Average hourly earnings rose by a less-than-expected 0.1% after a 0.6% increase in January.
“Alongside the rise in the unemployment rate to a two-year high and a much weaker rise in wages, there is less reason now to be concerned that renewed labour market strength will drive inflation higher again,” said Andrew Hunter, deputy chief US economist at Capital Economics. “The decline in the job quits rate to below its pre-pandemic level suggests wage growth will slow a lot further over the coming months.”
Meanwhile, economist Nancy Vanden Houten from Oxford Economics said the higher-than-expected headline reading was not “[not] strong enough to change our call for the Federal Reserve to start cutting rates in May, as other aspects were weaker than expected, including more subdued growth in earnings, a decline in employment in the household survey, and a rise in the unemployment rate.”
Broadcom drags chip stocks lower
Broadcom and Marvell Technology were dampening sentiment in the chip sector on Friday with both underwhelming with their quarterly results. Intel, Microchip and Nvidia all finished with heavy losses.
The larger of the two, Broadcom, fell despite its first-quarter report beating forecasts, as it left its full-year guidance unchanged, likely disappointing investors following the recent rally in the shares. Smaller peer Marvell meanwhile missed profit estimates for its first quarter badly.
Wholesaler giant Costco was also weaker after missing forecasts with its quarterly sales figures, with revenues of $58.44bn missing the $59.16bn market estimate.
Monday newspaper round-up: Thames Water, McLaren, gigafactories
Thames Water has risked a fresh backlash over its commitment to tackling sewage dumping after it declined to commit funds to a £180m industry-wide initiative to fast-track efforts to reduce pollution in England’s waterways. The government said on Monday that the sum would be spent by six companies over the next 12 months to prevent more than 8,000 sewage spills, as water companies attempt to address their woeful record on tackling spills. – Guardian
A cryptocurrency firm transferred digital assets worth more than $4.2m to a crypto wallet belonging to a member of an alleged Russian arms-dealing network who was later hit with US sanctions, it can be revealed. Details of the transactions involving Copper Technologies raise questions about whether UK laws governing crypto have adapted quickly enough to keep pace with a rapidly evolving sector that has come under increasing scrutiny over the level of anonymity it can provide. – Guardian
The Bahraini owners of McLaren have hired bankers to find a buyer for their stake in the British car maker after investors were forced to pump it with £1.5bn in funding to prop it up in the wake of the pandemic. Mumtalakat, Bahrain’s sovereign wealth fund with a 50pc holding in McLaren Group, is said to have drafted in advisers at JP Morgan following an order from King Hamad bin Isa Al Khalifa to stem losses. – Telegraph
British battery metal refiners and electric car gigafactories are being handed cheap power deals by the Government as part of a battle to cut the West’s dependence on China. Companies will get the energy relief from next month with the aim being to boost domestic production of key minerals needed for wind turbines, electric cars and defence technologies, officials and executives say. – Telegraph
The boss of Sainsbury’s has warned that new government policies designed to make farming more sustainable could harm Britain’s food production and lead to more imported food. Simon Roberts, chief executive of Britain’s second-largest supermarket chain, said the UK food system “is at a crossroads” because environmental challenges like climate change and biodiversity loss are creating a perfect storm “with well-intentioned but inconsistent government policy”. – The Times
