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London open: FTSE little changed as investors eye payrolls
London stocks were little changed in early trade on Friday following heavy losses in the previous session, as investors paused for breath ahead of the latest US non-farm payrolls report.
At 0850 GMT, the FTSE 100 was down just 0.1% at 7,445.40.
CMC Markets analyst Michael Hewson said: “Expectations are for December payrolls to improve to 420k, and the unemployment rate to fall further to 4.1%, although some estimates for payrolls have come in as high as 900m. It will certainly need to see a decent number to help push the US dollar up from current levels, and don’t forget to keep an eye out for an upward November revision.
“Ultimately, today’s number is unlikely to make that much difference to how investors view the potential timing of the first US rate rise, with the most attention likely to be on the average hourly earnings numbers which are expected to fall back from 4.8% to 4.2%. This big drop is likely to be as a result of large-scale temporary hiring in the leadup to Thanksgiving and the Christmas period.”
The payrolls report is due at 1330 GMT, along with the unemployment rate and average earnings.
On home shores, the latest survey from Halifax showed that house prices rose in December at the fastest annual pace since July 2007 amid strong demand and low supply, but are expected to cool in 2022.
Prices rose 9.8% on the year following an 8.2% increase in November. On the month, prices were up 1.1% in December, in line with the previous month, with the average property price now standing at a new record high of £276,091.
In cash terms, house prices were up by more than £24,500 in 2021, which marks the largest annual cash rise since March 2003.
Halifax managing director Russell Galley, said: “The lack of spending opportunities afforded to people while restrictions were in place helped boost household cash reserves. This factor, alongside the Stamp Duty holiday and the race for space as a result of homeworking, will have encouraged buyers to bring forward home purchases that may have been planned for this year. The extension of the Government’s job and income support schemes also supported the labour market and may have given some households the confidence to proceed with purchases.”
Galley also cited a lack of available homes for sale as a factor behind the price increase.
“Looking ahead, the prospect that interest rates may rise further this year to tackle rising inflation, and increasing pressures on household budgets, suggests house price growth will slow considerably. Our expectation is that house prices will maintain their current strong levels but that growth relative to the last two years will be at a slower pace. However, there are many variables which could push house prices either way, depending on how the pandemic continues to impact the economic environment.”
In equity markets, Shell nudged down as it said its $7bn share buyback programme would continue “at pace” despite weaker oil product sales due to the Omicron Covid variant and forex headwinds in Turkey.
Bulmers and Magners owner C&C fizzed lower after it said trading conditions in December for its on-trade business were “significantly impacted” by renewed government restrictions across the UK and Ireland.
On the upside, miners gained as metals prices rose, with Rio, BHP and Anglo all higher.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rio Tinto Plc | +2.40% | +122.00 | 5,200.00 |
| 2 |  |
Bhp Group Plc | +2.12% | +47.50 | 2,292.50 |
| 3 |  |
Evraz Plc | +1.88% | +11.40 | 617.20 |
| 4 |  |
Marks And Spencer Group Plc | +1.79% | +4.50 | 255.40 |
| 5 |  |
Glencore Plc | +1.65% | +6.40 | 394.75 |
| 6 |  |
Smith (ds) Plc | +1.21% | +4.80 | 402.60 |
| 7 |  |
Anglo American Plc | +1.14% | +36.00 | 3,200.00 |
| 8 |  |
Bp Plc | +1.07% | +3.80 | 358.95 |
| 9 |  |
Prudential Plc | +0.97% | +12.50 | 1,298.00 |
| 10 |  |
Standard Chartered Plc | +0.88% | +4.20 | 481.50 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Carnival Plc | -2.64% | -38.40 | 1,415.80 |
| 2 |  |
Diageo Plc | -1.95% | -77.50 | 3,901.00 |
| 3 |  |
Itv Plc | -1.78% | -2.05 | 112.95 |
| 4 |  |
Burberry Group Plc | -1.59% | -29.00 | 1,791.00 |
| 5 |  |
Segro Plc | -1.59% | -21.50 | 1,333.00 |
| 6 |  |
Bt Group Plc | -1.54% | -2.70 | 172.85 |
| 7 |  |
British Land Company Plc | -1.51% | -8.20 | 535.40 |
| 8 |  |
Hikma Pharmaceuticals Plc | -1.51% | -32.00 | 2,093.00 |
| 9 |  |
Hargreaves Lansdown Plc | -1.40% | -19.00 | 1,339.00 |
| 10 |  |
Croda International Plc | -1.33% | -126.00 | 9,378.00 |
Europe open: Shares slip ahead of US payroll data
European shares were on the slide at the end of the week after US shares closed lower overnight and investors eyed US weekly jobless data euro zone inflation numbers later in the day.
The pan-European Stoxx 600 was down 0.18% in early deals.
“Last November’s payrolls report turned out to be a rather lacklustre affair, however it was still good enough for the Federal Reserve to accelerate the winding back of its taper program, even though the headline number was disappointing, coming in at 210k jobs, against an expectation of 550k,” said CMC markets analyst Michael Hewson.
“With Omicron spreading across the US like wildfire in December, and weekly jobless claims starting to edge higher from their lowest levels in 1969, there is a risk that this week’s report could similarly disappoint, although given how strong this weeks ADP report turned out to be, today’s number is a difficult call.”
“It ought to be a good number given that continuing claims have fallen back to the levels they were pre-pandemic at around 1.7m in recent weeks, while the employment component in the manufacturing ISM this week was decent.
In equity news, Deutsche Bank shares rose more than 2% after its finance director told the Handelsblatt newspaper the firm was confident it would hit a key profitability target this year.
Chipmaker STMicroelectronics rose 4% after preliminary fourth-quarter revenue came in slightly above the outlook given at the end of October amid a global supply crunch.
US close: Stocks lower as traders digest multiple data points
Wall Street stocks closed lower on Thursday as fears over tighter monetary policy remained in focus and investors digested a number of key data points.
At the close, the Dow Jones Industrial Average was down 0.47% at 36,236.47, while the S&P 500 was 0.10% weaker at 4,696.05 and the Nasdaq Composite saw out the session 0.13% softer at 15,080.86.
The Dow closed 170.64 points lower on Thursday, extending losses recorded in the previous session after minutes from the latest Federal Reserve Bank meeting revealed a more hawkish tone than previously communicated, with some officials looking to raise interest rates faster and trim its $8.8trn balance sheet to combat spiralling costs of living.
In the corporate space, Walgreens-Boots Alliance lifted forecasts but warned of rising labour costs as a result of efforts to keep up with Covid vaccines and tests and Bed Bath & Beyond said supply chain issues had led to its third-quarter results falling shy of expectations.
On the macro front, first-time claims for unemployment benefits came in at 207,000 in the week ended 1 January, according to the Labor Department, up from 200,000 in the previous week and above the 195,000 forecast by economists.
Continuing claims, which run a week behind the headline number, also increased, rising by 36,000 to 1.75m, while the four-week moving average, which accounts for weekly volatility in the numbers, grew to 204,500.
Also on jobs, Challenger, Gray & Christmas‘ December jobs cuts report revealed that US employers had announced plans to cut 19.052 jobs last month, roughly 75% lower than the figure reported at the same time a year earlier. For the whole of 2021, employers announced plans to cut 321,970 jobs from their payrolls – the lowest annual total on record since tracking began in 1993.
Elsewhere, November’s trade balance came to a print of -$80.17bn – larger than the $77.1bn expected on the Street, just shy of the September deficit of -$81.44bn, with exports up 0.2% and imports rising 4.6%.
Still on data, the Institute for Supply Management‘s non-manufacturing PMI printed at 62.0 in December, falling short of estimates for a reading of 66.9.
Lastly, factory orders increased strongly in November, according to the Commerce Department, rising 1.6%, while data for October was revised higher to show orders rising 1.2% instead of 1.0% as previously reported.
Friday newspaper round-up: Bain & Co, Hunterston B, Arm, Tesla
Boris Johnson should bar Bain & Company from lucrative government contracts in light of a judicial commission’s findings about the management consultancy’s “despicable” role in state corruption in South Africa, Peter Hain has said. In a letter shared with the Guardian, the former Labour minister and anti-apartheid campaigner urged Johnson to “immediately freeze all government contracts with Bain” and to advise all public bodies to do the same. – Guardian
The Hunterston B nuclear power station will shut down for ever at noon on Friday after 46 years of service, reducing the UK’s nuclear capacity by one-eighth and prompting calls from the industry for greater government backing for the sector. The plant, on the west coast of Scotland, provided one gigawatt of the UK’s 7.9GW nuclear capacity, enough to power to 1.7m homes. – Guardian
One of Britain’s biggest technology companies is investigating suspicious payments to senior executives at its Chinese joint venture, presenting a potential complication to its $40bn (£30bn) takeover by a US rival. Cambridge-based microchip maker Arm said that “allegations related to the appropriateness of payments” had been made against senior management at Arm China, which it co-owns with a Chinese investment firm. – Telegraph
When Simon Farthing started travelling less amid the pandemic, he traded in his petrol-run Volkswagen Tiguan for an all-electric Tesla Model 3. “If you’re only going from your home to work, and back to your home again, you find you don’t need the convenience of a car that can do longer range,” says Farthing, the manager of a software company. “It’s fantastic,” he adds. “It feels very, very safe and secure on the road.” – Telegraph
More than 50 lenders are caught up in an alleged fraud at Arena Television, which is suspected of inventing thousands of fake assets as it racked up nearly £300 million of loans, administrators have revealed. High street banks and specialist lenders are facing embarrassment and substantial losses as it emerged that only nine of fifty-five lenders to Arena have any verified assets supporting their loans, according to an official filing by insolvency practitioners at Kroll. – The Times
