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London open: Profit-taking deepens as losses on Wall Street mount
London stocks were getting walloped at the opening as investors’ jitters around the prospects for policy tightening by the US central bank continued and after another bruising session on Wall Street.
As of 0927 GMT, the FTSE 100 was trading 0.91% or 69.35 points lower at 7,515.17, alongside a 1.45% drop on the FTSE 250 to 22,385.75.
Overnight, the Dow Industrials, S&P 500 and Nasdaq Composite all gave back about 1%, alongside a five basis point drop in 10-year Treasury yields and a 7.3% jump in the CBoE’s volatility index.
“Tech carnage continues, stock markets continue downwards spiral, pandemic bubble stocks getting some treatment, Bitcoin cracks at $40k,” was Market.com chief market analyst Neil Wilson’s take on the latest market ructions Stateside.
“Is this the bear market proper – an end to the ’09-’18 expansion? Jeremy Grantham reckons trend for the S&P 500 is 2,500 – we’re at 4,400 still. Who’s up for a 50% decline? The Fed would try to stop that but can it?”
Worth noting, Thursday’s losses in the US materialised despite Janet Yellen, the US Treasury chief, sounding a positive note on the inflation outlook for the year ahead, indicating that it might fall sharply should the pandemic be brought under control.
Adding to the downbeat sentiment, shares of US video-streaming giant Netflix were tumbling 21% in premarket trading after the company’s fourth quarter subscriber growth numbers disappointed analysts.
US pre-market equity futures were pointing to a relatively flat start to trading on the Dow Industrial and S&P 500 at the end of the week, although Nasdaq-100 futures were again under some pressure .
On home shores, the latest economic news was mixed.
According to the Office for National Statistics, UK retail sales dropped 0.6% month-on-month, as expected by economists, although in annual terms they were up by 3.4% and two tenths of a percentage point ahead of the consensus.
But consultancy GfK reported a big drop in consumer sentiment as concerns about the rising cost of living mounted.
GfK‘s Consumer Confidence Index fell four points in January, to -19, its lowest level since February 2021. GfK attributed the fall to expected rises in inflation, fuel and interest rates.
Joe Staton, Client Strategy Director at GfK, said: ” Despite some good news about the easing of Covid restrictions, consumers are clearly bracing themselves for surging inflation, rising fuel bills and the prospect of interest rate rises.”
Close Brothers Group performs well in 1H, Ninety One posts small gain in AuM
Close Brothers Group reported that the firm had “performed well” over the first half of its financial year with “good” loan book growth and “strong” margins in Banking. Growth momentum at Close Brothers Asset Management had continued, although trading income in Winterflood has moderated since the end of the 2021 financial year.
Investment company Ninety One on Friday said assets under management at December 31 had risen to £141.7bn compared with £128.6bn a year earlier. The figure was a slight rise on the £140bn recorded at the end of last September, Ninety One said in an extremely short trading update.
Promotional products business 4imprint Group said on Friday that full-year unaudited group revenues had shot up in 2021, pushing pre-tax profits towards the upper end of analysts’ forecasts. 4imprint stated revenues for the 2021 financial year was approximately $787.0m, an increase of 41% year-on-year, as its total order count was roughly 90% of the figure seen in 2019, demonstrating “a strong recovery” in the business over the course of the year.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
British American Tobacco Plc | +0.66% | +20.50 | 3,134.00 |
| 2 |  |
Imperial Brands Plc | +0.58% | +10.00 | 1,734.50 |
| 3 |  |
Intertek Group Plc | +0.37% | +20.00 | 5,444.00 |
| 4 |  |
Rentokil Initial Plc | +0.34% | +1.80 | 529.00 |
| 5 |  |
United Utilities Group Plc | +0.28% | +3.00 | 1,075.50 |
| 6 |  |
Intercontinental Hotels Group Plc | +0.26% | +13.00 | 4,952.00 |
| 7 |  |
Relx Plc | +0.22% | +5.00 | 2,287.00 |
| 8 |  |
Burberry Group Plc | +0.16% | +3.00 | 1,913.50 |
| 9 |  |
Bae Systems Plc | +0.10% | +0.60 | 599.60 |
| 10 |  |
Unilever Plc | +0.07% | +2.50 | 3,658.00 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Scottish Mortgage Investment Trust Plc | -3.38% | -39.00 | 1,115.00 |
| 2 |  |
Fresnillo Plc | -3.27% | -28.20 | 833.40 |
| 3 |  |
Carnival Plc | -3.11% | -45.40 | 1,414.40 |
| 4 |  |
Bhp Group Plc | -2.98% | -74.50 | 2,428.00 |
| 5 |  |
Taylor Wimpey Plc | -2.95% | -4.75 | 156.15 |
| 6 |  |
Flutter Entertainment Plc | -2.91% | -330.00 | 11,015.00 |
| 7 |  |
International Consolidated Airlines Group S.a. | -2.46% | -4.00 | 158.56 |
| 8 |  |
Marks And Spencer Group Plc | -2.42% | -5.40 | 218.10 |
| 9 |  |
Rio Tinto Plc | -2.35% | -131.00 | 5,449.00 |
| 10 |  |
Evraz Plc | -2.34% | -13.20 | 551.00 |
US close: Stocks end session in the red following hotter than expected jobless claims print
Wall Street stocks closed lower on Thursday after this week’s jobless claims figures came in hotter than expected.
At the close, the Dow Jones Industrial Average was down 0.89% at 34,715.39, while the S&P 500 was 1.10% weaker at 4,482.73 and the Nasdaq Composite saw out the session 1.30% softer at 14,154.02.
The Dow closed 313.26 points higher on Thursday, extending losses recorded in the previous session.
Bond yields were firmly in focus again on Thursday, with the yield on the benchmark 10-year Treasury note hovering at around 1.782%, while the two-year, the note most closely tied to Federal Reserve rate policy, most recently yielded about 1.012%.
On the macro front, Americans made first-time unemployment benefit claims at a higher than expected clip last week, driven by an increased number of Covid-19 cases that disrupted business activity across the nation.
Initial claims for state unemployment benefits rose from 231,000 to a seasonally adjusted rate of 286,000 in the week ended 15 January, according to the Labor Department, ahead of forecasts for a print of 220,000 as the United States reports an average of 732,245 new coronavirus infections per day, according to a Reuters analysis of official data, in a winter surge driven by the Omicron variant.
Elsewhere, the Philadelphia Federal Reserve‘s manufacturing index rose to 23.2 in January, up from 20.0 in December and ahead of expectations for a flat reading as the new orders index rose to 17.9 from 13.7 and the prices paid index increased to 72.5 from 66.1.
Lastly, US existing home sales fell in December as higher prices and record low inventory levels shut out first-time buyers. Existing home sales dropped 4.6% to a seasonally adjusted annual rate of 6.18m last month, according to the National Association of Realtors, with sales falling across all regions. Economists were expecting sales to have fallen to 6.44m units.
In the corporate space, United Airlines shares were in the red after the firm warned in its quarterly results that the Covid-19 Omicron variant had impacted bookings and would hold back its recovery from the pandemic.
Friday newspaper round-up: Baltic Dry Index, BT Group, Unilever
In times of market dislocation, it rises sharply to reflect the difficulties in transporting goods — and during the pandemic it has done little else but rise, peaking at more than 5,700. […] That peak in the Baltic Dry Index was hit on October 7. Since then, the index has fallen sharply, halving within a month. Though it jumped in the run-up to Christmas, it has dropped back again since. Yesterday it fell further, its tenth consecutive daily decline, to 1,570. To put that in context, that puts the index back only to February 2021 levels but not completely out of kilter with the average over the past decade. – The Times
Millions of households are facing a steep increase to their broadband and phone line costs in a “tax on working from home” after BT kicked off a wave of price rises with an inflation-busting 9.3pc increase. BT will charge up to 14m customers as much as £42 a year more for their broadband after it put up charges in the wake of surging inflation, piling further pressure on households already facing a significant blow from higher taxes and energy prices in April. – Daily Telegraph
One of Unilever‘s biggest shareholders has raised the prospect of replacing chief executive Alan Jope and accused management of putting the company through a “near-death experience” with an aborted £50bn bid for part of GlaxosmithKline. Terry Smith, a top 10 shareholder in Unilever, said the company must fix fundamental problems of its own instead of seeking a mega-deal. – Daily Telegraph
Ex-Formula One team boss Eddie Jordan has pulled out of a bidding war to buy gambling software firm Playtech. The 73-year-old Irish businessman’s consortium JKO Play had been planning to offer 750p per share for the FTSE 250 group, valuing it at around £3billion. However, JKO is set to issue a statement pulling out of the process today, according to reports. – Daily Mail
Two of the City’s biggest companies have thrown their weight behind a groundbreaking British electric battery ‘gigafactory’ with £1.7billion of funding. Financial giant Abrdn and warehouse group Tritax backed the Britishvolt project, which is expected to open in 2024, after it clinched a hefty Government grant. – Daily Mail
Primark staff were dealt a blow yesterday with news the firm will slash 400 store management jobs to reduce costs. The High Street discount retailer will cut the roles from its 191 UK stores in response to rising cost pressures and as sales remain below pre-pandemic levels. Primark employs 29,000 staff and said it will start discussions with those affected by the cuts. – Daily Mail
The UK government has rejected plans from a leading Tory donor to build a controversial £1.2bn electricity and internet cable running from the UK to France. Kwasi Kwarteng, the business secretary, has refused to grant consent to Aquind Energy for the project, which has provoked fierce opposition over national security and environmental concerns from MPs and campaigners in the UK and France. – Guardian
