16th Dec 2024 07:53
(Alliance News) - The FTSE 100 was called to open lower on Monday as markets digest the latest sales and production data from China, kicking off the last full week of trading this year.
"China's latest efforts to convince investors that it will boost its economy with great stimulus measures had the same reaction than the previous ones: disappointment," Swissquote's Ipek Ozkardeskaya commented. "On Friday, the Chinese authorities repeated that they will boost consumption but the lack of details reversed the pre-announcement enthusiasm and sent the CSI 300 more than 2% lower. And the Chinese stocks were sold again today on the back of a significant slow down in retail sales growth last month, as confirmation that whatever is done in China is not bearing fruit.
"Meanwhile, the Chinese yields' nosedive does nothing to motivate investors to come back."
Business confidence among Britain's manufacturers has fallen at the sharpest rate since the start of the pandemic, new research suggests.
The US Federal Reserve releases its interest rate decision on Wednesday. The Bank of England follows suite on Thursday, as does the Bank of Japan, followed by China's central bank on Friday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called down 14.4 points, 0.2% at 8,285.93
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Hang Seng: down 1.0% at 19,773.96
Nikkei 225: down at 39,457.49
S&P/ASX 200: down 0.6% at 8,249.50
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DJIA: closed down 86.06 points, 0.2%, at 43,828.06
S&P 500: closed down marginally at 6,051.09
Nasdaq Composite: closed up 23.88 points, 0.2% at 19,926.73
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EUR: higher at USD1.0513 (USD1.0494)
GBP: higher at USD1.2637 (USD1.2620)
USD: lower at JPY153.58 (JPY153.64)
Gold: down at USD2,653.80 per ounce (USD2,660.10)
(Brent): up at USD74.17 a barrel (USD73.94)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
08:15 EST Canada housing starts
10:00 CET eurozone flash composite PMI
11:00 CET eurozone labour cost index
09:15 CET France flash composite PMI
09:30 CET Germany flash composite PMI
11:00 GMT Ireland trade balance
11:00 CET Italy CPI
08:30 CET Switzerland export and import prices
09:30 GMT UK flash composite PMI
08:30 EST US New York empire state manufacturing index
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China's retail sales growth weakened last month, official data showed on Monday, missing forecasts as demand remains muted in the world's number two economy. The country is battling sluggish domestic consumption, a persistent crisis in the property sector and soaring government debt – all of which threaten Beijing's official growth target for this year. Retail sales expanded 3% year-on-year in November, the National Bureau of Statistics said, slowing from a 4.8% rise in October that was its best reading in eight months. The figure fell significantly short of the 5.0% forecast in a Bloomberg survey of analysts. The NBS also said the national urban unemployment rate remained unchanged at 5% in November. Industrial production growth stayed broadly flat at 5.4% compared with 5.3% in October. Also, China's 30-year sovereign bond yield fell 0.03 percentage points to 1.99% on Monday morning, going below 2% for the first time following a key economic policy meeting that did not immediately assuage investor concerns.
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Angela Rayner will promise to make devolution the "default setting" for councils across the country after senior UK government figures warned they could overrule local authorities' objections to push through key building plans. In a speech to regional leaders, the deputy prime minister will vow to push power out of Whitehall and into the hands of people with "skin in the game" across a range of policy areas including housing. The government's devolution White Paper will be published on Monday, which Rayner has said will ensure regional powers are "no longer agreed at the whim of a minister in Whitehall". It comes after ministers warned they would be prepared to step in if plans to build more prisons, wind turbines and homes met opposition at a local level. "Our English Devolution White Paper will be a turning point when we finally see communities, people and places across England begin to take back control over the things that matter to them," Rayner is expected to tell mayors, local government and business leaders.
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Business confidence among Britain's manufacturers has fallen at the sharpest rate since the start of the pandemic, new research suggests. A survey of over 300 companies found that escalating costs have affected their outlook on the economy. Make UK said its study found that while recruitment and investment intentions were stable, the mood among companies has "darkened markedly" since the last survey in the summer when almost six in 10 companies saw a brighter economic outlook under a new Government. Almost three quarters of manufacturers said costs increased by up to a fifth in the last year, while around one in 12 had seen their costs increase by up to a half. Make UK said the survey showed almost nine in 10 companies will see their business costs increase due to the new employment reform, while the Budget is expected to add substantial extra business costs to the sector.
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New seller asking prices for properties in the UK dropped as usual in December and are set for a comfortable rise in 2025, Rightmove said Monday. The fall in new seller asking prices accelerated to 1.7% on-month in December, from a fall of 1.4% in November. Annually, the growth in new seller asking prices sped up to 1.4% in December from 1.2% in November, with the average asking price standing at GBP360,197 in December. The number of sales being agreed rose by 22% compared with this time last year, Rightmove highlighted. Nevertheless, it cautioned: "The latest snapshot identifies signs that sellers of smaller properties in higher-priced areas are trying to trade up or just sell before the deadline to avoid the higher stamp duty charges, despite now needing to act very quickly." Notably, Rightmove expects new seller asking prices to grow by 4% next year, as forecast mortgage rates are set to drop following the Bank of England's cuts in interest rates.
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Japan's flash composite purchasing managers' index showed the strongest rise in private sector activity since September, according to preliminary data published by S&P Global on Monday. The au Jibun Bank Japan flash composite PMI posted 50.8 points for December, up from November's final reading of 50.1. "December flash PMI data signalled a further expansion of business activity at Japanese private sector firms at the end of 2024," commented S&P Global Market Intelligence economist Usamah Bhatti. "Growth was only marginal but the most pronounced since September, amid an acceleration of services sector expansion." The flash services business activity index for December was 51.4, up from 50.5 in November. This indicated that services activity rose for the second month running and at a stronger rate, S&P Global said, adding: "Supporting the latest uptick in activity was a rise in new business inflows, where growth reached a four-month high. In turn, service providers hired additional staff to deal with ongoing workloads and limit the build-up of outstanding business." The flash manufacturing output index reading was 49.4 for December, slightly up from the final reading of 49.2 in November.
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The pace of contraction in Australia's manufacturing industry sped up in December, preliminary survey results published by S&P Global showed on Monday. "The softening of business conditions and muted selling price inflation are supportive of the lowering of interest rates by the Australian central bank in the new year, though rising cost pressure will need to be monitored for pass-through to selling prices in the coming months," said Jingyi Pan, economics associate director at S&P Global Market Intelligence. The flash composite output index swung down to 49.4 points in December from 50.2 in November. The flash Australia services PMI business activity index edged down to 50.4 points in December from 50.5 in November, indicating a slight slowdown in activity growth. The flash Australia manufacturing output index declined to 46.1 points in December from 48.3 in November, meaning the pace of contraction in manufacturing production accelerated. The flash Australia manufacturing PMI fell to 48.2 points from 49.4.
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US lawmakers scrambled to reach an agreement on funding federal agencies through the New Year to avert a damaging government shutdown due to begin in just seven days. Out of time to finalise a full-year package for the 2025 fiscal year, the parties look set instead to pass a stopgap patch known as a "continuing resolution" to keep services running on static budgets for the coming months. Text of the bill is expected over the weekend or early next week to allow both chambers to get the agreement to President Joe Biden's desk before lawmakers leave town for the Christmas holidays. Funding the government is often a contentious and chaotic affair as it requires the parties to agree on budgets that are subject to a 60-vote threshold in the closely divided 100-member Senate.
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South Korea's constitutional court kicked off proceedings on Monday over the impeachment of President Yoon Suk Yeol. South Korean lawmakers voted on Saturday to impeach Yoon over his brief declaration of martial law, which plunged the country into some of its worst political turmoil in decades. The Constitutional Court has around six months to determine whether to uphold the impeachment. Fresh elections must be held within two months if he is removed. A separate investigation into Yoon and his inner circle over the December 3 martial law declaration has rumbled on as the turmoil deepened. The prosecution said in a news release on Sunday they had summoned Yoon for questioning over the insurrection and abuse of power allegations "but he refused to comply". Han Dong-hoon, leader of Yoon's People Power party, has announced his resignation, saying that he did not regret calling for the impeachment - which most of his party's lawmakers did not support - but that "it has become impossible to carry out my duties as party chief" following the vote.
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Ratings agency Moody's downgraded France's credit rating to Aa3 with a stable outlook, following months of political crisis and the appointment of centrist Francois Bayrou as prime minister. Moody's cited France's "political fragmentation" in its decision, which comes after parliament ousted Michel Barnier's government in a historic no-confidence vote following a standoff over an austerity budget. "The decision to downgrade France's ratings to Aa3 reflects our view that France's public finances will be substantially weakened by the country's political fragmentation which, for the foreseeable future, will constrain the scope and magnitude of measures that could narrow large deficits," the ratings agency said in a statement. Bayrou's appointment makes him France's fourth prime minister this year, with Barnier being booted out after just three months in office.
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German Chancellor Olaf Scholz's Social Democrats are gradually making up ground ahead of expected elections in late February, having gained one percentage point for 17% support, a new poll commissioned by the Bild tabloid showed. The conservative Christian Democrats remain in the lead on 31%, one percentage point down on the week, the Insa poll of 1,203 respondents taken between December 9 and 13 found. Three weeks ago, the CDU/CSU bloc was 18 percentage points ahead. That lead is now down to 14. The Greens, the only remaining party in Scholz's coalition government, are down one percentage point at 11%. The far-right Alternative for Germany was also up a percentage point at 20%, placing it second behind the CDU/CSU. Despite this support, the party is unlikely to be part of a governing coalition, as all other parties refuse cooperation with the AfD. The new populist Sahra Wagenknecht Alliance, BSW, was stable at 8%, while The Left party was down a point at 3%. In an interview with a local public broadcasting programme, Scholz said on Friday that he can't imagine forming a federal government with BSW, whose ideas range from stopping support for Ukraine to pro-Russian sentiments.
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BROKER RATING CHANGES
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RBC cuts DCC to 'sector perform' (outperform) - price target 5,800 pence
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JPMorgan places Dunelm on 'negative catalyst watch'
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Deutsche Bank research raises TT Electronics price target to 150 (135) pence - 'buy'
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COMPANIES - FTSE 100
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BP announced that it and XRG, ADNOC's international energy investment company, have completed the formation of their new joint venture regional gas platform, Arcius Energy, to initially focus on development of gas assets in Egypt. Arcius Energy will focus on natural gas growth to meet growing regional demand while supporting Egyptian energy security and economic development, BP said. Announced in February 2024, Arcius Energy is 51% owned by bp and 49% by XRG. "The new joint venture will combine the pair’s deep technical capabilities and proven development track records as it aims to grow a highly competitive gas portfolio," BP said.
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COMPANIES - FTSE 250
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Computacenter said its Chief Financial Officer Christian Jehle has stepped down from his role with immediate effect. Jehle will remain at the firm until December 31 to facilitate a smooth transition and handover of his responsibilities. Computacenter also said those responsibilities will be fulfilled by the broader finance team and existing executive management team, ahead of "any future appointment". The company will now undertake a process to find a successor, it said.
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OTHER COMPANIES
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Ricardo has entered into an agreement to acquire 85% of E3 Advisory for an aggregate consideration of approximately AUD101.4 million, or around GBP51.0 million, with completion of the transaction conditional upon the disposal of Ricardo Defense, the company announced. E3 Advisory is an Australian infrastructure advisory firm. Ricardo said it expects to purchase the remaining 15% of E3 Advisory by January 2028. "E3 Advisory's skilled team, strong track record and substantial growth potential are highly complementary to Ricardo's geographic focus and capability in energy and transport infrastructure," it added. Separately, Ricardo announced the conditional disposal of its interests in the Ricardo Defense Business to Proteus Enterprises for around GBP67.5 million.
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By Emma Curzon, Alliance News reporter
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