13th Jan 2025 07:48
(Alliance News) - The FTSE 100 was called lower on Monday, after Friday's US jobs data strengthened Federal Reserve hawks' hand and made rate cuts less likely.
"Friday's blowout US labour market report saw markets end the week on a risk-averse note, as expectations grew that the Fed's anticipated January 'skip' could instead turn into a prolonged 'pause'," commented Pepperstone's Michael Brown. "Headline nonfarm payrolls rose [256,000] in December, topping the forecast range, and marking the biggest one-month jump in employment since last March. Meanwhile, unemployment unexpectedly declined to 4.1%, erasing November’s surprise increase, even as participation held steady at 62.5%."
Brown continued: "While, undeniably, good news, and a report that pointed to the continued resilience of the US labour market...the figures somewhat raise the chances of the FOMC sitting on the sidelines for longer, plotting an even more careful course when it comes to taking further steps back towards a more neutral policy setting."
Going forward, Brown said: "Here in the UK, a busy docket lies ahead, with the mid-week inflation figures likely of most interest. The GBP OIS curve discounts around a 3-in-4 chance of a 25bp [Bank of England] cut at the start of next month, though a further lack of disinflationary progress on underlying inflationary metrics could threaten the chances of further loosening. Naturally, a hot print would also be bad news for the fragile gilt market, where 10- and 20-year supply is due this week."
In company news, PageGroup said its gross profit has fallen, while Oxford Nanopore reported underlying revenue growth.
Here is what you need to know at the London market open:
----------
MARKETS
----------
FTSE 100: called down 24.4 points, 0.3% at 8,224.09
----------
Hang Seng: down 0.9% at 18,887.94
S&P/ASX 200: down 1.2% at 8,191.90
Respect for the Aged Day in Japan. Financial markets closed.
----------
DJIA: closed down 696.75 points, 1.6%, at 41,938.45
S&P 500: closed down 1.5% at 5,827.04
Nasdaq Composite: closed down 1.6% at 19,161.63
----------
EUR: lower at USD1.0215 (USD1.0233)
GBP: lower at USD1.2138 (USD1.2200)
USD: lower at JPY157.35 (JPY157.81)
GOLD: lower at USD2,687.01 per ounce (USD2,690.05)
OIL (Brent): higher at USD80.44 a barrel (USD78.61)
(changes since previous London equities close)
----------
ECONOMICS
----------
Monday's key economic events still to come:
11:00 EST US consumer inflation expectations
14:00 EST US monthly budget statement
----------
China's exports surged to a record high in 2024, providing a much-needed boost for the economy as the prospect of biting tariffs imposed by US president-elect Donald Trump looms. Trump, who imposed sweeping tariffs on China during his first term in office, has threatened even heftier levies when he returns to the White House next week. Exports have historically represented a key driver of activity for the world's number two economy, which officials say is likely to have grown 5% last year. "In 2024, China's total exports exceeded CNY25 trillion for the first time, reaching CNY25.45 trillion [USD3.47 trillion], an increase of 7.1% year-on-year," Lu Daliang, spokesman for the General Administration of Customs, said at a news conference. Total imports, meanwhile, rose 2.3% to 18.39 trillion yuan, Lu said. Combined trade swelled 5% to reach a record 43.85 trillion yuan, said Wang Lingjun, vice minister of the customs administration. Official customs data showed Monday that exports in December jumped 10.7% year-on-year, comfortably outperforming a forecast of 7.5% in a Bloomberg survey of economists. Imports last month grew 1% year-on-year, compared with a Bloomberg forecast of a 1% decline. Observers have pointed out that exports were likely boosted by companies ramping up stockpiles ahead of Trump's second term amid fears of a painful trade war.
----------
Data published by S&P Global showed that Ireland's construction purchasing managers' index returned to growth in December. The headline seasonally adjusted BNP Paribas Real Estate Ireland construction total activity index rose to 51.6 from 47.5 in November. The reading signalled a modest expansion in total activity, the first for eight months. Survey respondents attributed this to an "improving demand environment". "The increase in total construction activity reflected growth in two of the three monitored categories," S&P Global noted. "Housing continued to lead the way, posting a fourth consecutive monthly expansion and the ninth seen across the year as a whole. The rate of growth was solid and sharper than that seen in November. Commercial activity returned to growth for the first time in four months. Meanwhile, civil engineering activity continued to fall, albeit to the least extent since last May."
----------
Ahead of the inauguration of Donald Trump as US president later this month, Iran has warned the new administration in Washington against strategic miscalculations and threatened a protracted military conflict. "Be careful, don't make any strategic mistakes or miscalculations," said Hussein Salami, Commander-in-Chief of the Iranian Revolutionary Guards Corps, without directly naming Trump. According to Salami, the "enemy" may believe that Iran is weakened. But ne noted that the country is militarily up-to-date and ready for what he termed "big and protracted battles against the enemy and its allies in the region," according to Iran's ISNA news agency on Saturday. Despite these statements, experts believe Iran is in a weakened position. Following the developments in Lebanon and the change of power in Syria, the country is suffering from significant political and economic problems.
----------
Japanese Prime Minister Shigeru Ishiba told US President Joe Biden that his blocking of Nippon Steel's takeover of US Steel raised "strong" concerns in both countries, local media reported Monday. The comments came in a three-way call with Philippine President Ferdinand Marcos that according to the White House also touched on China's "dangerous and unlawful" behaviour in the region. The call was supposed to have been held on Sunday, but was postponed because of the Los Angeles wildfires, presidential spokesman Cesar Chavez said in a statement. Biden nixed Nippon Steel's USD14.9 billion acquisition of US Steel earlier this month, irking close ally Japan where the US has some 54,000 military personnel. "I said that strong voices of concerns are being raised not just in Japan but also in the US business community, and I urged [Biden] to dispel these feelings," Ishiba told reporters after the call on Monday. Blocking a takeover by a Japanese firm is highly unusual and both firms have launched legal action, accusing the outgoing US president of "illegal interference". Nippon Steel had touted the acquisition as a lifeline for its struggling US rival, but opponents warned the Japanese group would slash jobs despite its assurances to the contrary.
----------
US authorities have extended the deadline for Japan's Nippon Steel to abandon its acquisition of its American rival after President Joe Biden blocked the deal, the companies said Sunday. Biden cited national security concerns as he put a stop to the USD14.9 billion sale of US Steel to the Japanese giant. Accusing the president of "illegal interference", the companies filed a legal review with the US Court of Appeals. The administration will now hold off enforcing the order until June 18, Nippon Steel and US Steel said, extending an initial 30-day deadline.
----------
Rachel Reeves has said she will "take action" to meet her fiscal rules following turbulence on the gilt markets in the UK. Increases in the government's borrowing costs have sparked concern that the chancellor will be unable to meet her debt and spending targets, requiring either tax rises or deeper spending cuts when she delivers a fiscal statement at the end of March. Speaking to reporters in Beijing, where she is seeking to rebuild economic ties with China, the chancellor declined to give a "running commentary" on the markets but insisted her fiscal rules were "non-negotiable". She added: "We will take action to ensure that we meet those fiscal rules".
----------
Reeves met Chinese Vice President Han Zheng and Vice Premier He Lifeng, in the first high-level economic meeting between Britain and China since 2019. It follows Prime Minister Keir Starmer's meeting with Chinese President Xi Jinping at the G20 late last year as Labour has pursued a thaw in relations with China following the more frosty tone set by the previous government. At meetings on Saturday, Reeves hailed the trip as a "significant milestone" in Labour's re-engagement with China, saying she had agreed deals worth GBP600 million to the UK economy over the next five years. Speaking after she met with He, the chancellor said: "The outcomes we have agreed today represent pragmatic co-operation in action. "They represent common ground being found on areas like financial services, trade, investment and the climate." She added that "re-engagement" with China "already sets us on course to deliver up to GBP1 billion of value for the UK economy".
----------
Three of Germany's major parties met on Saturday to firm up their programmes and candidates ahead of the nationwide elections on February 23. With just six weeks to go, the centre-left Social Democratic Party gathered for a party conference in the capital Berlin, where it confirmed Chancellor Olaf Scholz as its top candidate and adopted its election manifesto. "There is a hell of a lot at stake," Scholz told the crowd, describing the ailing German economy - long considered the motor of Europe - as at a crossroads. "We are fighting to preserve and renew the successful brand 'Made in Germany' - for the ordinary people in our country. So, let's fight," he said.
----------
BROKER RATING CHANGES
----------
Goldman Sachs cuts Schroders price target to 310 (315) pence - 'sell'
----------
Jefferies cuts Hunting price target to 450 (530) pence - 'buy'
----------
Berenberg raises Dalata Hotel price target to 510 (480) EUR - 'buy'
----------
COMPANIES - FTSE 100
----------
GSK has agreed to acquire biopharma firm IDRx for up to USD1.15 billion, paying USD1 billion upfront followed by a possible further USD150 million success-based regulatory approval milestone payment. IDRx is dedicated to developing precision therapeutics for the treatment of gastrointestinal stromal tumours. It says the acquisition includes lead molecule, IDRX-42, a highly selective KIT TKI being developed as a first- and second-line therapy for the treatment of GIST. "IDRX-42 complements our growing portfolio in gastrointestinal cancers, says Chief Commercial Officer Luke Miels. "This acquisition is consistent with our approach of acquiring assets that address validated targets and where there is clear unmet medical need, despite existing approved products." Chief Scientific Officer Tony Wood added: "We are excited by the early data from IDRX-42 and its unique ability to target all clinically relevant KIT mutations present in GIST, a major gap in the current standard of care. We look forward to accelerating its development in 2025 to redefine treatment."
----------
Entain said BetMGM has reiterated its previous full-year Ebitda guidance of a USD250 million loss, despite customer-friendly US sports results during the fourth quarter following its half-year update.
For the full group, however, Entain expects Ebitda at the top of the GBP1.04 billion to GBP1.09 billion guidance range thanks to operator-friendly fourth-quarter sports results. In October, it predicted group Ebitda "towards the top" of the range.
----------
COMPANIES - FTSE 250
----------
PageGroup reported a fourth-quarter gross profit of GBP196.7 million, down 17% from GBP237.5 million the prior year. For the full year, gross profit fell 16% to GBP842.5 million from GBP1.01 billion. The firm noted continued subdued levels of client and candidate confidence. It said it expects a full-year operating profit in the lower end of its consensus range, of between GBP49 million and GBP58.5 million, adding that a high degree of uncertainty remains across most of its markets. This includes one-off costs totalling around GBP5 million relating to the closure of its shared service centres in the UK and Singapore. "Market conditions remained challenging in Q4 and whilst most markets were sequentially stable, we experienced a further worsening in Europe, particularly in our two largest markets, France and Germany," commented CEO Nicholas Kirk.
----------
OTHER COMPANIES
----------
MediaZest proclaimed a "positive performance" for financial 2024, ended September 30, "following strong Q4 trading with key customers continuing to roll-out digital signage installations across multiple sites". Annual revenue rose around 30% to about GBP3.0 million from GBP2.3 million the year before, returning to on-year growth. It expects to report a return to positive Ebitda following the prior year's loss of about GBP230,000. MediaZest said it continues to increase the number of longer-term recurring revenue contracts, with a recurring annual run rate at September 30 of approximately GBP900,000, compared to around GBP700,000 one year prior. CEO Geoff Robertson comments: "We are delighted with the strong year-end performance of the business, and the growing momentum we have brought into the new financial year. Our order book and overall forward visibility is encouraging and we look to continue our momentum into 2025."
----------
Georgia Capital addressed a report from Radio Liberty Georgia last week, which it says speculated that certain members of the US House of Representatives have sent a letter to the new US administration calling for action against a list of 25 individuals including Georgia Capital's Chair & CEO Irakli Gilauri. This was "in relation to recent political events in Georgia". The firm says it is busy contacting the relevant US officials to clarify the circumstances, but said it "has no basis for assessing the origin of the list of names", "rejects any suggestion that the US or any other government should be considering action against [Gilauri]", and is "confident that, when furnished with relevant information, the responsible authorities would reach the same conclusion". It adds: "Mr Gilauri leads the company in upholding the highest standards of corporate governance. We have a broad stakeholder base, and our policy has always been to not involve the company in the country's political process." Says it "will take every necessary action to respond to unwarranted accusations" against Gilauri and his company.
----------
By Emma Curzon, Alliance News reporter
Comments and questions to [email protected]
Copyright 2025 Alliance News Ltd. All Rights Reserved.