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FTSE 100 and European stocks slip as rate cut hopes waver

January 5, 2024


ftse London, UK. 28th December 2023. Daytime view of the City of London, the capital's financial district. Credit: Vuk Valcic/Alamy

The FTSE was down upon opening on Friday. Photo: Vuk Valcic/Alamy (Vuk Valcic)

The FTSE 100 and stocks across Europe started Friday on the back foot after a rocky first few days of the year, as investors pare their bets that central banks will look to push ahead with earlier than expected interest rate cuts.

London’s flagship index (^FTSE) was down 0.5% after the opening bell, while Frankfurt’s DAX (^GDAXI) declined 0.5% and the CAC (^FCHI) in Paris fell 0.6%. The Stoxx 600 (^STOXX) was down 0.5%.

Global markets eyes are turning to US non-farm payrolls on Friday, in the hope the report will give further clues as to the Federal Reserve’s rate path. The report is due out at 1.30pm UK time.

Data released on Thursday suggests the US’s economy and labour market are resilient.

Read more: FTSE 100 bosses earn UK average salary in just three days

Endeavour Mining (EDV.L) is the stock to watch on Friday morning, dragging the FTSE down with a 12% fall as markets opened in London, following he ouster of CEO Sébastien de Montessus for serious misconduct.

The miner said this followed an investigation into an irregular payment instruction issued by De Montessus. The payment totalled $5.9m, and was in relation to an asset disposal undertaken by the company.

Meanwhile, new data has shown UK footfall took a beating in December, due to rainy weather deterring shoppers. The British Retail Consortium’s IQ data showed a 5% decline year-on-year in December, compounding a 0.7% fall in November.

The fall also reflects the fact that December 2022 saw pent up demand for in-person shopping following pandemic shutdowns, the BRC said.

Follow along live:

Live7 updates

  • Maersk and the Red Sea

    Bloomberg has the latest on the Red Sea drama:

    The TL;DR?

    The shipping provider had been targeted in an attempt to disrupt the flow of goods to and from Israel, as the conflict between the Israeli government and Hamas rages on.

    It’s now saying it will divert ships from that route for the ‘foreseeable future’.

    “By suspending voyages through the Red Sea / Gulf of Aden, we hope to bring our customers more consistency and predictability despite the associated delays that come with the re-routing,” the company said in a statement on its website. “All available intelligence at hand confirm that the security risk continues to be at a significantly elevated level.”

  • Peloton on a premarket run

    Exercise equipment company Peloton stock finished almost 14% higher on Thursday and was continuing its ascent in premarket trade on Friday, after announcing a partnership with TikTok. As part of the deal, Peloton content will be featured on a dedicated fitness hub on the platform.

    This marks the first time the exercise bike company will produce bespoke social content for a partner outside of its own channels. With TikTok’s more than one billion active users globally, the partnership will bring fresh audiences to its content, which is usually licensed and distributed via its machines.

    It’s currently up 7.5% in premarket trade.

  • What’s going on at Endeavour?

    Endeavour Mining stock went into free fall this morning as markets opened in London, settling at around 12% lower after news broke on Thursday that its CEO Sébastien de Montessus had been fired due to serious misconduct related to the sale for a company asset.

    The moves were made after a board investigation into an “irregular payment instruction” of $5.9m issued by de Montessus.

    In a statement, the former executive said that in 2021 he instructed an unnamed creditor of the company to offset an amount owed for essential security equipment, to protect its partners and employees in an unspecified conflict zone.

    He added that the transaction did not benefit him in any way, but he had failed to inform the board about the misconduct “which I have freely accepted was a lapse in judgement.”

    The company is also considering how to respond to allegations made in October about the CEO’s personal conduct with colleagues.

  • FTSE risers and fallers

    Propping up the FTSE at 9.30am we have:

    ConvaTec — up 0.5% ⬆️

    Centrica — up 0.6% ⬆️

    GSK — up 0.3% ⬆️

    Severn Trent — up 0.2% ⬆️

    (… not that many stocks are up today!)

    And dragging it down:

    Endeavour Mining — down 13.8% ⬇️

    IMI — Down 3.8% ⬇️

    RS Group — down 3.7% ⬇️

    Ashtead — down 3.2% ⬇️

    Diageo — down 2.8% ⬇️

  • Non-farm payrolls

    Here’s Neil Wilson, Finalto’s chief market analyst, on the NFPs:

    After the FOMC minutes confirmed our view that the Fed is not quite so close to cutting rates as the market has been pricing, today’s payrolls numbers will be of some importance once more. The consensus estimate is +170k, with a range +80k to +225k. Meanwhile, the unemployment rate is seen ticking up to 3.8% from 3.7% and wages are seen down a tad at +3.9% year-over-year from 4.0%.

    Yesterday’s ADP was strong yesterday. December payrolls +164k vs. +125k estimate, up from +101k prior. This was the largest increase since last August. ADP has a sketchy record when it comes to predicting the BLS nonfarm data of course. GS: “We left our nonfarm payroll forecast unchanged at +190k ahead of tomorrow’s release, above consensus of +171k.

  • UK house prices on the up for third month in a row

    Average UK house prices rose for the third straight month in December to their highest level since March 2023 as lower mortgage rates fuelled a revival in the property market.

    The cost of an average home rose by 1.1% to £287,105, just over £3,000 more than in November and the highest level since March, Halifax said.

    It was the third monthly gain in a row after six consecutive falls before that.

    Property values increased by 1.7% on average across 2023, ending the year £4,800 higher than it had been at the end of 2022.

    Kim Kinnaird, director at Halifax Mortgages, said: “The growth we have seen is likely being driven by a shortage of properties on the market, rather than the strength of buyer demand.

    “That said, with mortgage rates continuing to ease, we may see an increase in confidence from buyers over the coming months.”

  • Overnight in the US and Asia

    Stocks in the US were broadly mixed overnight, with the tech-heavy Nasdaq (^IXIC) the biggest loser, down 0.6%. Thursday marked the indexes longest losing streak since October 2022, as jittery traders pare back risky bets while they assess the possibility of rate cuts.

    Meanwhile the Dow (^DJI) was almost flat and the S&P 500 (^GSPC) finished 0.3% lower.

    Over in Asia, Chinese stocks continued to lag, having started the year down due to poor manufacturing data and long-running worries about growth. The Hang Seng (^HSI) finished Friday 0.7% lower as the SSE Composite (000001.SS) fell 0.9%.

    Japan’s Nikkei (^N225) rose 0.3%.

Watch: Apple stock downgraded again, rough 2024 continues for stocks: Yahoo Finance Live





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