- FTSE 100 closes down 28 points at 7,461
- Rightmove jumps on upbeat trading
- Oil price eases ahead of Opec+ meeting
4:40pm: FTSE 100 closes near session lows
The FTSE 100 ended a lacklustre session close to session lows in the absence of any fresh catalysts.
At the close, London's premier index was down 27.50 points, 0.4%, at 7,460.70 while the FTSE 250 ended little changed at 18,449.22.
Chris Beauchamp at IG said: "“After weeks of gains, it is not surprising to see stocks catch their breath in afternoon trading."
"Things are quiet out there, perhaps a little too quiet, and more than a few investors will be casting a nervous eye on the Vix, which has reached its lowest level since January 2020."
"Nonetheless, barring a sudden handbrake turn from the Fed this month, the backdrop of falling yields and rising stocks could be with us well into December.”
A fall in the oil price weighed on index heavyweights BP and Shell while fellow index titan AstraZeneca dipped 1.7% after Jefferies cut forecasts and its price target.
Entain was hit by a double downgrade to 'sell' by Goldman Sachs (NYSE:GS) but it was a brighter story for online property websire, Rightmove, which jumped after an upbeat trading statement.
In the FTSE 250, Johnson Matthey climbed after a double upgrade by Bank of America while elsewhere musicMagpie tumbled after BT and Aurelius both pulled out of the running for bidding for the company.
3:53pm: Saga looking at ways to strengthen finances
Saga, the financial services and travel services provider to the over-50s, has drafted in a team of City bankers to help shore up its finances, according to reports.
Sky News said Saga has been working with Lazard to advise on prospective ways to strengthen its balance sheet, including reviving the sale of its insurance underwriting division.
City sources said that it had also been examining possible alternatives relating to the financing of its cruise ships, Spirit of Adventure and Spirit of Discovery.
Lazard is said to have presented its review of the company's earlier work on debt refinancing and restructuring options to Saga's board in recent days.
Other options, the details of which were unclear on Monday, are also understood to be under consideration.
The evaluation of new corporate activity by Saga's board comes ahead of a £150 million bond repayment which is due in May next year.
Shares in Saga were trading 0.9% higher on Monday.
3:14pm: Sunak pledges low tax approach at business summit
The Prime Minister Rishi Sunak has said a “low tax approach” is a key part of the UK’s pitch to international companies, as he addressed about 200 executives and investors at a London summit.
Sunak used the event to unveil nearly £30 billion of financial pledges and memorandums of understanding with international groups, which Sunak called a “vote of confidence” in the country.
In addition to “cutting taxes”, Sunak said the UK’s culture of innovation and its skilled workforce were part of the country’s attraction to investors.
A host of big beasts from the business world are at the summit, including the bosses of Goldman Sachs (NYSE:GS) and JPMorgan.
2:45pm: US markets open on the back foot
Across to the US and markets have, as expected, opened lower in the absence of any fresh catalysts.
Shortly after the opening bell, the Dow Jones Industrial Average was down 19.00 points, 0.1%, at 35,371.15, the S&P 500 was down 12.15 points, 0.3%, at 4,547.19 and the Nasdaq Composite was down 36.91 points, 0.3%, at 14,213.94.
Retailers were in focus as Adobe upgraded its Cyber Monday forecast after witnessing strong US spending at online retailers over the Thanksgiving weekend, despite persistent inflation and high interest rates.
The software company said sales across the ecommerce sector for Cyber Monday are expected to be between $12 billion to $12.4 billion, Adobe said on Monday, up from previous forecasts of $12 billion and $11.3 billion a year ago.
Back in London, and the FTSE 100 down 22 points at 7,466.
1:55pm: musicMagpie drops as Aurelius and BT rule out bid
Shares in musicMagpie PLC dropped 25% after telco BT Group PLC (LSE:BT.A) and Aurelius ruled out making a bid for the firm.
"BT Group confirms that it is not intending to make an offer for musicMagpie plc," the FTSE 100-listed firm said in a statement.
musicMagpie said Aurelius has also ruled itself out of bidding for the firm.
Last week, musicMagpie confirmed it was in "early stage discussions" with the telecommunications provider, and with asset manager Aurelius Group, with a deadline of December 18 to announce a firm intention to make an offer or walk away.
1:22pm: Market Movers
Risers
Metro Bank Holdings PLC (LSE:MTRO) rose 6% to 41.4p as shareholders are set to vote on a deal to bring in new funds and refinance debt.
East Star Resources jumped 18% to 1.41p as the Kazakhstan-focused explorer reported some healthy-looking sample grades from exploration at the Talovskoye prospect.
Fallers
Frontier Developments PLC (AIM:FDEV) tumbled 18% to 160p as it confirmed the latest computer game iteration of the Warhammer franchise, Realms of Ruin, had made a disappointing start.
Entain PLC (LSE:ENT) fell 2.4% to 838p after Goldman Sachs (NYSE:GS) double-downgraded the betting operator to ‘sell’ from ‘buy’ and slashed its price target to 820p from 1,450p.
1:03pm: Metro Bank jumps on £3bn mortgage sale reports
Shares in Metro Bank have jumped 8.5% today with reports suggesting the bank is close to sealing a deal, as part of a financial restructuring.
Sky News is reporting Barclays is in exclusive talks to buy a £3 billion residential mortgage portfolio from Metro Bank, part of a financial restructuring package for which the smaller London-listed high street lender expects to announce shareholder approval later today.
Exclusive: Barclays is in exclusive talks to buy a £3bn residential mortgage portfolio from Metro Bank, part of a financial restructuring package for which the smaller London-listed high street lender expects to announce shareholder approval later today. https://t.co/iDEYDtz6CL
— Mark Kleinman (@MarkKleinmanSky) November 27, 2023
A deal to raise extra funds from investors and refinance debt was struck last month after speculation about Metro's financial position.
The deal includes £325 million in new funding and the refinancing of £600 million of debt.
The mortgage deal would be on top of this.
12:36pm: Retail sales volumes fall for 7th month in row - CBI
Retail sales volumes fell year-on-year in November for the seventh consecutive month, according to the latest CBI distributives trades survey, but the downturn is expected to moderate further next month as retailers hit the key festive season.
The weighted balance used by the employers group improved to -11% from -36% in October. An even smaller net -6% of retailers expect a decline in sales in December, the CBI's report showed.
Retail sales volumes fell year-on-year in November for the seventh consecutive month, but at a slower pace than last month, according to the latest CBI #DTS. The downturn in sales is expected to moderate further next month pic.twitter.com/xkNFJmhl96
— CBI Economics (@CBI_Economics) November 27, 2023
The report showed sentiment amongst retailers recovered somewhat in November, with firms expecting their business situation to improve slightly over the next three months.
12:05pm: US markets expected to open modestly lower
Heading over to the US, and stock futures have dipped as Wall Street looks to build on four straight positive weeks for the equity market.
In pre-market trading, futures for the Dow Jones Industrial Average were down 0.1%, while those for the S&P 500 were 0.1% lower, and contracts for the Nasdaq 100 futures eased 0.1%.
Joshua Mahoney at Scope Markets said: “US markets look set for a negative open today, as we enter what could be a fifth consecutive week of gains across all three major US indices.”
He pointed out the latest core PCE price index data due on Thursday should help further inform markets over the likeliness of such a swift return to monetary easing.
Retailers will remain on focus as the winners and losers from black Friday are assessed – Mahoney noted that “early signs have pointed towards continued strength according to the key Adobe Analytics report,” with Friday seeing US consumers splash a record $9.8 billion in online sales.
Energy stocks may be a weak early feature as the oil price declined once more after tepid industrial profit figures from China.
West Texas Intermediate declined 1.5% to $74.45.
11:39am: BAE could net multi-million bonus from airline IPO
BAE Systems stands to net a multi-million windfall from the flotation of the national airline of Kazakhstan.
President Tokayev of Kazakhstan recently announced that Air Astana, in which BAE has a 49% stake, would pursue an international initial public offering next year – possibly in London.
The stake dates back to a botched defence technology deal more than 20 years ago but could now land the UK defence manufacturer an unexpected gain.
The British company put in $8.5 million to co-fund the launch of Air Astana in 2002 as part of an attempt to sell radar systems to the Kazakhs.
That defence deal fell apart under pressure from Russia, however, and BAE was left with the Air Astana stake, which today sits in its books with a valuation of £63 million.
Shares were down 0.6% in London at 1,061.50p.
11:19am: Johnson Matthey rises as BofA upgrades
Heading over to the FTSE 250, and the biggest riser is Johnson Matthey PLC (LSE:JMAT), recently demoted from the FTSE 100.
Shares are 3.9% higher after positive words from analysts at Bank of America which have put the stock on its buy list.
The investment bank believes Johnson Matthey can extract more value than it previously thought from its Clean Air franchise thanks to management's cost cutting efforts.
It also sees encouraging signs that it can generate new revenue streams in its Catalyst Tech business.
BofA said a deep dive into sustainable aviation fuels points to a large (£2.6 billion) addressable market for the firm by 2030.
The bank pointed out regulation is pushing airlines to use biofuels, with the EU mandating a 6% blend and the US targeting 10% by 2030.
Crucially, capturing this opportunity will require only modest capex (unlike batteries) given a licencing business model, and its existing expertise in syngas, the bank explained.
As a result, BofA thinks the company has a far better cash flow profile than its valuation discounts.
The market is understandably concerned about a core business in structural decline and reinvestment risk, indicated by the significant share de-rating in recent years, BofA accepts.
But, it pointed out recent results revealed upside to cost cutting targets, capital discipline in scaling back hydrogen capex, and a collection of Catalyst Tech awards.
The bank has upgraded the stock to ‘buy’ and increased its price target to 2,000p from 1,600p.
10:45am: Goldman admits getting in wrong on Entain
A few broker notes making waves today.
Leading the fallers in the FTSE 100 is Entain PLC (LSE:ENT), the owner of Ladbrokes and Coral, down 2.2%.
Goldman Sachs (NYSE:GS) has double-downgraded the stock to ‘sell’ from ‘buy’ and slashed its price target to 820p from 1,450p.
The investment bank admitted it had been “wrong” on Entain for a number of reasons.
Firstly, disappointing online growth, owing to a mix of regulatory headwinds, competition, market dynamics, and unfavourable sports results, which has contributed to material downward consensus EPS revisions.
Secondly, the BetMGM joint venture is losing market share in the US and thirdly, a larger-than-expected £585 million HMRC settlement.
The bank said its prior buy thesis looked for online growth to inflect from the third quarter of 2023, and the US JV to become meaningfully profitable in 2024 and potentially return capital to the parents.
Goldman now expects BetMGM to reinvest a significant amount of any profit in 2024 into the business in turn delaying the JV’s return of capital to the parents.
It also sees US operators (including BetMGM) that are outside the top-2 in online sports betting, as relatively more at risk from competition from new entrants such as ESPN Bet.
It expects the shares to continue to underperform on a 12-month view, although it added the key, external upside risk to its view would be a potential offer for Entain.
10:13am: Gold at six-month high on dolar weakness
The price of gold is trading at a six-month high above $2,000 an ounce, trading around $2,013/ounce.
Manoj Ladwa at ARJ Capital Ltd noted USD weakness “continues to underpin the safe-haven asset.”
With the market having significantly altered its Fed outlook over coming months, the greenback has come under heavy selling pressure recently, Ladwa explained.
The drop in US October labour market data and the fresh fall in CPI have seen traders pricing out any further Fed tightening in coming months, with pricing now reflecting expectations for a rate cut over the first half of 2024.
Shares in gold miner Endeavour Mining is up 1.4% while gold and siler miner, Fresnillo, is up nearly 5%.
The price of silver is also on the rise..
9:42am: AstraZeneca needs margin clarity - Jefferies
Another index heavyweight AstraZeneca is down 0.9% after analysts at Jefferies trimmed estimates and argued that clarity on margins may be needed for stock upside.
The broker, has a buy rating on the Anglo-Swedish drugs maker but has lowered its price target to 12,500p from 13,000p as well as cutting EPS estimates by up to 5%.
Jefferies also reduced its forecast for Ebit margin to 36% for 2028, below the consensus of 38%.
“We argue AZN is primarily a top-line growth and pipeline story, but margin clarity may be needed for stock upside,” the broker said.
It believes margin clarity is sorely needed for the stock to work and that consensus margin forecasst need trimming.
It said its buy thesis remains intact “based on deep dives into R&D assets outside oncology largely being ignored, offering significant upside optionality, such as Airsupra, tozorakimab, and Farxiga follow-ons.”
9:13am: Bank of England criticised over inflation failings
The Bank of England’s internal culture, governance and appointments processes need significant reform after it and other central banks showed “complacency” about the threat of inflation, said a House of Lords report.
The Lords economic affairs committee said BoE policymakers were too reluctant to challenge conventional wisdom and overly reliant on “inadequate” forecasting models when inflation was brewing in 2020 and 2021.
The Bank of England has been criticised for being slow to increase interest rates because they believed the jump in inflation triggered by the pandemic and the energy crisis would be transitory.
The committee’s report published on Monday recommended that BoE recruits should be drawn from a more varied intellectual background to foster a “diversity of views and culture of challenge”.
In particular it called for a review of the way senior BoE appointments are made, pointing out that three of its deputy governors previously worked at the Treasury, as did the recently retired Sir Jon Cunliffe.
“While we are of the strong view that independence should be preserved, reforms are needed to improve the bank’s performance and to strengthen its accountability to parliament,” said Lord James Bridges, chair of the economic affairs committee.
“The bank should learn from the errors it made — along with other central banks — in the conduct of monetary policy during the recent period of higher inflation,” he added.
8:44am: BoE's governor pushes back on rate cut hopes - again
The FTSE 100 remains in the red but is off earlier lows, down 10 points at 7,478.
The Bank of England’s governor Andrew Bailey has once again pushed back on hopes that interest rates may come down as early as next Spring.
Speaking to the Newcastle Chronicle he said we have to get inflation down to 2% and that is “why I have pushed back of late against assumptions that we're talking about cutting interest rates or we will be cutting interest in anything like the foreseeable future because it's too soon to have that discussion."
Bank of England governor warns of tough times ahead in battle to lower inflationhttps://t.co/c0XxKNywOt pic.twitter.com/HnSxgqH69w
— The Chronicle (@ChronicleLive) November 27, 2023
Bailey thinks inflation may be a “bit under” 4% by the end of the first quarter next year but said the rest of it has to be done by policy and monetary policy.
“And policy is operating in what I call a restrictive way at the moment - it is restricting the economy,” he added.
The jump in the gold price is supporting Fresnillo, up 1.5%, but AstraZeneca is down 0.6% after Jefferies trimmed its price target to 12.500p from 13,00p.
8:15am: FTSE 100 on the back foot as oil price falls
The FTSE 100 opened lower on Monday hit by falls in energy stocks as the oil price weakened ahead of Thursday’s Opec+ meeting.
At 8:15am, London’s blue-chip index was down 13.51 points, 0.2%, at 7,474.69 while the FTSE 250 was up 21.90 points, 0.1% at 18,480.00.
Richard Hunter at interactive investor said: "The premier index drifted lower, with an oil price which has drifted given OPEC uncertainty over the rearranged and upcoming meeting putting some pressure on the majors, with BP and Shell weaker."
BP and Shell both eased around 1% as the price of Brent crude fell below $80/barrel, while West Texas Intermediate slipped 1.0% to $74.82/barrel.
There was better news for investors in Rightmove where shares rose 5.0% after the UK’s largest property portal said trading was at least in line with guidance.
Analysts at Peel Hunt said it was a “reassuring statement” and it believes concerns over the competitive landscape from CoStar acquiring OnTheMarket are “overdone.”
Rightmove also outlined financial targets out to 2028, ahead of an Investor Day today, which Peel Hunt said were “sensible.”
Endeavour Mining rose 0.6% as the gold price hit a six-month high but video games developer Frontier Developments has dropped by 18% in London after cutting revenue expectations.
7:44am: Rightmove revenue ahead of guidance
Rightmove PLC (LSE:RMV) reported revenue growth has continued to track marginally ahead of consensus expectations, despite uncertainty in the housing market.
Updating investors on trading since July, the UK’s largest online property portal said the increase was driven primarily by higher-than-expected average revenue per advertiser (APRA).
Rightmove expects ARPA growth for the full year to be £112-116, exceeding previous guidance of £103-£105.
The firm said the overall full year outlook remains at least in line with previous guidance with revenue growth expected of 8% -10%, underlying operating profit growth of 7-8% and underlying margin of c73%.
The majority of the growth has been driven by new homes developers, while estate agents have continued to build their pipelines using a mix of branding, lead-generation and property products, Rightmove said.
The company said its commercial real estate business unit remains on track to deliver its expected full year revenues, continuing to grow as planned.
Rightmove is also expecting an Investor Day and is targeting revenue of more than £600 million and underlying operating profit of £420 million by 2028.
Commercial real estate revenue is forecast of more than £35 million with mortgage revenue of over £25 million.
7:23am: Aviva beefs up Canadian operations
We kick off with news of an acquisition from Aviva PLC which has expanded its operations in Canada with the acquisition of vehicle replacement insurance business, Optiom.
The FTSE 100-listed insurer has paid around £100 million to buy the business from Novacap in a deal which is expected to close in the first quarter of 2024.
The company said the purchase expands Aviva's capital-light businesses, which make up over half of its portfolio, and grows in a profitable segment of the Canadian insurance market.
Tracy Garrad, chief executive officer of Aviva Canada, said: “The acquisition strengthens our offering and distribution capabilities in a highly attractive segment of the Canadian insurance market.”
“We know Optiom well through our existing relationship and are excited about what we can do together to better serve our brokers and customers."
Aviva stressed the deal is consistent with its capital management framework and it continues to anticipate further regular and sustainable returns of surplus capital.
7:00am: Weak start expected in London
The FTSE 100 is expected to open lower when trading for the week gets underway on Monday following losses in Asia.
Spread betting companies are calling London’s lead index down by around 25 points after closing up 4.62 points, 0.1%, at 7,488.20 on Friday.
In Asia, the Nikkei 225 fell 0.5%, while the Shanghai Composite was 0.3% lower in late trade, and the Hang Seng was also 0.3% lower.
Later in the week and inflation figures in the US and Europe will take centre stage while the Opec+ meeting takes place on Thursday.
Ahead of that, the main early focus in London today will be an update from online property website, Rightmove.