Blue-chip shares struggled today as investors opted not to take new positions ahead of a significant week for the outlook on borrowing costs.
Markets are betting on interest rate cuts in 2024 but the message from central bankers in the coming days is likely to be that such talk is premature.
This week's market mood will also be determined by tomorrow’s US inflation reading, as well as the UK’s GDP and unemployment figures.
FTSE 100 Live Monday
Focus on central banks amid rate cut talk
UK tax level highest on record - OECD
Heathrow passenger numbers in November jump
Lord Byron’s Piccadilly mansion up for sale with £29.5 million price tag
Monday 11 December 2023 15:55 , Jonathan Prynn
A spectacular Piccadilly mansion where Lord Byron once lived and wrote some of his most famous works has come on the market priced at just under £30 million.
The grade II listed residence at 139 Piccadilly overlooking Green Park has been used as an office building in recent years but is being sold with planning permission for conversion back into a family home with up to eight bedrooms. Agents estimate the seven storey building could be worth £70 million after a refurbishment that could cost as much as £15 million.
The house was built between 1760 and 1764 and in 1815 became Byron’s London home where he wrote his tragic verse Parsinia and his narrative poem, The Seige of Corinth. Later occupants included Baron Emile Beaumont d’Erlanger, whose family owned the French merchant bank Emile Erlanger and Company, and his society hostess wife Baroness Catherine d’Erlanger, whose salon guests included Winston and Clementine Churchill.
City eyes Bank of England vote split for rate cut timing clues
Monday 11 December 2023 15:31 , Michael Hunter
Homeowners, house hunters and City traders are all looking toward the Bank of England this week for any clues on when interest rates might start to fall, with a busy run of influential numbers leading up to the last set-piece decision of 2023.
Due at noon on Thursday, it is all but certain to keep the base cost of borrowing on hold at 5.25%. It would be the third consecutive time at which it has stayed steady.
But with inflation at 4.6% and seemingly falling consistently toward the BOE’s official 2% target from its peak over 11%, speculation is growing in the City over when a cut will be on the cards. And the market is betting that there will be more than one cut by the end of next year, starting in the first half of the year.
But it they are unlikely to start quite yet. The BOE’s Governor Andrew Bailey has signalled that rates will have to stay higher for longer before the balance of opinion on the nine-member Monetary Policy Committee he chairs.
Goldman Sachs says 'Stop shorting UK real estate' as interest rates to ease
Monday 11 December 2023 13:55 , Bloomberg
Goldman Sachs ended a recommendation to short UK real estate stocks, saying the housing market is stabilizing and interest rates should start to come down from next summer.
“The real estate market is holding up: housing prices edged up last month amid encouraging signs that mortgage rates are starting to come down,” strategists including Sharon Bell wrote in a note to clients. They removed their advice to bet against the sector, while also downgrading European banks to neutral on the rates outlook.
The move comes as economists at the lender predict the Bank of England will cut its main interest rate in August and then again for several consecutive quarters as inflation cools. Real estate has been highly affected by rate hikes due to the impact on mortgage costs, the sector’s heavy debt load and tumbling valuations of commercial property as the economy weakened.
Market snapshot with FTSE 100 lower
Monday 11 December 2023 13:45 , Daniel O'Boyle
The FTSE 100 continued its decline through the morning, falling close to the 7500 mark before a slight rebound.
Take a look at our latest market snapshot.
The City to open its first office in the United States
Monday 11 December 2023 13:21 , Daniel O'Boyle
The City of London Corporation is to open a US office for the first time in its history at a time of intense competition from New York for the crown of world’s leading global finance centre.
Chris Hayward, policy chairman of the Corporation and effective the “council leader” of the Square Mile’s ancient local authority and governing body, is due to make the announcement at a reception hosted at JP Morgan’s headquarters on Wall Street tonight.
There will be a second reception at the UK Embassy in Washington DC tomorrow night. The City’s new “ambassador” in America, managing director Ed Price will start in the role in late January.
WH Smith boss sees pay deal jump 78% to £2.9 million as rebound continues
Monday 11 December 2023 12:27 , Daniel O'Boyle
WH Smith’s boss has seen his pay surge by 78% over the past year after the retailer continued its travel-boosted resurgence.
Carl Cowling, chief executive since 2019, received a total pay deal worth £2.91 million for the year to August 31, according to the firm’s latest annual report.
That compares to a £1.63 million pay deal a year earlier.
Around four-fifths of the larger pay deal was linked to performance-based bonuses after the company saw sales and profits jump.
Surge in failed businesses boosts Begbies Traynor
Monday 11 December 2023 12:17 , Daniel O'Boyle
Firms are going bust at the fastest rate since the financial crisis, boosting revenues at insolvency group Begbies Traynor.
That’s down to rising borrowing costs and lower consumer confidence, and is potentially a bad sign for the wider economy and employment.
Begbies shares rose 2p to 115p today, which leaves it valued at £180 million. Half year revenues rose by £7.4 million to £65.9 million, allowing for a slight rise in the interim dividend to 1.3p. Profits slipped by £2 million to £3 million.
Begbies has made several takeover deals in recent years and is hungry for more. Chairman Ric Traynor said the insolvency team “has maintained its market-leading position (by volume) in a growing marketplace nationally.
Report: Shein chair met City bosses over blockbuster London listing
Monday 11 December 2023 11:35 , Daniel O'Boyle
The chair of Chinese fast-fashion giant Shein has held talks with London Stock Exchange executives over a potential blockbuster IPO that could represent a drastic change of fortunes for the stock exchange, according to a report.
Sky News reports that Donald Tang met London Stock Exchange bosses and other top City brass on a visit to London last week. Among the topics discussed was a potential UK listing of Shein.
The fast-fashion firm has long been rumoured to go public, but this was widely expected to be in the US. According to the report, the US remains the most likely option.
Shein was valued at more than $100bn at one point last year. Its valuation has since fallen, but if it lists in London it is still likely to be the biggest City IPO in history.
New plans for care home and apartments at listed Hammersmith hospital
Monday 11 December 2023 10:58 , Daniel O'Boyle
A listed west London hospital where thousands of servicemen were treated during the Second World War that has stood empty since 2006 is to be converted in apartments, a cultural centre and a private care home under a major new scheme.
The modernist grade II* listed Royal Masonic Hospital next to Ravenscourt Park in Hammersmith was bought by property company TT in 2022. It has now teamed up with London architects SPPARC to convert the brick building into a mixed use development.
The hospital, originally built by the Freemasons and designed by Scottish modernist architect Thomas S. Tait, was opened by King George V and Queen Mary in 1933 and won the RIBA gold medal that year. Its design includes concrete reliefs of Greek god Aesculapius and the goddess Hebe.
Rate uncertainty keeps investors on sidelines, Rolls-Royce higher
Monday 11 December 2023 10:16 , Graeme Evans
A packed diary of potentially market-moving events today prompted a risk-averse session, with the FTSE 100 index down 26.01 points to 7528.46 and the FTSE 250 index off 36.91 points to 18,665.08.
Markets are betting on rate cuts in 2024 but this week's message from central banks in the US, Europe and UK is likely to be that such talk is premature given that core inflation is still too high.
In addition to the interest rate uncertainty, blue-chip mining stocks were impacted by deflation worries in China after figures on Saturday showed consumer prices fell 0.5% in November. Fallers included Glencore, which lost 7.25p to 450.15p.
Anglo American steadied after its shock warning of copper and coking coal production cuts in Friday’s strategic update caused shares to slide 19%.
The FTSE 100 stock has fallen from 3500p at the start of the year to this morning’s 1838p, but UBS is hopeful that the update is the “last of the bad news”.
The bank highlighted a price target of 2500p, noting expectations of limited further downside to diamond and platinum group prices and the potential for iron ore to stay elevated alongside “meaningful” upside risk to copper.
On the FTSE 100 risers board, Rolls-Royce put on another 6.5p to 295.8p as the engine giant’s turnaround progress prompts more analysts to revise their estimates. The latest upgrade came from Citigroup, backing the shares to reach 431p.
Other risers included JD Sports Fashion after a gain of 1.2p to 168.1p took the sportswear chain to the highest level since May.
Among the small-caps, one of the best performances came from surveillance systems business Synectics. The AIM-listed shares jumped 31p to 136p on guidance that 2023 results will be materially ahead of City expectations, driven by particularly strong trading in the oil and gas sector.
Government reduces NatWest stake again
Monday 11 December 2023 10:01 , Daniel O'Boyle
The Government has sold a small portion of its NatWest stake, bringing its holding of the banking giant down to 37.97%.
The sale represents about 0.56% of the bank. The taxpayer acquired a majority stake in the business, then known as Royal Bank of Scotland, as part of a rescue deal to keep the bank afloat during the Global Financial Crisis. It has slowly sold down that stake.
In his Autumn Statement this year, the Chancellor revealed plans to sell the remainder of the stake with retail investors having an opportunity to buy in for the first time.
NatWest shares are down 1% to 218.4p today.
Interest rates ‘almost certain’ to be held steady by Bank of England
Monday 11 December 2023 09:43 , Daniel O'Boyle
Interest rates will “almost certainly” be held steady for a third time in a row by the Bank of England, economists have predicted.
The final Bank of England Monetary Policy Committee (MPC) meeting this year, on Thursday December 15, is expected to show a relatively stable end to a dramatic year for borrowing costs.
The central bank had hiked interest rates – which help dictate mortgage rates set by banks – in 14 consecutive meetings until they peaked at 5.25%.
However, the MPC held rates in the September and November meetings after witnessing a notable cooling in the rate of inflation.
UK tax level rises to highest on record – OECD
Monday 11 December 2023 09:21 , Daniel O'Boyle
The UK’s tax level across the economy has increased to its highest rate on record, according to new data from the OECD.
It came as separate figures showed the UK also now faces the highest level of property taxes across the developed world.
The OECD’s (Organisation for Economic Co-operation and Development) annual revenues statistics update found the total tax-to-GDP ratio across the UK hit 35.3% for the 2022/23 financial year – the highest since OECD records began in 2000.
It represents a 0.9 percentage point increase from the 34.3% record a year earlier.
Diwali and Thanksgiving boost Heathrow in November
Monday 11 December 2023 08:54 , Daniel O'Boyle
A total of 6.1 million passengers flew through Heathrow in November, up by 10% on last year as Thanksgiving and Diwali made the US and India popular destinations.
Traffic to North America in particular surged, with 50,000 passengers flying to the continent in a single day on 17 November, the Friday before Thanksgiving.
Heathrow CEO Thomas Woldbye said: "For so many, holidays and cultural festivities are all about spending quality time with friends and family.”
November also saw the first transatlantic flight powered entirely by sustainable fuels take off from Heathrow. Woldbye said: “Now we need collaboration between industry and government who both have critical deliveries to scale up SAF production.”
Market snapshot: shares flat
Monday 11 December 2023 08:33 , Daniel O'Boyle
Take a look at today's market snapshot with the FTSE 100 and 250 both close to flat
Anglo American remains under pressure, FTSE 100 lower
Monday 11 December 2023 08:23 , Graeme Evans
Anglo American shares are under fresh selling pressure, having slid 19% on Friday after the mining giant slashed production guidance.
The latest fall of 20.4p leaves Anglo near to a three-year low of 1782.2p, down from 3,500p at the start of the year.
The FTSE 100 index got off to a worse-than-expected start by falling 0.3% or 21.20 points to 7533.27, with Glencore and Rio Tinto among other miners under pressure.
Rolls-Royce continues to make progress after adding another 6.6p to 295.9p, while BAE Systems also put on 8p at 1050.5p.
The FTSE 250 index was broadly unchanged, with Auction Technology Group among the leading fallers after a 3% decline.
Hipgnosis completes sale of 2,000 songs at discount
Monday 11 December 2023 08:15 , Daniel O'Boyle
Embattled music investment fund Hipgnosis Songs Fund has completed the sale of more than 2,000 songs for a discount compared to their assessed price.
The fund announced in September that it was planning to sell the songs for around $25 million, and had them assessed at a value of $26.9 million a little over six weeks ago. But it has now revealed the sale price will be $23.1 million.
The songs in question were acquired from Kobalt Capital in a massive $323 million deal in 2020, but represent some of the less popular songs in that portfolio . Hipgnosis said it had always been the plan to sell these rights in order to focus on the “iconic” hits.
The 2020 Kobalt deal included songs written by big names including Lindsey Buckingham, Steve Winwood, the B-52s, 50 Cent, Savan Kotecha, Skrillex and Nelly, though this sale is unlikely to have included major hits written by any of those names.
Focus on central banks amid rate cut talk, FTSE 100 set for steady session
Monday 11 December 2023 07:19 , Graeme Evans
Central bank bosses are expected to push back against interest rate cut speculation when they hold their final meetings of the year later this week.
The US Federal Reserve on Wednesday and the European Central Bank and Bank of England the following day will leave policy unchanged but are likely to remind markets that the fight to bring inflation back to target is ongoing.
Some of the optimism about potential US rate cuts in the first part of next year was checked on Friday when it emerged the economy added more jobs than expected in November.
However, with a large number of workers returning from strikes the non-farm payrolls performance failed to derail Wall Street as all three major benchmarks rose by around 0.4%.
Asia shares have posted a mixed performance this morning after it emerged China consumer prices fell 0.5% year-on-year in November, the biggest drop in three years.
The Hang Seng index retreated 1% but the Shanghai Composite added 0.7% and the Nikkei 225 in Tokyo improved by 1.5%.
The FTSE 100 index closed 0.5% higher on Friday and is forecast by CMC Markets to add another seven points to 7561 this morning.
Recap: Friday's top stories
Sunday 10 December 2023 23:04 , Simon Hunt
Good morning from the City desk of the Evening Standard.
It's the last big busy economic week before the Christmas break, with the UK unemployment rate, GDP figures and the Bank of England's last interest rate decision of the year to come over the next few days. Stay tuned here to keep up to speed.
Here's a look at our top headlines from Friday:
City spread betting giant IG Group appoints former Paddy Power boss Breon Corcoran as Chief Executive Officer