5.05pm: Footsie closes ahead
FTSE 100 closed higher on Thursday, as US markets took a breather for the Thanksgiving holiday.
The UK blue-chip benchmark finished up around 24 points, or 0.33%, at 7,310. The session low was 7,286 and the high 7,311.
“European markets have enjoyed a relatively upbeat day today, with the lack of US involvement reducing volatility into the close,” said Joshua Mahony, senior market analyst at online trading group IG.
The analyst noted that traders were still mulling yesterday’s FOMC minutes.
“With the core PCE inflation and initial jobless claims figures both reaching levels not seen in decades, it should come as no surprise to see the Fed starting to consider whether an asset purchase scheme is actually necessary right now,” he added.
3.50pm: FTSE 100 hits high for the day
As we head towards the close, leading shares are at their high of the day.
The FTSE 100 has added 21.64 points or 0.3% to 7307.96, with Intercontinental Hotels Group PLC (LSE:IHG) still leading the way.
The firm’s shares are up 3.3% after an upgrade from analysts at Jefferies, while the same broker has helped lift Whitbread PLC (LSE:WTB) by 2.48%.
Given it has been a fairly light day on the corporate and data front – with Wall Street closed too for Thanksgiving – it is no surprise broker recommendations are giving shares a boost.
Vodafone Group PLC (LSE:VOD) is leading the fallers, down 3.65% after its shares went ex-dividend.
The FTSE 250 is also heading higher, up 0.54% at 23,292.39.
Vivo Energy PLC (LSE:VVO) is topping the mid-cap risers, up 18.49% after it accepted a GBP1.8bn offer from Vitol Group.
3.00pm: Sterling at 11 month lows against the dollar
The pound is hovering at eleven month lows against the dollar, as the hawkish tone of the US Federal Reserve minutes supports the greenback.
Added to that, there is continued uncertainty about whether the Bank of England will raise rates at next month’s meeting.
After all “unreliable boyfriend” and Bank governor Andrew Bailey and his cohorts seemed to strongly hint at a rise in November, but that never came to pass.
Yesterday monetary policy committee member Silvana Tenreyro said she was thinking more of the medium term for a rate rise, looking at the data at the time of the meeting rather than setting a specific date.
She told the Oxford Economics Society: “We’re learning about critical parts of the economy in coming months. My personal decision will be informed by that. I see myself as thinking more in [the] medium term.”
So the pound is currently down 0.136% at US$1.331.
2.03pm: Subdued session continues
Leading shares are continuing their drift higher, with no help from Wall Street to give any direction.
The FTSE 100 is up 7.18 points or 0.09% at 7293.5,
Michael Hewson, chief market analyst at CMC Markets UK, said: “In a fairly subdued session European markets have edged modestly higher, with the absence of US markets due to Thanksgiving keeping volatility, as well as interest fairly low.
“Despite the lack of volume, investors are keeping one eye on events in Europe, and Germany in particular as a new government there takes shape, and what steps it might look to take in addressing an infection and hospitalisation rate that appears to be running out of control.
“The FTSE 100 is edging back towards the 7,300-level helped by some decent performances from the likes of Holiday Inn owner IHG and Premier Inn owner Whitbread, both of whom were on the receiving end of a broker upgrade on optimism over a rebound in demand in 2022.
“On the downside, Vodafone and Imperial Brands were lower after going ex-dividend.”
12.42pm: Mid-cap index also making small gains
There is not much more movement in the FTSE 250.
The mid-cap index is up 0.17% at 23,206.2.
Vivo Energy PLC (LSE:VVO) is the biggest riser, up 19.39% at 133p after it accepted a raised US$1.85 (139p) per share offer from Vitol Group, valuing the company at US$2.3bn (GBP1.8bn).
Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF) is 15.82% higher at 141.3p.
The company halved in value recently following potential threats of mine closures in Peru. But now it says it has received official communication that the government is committed to upholding the rule of law and allowing the continued rights of mining companies to request extensions and modifications to existing licences.
12.11pm: IHG gets broker boost
Leading shares are still on track for a fourth day of rises, despite struggling to remain above 7300.
The FTSE 100 is currently up 11.37 points or 0.16% at 7297.69.
Intercontinental Hotels Group PLC (LSE:IHG) is leading the way, up 3.12% to 5060p.
The company has been upgraded from underperform to buy by analysts at Jefferies, with a price target of 5750p.
They also put a buy rating on Whitbread PLC (LSE:WTB), up 1.92% to 3082p, but cut their price target from 4000p to 3600p.
11.09am: Retailers see upswing in sales volumes
Some positive news for Britain’s retailers heading into Black Friday and Christmas.
According to the latest CBI distributive trends survey, shop keepers reported sales were good for the time of year in November and were expected to remain above the seasonal norm in December.
The survey showed showed a balance of +35% of retailers reporting strong sales, from -1% last month.
Year on year internet sales fell for the first time in the survey’s history, but the CBI said this was probably due to the comparison with the surge in online shopping last year during the COVID-19 lockdowns.
The bad news for shoppers is that retail selling prices increased at the fastest pace since May 1990 and are expected to rise at a broadly similar pace next month.
Ben Jones, CBI lead economist, said: “Christmas seems to have come early for retailers, with clothing and department stores in particular seeing a big upward swing in sales volumes in November.
“It seems likely that reports of supply chain disruptions prompted consumers to start their Christmas shopping early. And there are encouraging signs that retailers’ efforts to help avoid any festive disappointments may be paying off, with stock levels seen as adequate for the first time in seven months.
“Overall, retailers are becoming more optimistic, with both employment growth and investment intentions picking up strongly. Cost pressures remain a very real concern, however, with selling prices growing at the fastest pace since 1990.”
Meanwhile the FTSE 100 is now up 13.88 points or 0.19% at 7300.20.
Chris Beauchamp, chief market analyst at IG, said: “The quiet Thanksgiving Day session in global markets has seen European indices edge slightly higher, taking their cue from a better finish to the day yesterday, especially in the US where the usual pre-holiday buying helped to lift stocks from the lows seen earlier in the session.
“With an empty calendar before us markets will find it hard to make much headway, but at least the pound and euro might get some respite after the avalanche of selling they have suffered as everyone piles into the US dollar in expectation of a move to higher interest rates in the US. But any breathing space will be brief, since yesterday’s claims and Fed minutes have given a further indication that a rate hike will be on the cards for 2022, barring any deterioration in the data in the first half of the year.”
10.03am: UK housing supply falls
The number of new houses in England has fallen according to the latest data from the Office for National Statistics.
It said annual housing supply amounted to 216,490 net additional dwellings in 2020- 21, down 11% on 2019-20.
The net additions came from 194,060 new build homes, 23,790 gains from change of use between non-domestic and residential, 3,870 from conversions between houses and flats and 530 other gains (caravans, house boats etc.), offset by 5,760 demolitions.
Imran Hussain, director at Nottingham-based Harmony Financial Services said: “Not enough houses are being built, full stop. The lack of new homes under construction is a failure of countless Governments. Even when new properties are being built, we are not building enough affordable homes, which creates liquidity all the way up through the property market. Without all-important first-time buyers being able to buy new, affordable homes, the whole market is straitjacketed. It all starts from the bottom.”
9.47am: Diageo in demand
Shares in drinks giant Diageo PLC (LSE:DGE) are 0.75% higher, with the company benefiting from good results from rival Remy Cointreau.
Russ Mould, investment director at AJ Bell, said: “Diageo has been enjoying a strong rally since September.. Investors have been warming to the recovery story as it enjoys greater sales from pubs, restaurants and hotels now that many COVID-19 restrictions have been lifted.
“Helping to drive shares in Diageo was positive read-across from Remy Cointreau whose shares jumped 9.4% after reporting stronger than expected first half results including operating margins at a new all-time high.
“While there is a growing trend for more people not to drink alcohol, there is also a shift with others preferring more premium spirits which is playing to Diageo and Remy Cointreau’s strengths.
“Year to date Diageo’s share price is up by 33%, meaning it has achieved three times the returns from the FTSE 100 in 2021.”
9.25am: Mining shares provide support
Leading shares are off their best levels but still in positive territory.
The FTSE 100 is up 9.9 points or 0.14% at 7296.22.
Victoria Scholar, head of investment at interactive investor said, “European markets have opened stronger amid lighter volumes with US markets closed today for Thanksgiving. The FTSE 100 is drifting higher, inching closer to resistance at 7,300 with a break above potentially paving the way for further gains. Oil prices are steady for the second day in a row, holding onto Tuesday’s sharp gain with Brent crude firmly above support at $80 a barrel.”
A rise on the Nasdaq has lifted Scottish Mortgage Investment Trust PLC (LSE:SMT) – which has a number of tech investments – by 1.43%.
8.37am: Germany set for bleak Christmas
Over in Germany, consumer confidence has fallen sharply after a surge in infections and rising inflation.
The GfK consumer sentiment index is forecast to drop by 1.6 points in December compared to a 1 point rise in November. This is the lowest level in six months.
GfK’s Rolf Burkl said: “Consumer sentiment is currently being squeezed from two sides. On the one hand, the number of cases in the fourth wave of the coronavirus pandemic is exploding, which threatens to overwhelm the health system and could lead to further restrictions. On the other hand, the purchasing power of consumers is dwindling due to a high inflation rate of four percent.
“The outlook for the upcoming Christmas season is now somewhat bleak.”
8.29am: M&B boosted by update
With not much corporate news around, one stand-out is pubs group Mitchells & Butlers (LSE:MAB), whose shares have toasted its latest update with a 5.11% rise to 248.06p.
Richard Hunter, head of markets at interactive investor, said: “For Mitchells & Butlers (LSE:MAB), a fair proportion of the year was viewed from behind locked doors with lockdowns in place. As such, revenues declined by 28% and like-for-like sales by 9.6%, although more promisingly the latter has shown growth of 2.7% in the eight weeks since the end of the reporting period. The limitations of the trading environment also resulted in a pre-tax loss of GBP42mln, although this represents a narrowing of the previous loss of GBP123mln.
“The group has a number of factors in its favour, which should promote optimism on a continuing recovery. The company owns around 82% of its property estate, the GBP351mln fundraising exercise and general credit facilities have eased balance sheet pressures, and the return to cash generation will further consolidate the group’s financial position. Although temporary, the VAT reduction on food and non-alcoholic drink sales provided a windfall of GBP81mln, and the cash on hand figure has also seen a marked improvement.”
8.24am: Ex-divs have an impact
It being a Thursday, there are a number of major companies seeing their shares go ex-dividend.
So Vodafone Group PLC (LSE:VOD) is down 4.01% and the leading faller, Imperial Brands PLC (LSE:IMB) has lost 3.25%, British Land Company PLC (LSE:BLND) has fallen 1.54% and Land Securities Group PLC (LSE:LAND) is off 0.67%.
8.18am: UK investors remain positive
Leading shares have edged higher on what could be a relatively quiet day, given that US markets are closed for Thanksgiving.
The FTSE 100 is currently up 13.80 points or 0.19% at 7300.12 despite worries about further lockdowns in Europe, particularly Germany, and the continuing pricing pressures which are likely to prompt further central bank action.
On that note, the minutes from the last US Federal Reserve meeting – when the central bank said it would start tapering its bond purchases by US$15bn – have been received fairly calmly after their release yesterday.
But there were signs the Fed could cut its support for the economy more quickly than expected.
Ipek Ozkardeskaya, senior analyst at Swissquote, said: “The market mood is rather ok-ish after the FOMC minutes, although [they] showed that the US policymakers are now considering a faster QE taper and an earlier interest rate hike if inflation continues running higher.
“And the minutes were of a meeting that happened before the US released its latest CPI figure, which soared above the 6%, to a three-decade high. At this point, it makes sense to expect an earlier, and maybe a steeper rate normalization from the Fed. The US 2-year yield continues pushing higher on rising expectation of a tighter Fed policy, but appetite in US equities is not much hit. Nasdaq, which is supposed to be the most sensitive to higher rates closed yesterday’s session higher than the other major US indices, while gold slipped below the US$1800 per ounce as the rising yields increase the opportunity cost of holding the non-interest-bearing gold, at a time when the risk rally promises bigger returns to investors who invest in, well, risky assets.”
But as Jim Reid at Deutsche Bank pointed out, the Fed members do seem to be moving towards further action to try and curb inflationary pressures.
He said: “San Francisco Fed President Daly, one of the biggest doves on the FOMC and a voter in December, said in an interview that, “if (strong inflation and jobs data continue) then those are the things that would say, looks like we need faster tapering”. Furthermore, she also said that “I am very open and, in fact, leaning towards that we’ll want to raise rates from the zero lower bound at the end of next year”
“So if one of the Fed’s biggest doves is feeling this way, then that showcases the shift in thinking that could be taking place more broadly on the committee.”
Deutsche now expects the Fed to double the pace of tapering at the December FOMC meeting following better-than-expected inflation and employment data since the November meeting. This would bring monthly reductions in Treasury purchases to US$20bn and mortgage-backed security purchases toUS $10bn, which would bring the end of taper forward to March.
The Fed minutes did send sterling to a 2021 low of US$1.3325 against the dollar at one point, but it has since recovered a little and is now trading at US$1.3348, up 0.144% on the day.
6.50am: UK market expected to make positive start
FTSE 100 was set for a decent start even with the surge in corornavirus infections in Europe and a sharp rise in inflation in the US.
An hour before trading, financial spread betting firms were tipping London’s blue-chip index to open around 22 points higher compared to Wednesday’s close of 7,286.
Yesterday saw another 19 points gain, its third rise in a row and helped by the oil giants with crude prices near a weekly high even with the release of US strategic reserves.
News that the government has set aside GBP1.7bn to keep failed energy supplier Bulb supplying customers will make the headlines today.
Support services group Mears and property group New River are the most significant updates in a pretty empty company schedule.
The CBI distributive trades survey is the main set of economic data to be released and the consensus is for a rise to around +34.
Elsewhere, the current wave of Covid-19 hitting Europe has prompted Olah Scholz to warn that his first job as new German chancellor might be to impose a full country-wide lockdown.
Turkey’s collapsing currency is also causing concern, with the lira down 40% this year against the dollar as the markets’ give their own assessment of President Erdogan’s economic stance.
It is turkeys of a different kind on the minds of Americans as they sit down to their traditional Thanksgiving Day meal.
Economists say it is likely to cost 15% more than a year ago, with the trend of rising prices confirmed yesterday by the official data.
The PCE deflator, the US Federal Reserve‘s main measure of inflation, hit a 31-year high in October rising by 5% year-on-year and by 0.6% in the month alone.
Minutes from the US interest rate-setting committee, the FOMC, also noted that inflationary expectations in the near term could exceed forecasts and that a faster tapering is not out of the question.
Not the most palatable combination for a celebration but at least there is Black Friday to come for some shopping therapy.
Asian markets were mixed with mild declines in most places towards the end of trading.
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were mixed on Thursday after South Korea raised its policy rate by 25 basis points to 1%.
The Bank of Korea said in a statement that “The Korean economy has continued its sound recovery.”
“The Board will continue to conduct monetary policy in order to sustain the recovery of economic growth and stabilize consumer price inflation at the target level over a medium-term horizon, while paying attention to financial stability,” it added.
China’s Shanghai Composite slipped 0.08% while Hong Kong’s Hang Seng index rose 0.22%,
The Nikkei in Japan gained 0.67% but South Korea’s Kospi slipped 0.45%.
Australia’s S&P/ASX200 closed 0.11% higher at 7407.3 points with the IT sector standing out with a gain of 2.4%.