US jobs figures are keeping monetary policy in the spotlight after a week of outsized interest rate movements ended with more strong jobs growth, opening the way for more big hikes.
The US Federal Reserve lifted rates by 0.75% on Wednesday and raised Wall Street expectations on the eventual peak. Today’s non-farm payrolls report showed the addition of 261,000 jobs in October, stronger than the 200,000 predicted but down from 263,000 the previous month.
The Bank of England lifted by 0.75% to 3% yesterday, but the pound weakened as policymakers gave a softer-than-expected rates outlook and warned of a two-year recession.
Santander limits Bitcoin payments amid fresh crackdown on customer crypto spending
18:49 , Simon Hunt
Santander has intensified its crackdown on customer crypto trading as the bank set fresh limits on transactions in Bitcoin and Ethereum and warned of the risks of investing in crypto assets.
From the 15th of November, Santander mobile and online banking customers will be restricted to a £1,000 limit for individual cryptocurrency transactions and a £3,000 cap on transactions in a rolling 30-day period. Payments sent to cryptocurrency exchange Binance will continue to be blocked, while payments from cryptocurrency exchanges, including Binance, will still be permitted.
Santander is the latest bank to impose restrictions on customer crypto activity, joining the likes of Lloyds, Barclays and RBS who have imposed a range of new measures including blocking credit card payments and blocking transactions with crypto exchanges. 47% of UK banks don’t allow customers to interact with crypto exchanges, according to personal finance comparison site finder.com.
FTSE 100 buoyed by mining gains amid China reopening speculation: evening wrap
17:55 , Simon Hunt
European stocks enjoyed a boost on Friday, closing the week on a high amid reports that China is mulling over reopening its economy.
The FTSE 100 surged by more than 2.5% at one point on Friday as investors piled cash into the index’s China-exposed mining giants.
Meanwhile, Endeavour Mining, Rio Tinto and Antofagasta all made gains above 5%.
The FTSE 100 closed the day up 2.03%, or 146.21 points, at 7,334.84.
Elon Musk decries ‘massive drop in revenue’ at Twitter
14:51 , Simon Hunt
Elon Musk has warned of a ‘massive drop in revenue’ at Twitter as advertisers cut bank on their spending with the social media giant.
The billionaire tweeted: “Twitter has had a massive drop in revenue, due to activist groups pressuring advertisers, even though nothing has changed with content moderation and we did everything we could to appease the activists.
“Extremely messed up! They’re trying to destroy free speech in America.”
It comes as Musk plans to fire as many as half of Twitter staff in a bid to cut costs and improve profitability.
Twitter has had a massive drop in revenue, due to activist groups pressuring advertisers, even though nothing has changed with content moderation and we did everything we could to appease the activists.
Extremely messed up! They’re trying to destroy free speech in America.
— Elon Musk (@elonmusk) November 4, 2022
Prospect of $1 billion in revenue sends 4Imprint to the top of the FTSE 250
14:44 , Simon Hunt
A Holborn-based company that prints corporate logos on pens for a little as 19 pence climbed to the top of the FTSE 250 after it said it was closing in revenue of over $1 billion for the year.
The looming landmark sent share in 4Imprint up by 245p to 3820p, a rise of almost 7%, taking its gain for the year to over 20%. The rally came as companies continued to spend on its range of branded giveaways, from stationery and mugs to polo shirts and backpacks.
There are also scarfs and blankets as well as “colour-in Christmas hats” for children, alongside promotional items more familiar to London’s office workers, such as stress balls and power bank phone chargers.
While companies grappling with rising costs may have been thought likely to cut back on branded gifts, a rise in orders of over a third in 4Imprint’s North American business helped it close in on the billion dollar mark. It said profits would be at least $90 million.
Stocks make gains on Wall Street after strong US payroll data
13:49 , Simon Hunt
Stocks made gains in the opening minutes of trading on Wall Street after better-than-expected US payroll data was released this afternoon. However, the data also showed unemployment figures widening, raising investor hopes of smaller interest rate hikes in the months ahead.
The Nasdaq gained almost 2%, while the S&P was up 1.3% and the Dow rose 0.8%.
Shares in action camera GoPro didn’t perform well, however -- their shares were down some 9% after the firm said weakened consumer spending would mean sales during the holiday quarter would fall below expectation.
US jobs data powers through expectations pointing to more big rate hikes
12:34 , Simon Hunt
Today’s non-farm payrolls report showed the addition of 261,000 jobs in October, stronger than the 200,000 predicted but down from 263,000 the previous month.
Strong job creation is seen as one of the main factors that has given the Federal Reserve room for its programme of aggressive rate rises, including another 0.75% rise this week.
The dollar rallied after today’s data, with the index tracking it against a range of alternative currencies up 0.6% at 112.0, taking its rally for the year over 20%. US stock futures were volatile after the data, initially cooling and pointing to opening losses at the start of New York trade before recovering to predict a modest gain for the S&P 500.
Srijan Katyal, global head of strategy at the brokerage ADSS, said: “We are still seeing a positive labour market despite the slight month-on-month slowdown. Private payrolls increased more than expected, providing greater evidence of a resilient jobs market. However, the story doesn’t end there – with tech firms moving towards hiring freezes and some going as far as job cuts, the next few months may look challenging.”
Travel insurance premiums could rise by a quarter amid rocketing inflation and a weaker pound
10:34 , Simon Hunt
Travel insurance premiums could go up by as much as 25% in the coming months as a trifecta of soaring inflation, the weak pound and European firms withdrawing from the market forces up prices.
Anthony Kaye, chair of the Association of Travel Insurance Intermediaries, told the Standard: “Monetary inflation has a huge impact on the way holiday travel insurance works because it’s a global financial instrument.
“Across the industry since the start of the pandemic premiums have gone up in the region of 20-25% and I can see them continuing to increase as inflationary factors apply.”
Kaye also warned of a risk that a number of European insurers trading on a temporary passporting regime into the UK could withdraw from the market.
“If the Financial Conduct Authority makes life hard, with additional bureaucracy and red tape, then the cost of doing business in the UK goes up and European insurers may say: ‘this is not a market for us.’”
City Voices: The fight to clear Tom Hayes
10:28 , Simon English
There but for the grace of God is how they feel about the former UBS and Citigroup trader who was convicted in 2015 of conspiring to rig Libor and sentenced to 14 years in prison, reduced to 11 on appeal.
They’ve got nothing but sympathy for Hayes, who was released in January last year after serving five-and-a-half years and continues to protest his innocence. Hayes is awaiting a final decision from the Criminal Cases Review Commission or CCCR, which investigates potential miscarriages of justice.
This week, he received a boost when a New York judge threw out criminal charges against him. That decision followed an appeals court ruling in a separate US case, which overturned the convictions for Libor rigging of two former Deutsche Bank traders. There the court ruled the US government had “failed to show that any of the trader-influenced submissions were false, fraudulent or misleading”.
Hayes was a star, brilliant at his job. He’s said to have made more than $280 million in profits for UBS between 2006 and 2009 while trading derivatives for the investment bank in Tokyo. Citigroup hired him on a $4.2 million joining bonus, he was that good. Ten months later, he was fired, as the Libor scandal exploded.
Markets higher on China speculation, BP shares rise
10:16 , Graeme Evans
Big gains for miners and other China-focused stocks today improved the mood at the end of a week dominated by recession fears and outsized interest rate rises.
Shares in economy-driven Anglo American and Rio Tinto surged by 5% as traders latched on to fresh speculation that China is close to relaxing its strict Covid curbs.
The reopening rumours helped Hong Kong’s Hang Seng index to rally by 5.4% for its best week in a decade. Prudential, which is now focused on insurance operations in Asia and Africa, added 43.6p to 882p and luxury goods group Burberry cheered 35p to 1880.5p.
Brent crude futures rose 2% to over $97 a barrel amid the potential for a demand boost from China, meaning shares in BP were 3.4p higher at 496.9p and up 42% so far in 2022.
The FTSE 100 index rose another 69.62 points to 7258.25, having been one of yesterday’s strongest performing indices due to the weakness of the pound.
The FTSE 250 index, which has fallen more than 20% this year as the UK outlook deteriorates, improved 88.58 points to 18,198.19 in a session when Aston Martin Lagonda regained some lost ground with a rise of 6%.
Cyber security firm Darktrace also improved 12.9p to 355.7p after analysts at Numis initiated coverage with a “buy” rating and 520p target.
Windsor-based Morgan Advanced Materials led the FTSE 250 index as the carbon and ceramic metals manufacturer nudged up profits guidance following a 10.5% rise in sales for the first nine months of the year. Shares jumped 25p to 268p.
City Comment: Save Simpson’s Tavern
10:11 , Simon English
For 265 years Simpson’s Tavern has been a huge part of the cultural and commercial life of the City.
It has, as it notes, survived fires, world wars, plagues and disastrous budgets with the same approach: carry on and eat sausages.
Now it has shut in a dispute with a landlord over rent arrears built up during lockdown. The (Bermuda based) landlord has its reasons, but this remains an awful pity.
A City fan writes in: “The waitresses are all old and blunt. And everyone loves them. It has never changed. It is surrounded by sky scrapers and the planners to their eternal credit haven’t allowed developers to touch it.”
The pub is a three-minute walk from Leadenhall Market on Cornhill – a perfect place for insurers and bankers to meet, and exchange the sort of chatter you can’t do on the phone.
The very best bit about it? That whatever you order comes with a massive sausage. No one really knows why.
Simpson’s says the landlords are “unwilling to engage” on the money owed, which suggests they have other plans.
Hartnell Taylor Cook, which represents the landlords Tavor Holdings, sounds as sad as anyone at Simpson’s demise. It does not want to be known as the firm that finally sent a chophouse at the heart of the City since 1757 to its demise.
It hopes a deal can be made.
A crowdfunding exercise to save the pub, which you can easily find online, has raised at least £20,000 in short time.
It might need closer to £400,000 to get through.
This feels like an occasion for a public-spirited gesture by a wealthy City gent. A man who has perhaps frequented Simpson’s over the years and feels a debt of gratitude.
It would be unfair of us to single out either Michael Spencer or Crispin Odey. There’s no particular reason why this should fall on them. But why not chaps?
Remember the sausages.
Covid speculation boosts Hang Seng, Pru 3% higher
08:28 , Graeme Evans
Hong Kong’s Hang Seng index has surged 5%, reflecting renewed speculation that China is taking steps to relax its strict Covid policies.
The talk also led to gains of more than 3% for shares in London-listed mining stocks and Asia-focused insurer Prudential.
Hargreaves Lansdown analyst Sophie Lund-Yates said: “China’s impenetrable policies have caused a great deal of economic pain, both inside and outside the country.
“Supply chains, manufacturing and demand have all come under very serious pressure. Any indication that some rules could be relaxed would be an immediate dose of grease in the jarring cogs of China’s economy.”
“Outperforming” FTSE 100 opens higher
08:16 , Graeme Evans
The FTSE 100 index has built on yesterday’s robust session by adding another 0.7% or 46 points to 7234, while the FTSE 250 index is up by a more modest 0.4% at 18,187.
Richard Hunter, head of markets at Interactive Investor, said the UK stock market remains a tale of two indices as the domestically-focused FTSE 250 continues to shoulder the burden of a pallid economy.
Hunter points out that the second tier benchmark is down by 23% in the year to date, whereas the globally-focused FTSE 100 continues to show relative resilience following a decline of just 2% so far this year.
He said the FTSE 100 outperformance had been “propelled by a mixture of defensive and cyclical plays, with a particular weighting to the likes of the oil majors, and where an average dividend yield of 4% remains an additional attraction”.
DFS defies market gloom and hails ‘positive trend’ in consumer demand
07:53 , Simon Hunt
Furniture business DFS today defined industry gloom and said it had “observed a more positive trend” in consumer demand in recent weeks despite a significant softening earlier in the year.
The firm said it had increased its market share and expected earnings to be in the mid range of analyst expectations.
Tim Stacey, Chief Executive, said: "We are pleased to report that since mid September we have seen positive year-on-year order volume growth.
“While we continue to be watchful of the macro economic environment, we continue to take market share and our market leading position, inherent scale and proven strategy give us confidence in our future prospects."
Average used car price nears £18,000 up almost 50% from pre-pandemic levels
07:51 , Michael Hunter
The average price of a used car rose by almost £180 in October to reach £17,587 according to a market tracker driven by Auto Trader.
That took the rise since August to almost £550 and the run of months without a drop in prices to 31. The rises come as the secondhand car market benefits in part from pent-up demand from the pandemic and longer delivery times for new vehicles, where there are problems in the supply chain.
It left the average price up 47% from pre-pandemic levels.
Richard Walker, Auto Trader’s director of data and insights, said: “The market won’t be immune to the current financial uncertainties, but there’s a range of factors unique to the automotive sector which should insulate it from some of the broader economic disruption. From what we’re tracking, there’s no sign of average used car prices falling.”
Cars were also leaving forecourts at speed. Used vehicles took an average of 25 days to be sold in October, one day faster than in September. Nonetheless, the number of advert views on Auto Trader’s marketplace slipped 4% year-on-year, but were up 14% from 2019, which was a more normal trading year.
Pound steady, focus on US payroll report
07:33 , Graeme Evans
The pound has steadied at just above $1.12, having fallen 2% yesterday as the worst performing of the world’s major currencies.
The sharp decline followed projections from the Bank of England that interest rates might not go as high as City expectations, in contrast to the US where the Federal Reserve has raised Wall Street guidance.
The weaker pound boosted overseas earners in the FTSE 100, which closed 0.6% higher in a session when other global markets traded lower. In the US, the S&P 500 fell 1% and the Nasdaq Composite dropped 1.7%.
CMC Markets expects the FTSE 100 to open 40 points higher at 7228, but traders will be focused on this afternoon’s monthly jobs report in the US.
September payroll numbers showed the addition of 263,000 jobs and an unemployment rate of 3.5%. Hiring for temporary roles ahead of Black Friday means the labour market is likely to remain tight for the rest of the year, with markets expecting an October figure close to 200,000 and a rate of 3.6%.