Wall Street and FTSE higher in the last full trading week of the year. (NDZ/STAR MAX/IPx)
The FTSE and European stocks finished higher this Tuesday amid investor optimism around rate cuts by the Federal Reserve, European Central Bank and Bank of England next year and positive inflation data coming out of the Eurozone.
The FTSE 100 (^FTSE) rose 0.3% to close at 7,635 points, while the CAC 40 (^FCHI) advanced 0.1% to 7,577 points. In Germany, the DAX (^GDAXI) climbed 0.6% to 16,746. Europe’s Stoxx 600 (^STOXX) climbed 0.4%.
Across the pond, US stocks ticked up, with an eighth weekly win still within reach as investors stayed upbeat on the prospect of interest rate cuts despite warnings those hopes are overdone.
The Dow Jones (^DJI) rose 0.6% to 37,529 points. The S&P 500 (^GSPC) rose 0.5% to 4,762 points and the tech-heavy NASDAQ (^IXIC) climbed 0.5% to 14,975.
The US Federal Reserve now sees 75 basis points of rate cuts coming in 2024, which accounts for one more rate cut than had been projected in September. That helped drive a rally in US stocks with the Dow reaching a record and the major indexes posting a seventh-straight winning week.
In Asia, Tokyo’s Nikkei 225 (^N225) climbed 1.4% to 33,219 points after the Bank of Japan maintained its super-loose monetary policy, while the Hang Seng (^HSI) in Hong Kong retreated 0.7% to 16,512. The Shanghai Composite (000001.SS) finished flat at 2,932 points.
The pound (GBPUSD=X) was slightly higher against the dollar, with sterling trading at $1.2756.
Sterling (GBPEUR=X) was also higher against the euro, trading at €1.1616.
Meanwhile, Brent crude (BZ=F) was higher, trading at around $79 per barrel as oil tankers avoid the Red Sea following heightened attacks by Iran-backed Houthi militants in the region which have disrupted international shipping routes.
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Pedro Goncalves
That is all from us today but do check out our US blog for the latest moving stocks across the pond.
See you all tomorrow,
PHG
Pedro Goncalves
ChatGPT portfolio outperforms the UK’s top 10 most popular funds
A selection of stocks picked by artificial intelligence chatbot ChatGPT back in March is still beating the UK's top 10 most popular funds, according to an experiment conducted by finder.com.
Analysts at the personal finance comparison site asked ChatGPT to create a theoretical fund of 38 stocks, following a range of investing principles taken from leading funds.
The "fund" has risen 16.73% in the nine months since it was created on 6 March 2023, outperforming the average of the UK’s 10 most popular funds, which have collectively gained 6.24% in value over the same time period.
Inflation set to ease back again but rate cuts remain some way off
UK inflation is expected to be revealed easing back further when official figures are released on Wednesday, but experts caution interest rate rises remain some way off for hard-hit homeowners despite slowing price hikes.
The Office for National Statistics (ONS) is set to show the rate of Consumer Prices Index (CPI) inflation falling to 4.3% in November, down from 4.6% in October, on the back of slower increases in food and petrol prices, according to most economists.
It is unlikely to match the dramatic fall seen in October, when it fell from 6.7% in September, enabling Prime Minister Rishi Sunak to declare an early victory on his goal to halve inflation by the year end.
The Bank of England has been quick to caution that the job of bringing inflation back to its 2% target is far from done and has poured cold water on mounting hopes of an imminent interest rate cut.
Pedro Goncalves
EasyJet orders 157 new planes
EasyJet (EZJ.L) has confirmed an order for 157 new planes after receiving shareholder approval, the airline said.
It has agreed with manufacturer Airbus to purchase 101 A321neo and 56 A320neo aircraft.
They are due to be delivered between October 2028 and September 2034.
EasyJet said there are “limited delivery slots” available for narrow body aircraft until at least 2029.
An existing order for 35 A320neo planes will be converted into the larger A321neo model.
EasyJet said the announcement will enable it to boost its capacity and increase fuel efficiency, as it completes its programme of replacing older A319 aircraft and half of its A320ceo planes.
Pedro Goncalves
Legacy banks want to “screw as much money out of people as possible”
Legacy banks want to “screw as much money out of people as possible”, a Conservative MP has claimed.
Speaking in the Commons, Philip Davies asked what the government was doing to stop businesses being debanked.
The MP for Shipley said: “It’s pretty clear that most of the legacy banks don’t give a stuff about their customers and just want to screw as much money out of people as possible.
“After the scandal of Coutts debanking Nigel Farage, the government acted swiftly to try and make that much more difficult for other customer, but many businesses are facing the same problem that Nigel Farage faced when he was debanked.
“What’s the government going to do to stop businesses being debanked?”
In response, Treasury minister Bim Afolami said: “I’m not sure I’d quite accept his characterisation of the banking industry but I’m very happy to meet with him and discuss problems that he has outlined in relation to the specific businesses and access to bank accounts.”
Pedro Goncalves
Positive EU inflation to push ECB to cut rates sooner
Latest inflation data will pressure ECB to cut interest rates, says Michael Field, European market strategist at Morningstar:
“European inflation fell to its slowest rate in more than two years in November, with prices rising just 2.4% year over year. We have come a long way since the heady days of double-digit inflation in late 2022, with inflation now close to the European Central Bank’s 2% targeted level. There is still a little way to go to reach this level, and of course the last few pounds are always the hardest to shed, but the target is now firmly in sight.
“Even larger than the fall in headline inflation was the fall in core inflation. Here the number fell by 60 basis points to 3.6%, still well above the ECB’s target level of inflation, but a welcome move nonetheless.
“With inflation now within touching distance of the much coveted 2% level, the focus for the ECB will certainly now shift to keeping the Eurozone economy alive, an economy which has been teetering on the brink of recession in 2023. Markets have rallied in recent weeks in the hope of interest rate cuts early into 2024, and with inflation falling rapidly there is further motivation for the ECB to make cuts sooner rather than later.
“The ECB, like the other major central banks, has been using language in its interest rate policy statements to give itself the ability to hold-off on rate cuts should inflation rally again. However, today’s number gives no suggestion of this happening soon.”
Pedro Goncalves
Bank of England inks deal with UK competition regulator
The UK's competition watchdog has sealed a partnership with the Bank of England to work together to help the economy, businesses and consumers.
The Competition and Markets Authority (CMA) said the pair had established a framework for co-operation and collaboration so they could liaise in matters of common interest.
“The CMA and the Bank of England have, for the first time, agreed a memorandum of understanding on how the two organisations will work together to deliver better outcomes for the UK economy, businesses and consumers,” the CMA said.
Pedro Goncalves
Eurozone inflation remains at 2.4% in November
Eurozone inflation remained at year-on-year level of 2.4% in November, in a reading that met estimates.
Month-on-month it dropped 0.6%, a faster clip than the anticipated 0.5% decline, and now not far off the central bank's 2% target.
Core inflation — a reading that strips out the more volatile measures — was still at 3.6% year-on-year, hitting estimates.
The data comes following a big week of central bank news, which saw the ECB keep rates unchanged and the Federal Reserve hint at a more hawkish path for the US. There has been speculation the ECB will start cutting rates again next year as inflation appears to cool.
Beyoncé and Blondie song fund Hipgnosis delays results amid valuation concerns
Hipgnosis has announced a last-minute delay to the publication of its half-year results, as troubles mount for the music fund set up by Nile Rodgers and Merck Mercuriadis, former manager of Sir Elton John and Beyonce.
Hipgnosis Songs Fund, which owns the rights to tracks by world-famous artists from Beyoncé to Shakira and Blondie, was due to reveal its financial results on Tuesday.
But the firm said it was postponing the release over concerns that its music catalogues are not being valued highly enough amid a potential sale.
Hipgnosis said the company valuation received from an independent valuer is “materially higher than the valuation implied by proposed and recent transactions in the sector”, in particular the proposed sale of its assets to Hipgnosis Songs Capital.
The London-listed firm had agreed in September to sell 29 music catalogues to the sister fund, backed by investment giant Blackstone.
The deal valued the assets at about 418 million US dollars (£360m), a discount of nearly a quarter on the valuation given in March this year.
Pedro Goncalves
Trending tickers: UBS | Maersk | BP | Apple | Entain
UBS was one of Tuesday's trending tickers after an FT report revealed new activist investor involvement. (Reuters / Reuters)
UBS (UBSG.SW) - UBS stock rose around 1.7% in early trade on Tuesday after a report by the Financial Times revealed an activist investor had taken a €1.2bn (£1bn, $1.3bn) stake in the Swiss bank.
Maersk (MAERSK-B.CO) and BP (BP.L) - Shipping firms and oil companies are having to make tricky choices as the war in Israel and Gaza plays out, diverting tankers and deliveries due to militant attacks in Yemen.
Apple (AAPL) - Apple stock was slightly down in premarket trade after the tech company said it will halt sales of its Apple Watch Series 9 and Apple Watch Ultra 2 in the coming days. Apple will remove the watches from its online stores by the afternoon of 21 December and from physical stores by 24 December.
Entain (ENT.L) - Gambling heavyweight Entain rose on Tuesday after an upgrade by Jeffries to "buy" from "hold".
Shares in Superdry (SDRY.L) have plummeted to an all-time low after the retailer warned its profits will be worse than expected, blaming a tough consumer retail market and abnormally warm autumn weather delaying sales of its crucial autumn/winter range.
The update from the fashion chain sent its share price tumbling by about a fifth on Tuesday morning, hitting about 30p per share, the lowest level since it began trading in 2010.
The business has been cutting costs, clearing stock and selling off assets this year as part of efforts to boost profits.
But a warm spell across the UK and Europe during September spoiled sales for the brand, known for its jackets and hoodies.
Retail sales fell by 13% over the six months to the end of October, with shopping impacted by the weather as well as a later start to its end-of-season summer sale.
Online shopping was also affected by the group reducing spending on digital marketing, it said.
Wholesale, where the business sells its products to other retailers, tumbled by more than 40% year-on-year, which Superdry said was partly expected after deciding to exit its US operations.
Pedro Goncalves
UK economy at risk of downturn next year, bond fund giant Pimco warns
The UK is at risk of a major economic downturn next year according to one of the world’s biggest active bond fund managers.
Daniel Ivascyn, chief investment officer at Pimco, is predicting the UK will suffer greater economic strain than the US economy next year. He told the Financial Times:
“In the case of the UK — a smaller, open economy, with a consumer that’s feeling the brunt of central bank policy far more than their US counterparts — you just have a higher probability of more significant economic deterioration.”
“We do think there’s potentially more hard landing risks.”
Watch: BP becomes latest company to temporarily suspend shipping due to Red Sea attacks
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Prince Harry has reportedly extended an olive branch to King Charles and asked if the pair can meet during his upcoming visit to the UK and he received a 'four-word response'
A member of the Britain’s Got Talent audience has commented on the long-running rumours that a part of the hit entertainment show is faked each week for TV viewers
Jennifer Gothard won £10,000 on a £3 "triple cashword" scratchcard in March - but is still waiting for her winnings due to a new rule introduced by operator Allwynn
Benidorm actor Jake Canuso, who portrayed bartender Mateo Castellanos in the ITV show, looks worlds away from his former role, six years after the ITV show finished
TV presenter Piers Morgan has claimed King Charles should sit down with Prince Harry and Meghan Markle to discuss the pair's use of their Duke and Duchess of Sussex titles
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