• FTSE 100 drops 50 points
• Trading volumes reduced due to holidays
• Retail sector job cuts climb
• Pub closures in England accelerate 

3.50pm: Red everywhere

Markets in Europe have continued in slightly shellshocked manner after Wall Street opened in pessimistic mood. 

Having shrugged off the US sell-off at the end of last week, today, London and continental investors are joining in. 

That means the FTSE 100 is down 50 points or 0.6% at 8,100, while the FTSE 250 is down 0.7%.

Across the Channel, the DAX and CAC 40 are down 0.4% and 0.6% respectively.   

2.47pm: Wall Street tech sell off resumes

Wall Street tech stocks are falling sharply for the second session in row, with the Nasdaq Composite index plunging 340 points or 1.7% in the first few minutes of Monday trading. 

This followed a near-300-point decline last Friday. 

The S&P 500 has also dropped 1.5%, the Dow Jones has fallen 1.4% and the small and mid-caps of the Russell 2000 are down just over 1%.

Semiconductor stocks are among the big fallers, with Super Micro Computer Inc, Broadcom Inc and Micron Technology Inc three of the five biggest fallers on the S&P. 

Boeing, down almost 5%, is bottom of the list, on the back of the South Korean airline crash yesterday.   

Among the trillion-dollar mega-caps Apple, Nvidia, Microsoft, Alphabet, Amazon, Meta and Tesla are all in the red, down between, 1.1% and 1.7%.  

2.12pm: Gold in focus

Let’s take a look at gold, where prices are holding largely steady at around $85,000 per kg or just over $2,600 an oz in the past month.

SP Angel analyst John Meyer says the market is looking forward to what’s coming in the new year, and wondering if 2024’s rally can extend into 2025 or if the bull market is over, after rising from $2,000/oz a year ago amid escalating geopolitical tensions, central bank buying and the BRICs summit.

“The past two months’ weakness likely reflects a combination of higher US dollar, higher US Treasury yields and an easing of tension in the Middle East,” says Meyer.

“The BRICs summit was also expected to highlight the strategy of nations such as Russia, Turkey, and China to further diversify their foreign reserve holdings away from the dollar, with gold expected to be a beneficiary.

“Whilst there were murmurings of a BRICs payment currency, gold was not emphasised as much as gold bulls were expecting, supporting a sell-down.”

Gold was likely to have been “severely overbought” at the $2,790/oz mark, with algorithm-based momentum funds pushing speculative positions to extended levels, he says. 

“We see the recent period of weakness in gold as an encouraging consolidation process, with the metal finding strong support at $2,620/oz. This comes despite a sharp rally in the US dollar, with the dollar index up 8% since September.”

With this following an extended sell-off in US Treasuries since the September Fed meeting, with the 10-year yield rising from 3.6% to 4.6%, despite 100bp worth of cuts from the FOMC, Meyer notes that gold traditionally moves inversely to the dollar and US real yields, although this dynamic was somewhat skewed over 2024 given record levels of central bank buying.

“We expect the key focus for 2025 to be on the US unemployment rate, which is currently hovering around 4.3% using the Fed’s primary gauge. Should inflation stay relatively anchored and not reaccelerate, we would see a further uptick in the unemployment rate as likely refuelling recessionary positioning, with gold set to be a beneficiary.”

“Ultimately, we remain bullish gold into the new year and would expect a reversal in the recent and aggressive sell-off in US Treasuries to lift gold out of its recent malaise.”

1.36pm: US futures dive

As the US wakes up and Wall Street stock futures dive, stock declines in Europe have increased, with the FTSE 100 down 30 points or 0.4% and the FTSE 250 down 120 points or 0.6%.

Across the Channel, the CAC 40 is down 0.3% and the DAX is down 0.4%. 

US stock futures are down sharply now, with the Nasdaq 100 expected to dive 1.1% lower at the open and the S&P seen heading for a 1% fall. 

Looking around at US-related news headlines, there are reports that Russia has rejected Donald Trump’s plan to end the Russia-Ukraine war.

The US President-elect’s team suggested that Ukraine’s NATO membership be deferred in exchange for a ceasefire, but Russian state-owned media say this has been pooh-poohed by Moscow. 

But market analyst Kenny Polcari at Slatestone Wealth says, like at the end of last week, bonds are the issue. 

“Why the weakness? Where is Santa? Well, have you taken a look what bonds are doing?” he hollers, noting that the US 10yr bond yield is up another 20 basis points since Jerome Powell and the Federal Reserve cut rates earlier this month and they are up 100 bps since the September cut. 

This morning the 10-yr yield is 4.59%.

“And so you ask, why are yields rising when [Powell] is cutting? Shouldn’t yields go in the same direction as Fed funds?

“Well, When the 10-year Treasury yield rises while the Fed is cutting rates, it can signal several complex dynamics at play in the bond market and the broader economy,” says Polcari, pointing to several possible explanations, including markets maybe expecting higher inflation in the future if the Fed’s rate cuts are seen as too aggressive, potentially overstimulating the economy; or optimism about economic growth, lower risk aversion encouraging investors to move out of safe-haven assets like long-term Treasuries; an imbalance in supply and demand “Econ 101” where increased supply of 10-year Treasuries pushes yields higher regardless of Fed policy; or maybe doubts about the effectiveness of rate cuts; or finally perhaps the term premium (the extra yield demanded by investors for holding longer-term bonds) might increase due to perceived risks related to inflation, debt sustainability, or uncertainty about future Fed actions.

“In any event – the bond market is telling us to be cautious….so pay attention,” Polcari says. “And do not discount the recent strength in the dollar….it is up 7% for the quarter and up 2.2% in the last month.

“Remember – a strong dollar can have significant impacts on stock prices and commodities, with the effects varying based on a company’s operations, sector, and market focus.”

Also, much of the moves in market over the next two days “will be technical”, he adds, “some profit taking, some tax selling and some short covering – all very typical for this time of year.

“It’s another holiday shortened week, volumes will be light, moves will be exaggerated. Don’t make any major investing decisions this week.”

12.53pm: Optimism growing in financial services sector 

Finance sector bosses are growing more optimistic about the new government’s plans, with a survey from KPMG finding that more than half saying they plan to hire faster in 2025.

Around 70% of financial services leaders think policies to cut red tape will help attract foreign investment into the sector, while over 90% of respondents were confident their firms will be profitable in the first quarter of next year, an increase on the 83% that held the same position a year ago.

Around 94 per cent said they think they will turn a profit in the first quarter, up 11 percentage points from 83 per cent in the first quarter of this year.

As for hiring plans, 55% of those surveyed said they plan to step things up in the year ahead, while 17% said they are planning a “significant” recruitment drive.

Last month, Chancellor Rachel Reeves used the Mansion House speech to also lay out plans for Canadian- and Australian-style pension megafunds, along with the bonfire of red tape, which she said would be “the biggest set of reforms to the pensions market in decades”.

12.06pm: Market summary 

Just after midday on Monday the FTSE 100 is marginally in the red, with slightly more sellers than buyers in evidence. 

The mid-cap FTSE 250 is also lower, down just over 50 points or 0.3%.

In other European markets, Germany’s the DAX is also down slightly, while France’s CAC 40 is up 0.2% and Spain’s IBEX 35 up 0.5%.

Across the pond, US stock futures are pointing to falls, with S&P and Nasdaq futures down close to 0.3%. 

11.25am: Profit taking underway

There are few big movers among the FTSE 350 today as many investors remain on holiday.

The biggest faller among the mid-caps this morning is Raspberry Pi Holdings PLC (LSE:RPI), down roughly 4% – this comes after an end-of-year charge that saw its shares reach a new all-time high of over 720p last week.

After floating in the summer, the UK tech name’s share price has more than doubled since the end of November, giving it a £1 billion market cap, helped by recent buying by US hedge fund SW Investment Management.

Today looks to be some year-end profit-taking, similarly seen at CMC Markets PLC (LSE:CMCX), which was up over 200% at the end of November but has fallen by 27% since. 

Elsewhere, Ocado Group PLC (LSE:OCDO) is down 3.3%, back down below the 300p level that has shown some supportive buying since sinking to an all-time low of 278p in the summer. 

Risers on the 350 include STHree PLC, up 2%, after shares in the recruiter crashed around 30% earlier this month on a profit warning.   

10.57am: House prices fall in London, up in Slough, Midlands and the North

London boroughs generally saw the lowest house price growth this past year, research from lender Halifax has shown, with most of the biggest rises coming north of the Watford Gap, in places such as Stoke-on-Trent, Oldham and Bradford, of between 17% and 13%

Halifax, part of Lloyds Banking Group PLC, found that the Yorkshire and Humber region saw the strongest house price increases in England, at 6.4%, followed closely by the West Midlands, at 6.3%. 

Meanwhile, the south-east of England had the smallest percentage growth in average house prices in the 12 months to September, of 1.8%.

The boroughs of Ealing, Southwark, Enfield, Harrow and Westminster were among the 10 worst areas, while in Greater London and the southeast areas the likes of Bromley, Kingston Upon Thames, Aylesbury and Slough were also found in the list, all with house prices falling on average in the period. 

There were notable regional exceptions though, as Huddersfield and The Wirral saw the biggest falls in average house prices, down 6.6% and 5.4% respectively. 

Huddersfield topped the house price growth table in 2023 with an increase of 8.7%, but over two years prices in the area have risen slightly.

Slough, just west of London and now connected to the Elizabeth Line, saw a rise of 14.9% in the cost of a home, with Halifax research finding that it was a popular area for first-time buyers, with 73% of purchases made by those taking their first steps on the property ladder. 

10.30am: AI company joins AIM

A British tech company has made its debut on the London stock market today: welcome Priority Intelligence Group PLC. 

But, today, interested investors will need to look for Alteration Earth PLC before it changes its name.

A special purpose acquisition company (SPAC), Alteration recently completed the reverse takeover of Pri0r1ty AI Ltd, which provides AI-powered SaaS solutions to SMEs such as social media, investor relations and governance.

After raising shy of £1 million, at 13.5p, the firm comes to AIM with a market capitalisation of £13 million.

Daniel Gee, Pri0r1ty AI founder and major shareholder (and a former stock broker), had some warm words for AIM and the City of London too, saying “too many early-stage British tech companies think that the only route to growth is through VC funding, or even moving abroad”.

9.50am: Further US retreat expected, Boeing to drop sharply  

An early look across the Atlantic shows futures are pointing to another session of falls for Wall Street.

S&P 500 and Nasdaq 100 futures are both pointing to a decline of around 0.3%.

Boeing Co (NYSE:BA, ETR:BCO) shares are set to fall 4.5% too, following the South Korea crash yesterday. 

9.16am: Small-cap deals

The company news this morning is strictly from small-cap names, with no announcements of note from any of the FTSE 350.

E-commerce company Huddled Group PLC (AIM:HUD) has bought out the final 25% of Boop Beauty that it did not already own, paying the platform’s founder, Yasmine Amr, 3.25 million shares to cover the £100,000 payment. 

“The board of Huddled has been encouraged by Boop Beauty’s trading thus far and feel full ownership better justifies the allocation of additional resources to the business in order to fuel its continued growth,” the company said in an announcement this morning. 

Amr, a former in-house counsel at L’Oreal, founded Boop in 2023 as a circular economy e-commerce business, specialising in selling excess inventory from luxury beauty brands directly to consumers, helping reduce waste in the industry.

Huddled said purchasing 100% of the business would accelerate Boop’s “growth trajectory” as it could now justify upping investments in inventory and marketing initiatives and also allow Amr “to stay actively engaged” as a non-executive director of Boop.

In another AIM acquisition, HeLIX Exploration PLC (AIM:HEX) says it snapped up a helium processing plant for $500,000.

It says the plant has proven capability, having previously produced 48,000 Mcf of high-grade helium a year, with a 98.5% uptime.

The deal aims to accelerate production at Helix’s Rudyard Project in Montana while reducing capital expenditure.

8.41am: Trade war warning

If Donald Trump hikes tariffs after re-entering the White House, China could look to ship masses of cheap goods and “export deflation” to Europe, a European Central Bank governing council member has stated this morning.  

Klaas Knot told Dutch newspaper Volkskrant that if the US starts a trade war, “there is a chance that the Chinese will start offering their goods in Europe at lower and lower prices”.

Having made a recent trip to China, Knot said there is “a serious chance of a trade war” and it would be “extremely negative for the global economy, particularly for growth but also for inflation” …read more

8.12am: FTSE flops in early trading

The FTSE 100 has dropped 30 points or 0.4% to 8,118 in initial trades, with all but 10 of the index starting the day in red. 

Rolls-Royce Holdings PLC (LSE:RR.) is the biggest faller this morning, possibly in connection to the Korean air crash yesterday, which could lead to further problems for Boeing and its suppliers. 

Among the few risers are housebuilders Barratt Redrow and Berkeley Group. 

7.58am: Retail sector job cuts, pub closures accelerate

Some gloomy data for retail sector workers as companies are expected to continue trying to work with as few humans as possible.

A total of 169,395 retail jobs were lost in the 2024 calendar year, up 42% compared to last year and the worst year since 2020. 

This is according to a report from the Centre for Retail Research (CRR) and Altus released yesterday, which forecasts next year could be even worse due to the recent Budget changes.  

A third of the high street job losses in 2024 resulted from administrations, including Carpetright, Body Shop, Homebase, Lloyds Pharmacy and Ted Baker.

Looking forward, the report suggested 2025 could remain challenging for the high street because of recent tax and wage measures in the Budget, as well as a less generous discount to business rates.

Altus today also recorded a further fall in the number of pubs around the country.

The decline in the number of pubs in England and Wales accelerated in 2024, research found, with the past 12 months seeing 412 pubs shuttered, either totally demolished or converted into flats or other uses.

That meant the number of pubs fell below 39,000 for the first time, to 38,989 to be precise.

Pub and bar owners have been vocal in recent months about rising costs, though looking back at previous sector news, this was also the case for most of the previous years too.

7.28am: Market rebalancing ahead of the new year?

Last week finished with a small gain for the FTSE, but a big tumble for US stocks. 

This all but dashed the possibility of finishing the year at record highs, says Kyle Rodda, market analyst at Capital.com, though the S&P 500 has still gained around 25% on a nominal basis for the year.

“Diluting the optimism is the fear that after two successive years of similar performance, valuations are too rich and positioning too stretched, despite a strong outlook for fundamentals going into 2025, with that sentiment driving part of Friday’s pullback.”

Friday’s US retreat was caused by a jump in bond yields, says Rodda, “amidst persistent fears of a material re-rating in bonds to reflect strong growth, a significant fiscal impulse from the Trump administration and, tangentially, fewer Fed cuts next year”.

Trading volumes were robust on Friday, which he notes defied the generally sleepy nature of trade this time of the year.

“It perhaps indicates a high level of churn in US equities, particularly tech stocks, which is an amber signal of a market cutting exposure and rebalancing going into the new year.”

For today and the week ahead the macro and other economic events are thin on the ground, though end-of-year flows are “potentially” a driver of prices across financial markets, he says.

“Chinese PMI data will be released today and could shake things up, given the down risk seen in the country’s growth data and asset prices recently. The US ISM print on Friday will also be closely watched and will present a volatility risk given the nervous balance between growth concerns and inflation risks in the US.”

7.16am: FTSE 100 to open sharply lower

The FTSE 100 is expected to fall sharply when trading begins on Monday, with low trading volumes being seen on the penultimate day of the year. 

London’s blue-chip index has been called 26 points lower on futures markets, having inched slightly higher last week to 8,149.78. 

Asian markets are mixed this morning, with Japan’s Nikkei down 1% and Korea’s Kospi falling 0.2%, with JejuAir plunging around 9% earlier following the deadly crash over the weekend, but elsewhere Hong Kong’s Hang Seng is just above flat and the Shanghai Composite is up 0.2%. 

Trading volumes for Asia and Australia stock markets were low, said market analyst Ipek Ozkardeskaya at Swissquote Bank.

Is Tokyo, she noted that Bloomberg data showed trading volumes were nearly 20% lower and 55% lower for their Australian peers.

“Futures point at an unappetizing start for the last Monday of the year both in Europe and in the US, and the price moves could be exaggerated with low trading volumes,” she says.