Stock prices in Europe were mostly lower on Monday morning, as UK consumer confidence deteriorated while France’s credit rating received a downgrade from Moody’s.
China’s retail sales growth weakened last month, missing forecasts as demand remains muted in the world’s number two economy.
Retail sales expanded 3% year-on-year in November, the National Bureau of Statistics said, slowing from a 4.8% rise in October which was its best reading in eight months. The NBS also said the national urban unemployment rate remained unchanged at 5% in November. Industrial production growth stayed broadly flat at 5.4% compared with 5.3% in October.
Also, China’s 30-year sovereign bond yield fell 0.03 percentage points to 1.99% on Monday morning, going below 2% for the first time following a key economic policy meeting that did not immediately assuage investor concerns.
UK consumer confidence deteriorated in December, data published by S&P Global showed.
The UK S&P Global consumer sentiment index fell to 46.6 in December from 46.9 in November. Falling further from the neutral 50-points mark separating growth from contraction, it indicates the pace of decline accelerated.
Perhaps more positively, the labour market sentiment index rose to a 5-month high of 54.4 in December from 53.9 in November.
‘High levels of employment are being accompanied by rising income from employment, which increased at the strongest rate in the series’ history, which spans over 15 years, though this in part reflects households having to work harder to maintain their standards of living without recourse to debt or savings,’ said Maryam Baluch, economist at S&P Global Market Intelligence.
The FTSE 100 index opened down 7.71 points, 0.1%, at 8,292.62. The FTSE 250 was down 33.06 points, 0.2%, at 20,856.09, and the AIM All-Share was up 0.42 points, 0.1%, at 733.78.
The Cboe UK 100 was down 0.1% at 831.78, the Cboe UK 250 was down 0.3% at 18,338.26, and the Cboe Small Companies was down 0.1% at 16,135.50.
AstraZeneca was among the FTSE 100 winners, up 0.9%.
The pharmaceutical company said Arm Holdings’ Chief Executive Officer Rene Haas will join its board from January 1. Also, Sonova Holdings Chief Financial Officer Birgit Conix will join the board from February 1.
Entain was the biggest loser, down 4.0%.
The Australian anti-money laundering and counter-terrorist financing regulator has commenced civil penalty proceedings in the Federal Court of Australia against Entain Australia.
Entain said it has co-operated fully with AUSTRAC throughout the probe started in 2022, and in December 2022 commenced a programme of further enhancements to Entain Australia’s anti-money laundering and counter-terrorist financing systems and processes. This is due for completion in June next year.
On the Bank of England’s rate call on Thursday, Swissquote’s Ipek Ozkardeskaya said: ‘The Bank of England is expected to maintain its rate unchanged this week, to make sure to balance out the government’s spending plans, but some officials could sound doveish on the back of weak growth numbers.’
In European equities on Monday, the CAC 40 in Paris was down 0.4%, while the DAX 40 in Frankfurt was down 0.3%.
Ozkardeskaya noted that ‘in France, the relief on the appointment of Francois Bayrou – another very established name in French politics – to replace Barnier as the new French PM was clouded by Moody’s downgrading the French credit rating to Aa3 – three levels below the top.
‘Moody’s blamed the political fragmentation, and Bayrou will probably struggle with the same divided government as his predecessor to pass any budget-healing measures.’
The pound was quoted higher at $1.2639 early on Monday in London, compared to $1.2620 at the equities close on Friday. The euro stood higher at $1.0510, against $1.0494. Against the yen, the dollar was trading flat at JP¥153.66 compared to JP¥153.64.
In Asia on Monday, the Nikkei 225 index in Tokyo was marginally lower. In China, the Shanghai Composite was down 0.2%, while the Hang Seng index in Hong Kong was down 1.0%. The S&P/ASX 200 in Sydney closed down 0.6%.
The pace of contraction in Australia’s manufacturing industry sped up in December, preliminary survey results published by S&P Global showed. The flash composite output index swung down to 49.4 points in December from 50.2 in November, reflecting ‘a softening of business conditions in the final month of the year,’ S&P’s Jingyi Pan said.
Japan’s flash composite purchasing managers’ index showed the strongest rise in private sector activity since September. The au Jibun Bank Japan flash composite PMI posted 50.8 points for December, up from November’s final reading of 50.1.
The au Jibun Bank Japan flash composite PMI posted 50.8 points for December, up from 50.1, indicating that services activity rose for the second month running and at a stronger rate.
In the US on Friday, Wall Street ended mixed, with the Dow Jones Industrial Average down 0.2%, the S&P 500 slightly lower and the Nasdaq Composite up 0.2%.
Brent oil was quoted higher at $74.26 a barrel early in London on Monday from $73.94 late Friday.
‘Oil rose as simmering geopolitical conflicts and the prospect of sanctions on Russia and Iran countered projections for a supply glut next year,’ Cavendish analyst James McCormack said. ‘Trump’s pick for national security adviser this week vowed a return to ’maximum pressure’ on Iran, while the Biden administration is considering new sanctions on Russia’s oil trade. The European Union has meanwhile given preliminary backing to a 15th package of sanctions against Russia.
‘The rising geopolitical risks to supply have options traders bracing for a price spike. Brent call options, which profit when prices gain, were at a premium to puts for the first time in three weeks at the close of trading on Thursday. Implied volatility also climbed.’
Gold was quoted lower at $2,658.23 an ounce against $2,660.10.
Still to come on Monday’s economic calendar, Italy has a flash composite PMI release.
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