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London stocks edged up a touch on Thursday morning but trading is set to be quiet as US markets will be closed for the Thanksgiving holiday.
In the UK, investors are mulling over a survey which showed that consumer confidence has remained low and largely unchanged since the Budget, weighed down by ongoing concerns about the strength of the economy.
According to the latest consumer sentiment monitor from the British Retail Consortium, expectations for personal finances over the next three months improved slightly, ticking up to -3 in November from -4 in October.
People also expected to spend more on retail over the next three months, with the measure rising to 3 from 2.
However, expectations for the wider economy weakened, easing two points to -19, while personal spending overall was unchanged at 17. Helen Dickinson, chief executive of the BRC, said: "There was little shift in consumer confidence since the Budget, with many worried about the economy in the lead up to Christmas.
"While there was a very slight improvement in people’s expectations of their personal financial situation, this was offset by declining expectations of the wider economy.
In equity markets, Direct Line surged more than 35% after it said late on Wednesday that it had rejected a £3.3bn takeover proposal from Aviva. Aviva offered 112.5p per share in cash and 0.282 new Aviva share, valuing the group at 250p per share. This is a 59.7% premium to the closing Direct Line share price on 18 November, which was the day before the proposal was submitted.
Direct Line dismissed the offer as "highly opportunistic", saying that it "substantially undervalued the company".
Admiral gained 3.4%, while Aviva was the worst performer on the top-flight index.
Spirax-Sarco shot to the top of the FTSE 100 gains after an upgrade to ‘outperform’ at BNP Paribas Exane and an initiation at ‘buy’ at Citi, which also started Smiths Group at ‘buy’ and Halma at ‘neutral’.
Sainsbury’s and Tesco were also high risers after double upgrades at JPMorgan Cazenove to ‘overweight’ from ‘underweight’.
Troubled footwear maker Dr Martens rallied as it said it swung to a loss for the half year but that trading since the start of the autumn/winter season had been "encouraging", and held guidance for the 2025 fiscal year. Pre-tax losses came in at £28.7m for the six months to September, compared with a £25.8m profit a year earlier. Revenue fell 18% to £324.6m.
On the downside, Imperial Brands, United Utilities, Severn Trent, Land Securities, 3i Group and Ithaca Energy all lost ground as they traded without entitlement to the dividend.
Mainland European stocks snapped two days of declines, with technology leading the advance amid hopes that US curbs on chip equipment sales to China may prove lighter than feared.
The Stoxx 600 index climbed 0.5%, with tech stocks rallying the most in two weeks. Additional curbs the US is weighing on sales of semiconductor equipment and AI memory chips to China would stop short of some stricter measures previously considered, Bloomberg News reported. US equity futures ticked higher, with no cash trading later due to the Thanksgiving holiday.
Yields on benchmark French bonds have risen again amid worries that a budget standoff may topple the government. Investors are concerned that Prime Minister Michel Barnier may struggle to pass a budget for next year and ultimately remain in power. While French bonds went on to rally later Thursday after Finance Minister Antoine Armand said he is prepared to make concessions on the 2025 budget, that did little to dent months of underperformance.
The rate on 10-year French notes, regarded as among the safest in the euro area, climbed to 3.03%, the same as comparable Greek bonds, which only last year were still classified as junk. Trading in Treasuries is shut.
The political turmoil in France is also weighing on the nation’s stocks, which are set for their worst under-performance against European peers since 2010 and its second worst year for over 25. Normally a solid performer, the CAC 40 has been hit by uncertainty but no doubt, this will pass.
In Spain, inflation quickened to its fastest pace since August, though the acceleration was driven by base effects and is unlikely to scupper plans for the European Central Bank to continue lowering interest rates.
Consumer prices advanced 2.4% from a year ago in November, according to National Statistics Agency data published Thursday. That compares with 1.8% in October and is in line with the median estimate in a Bloomberg survey of economists.
A gauge of underlying pressures that strips out energy and some food prices eased to 2.4%, defying analyst predictions for it to also quicken.
A brief jump in inflation across Europe has been widely expected by ECB officials, who see their 2% target being sustainably reached next year. Spain’s figures are the first for this month from a major euro-zone economy, with Germany to publish its own later in the day. Early German data showed price growth accelerating in its regions.
Policymakers are set to look through the uptick in the euro area, where analysts reckon Friday’s number for November will come in at 2.3%. The ECB remains on course for a fourth reduction of the year in the deposit rate in two weeks to 3%.
Chinese stocks led declines in Asia Thursday as traders awaited signals of further stimulus from policymakers in Beijing ahead of a key economic meeting next month.
Usually held in December, China’s Central Economic Work Conference typically offers a blueprint for monetary, fiscal and various industrial policies for the coming year.
Talk of sanctions has underscored the persistent threat to already fragile trade relations between the US and China, weighing on sentiment in the region. Asian equities were on pace for their first back-to-back monthly drawdown this year following the dollar’s recent advance and concerns over escalating trade tensions.
Despite optimism on the potential for further stimulus from Beijing, “there are increased concerns and frustrations,” from investors, Winnie Wu, China equity strategist for Bank of America Securities, said on Bloomberg Television. The potential for further support and the prospect of US tariffs on China mean even long-term investors “are focusing on the next three to six months, or even three to six weeks,” she said.
On the monetary policy front, a pick-up in the Federal Reserve’s preferred gauge of underlying inflation on Wednesday is reinforcing the case for policymakers to proceed gradually with further interest-rate cuts. Traders are also weighing the expected impact of Donald Trump’s administration picks, with the US president-elect’s policies expected to reinforce price pressures.
“The lack of an upside surprise in the recent US inflation read saw rate bets lean further toward another 25 basis-point Fed cut in December,” said Jun Rong Yeap, a market strategist at IG Asia. This potentially helps to “offer more clarity versus the coin-flip rate scenario priced just a week ago.”
This lean toward a rate cut helped Gold stop its downward spiral which started soon after the election. Gold prices rose on Thursday, up 0.4% to $2,645.6 per ounce.
"The market now is a bit more careful and prices probably will be range-bound with more downward bias going into the year-end," said Brian Lan, managing director at Singapore-based dealer GoldSilver Central.
Spot silver fell 0.2% to $30.01 per ounce, platinum rose 0.6% to $933.04 and palladium gained 1.2% to $983.30.
Oil prices are lower on the week after a surprise jump in U.S. gasoline inventories. U.S. gasoline stocks rose 3.3 million barrels in the week ending Nov. 22, the U.S. Energy Information Administration said on Wednesday, countering expectations of a small draw in fuel stocks ahead of holiday travel.
Slowing fuel demand growth in top consumers China and the United States has weighed heavily on oil prices this year.
Brent and WTI have lost more than 3% this week.
The market is up a touch this morning though after a postponement of the OPEC+ meeting on output policy to Dec. 5 from Dec. 1. Brent crude futures edged up by 8 cents to $72.91 a barrel by 0955 GMT while U.S. West Texas Intermediate crude futures were up 7 cents at $68.79.
OPEC+, comprising the Organization of the Petroleum Exporting Countries and allies including Russia, delayed its weekend meeting to avoid a conflict with another event, the producer group said.
The group pumps about half the world's oil but has maintained production cuts to support prices during an extended period of weak global demand. That has pushed OPEC+ to repeatedly delay the rolling back of those cuts.
OPEC+ sources have said there will again be a discussion on Dec. 5 over another delay to oil output increases due to start in January.
A further deferment has mostly been factored into oil prices already, said Suvro Sarkar at DBS Bank. "The only question is whether it's a one-month pushback, or three, or even longer."
Happy Thanksgiving and more from us at the weekend with our Week In Review.
