London close: Stocks weaker ahead of key central bank decisions

London stocks ended lower on Monday as investors adopted a cautious stance ahead of a week filled with major central bank policy decisions.
The FTSE 100 index closed down 0.46% at 8,262.05 points, while the FTSE 250 slipped 0.36% to 20,813.03 points.

In equity markets, sterling was last up 0.56% on the dollar to trade at $1.2690, while it gained 0.44% against the euro, changing hands at €1.2071.

"It will come as no surprise to investors to hear that the final full week of trading in global markets in 2024 has started with more gains for the US while Europe struggles," said IG chief market analyst Chris Beauchamp.

"The Nasdaq 100 has hit a fresh record high, and small caps are in demand, as the final year-end chase gets underway.

"This is the 'Santa rally' almost right on cue, with most US stocks having struggled in the first half of December, a tradition as hallowed as the second half's gains."

Beaiuchamp added that Germany was now set for elections early in the new year, throwing a new ingredient into "Europe's heady brew" of political instability.

"French stocks were in 'buy the rumour, sell the news' mode, falling once again after a brief rally following the collapse of the Barnier government.

"While his successor is now hard at work, the problems he faces remain intractable."

UK private sector activity declines sharply, house seller prices fall further

In economic news, the UK saw its sharpest decline in private sector employment in nearly four years this December, despite stable output levels.

The S&P Global flash UK composite output purchasing manager's index (PMI) held steady at 50.5, just above the threshold separating growth from contraction, but missed expectations of 50.7.

Manufacturing activity contracted further, with the PMI dropping to an 11-month low of 47.3, while the services sector saw modest growth, with its PMI rising to 51.4, a two-month high.

Softer demand, rising costs, and squeezed margins drove significant job cuts, marking the steepest drop in private sector employment since January 2021.

"Businesses are reporting a triple whammy of gloomy news as 2024 comes to a close, with economic growth stalled, employment slumping and inflation back on the rise," said Chris Williamson, chief business economist at S&P Global Market Intelligence.

"Economic growth momentum has been lost since the robust expansion seen earlier in the year, as businesses and households have responded negatively to the new Labour government's downbeat rhetoric and policies.

"Business confidence has sunk to a two-year low as companies weigh up a tougher outlook for sales alongside rising costs, notably for staff as a result of changes announced in the Budget."

In the UK housing market, new seller asking prices fell for the second consecutive month, declining 1.7% in December, following a 1.4% drop in November, according to property marketing platform Rightmove.

Despite the seasonal slowdown, annual price growth ticked higher to 1.4%, with the average home now priced at £360,197.

Buyer demand and sales activity remained robust, significantly outperforming levels seen in late 2023.

Rightmove expressed optimism for a "Boxing Day activity bounce".

"New sellers in December have to work particularly hard to capture the attention of Christmas party and festivity-distracted buyers, and the 1.7% average monthly fall is a fitting gift for those who are still buying homes rather than presents," said Tim Bannister, Rightmove director of property science.

"Despite this monthly drop, prices have risen by 1.4% compared with this time in 2023, broadly in line with our prediction of a 1% rise in prices this year.

"We are now looking ahead to the traditional Rightmove Boxing Day bounce in home-mover activity, which has increasingly become a key date in the housing market calendar."

On the continent, eurozone business sentiment showed signs of recovery in December, with the HCOB composite PMI rising to 49.5 from November's 48.3, exceeding expectations of a further decline.

Although still in contraction territory, services activity returned to growth, offsetting some of the manufacturing sector's continued struggles.

Germany's economy meanwhile saw signs of contraction for the sixth consecutive month, with its composite PMI at 47.8.

Manufacturing output hit a three-month low, with a PMI of 41.7, while services showed resilience, climbing back to growth with a reading of 51.0.

Across the Atlantic, the US economy presented a mixed picture.

Services activity surged in December, with the S&P Global PMI jumping to 58.5 from 56.1, its fastest pace since the economy reopened post-Covid.

In contrast, manufacturing slipped further into contraction, with the PMI falling to 48.3.

The composite index, which combines services and manufacturing, rose to 56.6, signaling robust overall activity.

Finally on data, November's economic figures out of China also painted a varied picture.

Industrial production grew 5.4% year-on-year, slightly exceeding October's pace, but retail sales disappointed, slowing to 3% from October's 4.8% and missing forecasts of 5%.

Fixed asset investment growth also eased slightly to 3.3% in the first 11 months of 2024.

The unemployment rate remained stable at 5.0%, with the job market described as generally stable by the National Bureau of Statistics.

Saga jumps on Ageas deal, Computacenter sinks as CFO departs suddenly

On London's equity markets, Saga soared 7.61% after announcing a 20-year partnership with Ageas for motor and home insurance, including the sale of its underwriting business.

PureTech Health rallied 6.02% following positive trial results for its lung disease treatment deupirfenidone.

The findings, described as "extremely exciting" by the trial's lead investigator, fueled optimism about the treatment's commercial potential.

Johnson Matthey climbed 3.33% after its largest shareholder, Standard Investments, called for a strategic review that could include a potential sale of the company.

"The market seems to welcome Standard Investments' intervention and that may hint at the potential for success in its efforts to secure new voices on the board and radically shake-up the business," noted Russ Mould, investment director at AJ Bell.

Bunzl gained 1.08% after RBC Capital Markets upgraded the stock to 'outperform,' citing improved prospects for the distribution group.

International Distribution Services rose 0.84% as the UK government conditionally approved Czech billionaire Daniel Kretinsky's £3.6bn takeover of Royal Mail.

On the downside, Entain slid 6.28% after Australia's financial crime regulator initiated civil penalty proceedings against the Ladbrokes owner for alleged breaches of anti-money laundering laws.

Housebuilder Persimmon dropped 2.45% after chief executive officer Dean Finch warned that tax increases and a new cladding levy could cost the company up to £40m annually.

Computacenter fell 3.13% following the sudden and unexpected departure of chief financial officer Christian Jehle.

The company said his responsibilities would be temporarily managed by the finance team.

"There is no explanation as to why he has gone and that's troubled the market," Russ Mould said.

"There is now a guessing game as to whether Computacenter has found something lurking in the closet or there's another reason why the CFO has gone."

DCC declined 1.37% after being downgraded to 'sector perform' by RBC Capital Markets, while PageGroup dipped 0.89% on a downgrade to 'neutral' by BNP Paribas Exane.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,262.05 -0.46%
FTSE 250 (MCX) 20,813.03 -0.36%
techMARK (TASX) 4,656.21 -0.19%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 583.80p 1.96%
3i Group (III) 3,697.00p 1.40%
Halma (HLMA) 2,771.00p 1.39%
London Stock Exchange Group (LSEG) 11,510.00p 1.10%
International Consolidated Airlines Group SA (CDI) (IAG) 296.40p 1.09%
Bunzl (BNZL) 3,558.00p 1.08%
Experian (EXPN) 3,632.00p 0.92%
Smurfit Westrock (DI) (SWR) 4,288.00p 0.85%
Intermediate Capital Group (ICG) 2,164.00p 0.74%
Rightmove (RMV) 682.00p 0.62%

FTSE 100 - Fallers

Entain (ENT) 763.20p -6.28%
Centrica (CNA) 127.15p -3.66%
Convatec Group (CTEC) 227.60p -3.07%
BP (BP.) 385.10p -2.74%
Persimmon (PSN) 1,235.50p -2.45%
Croda International (CRDA) 3,360.00p -2.33%
SSE (SSE) 1,637.00p -2.16%
Unite Group (UTG) 811.00p -1.99%
Pershing Square Holdings Ltd NPV (PSH) 3,886.00p -1.97%
Airtel Africa (AAF) 105.30p -1.68%

FTSE 250 - Risers

W.A.G Payment Solutions (WPS) 83.80p 4.75%
Indivior (INDV) 950.00p 4.63%
PureTech Health (PRTC) 171.40p 4.42%
Trustpilot Group (TRST) 304.50p 3.40%
Johnson Matthey (JMAT) 1,397.00p 3.33%
Senior (SNR) 161.00p 3.21%
Watches of Switzerland Group (WOSG) 592.00p 2.87%
Moonpig Group (MOON) 228.00p 2.47%
Raspberry PI Holdings (RPI) 489.60p 2.30%
C&C Group (CDI) (CCR) 151.40p 2.02%

FTSE 250 - Fallers

Aston Martin Lagonda Global Holdings (AML) 100.00p -4.31%
SThree (STEM) 260.00p -3.70%
Computacenter (CCC) 2,168.00p -3.13%
Endeavour Mining (EDV) 1,459.00p -3.06%
International Workplace Group (IWG) 158.00p -3.01%
Pets at Home Group (PETS) 219.00p -2.49%
Safestore Holdings (SAFE) 670.00p -2.47%
HICL Infrastructure (HICL) 117.60p -2.33%
Bloomsbury Publishing (BMY) 682.00p -2.29%
Dunelm Group (DNLM) 1,099.00p -2.24%