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London open: Stocks edge up but Shell, Flutter in the red
London stocks rose in early trade on Wednesday but gains were muted after disappointing updates from Shell and Flutter Entertainment, and amid worries about inflation.
At 0845 GMT, the FTSE 100 was up 0.2% at 8,258.90.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Inflation concerns have stoked fresh wariness on the markets, with worries that a pressure cooker of prices increases is heating up again. The FTSE 100 has opened slightly higher but gains are likely to be held back as investors assess data indicating that interest rates may have to stay higher for longer.
“The Institute for Supply Management’s monthly survey of the US Services sector showed prices jumped to the highest level since last January. Job vacancies also rose, by more than expected, reaching a six-month high. Although S&P futures indicate a small rebound, nervousness is set to remain, and all eyes will be on Friday’s closely watched jobs number.
“It’s expected to be robust, indicating persistent strength of the US economy. Although such a show of strength might be seen as good news, it’s leading to concerns that the Fed will go even slower on interest rate cuts.
“Already the Fed had warned there is likely to be only two reductions this year, down from four forecast in September, but speculation is brewing that there this could be reduced to just one if price pressures persist. The unpredictability of the incoming Trump administration and the potential impact of his tariff plan on inflation is also adding to concerns. Amid expectations of a higher for longer rate environment, Treasury yields have risen to around 4.67% the highest level in eight months.”
There are no major UK data points due on Wednesday, but in the US the ADP report for December is scheduled for release at 1315 GMT while the FOMC’s December minutes will be out at 1900 GMT.
In equity markets, oil major Shell was weaker as it said that results for the fourth quarter were significantly lower than the preceding three months, revealing $700m of well-write offs and a $1.3bn hit to cashflow.
The company also cut its liquefied natural gas production guidance for the three months to 30 December to 6.8-7.2m metric tons, from earlier estimates of 6.9-7.5m tons.
Flutter Entertainment was also under the cosh as the online betting firm downgraded its US guidance, citing unfavourable sports results.
It noted that the 2024/2025 NFL season to date has been the most customer-friendly since the launch of online sports betting, with the highest rate of favourites winning in nearly 20 years.
As a result, the company now expects 2024 US revenue to be around $370m lower than its previous guidance midpoint at approximately $5.78bn. It had previously guided to between $6.05bn and $6.25bn.
After incremental one-off cost mitigation, adjusted EBITDA for the year is set to be around $205m lower than the previous guidance midpoint at approximately $505m, versus $670m to $750m.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
London Stock Exchange Group Plc | +2.19% | +250.00 | 11,675.00 |
| 2 |  |
Natwest | +2.05% | +8.10 | 403.30 |
| 3 |  |
Barclays | +1.98% | +5.25 | 270.95 |
| 4 |  |
Aib Group Plc | +1.91% | +8.50 | 453.00 |
| 5 |  |
Ferguson Enterprises Inc. | +1.81% | +250.00 | 14,050.00 |
| 6 |  |
Hsbc Holdings Plc | +1.64% | +12.70 | 788.70 |
| 7 |  |
Bae Systems Plc | +1.26% | +14.50 | 1,168.50 |
| 8 |  |
Rolls-royce | +1.11% | +6.40 | 583.00 |
| 9 |  |
Experian Plc | +1.08% | +37.00 | 3,463.00 |
| 10 |  |
Banco Santander S.a. | +0.92% | +3.50 | 382.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Flutter Entertainment Plc | -2.53% | -520.00 | 20,010.00 |
| 2 |  |
Sse Plc | -1.80% | -29.00 | 1,583.50 |
| 3 |  |
United Utilities Group Plc | -1.76% | -18.00 | 1,006.50 |
| 4 |  |
Bp 9% 2nd Prf | -1.63% | -2.50 | 150.50 |
| 5 |  |
Next Plc | -1.59% | -158.00 | 9,754.00 |
| 6 |  |
Shell Plc | -1.51% | -39.50 | 2,577.50 |
| 7 |  |
Prudential Plc | -1.39% | -8.80 | 625.40 |
| 8 |  |
Jd Sports Fashion Plc | -1.28% | -1.30 | 100.20 |
| 9 |  |
Barratt Redrow Plc | -1.24% | -5.20 | 414.80 |
| 10 |  |
Rentokil Initial Plc | -1.21% | -4.70 | 385.00 |
US close: Stocks drop as bond yields hit eight-month high
US stocks sold off sharply on Tuesday as bond yields hit a nine-month high on the back of stronger-than-expected economic data and renewed concerns about inflation.
The Dow finished 0.4% lower, while the S&P 500 and Nasdaq dropped 1.1% and 1.9% respectively, pulling back after two days of solid gains.
Weighing on sentiment was a jump in 10-year US Treasury yields, up 5.3 basis points at 4.689%, hitting levels not seen since last April ahead of the Treasury’s auction of $39bn of 10-year notes after the close.
Meanwhile, the yield on a 30-year US bond was up 5.8 basis points at 4.916%, its highest since October 2023, ahead of a sale of $22bn of 30-year bonds on Wednesday.
“A couple of days into the first full week of 2025 and markets are waking up to some uncomfortable truths,” said AJ Bell’s head of financial analysis, Danni Hewson.
“Interest rates are expected to stay higher for longer as central bankers around the world have to price in politics and no one really knows whether Donald Trump will follow through with the threat of mega tariffs or if the incoming president is just playing a global game of chicken.”
Services PMI, job openings
The closely watched ISM services purchasing managers’ index rose to 54.1 in December, up from 52.1 in November and comfortably ahead of the 53.3 consensus forecast. This was the 10th straight month of expanding activity in the sector.
A key sub-index of new orders improved from 53.7 to 54.2, whilst that tracking the prices paid by companies jumped from 58.2 to 64.4. Purchasing managers from several sectors cited by ISM noted concern or uncertainty around the tariffs that the new Trump administration might put in place.
Meanwhile, the number of job openings in the US rose to 8.10m in November, up from 7.84m in October and above the 7.70m expected by the market. However, while numbers were up month-on-month, the ratio of openings to unemployed workers was still below pre-pandemic norms and doesn’t necessarily equate to a healthy jobs market.
Specifically, the number of quits continued to decline, falling by 1.9% or 218,000 to 3.1m, which could imply that workers are less confident about securing another job.
The labour market will be in keen focus this week, with the ADP Employment Report for December on Wednesday, weekly jobless claims on Thursday and the all-important non-farm payrolls figure on Friday.
Tech stocks tank
Nvidia‘s stock finished down 6% with the market underwhelmed by chief executive Jensen Huang’s keynote speech at CES the previous evening, which included announcements about the next generation of AI-powered gaming chips using its Blackwell technology, as well as advancements in self-driving cars and robotics.
With the shares having jumped 11% in the past three sessions combined, and analysts expressing disappointment about the lack of details surrounding Blackwell production, investors chose to take profits.
Others in the chip sector such as TSMC, Dell and Broadcom were also out of favour on Tuesday.
Bucking the trend however was Micron Technology which jumped 3% after Huang mentioned the company would be providing memory to Nvidia’s new gaming chips.
Shares in Meta Platforms were lower after Mark Zuckerberg announced that he would end fact-checking and restrictions on speech across Facebook and Instagram – a move that comes as the founder and chief executive attempts to form closer relationships with the incoming Trump administration.
Getty Images jumped 24% on the news that it is to merge with rival photo agency Shutterstock in a deal worth $3.7bn. In a joint statement, the Wall Street firms said the deal would create a content library with “greater depth and breadth for the benefit of customers [and] expanded opportunities for its contributor community”.
Wednesday newspaper round-up: Rolls-Royce Motor Cars, Shein, JPMorgan Chase
The UK’s advertising watchdog has banned a campaign by an online investment company predominantly targeting Muslims that featured images of euros and US dollars and the words “The United States of America” in flames alongside a call to “join the money revolution”. Wahed Invest Ltd, an online investment platform, ran six posters on various Transport for London (TfL) services, including the London Underground and on buses, last September and October. – Guardian
Rolls-Royce Motor Cars has said it will invest £300m in expanding its Goodwood factory in West Sussex to meet the growing demand for bespoke upgrades, after the luxury carmaker recorded its third-highest annual sales in 2024. The investment will extend the luxury carmaker’s manufacturing facility as it gradually moves away from V12 petrol engines to battery electric vehicles, as well as increasing its capacity to fulfil the whims of some of the world’s richest people. – Guardian
An overtime ban at Britain’s aviation regulator could delay aircraft upgrades, the Prospect union claimed, including a revamp of first-class cabins at British Airways. Prospect said 360 members employed by the Civil Aviation Authority (CAA) will begin a work-to-rule on January 20 in protest against the public body imposing a 3-4pc pay rise. – Telegraph
Shein’s London float has been thrown into further doubt after it was accused by MPs of behaviour that “bordered on contempt” by repeatedly refusing to answer questions over the origins of its cotton sourcing. The Chinese-founded fast-fashion giant, which is hoping to list in the UK this year, was summoned by parliament to provide evidence to the business and trade select committee on Tuesday after concerns over labour practices in its supply chain. – The Times
JPMorgan Chase is planning to order all its staff back to the office five days a week, in the latest crackdown on hybrid working policies introduced during the pandemic. America’s biggest bank, which employs more than 300,000 people worldwide and about 22,000 in the UK, is preparing to end remote working for thousands of staff. – The Times
