London midday: Stocks fall as investors eye central bank announcements

London stocks had fallen into the red by midday on Monday as investors eyed a busy week, with policy announcements due from the Federal Reserve, the Bank of England and the Bank of Japan.

The FTSE 100 was down 0.4% at 8,267.41.

Kathleen Brooks, research director at XTB, said: "It may be the last full week of trading before 2025, however, there is a bumper week of data and news to digest that could impact market performance before year end. Central bank decisions, year-end economic data and European political developments are all worth watching."

As far as the BoE rate decision on Thursday is concerned, Brooks said there is virtually no expectation of a rate cut, with the market instead pricing in a 76% chance of a cut in February.

"The BOE have been vocal about their plans for gradual rate cuts, however the weak run of confidence data and economic data means that the commentary from the BOE will be worth watching on Thursday. While we doubt the BOE will cut rates, they could signal a faster pace of cuts next year. There are currently three cuts expected, however, we think that the BOE could cut at a faster pace due to the deterioration in the economic data," she said.

"If the BOE does sound concerned about the growth outlook at this week’s meeting, then it could have a big impact on financial markets even if they don’t cut rates on Thursday."

A survey out earlier showed the UK experienced the fastest decline in private sector employment for nearly four years in December, despite a marginal upturn in output.

The S&P Global flash UK PMI composite output index printed at 50.5, unchanged on November. This remained above the 50.0 mark that separates contraction from expansion but was a touch below expectations for a reading of 50.7.

The flash manufacturing purchasing managers’ index fell to an 11-month low 47.3 in December from 48.0 the month before.

The services PMI, meanwhile, rose to 51.4 from 50.4, hitting a two-month high.

The survey found that softer demand, rising employment costs and squeezed margins contributed to a further reduction in private sector headcounts at the end of 2024. The latest decline in workforce numbers was the steepest since January 2021.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “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.

"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. The survey’s price gauges are indicating that inflation is turning higher again.

"Firms are responding to the increase in National Insurance contributions and new regulations around staffing with a marked pull-back in hiring, causing employment to fall in December at the fastest rate since the global financial crisis in 2009 if the pandemic is excluded."

Investors were also mulling the latest data from Rightmove, which showed that new seller asking prices fell by 1.7% on the month in December following a 1.4% decline the month before. On the year, prices were up 1.4% following 1.2% growth in November.

The average price of a home was £360,197 this month, versus £366,592 a month earlier.

Rightmove said that despite "the festive lull", activity remains "substantially" stronger than the same period a year ago, with the number of sales being agreed up 22% and new buyer demand up 13%.

In equity markets, Bunzl was boosted by an upgrade to ‘outperform’ at RBC Capital Markets.

Puretech Health rallied as it hailed promising results from the trial of its lung disease treatment deupirfenidone, which the lead investigator hailed as "extremely exciting".

Johnson Matthey gained as its largest investor, Standard Investments, called for a strategic review of the business which could include its sale.

Russ Mould, investment director at AJ Bell, said: "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."

Saga surged after saying it had entered into an agreement with Ageas to establish a 20-year partnership for motor and home insurance which includes the acquisition of its underwriting business.

IDS ticked up after Czech billionaire Daniel Kretinsky's £3.6bn takeover of Royal Mail was conditionally approved by the government.

On the downside, Ladbrokes owner Entain slumped after Australia’s financial crime regulator began civil penalty proceedings against the company related to alleged contraventions of an anti-money laundering and counter-terrorism financing act.

Entain said that, judging by the fines handed out for similar cases in the past, the investigation "may result in a penalty being levied which could be potentially material".

DCC also fell after a downgrade to ‘sector perform’ at RBC Capital Markets, while PageGroup was knocked lower by a downgrade to ‘neutral’ at BNP Paribas Exane.

Computacenter was weaker after it announced the immediate departure of Christian Jehle as its chief financial officer and an executive director by mutual agreement, with his responsibilities temporarily managed by the finance team and executive management until a successor is appointed.

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

Market Movers

FTSE 100 (UKX) 8,267.41 -0.40%
FTSE 250 (MCX) 20,792.25 -0.46%
techMARK (TASX) 4,645.33 -0.43%

FTSE 100 - Risers

Bunzl (BNZL) 3,572.00p 1.48%
International Consolidated Airlines Group SA (CDI) (IAG) 296.30p 1.06%
3i Group (III) 3,679.00p 0.91%
AstraZeneca (AZN) 10,562.00p 0.90%
Barclays (BARC) 271.70p 0.85%
NATWEST GROUP (NWG) 408.10p 0.64%
Tesco (TSCO) 373.60p 0.43%
Experian (EXPN) 3,613.00p 0.39%
Beazley (BEZ) 842.00p 0.30%
Intermediate Capital Group (ICG) 2,154.00p 0.28%

FTSE 100 - Fallers

Entain (ENT) 763.80p -6.28%
Centrica (CNA) 126.70p -3.39%
Persimmon (PSN) 1,228.00p -3.04%
Barratt Redrow (BTRW) 426.60p -2.38%
Taylor Wimpey (TW.) 121.70p -2.13%
Diploma (DPLM) 4,330.00p -2.08%
DCC (CDI) (DCC) 5,345.00p -2.02%
Unite Group (UTG) 811.00p -1.99%
B&M European Value Retail S.A. (DI) (BME) 362.40p -1.87%
Antofagasta (ANTO) 1,657.50p -1.81%

FTSE 250 - Risers

PureTech Health (PRTC) 173.00p 6.27%
Johnson Matthey (JMAT) 1,410.00p 4.29%
W.A.G Payment Solutions (WPS) 83.40p 4.25%
Trustpilot Group (TRST) 303.00p 2.89%
Patria Private Equity Trust (PPET) 545.00p 1.68%
Watches of Switzerland Group (WOSG) 585.00p 1.65%
Twentyfour Income Fund Limited Ord Red (TFIF) 107.60p 1.51%
Hochschild Mining (HOC) 216.00p 1.41%
Moonpig Group (MOON) 225.50p 1.35%
Wizz Air Holdings (WIZZ) 1,482.00p 1.30%

FTSE 250 - Fallers

Computacenter (CCC) 2,118.00p -5.36%
International Workplace Group (IWG) 156.30p -4.05%
SThree (STEM) 261.00p -3.33%
Pagegroup (PAGE) 350.20p -2.45%
SSP Group (SSPG) 181.80p -2.42%
HICL Infrastructure (HICL) 117.60p -2.33%
Pennon Group (PNN) 610.00p -2.24%
Pets at Home Group (PETS) 219.80p -2.14%
Bellway (BWY) 2,400.00p -2.04%
PZ Cussons (PZC) 83.60p -1.99%