- FTSE 100 trades flat despite signs of China’s manufacturing recovery.
- The Institute of Directors report indicates a loss of confidence in UK business community.
- Tough November for retail but Black Friday promotions set to see late deluge of sales.
- Stellantis boss unexpectedly quits, leaving a vacuum at the top of the Peugeot and Vauxhall owner.
Susannah Streeter head of money and markets, Hargreaves Lansdown:
‘’The FTSE 100 is lacking in Monday motivation, despite signs that China’s economy is cranking up a gear. Worries are also swirling about investment being curtailed in the UK amid falling business confidence. The snapshot of factory activity, the Caixin China General Manufacturing PMI, rose to 51.1 in November from October’s 50.3, beating expectations, with 50 indicating expansion. The acceleration of output, selling prices and the strongest growth in foreign orders since February 2023, has lifted spirits. Hopes have risen that the big stimulus programme which started to be rolled out by authorities in September is showing some signs of bearing fruit. Trump’s tariffs could still upset the apple cart though so there’s still a ‘wait and see mood’ lingering. Brent Crude hasn’t moved much and is hovering around $72 a barrel as traders count down to the delayed OPEC+ meeting this week.
While business confidence appears to be improving in China, the mood among directors in the UK has headed in the opposite direction. According to the IoD, the UK Budget has led to a fresh fall in optimism among bosses, with concerns that they will hold back from investing to expand their businesses as a result. Some Bank of England policymakers have already indicated they may be more inclined to reducing interest rates only gradually mindful that prices may be pushed up because of the increase in employers’ National Insurance Contributions. In the IoD survey 44% said they planned to pass on the costs to customers, 43% said their workforces would shrink but 50% said they would be less generous with wage increases. With stubborn pay growth one of the reasons for reticence about reducing rates among some at the Monetary Policy Committee, this niggling worry could subside. But it’s clear a cautious approach in easing monetary policy will be the order of the day.
Emails screaming ‘sale almost over’ are clogging up inboxes on Cyber Monday as retailers make a last-ditch attempt to snag a sale. It’s been a super-tough November for the sector, with a Scrooge-like mentality emerging as cost-of-living pressures and worries about the economy took hold. Accountancy firm BDO estimated that online sales fell 7.8%, while store sales fell 5.5% during the month. However, with three-quarters of people expected to have put off spending until the Black Friday promotional weekend, the signs are that the month ended with a deluge of spending. The Mastercard pulse survey shows shoppers in the US kept e-commerce tills rising merrily with online sales up more than 14% on Friday, although in-store sales only rose 0.7%. However, due to the discounts offered, it will mean smaller profit margins for retailers at a crucial time of the year.
It’s all change at the top of Peugeot and Vauxhall owner Stellantis after a board room spat which saw the chief executive walk away. The departure of Carlos Tavares came in an abrupt fashion, but given how the company has been on such a rocky road, a corporate shakeup isn’t surprising. Nevertheless, it leaves a hole of uncertainty at the top of the company, which is clearly unsettling for investors. The board is clearly unhappy with the plan of action Tavares has been following, after plummeting sales led to a profit warning. The big worry has been that his slash and burn cost-cutting policy will hurt quality and the image of its global brands. His replacement will still have an uphill struggle in turning around the company’s performance, particularly given how tough the EV market is right now.’’
