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British stocks declined on Friday, driven mainly by weakness in the financial sectors, including insurance and banking. Similarly, major U.S. indexes recorded sharp losses early in the session after a stronger-than-expected jobs report, boosting hopes that the Federal Reserve may proceed cautiously with monetary policy easing this year. Meanwhile, the oil and gas sector outperformed, rising 1.2% as crude prices advanced. Mid-cap stocks faced pressure from a sharp rise in British borrowing costs this week, triggered by concerns over high borrowing levels in the UK and proposed business tax hikes by finance minister Rachel Reeves. UK government bond yields also stayed elevated, with the 10-year gilt yield approaching its highest level since 2008 and the 30-year yield reaching its highest point since 1998.Single Stock Stories:
Shares of Sainsbury’s, the UK’s second-largest supermarket group, dropped 2.2%, making it the top loser on the FTSE 100 index. The company forecasts its full-year underlying operating profit to align with the consensus and midpoint of its guidance range of £1.01 billion to £1.06 billion ($1.24 billion to $1.30 billion). It reported a 2.8% increase in underlying sales for the Christmas quarter, though sales at Argos, its multi-category retailer, declined by 1.4%. General merchandise and clothing sales across Sainsbury’s stores slipped slightly, down 0.1% in the third quarter. As of the previous close, the stock is down 3.8% year-to-date.
Shares in shipping services firm Clarkson rose 7.7% to 4,190p, making it the top percentage gainer on the FTSE Midcap index. The company announced that its results for the year ending December 31, 2024, are expected to slightly surpass market expectations. Clarkson forecasted an underlying profit before tax of no less than £115 million ($141.37 million) for 2024, compared to £109.2 million reported in 2023. The stock reached its highest level since August 2, 2024, and has gained approximately 25% so far this year.
Broker Updates:
Shares of Haleon fell 1.6%, marking it as one of the biggest decliners on the FTSE 100 index. Morgan Stanley downgraded the stock from “overweight” to “equal-weight” while slightly increasing the price target from 400p to 410p. The brokerage noted that, following a year of strong outperformance, the stock has limited potential for significant further gains in the near term. They also warned that weaker consumer demand, failure to improve margins by 2025, or additional divestments could lead to earnings downgrades or a decline in valuation. Morgan Stanley indicated a preference for Reckitt within the consumer health sector. Despite this recent pullback, Haleon has risen approximately 16% in 2024.
Technical & Trade ViewFTSE Bias: Bullish Above Bearish below 8225
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