FTSE 100 higher as US gains on jobless claims, Berkeley profits up, Flutter stays in FTSE despite US move and Anglo American slashes production guidance

“The FTSE 100 was modestly higher in early trading on Friday following gains in the US overnight as the market awaits a key jobs report from across the Atlantic,” says AJ Bell Investment Director Russ Mould.

“An increase in jobless claims suggests the US labour market, a critical factor in Federal Reserve decision making, is cooling and investors will be looking for non-farm payrolls data as confirmation. Next week will also be a crunch moment as the Fed announces its latest rate decision, with the market pricing in rate cuts as early as March. Chair Jerome Powell may look to pour some cold water on this idea.

“Japanese stocks have endured a tough week, with exporters particularly hard hit, as the yen surges on expectations the country’s central bank might move away from its ultra-loose monetary policy.

“High-end housebuilder Berkeley is on track to meet guidance for the next two years despite a difficult market backdrop. However, news it is not investing in new developments thanks to the ‘volatile’ planning and regulatory environment felt quite telling, with sales volumes also falling in the six months to 31 October.

“A key bugbear of UK housing developers, even in better times, is that under-resourced local planning departments are unable to approve projects in a timely fashion. However, an increase in profit from Berkeley, during tough times, shows it continues to be near the top of the class in the sector.”

Flutter Entertainment

“Flutter’s decision to pack its bags and set up camp on the New York Stock Exchange on 29 January 2024 is not the hammer blow to the UK stock market as one might think.

“Whereas the likes of CRH and Ferguson opted to make their primary listing in the US, and in the process no longer qualified for inclusion in the prestigious FTSE 100 index, Flutter is doing things differently.

“The gaming group is keeping its primary listing in the UK which means it will continue to sit in the FTSE 100. For now, that means it’s business as usual for tracker funds holding the stock and its role as the UK’s largest listed gambling stock remains intact.

“How long that situation remains is another matter. London-listed companies typically add a US stock listing if they want to be valued on a higher rating. If that leads to the bulk of the trading in the shares happening in the US rather than the UK, a company such as Flutter could argue that it makes sense to switch its primary listing to the States. At that point, it would no longer qualify for the FTSE indices.”

Anglo American

“As Anglo American announces cuts to production and capex guidance the silver lining is that a significant number of its peers have done the same – particularly for metals like platinum, rhodium and palladium.

“So-called ‘PGM’ metals are used in diesel and petrol combustion engines to limit exhaust emissions and therefore face declining demand as the shift towards electric vehicles continues.

“On the one hand Anglo’s actions demonstrate some discipline, matched elsewhere in the sector, and on the other constrained production could support higher prices in 2024.

“However, the lower output also means lower earnings and cash flow and potentially less generous returns to shareholders too. The scale of Anglo American’s cuts may also have come as a bit of a shock to the market, and they suggest incoming finance director John Heasley may look to keep a tight rein on the purse strings when he takes over from Stephen Pearce at the end of the year.

“The company also faces the challenge of a mounting debt pile and its somewhat patchy operational performance means it may not be awarded a huge amount of patience by the market.”

These articles are for information purposes only and are not a personal recommendation or advice.