The FTSE Finish Line: December 17 - 2024
FTSE Sinks To Two Month Low Ahead Of BoE Rate Decision
The FTSE 100 in the UK fell to a nearly one-month low on Tuesday following robust wage data, as investors prepared for insights regarding the future interest rate path of the Bank of England (BoE) later this week. Ahead of the Bank of England's policy decision on Thursday, data revealed that British wages increased more than anticipated in the three months leading up to October, leading investors to reduce their expectations for rate cuts next year and resulting in a rise in domestic government bond yields. The central bank is largely expected to maintain current rates this week, just a day after the Federal Reserve is set to announce its own policy decision, which is likely to include a quarter-point rate cut. Wage growth appears robust; this will strengthen the case for the hawks to keep the bank rate steady for a longer period and maintain a more restrictive policy. However, concurrently, the demand for jobs is rapidly declining. Payrolls are decreasing. This will ultimately impact demand and medium-term inflation pressures. The British inflation figures released on Wednesday will provide more insight into the Bank of England's interest rate path.
Single Stock Stories:
Shares of business supplies distributor Bunzl down fell by 5%, marking their lowest point since August 23, 2024. The stock is the biggest loser in the FTSE 100 index, which has decreased by 0.7%. The company anticipates a minor impact on its 2024 profits due to more persistent deflation than expected, particularly in the Continental Europe division. Nevertheless, it expects the group's adjusted operating profit for 2024 to be higher compared to 2023 when adjusted for constant exchange rates. The company is forecasting "strong" revenue growth for 2025 and estimates that 2024 revenue will be approximately 3% higher than the previous year at constant exchange rates, while it may decline between 0% and 1% at actual exchange rates. As of the last closing, the stock has risen by 11.5% year-to-date.
Shares of the London-listed pharmaceutical company Indivior, have fallen by up to 4.6% following the announcement that its finance chief, Ryan Preblick, is set to resign amid board changes pressured by its second-largest shareholder, Oaktree Capital. In response, Indivior has named Robert Schriesheim and Joe Ciaffoni as independent non-executive directors. The company also agreed to implement a more conventional U.S. remuneration system for directors after its recent primary listing in New York. The path to fixing Indivior is expected to be lengthy, with Oaktree's small victory representing just the first step in a more extensive repair process. Currently, Indivior's stock is down 3.4%, contributing to year-to-date losses of about 23%
Broker Updates:
UBS has initiated coverage on the English Premier League soccer team Manchester United, giving it a "buy" rating and a price target of $23. In a report titled 'The Red Devils set to rise again', UBS suggests that the club's new management could enhance performance both on and off the pitch. The team, known as the Red Devils, has undergone significant changes since British billionaire and INEOS founder Jim Ratcliffe acquired a 27.7% stake earlier this year and took over its football operations. UBS notes that "a focus on cost management should facilitate investment to enhance sporting performance and achieve net profitability." Manchester United boasts a revenue base that is largely unparalleled among its Premier League counterparts, and a potential return to the lucrative UEFA Champions League could increase revenue to £800 million ($1.02 billion) by FY28, according to UBS. Last month, Manchester United reported a reduced adjusted net loss for Q1 2025, aided by cost-cutting measures and favourable exchange rates. The club also plans to upgrade its Old Trafford stadium, which UBS believes could further increase potential revenue by approximately £200 million. As of the last closing, Manchester United's stock is down 13.3% year-to-date.
Technical & Trade View
FTSE Bias: Bullish Above Bearish below 8225
Primary support 8000
Below 8000 opens 7855
Primary objective 8600
Daily VWAP Bearish
Weekly VWAP Bullish
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!