International markets suffered a turbulent week, with European markets battered by the ongoing energy crisis, US markets bracing for further aggressive interest rate hikes and the FTSE 100 tumbling as the UK faces the worst living standards in a century.
The blue chip index regained some ground after its surprising nosedive earlier this week, closing 1.8% higher at 7,281.1 on Friday. However, the market fell 2.6% over the week, highlighting the tightening screws as the country looked ahead to a difficult winter.
US markets gained on positive jobs data, with the economy marking 315,000 new nonfarm payrolls against analyst expectations of 300,000.
However, news of a continued tightness in the labour market is set to add fuel to the Fed’s hawkish fire, with chair Jerome Powell eyeing a softening in the labour market before he begins to consider a dovish approach to rate hikes.
“US jobs numbers … offer an insight into the health of the world’s largest economy, it is typically influential on markets. However, US Federal Reserve chair Jerome Powell was so clear in his messaging at last week’s Jackson Hole summit that it would take a big surprise to really move the dial,” said AJ Bell investment director Russ Mould.
The NASDAQ rose 1% to 11,908.8, the Dow Jones increased 1% to 31,996.5 and the S&P 500 climbed 1.1% to 4,011.9.
“There will be some relief on Friday morning that, for now, the recent wave of selling in global stock markets has eased,” said Mould.
“After US stocks broke a four-day losing streak overnight, the FTSE 100 has eked out modest gains, supported by a broad range of companies caught up in the sell-off.”
Housebuilders fall
Housebuilders fell to the bottom of the FTSE 100 after Nationwide reported a slowdown in the housing market over August.
Last month saw a 10% annual rise in house prices against an 11% rise in July, and although the figures remained in the double-digits, analysts pointed out signs that the red-hot market was starting to cool.
Surveyors noted a drop in new buyer enquiries in August, with a slide in the level of mortgage approvals to below pre-pandemic numbers.
Berkley Group Holdings shares fell 2.6% to 3,494.5p, Persimmon decreased 1.7% to 1,443.7p and Barratt Developments declined 1.1% to 410.3p.
“Housebuilders were firmly lower after a week which revealed cracks in the foundations of the property market and raised questions about how much longer their selling prices can run ahead of rising labour and raw material costs,” said Mould.
Avast/NortonLifeLock merger greenlit
Avast shares gained 0.2% to 715.3p after the company received the final green light from the Competitions and Markets Authority (CMA) for its merger with NortonLifeLock.
The CMA opened a prior investigation into the merger over concerns the transaction would be harmful to sector competition. However, the deal was cleared by the Authority after a provisional clearance earlier in August.
The agreement was confirmed after the CMA noted sufficient competition in the industry from Microsoft and McAfee, among others.
“Competition authorities cleared the takeover of Avast by rival NortonLifeLock and while this was not a surprise, it adds to a potential exodus of firms from an already threadbare UK tech sector, with Aveva and Micro Focus among those names either already in discussions or rumoured to be attracting interest,” said Mould.
Shell CEO to resign
Shell shares rose 2.2% to 2,324p, despite reports from Reuters that CEO Ben van Beurden was set to resign from the oil giant after almost a decade at the company.
Two sources close to the matter identified four candidates shortlisted to replace the departing boss, with the new CEO to be chosen under a succession committee led by chair Andrew Mackenzie.
Shell head of integrated gas and renewables Wael Sawan is allegedly on the list, along with downstream refining operations head Huibert Vigeveno.
Chief financial officer Sinead Gorman and head of upstream Zoe Yujnovich are also under consideration for the role.
“After yesterday’s surprise departure of Reckitt Benckiser chief executive Laxman Narasimhan, it looks as if another FTSE 100 company is poised for a change at the top as Shell’s Ben van Beurden is reportedly preparing to step down,” said Mould.
“His successor faces a tough task … with regulatory pressure likely to be a key theme. Internal appointments are rumoured to be in the running, befitting an organisation which has often looked inwards when planning a succession process.”
“Whoever prevails will have to balance the demands of the environmental lobby, governments and investors. At least van Beurden spared them the decision of cutting the dividend, a step taken for the first time since the Second World War in 2020. However, there will be more hard decisions to come if the company is going to live up to its net zero rhetoric.”
