Investing doesn’t guarantee productivity growth, says analyst
Isabel Albarran, investment officer at Close Brothers Asset Management, talks about the ramifications of the U.K. budget, and how it may take some time for confidence to grow.
Stocks open higher Friday
U.S. stocks began Friday’s trading session in the green.
The Dow Jones Industrial Average added 212 points, or 0.5%.
The S&P 500 and Nasdaq Composite gained 0.5% and 0.6%, respectively.
— Hakyung Kim
UK bond yields fall after U.S economy adds less jobs than expected in Ocotber
U.S. economy adds just 12,000 jobs in October
The U.S. economy added far fewer jobs last month than anticipated at just 12,000. Economists polled by Dow Jones expected a gain of 100,000 jobs for October. The unemployment rate, meanwhile, came in at 4.1%.
The Labor Department did warn, however, that storms hitting the U.S., as well as a Boeing strike, impacted jobs creation for the month.
— Fred Imbert
Stoxx 600 set for weekly loss despite Friday’s gains
Despite rising on Friday, the pan-European Stoxx 600 is set to record a weekly loss when markets close, LSEG data showed around midday London time.
If the drop materializes, it will mark the second consecutive week of declines for the index.
Stoxx 600
Spike in UK borrowing costs is not a repeat of the ‘mini-budget’ crisis, economists say
Britain’s Prime Minister Keir Starmer meets with Britain’s Chancellor of the Exchequer Rachel Reeves, days before the announcement on the first budget of the new Labour government, at Downing Street on October 28, 2024 in London, England. Starmer and Reeves are meeting ahead of the Budget on Wednesday.
Wpa Pool | Getty Images News | Getty Images
U.K. borrowing costs posted two days of gains right after the Labour government unveiled a huge package of borrowing and tax rises in its Wednesday budget — but analysts downplayed the possibility of a second “mini-budget” crisis in the British bond market.
Along with around £40 billion in tax hikes, Finance Minister Rachel Reeves on Wednesday announced significantly higher increase in short-term borrowing than many economists had expected.
Reeves said the moves were necessary to transition the budget toward a day-to-day spending balance while investing in public services and infrastructure.
Many of her plans reached the public in advance, bracing markets for impact. But traders remain on-edge given the U.K.’s recent history with volatile bond movements, even though many macro conditions — most notably the significant cooling of inflation — are now different.
— Jenni Reid
Lufthansa shares down nearly 3%
German airline Lufthansa slipped toward the bottom of the pan-European Stoxx 600 after HSBC cut its stock rating and downgraded the company to hold from buy.
Shares of Lufthansa were down almost 3%.
The flag carrier, which reported a 9% year-on-year fall in third-quarter profit earlier in the week, has fallen more than 23% year-to-date.
— Sam Meredith
U.S. presidential election may come down to just three states, APAC Advisors CEO says
The outcome of next week’s U.S. presidential election may come down to just three states, according to Steven Okun, CEO of consultancy APAC Advisors.
Asked by CNBC’s “Squawk Box Europe” whether Tuesday’s election will likely come down to a handful of key battleground states once again, Okun said: “It’s going to be identical it looks like right now.”
“Both 2016 and 2020 came down to the same seven states. In 2016, it’s a margin of less than 80,000 votes across three states that gave the election to Trump. In 2020, it was a margin of less than 43,000 votes across three different states that gave the [election] to President Biden,” Okun said on Friday.
“It’s impossible to predict what is going to happen in so close an election when you’re talking about literally 0.03% of all votes cast. So, yes it is going to be a repeat and it’s going to be close. It’s going to be coming down to a few states, it may even come down to just three states this time,” he added.
— Sam Meredith
Oil prices rise on reports Iran preparing to strike Israel
Oil prices were higher on Friday morning, extending gains on reports Iran was preparing to launch a retaliatory strike against Israel in the coming days.
International benchmark Brent crude futures with January expiry rose 2.5% to $74.64 a barrel, while U.S. West Texas Intermediate futures with December expiry rose 2.7% to $71.14.
— Sam Meredith
Risk premium returns to the UK after landmark budget, Hargreaves Lansdown says
Rachel Reeves, UK chancellor of the exchequer, outside 11 Downing Street ahead of presenting her budget to parliament in London, UK, on Wednesday, Oct. 30, 2024.
Bloomberg | Bloomberg | Getty Images
A higher risk premium for U.K. debt has returned following a landmark budget from Britain’s Labour government, according to Susannah Streeter, head of money and markets at Hargreaves Lansdown.
U.K. bond yields spiked sharply on Thursday, extending gains from the previous session when Finance Minister Rachel Reeves unveiled a sweeping package of tax hikes and increased borrowing.
“I think what has been happening is that there has been a much deeper dig into the government finances and those forecasts from the Office for Budget Responsibility, indicating that not only will growth undershoot previous forecasts over a four-year period, but also inflation is likely to edge up because of all this extra spending,” Streeter told CNBC’s “Squawk Box Europe” on Friday.
Streeter said Thursday’s spike in government bond yields was not solely down to investor worries about an inflationary budget.
“It’s also this concern about just where all this extra investment spending will go and just how responsible the government will be in using that money. So, the risk premium has returned, to some extent, on the UK,” Streeter said.
“It isn’t anything like we saw with the Trussonomics mini budget when that spike really was high after those unfunded tax cuts came in,” she continued.
“It’s just this extra weariness that, you know, this is a big tax, this is a big spending budget [so] will government use prudence in executing its strategy? And I think that’s what bond investors want to see.”
— Sam Meredith
Maersk shares up 5%
Shares of Danish shipping giant Maersk rose more than 5% on Friday after both Barclays and JPMorgan rose their target price for the stock.
The company was among the top performers on the Stoxx 600 during early morning deals.
— Sam Meredith
Shares of Reckitt Benckiser jump 10%
Shares of U.K.-based consumer goods company Reckitt Benckiser surged more than 10% on Friday shortly after the company was cleared of liability in a preterm formula case.
The stock, which is down more than 14% year-to-date, jumped to the top of the European benchmark on the news.
— Sam Meredith
European markets open marginally higher
European markets opened slightly higher on Friday.
The pan-European Stoxx 600 traded up around 0.1% shortly after the opening bell, with sectors pointing in opposite directions.
— Sam Meredith
Britain’s annual house price growth slows in October
A pedestrians looks at residential properties displayed for sale in the window of an estate agents’ in Windsor, west of London.
Justin Tallis | Afp | Getty Images
U.K. house prices rose 2.4% on an annualized basis in October, mortgage lender Nationwide said on Friday, reflecting a weaker increase than September’s growth of 3.2%.
The building society said house prices rose 0.1% on a monthly basis in October, down from a 0.6% increase in the month prior.
“Housing market activity has remained relatively resilient in recent months, with the number of mortgage approvals approaching the levels seen pre-pandemic, despite the significantly higher interest rate environment,” Robert Gardner, chief economist at Nationwide, said in a statement.
“Solid labour market conditions, with low levels of unemployment and strong income gains, even after taking account of inflation, have helped underpin a steady rise in activity and house prices since the start of the year,” he added.
— Sam Meredith
U.S. jobs data ‘absolutely key’ to Fed decision-making, investment officer says
A jobseeker holds flyers during the New York Public Library’s annual Bronx Job Fair & Expo at the the Bronx Library Center in the Bronx borough of New York, US, on Friday, Sept. 6, 2024.
Yuki Iwamura | Bloomberg | Getty Images
The release of U.S. jobs data on Friday is “absolutely key” to the Federal Reserve’s decision-making ahead of the central bank’s meeting next week, according to Isabel Albarran, investment officer at Close Brothers Asset Management.
Speaking to CNBC’s “Squawk Box Europe” on Friday, Albarran said it was “very difficult” to make the case for another jumbo interest rate cut of 50 basis points when Fed policymakers meet on Nov. 6-7.
“Labor market data remains absolutely key to Fed decision-making,” Albarran said.
“I think the great news has been that initial jobless claims have been so much stronger than people had expected given the magnitude of the storm season but, as you mentioned, we have had that strike action, so this could be a little bit of a softer print,” she added, referring to hurricanes Helene and Milton and the strike at Boeing.
“I think the Fed are going to be relatively sanguine about that given how much resilience we have seen in broader economic data coming out of the U.S. though,” Albarran said.
— Sam Meredith
CNBC Pro: Wealth manager for the super-rich names 3 stocks to buy before the year-end
Equity markets rallied this year, as investors remained bullish on Big Tech but also scooped up shares in under-the-radar companies.
CNBC Pro touched base with Kevin Teng, CEO of Wrise Private Singapore, for his take on the stocks he favored at the start of the year, as well as names he’s betting on before the year’s end.
The wealth manager — whose firm serves ultra-high-net-worth individuals across Asia, the Middle East and Europe — revealed his three stock picks, including two under-the-radar names.
CNBC Pro subscribers can read more here on the three stocks he’s betting on now.
— Amala Balakrishner
European markets: Here are the opening calls
European markets are expected to open mixed on Friday.
The U.K.’s FTSE 100 is poised to open 8 points higher at 8,113, Germany’s DAX 6 points higher at 19,060, France’s CAC up 8 points at 7,342 and Italy’s FTSE MIB down 22 points at 34,008, according to data from IG.
It comes shortly after European stocks closed lower on Thursday, ending October with its steepest loss for year as investors weighed a flurry of corporate earnings, inflation data and a landmark U.K. budget.
— Sam Meredith