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London open: Stocks little changed as investors digest GDP
London stocks were little changed in early trade on Friday as investors digested better-than-expected UK GDP data.
At 0840 GMT, the FTSE 100 was down 0.1% at 7,554.28, while sterling was up 0.2% against the dollar at 1.3733.
According to figures released earlier by the Office for National Statistics, the economy recovered to above pre-pandemic levels in November.
GDP grew 0.9%, up from 0.2% in October and coming in ahead of expectations for 0.4% growth. That left the economy 0.7% above its level in February 2020, just before the first wave of the pandemic hit.
ONS chief economist Grant Fitzner said: “The economy grew strongly in the month before Omicron struck with architects, retailers, couriers and accountants having a bumper month.
“Construction also recovered from several weak months, as many raw materials became easier to get hold of.
“This meant that monthly GDP exceeded its pre-pandemic level for the first time in November.”
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said that “with Omicron expected to be a short sharp shock rather than a lingering malaise, this November snapshot is likely to be taken as more evidence that once infection rates subside the economy will be in good enough shape to withstand further interest rate rises, to keep a lid on soaring inflation”.
“However, there are also indications that supply chain snarl ups may have eased, with car output rising and construction materials reportedly easier to source, which could help limit the rise in prices to some extent.”
In equity markets, electricals retailer Currys slumped after it reported a fall in sales over the peak Christmas period as a tough comparator year, uneven customer demand and supply disruption hit revenues.
Credit-checking firm Experian lost ground even as it posted a 14% rise in third-quarter revenue, driven by growth across all geographical units as it lifted annual guidance.
Discount retailer B&M European Value Retail was under the cosh after SSA Investments sold 40m shares in the company – a 4% stake – in a placing.
On the upside, Cineworld gained after saying it had successfully generated positive cash flow in the fourth quarter of 2021 thanks to steady growth in performances and attendances over the period.
Housebuilder Berkeley Group was lifted by an upgrade to ‘buy’ from ‘hold’ at Deutsche Bank.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Berkeley Group Holdings (the) Plc | +2.27% | +102.00 | 4,588.00 |
| 2 |  |
Standard Chartered Plc | +1.60% | +8.20 | 519.60 |
| 3 |  |
Relx Plc | +1.37% | +30.00 | 2,216.00 |
| 4 |  |
3i Group Plc | +1.35% | +19.00 | 1,426.50 |
| 5 |  |
Associated British Foods Plc | +1.18% | +25.00 | 2,135.00 |
| 6 |  |
Barratt Developments Plc | +1.17% | +8.00 | 692.80 |
| 7 |  |
Bp Plc | +0.92% | +3.55 | 387.45 |
| 8 |  |
United Utilities Group Plc | +0.90% | +9.50 | 1,064.00 |
| 9 |  |
Barclays Plc | +0.74% | +1.60 | 218.70 |
| 10 |  |
National Grid Plc | +0.71% | +7.60 | 1,074.20 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Marks And Spencer Group Plc | -2.96% | -6.90 | 226.10 |
| 2 |  |
Scottish Mortgage Investment Trust Plc | -2.58% | -30.50 | 1,150.00 |
| 3 |  |
Experian Plc | -1.78% | -56.00 | 3,097.00 |
| 4 |  |
Croda International Plc | -1.75% | -150.00 | 8,442.00 |
| 5 |  |
Rolls-royce Holdings Plc | -1.44% | -1.84 | 125.86 |
| 6 |  |
Rightmove Plc | -1.41% | -10.20 | 715.40 |
| 7 |  |
Tui Ag | -1.31% | -3.40 | 255.80 |
| 8 |  |
Halma Plc | -1.26% | -35.00 | 2,745.00 |
| 9 |  |
Ocado Group Plc | -1.05% | -16.00 | 1,503.00 |
| 10 |  |
Burberry Group Plc | -0.97% | -17.00 | 1,734.50 |
Europe open: Shares edge lower on hawkish Fed comments
European shares fell at the opening on Friday after US central bank officials signalled rate rises were on the way as inflationary worries persisted.
The pan-European Stoxx 600 shed was down 0.6% in early deals. Federal Reserve Governor Lael Brainard overnight said rates would rise in March to combat inflation.
In the UK, official data showed GDP grew 0.9%, up from 0.2% in October – ahead of expectations for 0.4% growth. That left the economy 0.7% above its level in February 2020, just before the first wave of the pandemic hit.
On the equities front, energy group EDF plunged 23.4% after France ordered the state-controlled firm to sell more of its cheap nuclear power to smaller competitors to limit the increase of electricity prices in the country.
EDF said the order could cost it up to €8.4bn. It also lowered earnings guidance and nuclear production forecasts after technical problems forced it to extend the outage of a fifth nuclear reactor.
B&M Value Retail shares fell after SSA Investments sold 40m shares in the company – a 4% stake – via a placing.
Shares in German business software maker SAP were up as the company said fourth-quarter revenue from its cloud computing business jumped 28%.
Silicon specialist Wacker Chemie jumped 3.8% after reporting 2021 earnings were above expectations.
US close: Nasdaq slide leads Wall Street weaker
Wall Street stocks closed in the red on Thursday, with Big Tech names on the slide, as investors digested December’s producer price index and this week’s jobless claims figures.
At the close, the Dow Jones Industrial Average was down 0.49% at 36,113.62 and the S&P 500 was off 1.42% at 4,659.03, while the Nasdaq Composite slid 2.51% to 14,806.81.
The Dow closed 176.7 points lower on Thursday, reversing gains recorded following the publication of December’s consumer price index in the previous session.
“It is rare to see the Nasdaq under so much pressure compared to other indices, but the continued pricing in of tighter policy points towards an ongoing move away from high-valuation growth names and towards less-exalted sectors,” said IG chief market analyst Chris Beauchamp.
“Such a move should benefit the FTSE 100 overall, with its focus on raw materials firms that are less sensitive to inflation worries and on banks, where higher rates will come as a welcome change.”
Thursday’s primary focus was the publication of the Labor Department’s weekly jobless claims report and the December producer price index.
On the jobless front, claims for unemployment benefits unexpectedly jumped in the seven days ended 8 January but still remained low by historic standards and broadly in line with the pre-pandemic average of around 220,000.
According to the Labor Department, initial jobless claims totalled 230,000 last week, well ahead of estimates for a print of 200,000 and the previous week’s unrevised total of 207,000.
The four-week moving average, which levels out volatility in the numbers, came to 211,000, up 6,300 week-on-week, while continuing claims, which run a week behind the headline number, declined to 1.55m from the previous week’s revised print of 1.75m.
“The jobless claims numbers are plagued by seasonal adjustment problems before, during and after the holiday season,” said Pantheon Macroeconomics‘ Ian Shepherdson.
“The speed of the drop in claims in November was flattered by favourable seasonals, and the payback is evident in the recent numbers.”
Shepherdson said the seasonal issues would likely persist for “another week or two”, after which he saw claims dropping towards new cycle lows.
“The trend is heading south, just not as quickly as the data late last fall appeared to suggest.”
Turning to the producer price index, wholesale prices in the US increased less quickly than expected last month as food and energy prices slipped.
According to the Labor Department, so-called final demand prices edged up at a month-on-month pace of 0.2%, pushing the annual rate of gains one-tenth of a percentage point lower to 9.7%.
Total final demand prices for goods dropped by 0.4% in comparison to December, but outside of food and energy were up by 0.5%., while final demand services’ prices were 0.5% higher, mainly due to a 1.7% jump in transportation and warehousing costs.
In equities, Delta Air Lines ascended 2.12% after it beat expectations on fourth quarter revenue and adjusted profit, while Boeing rose 2.97% amid reports its contentious 737 MAX narrowbody jet could get the nod to resume flying in China shortly.
Housebuilder KB Home rocketed 16.52% after it met forecasts on fourth quarter sales, and beat them on profits, as it cited an “extremely challenging” operating environment amid “healthy demand” for its homes.
On the downside, cinema operator AMC Entertainment was 9.07% lower after chief executive Adam Aron tweeted that he sold 312,500 shares in the popular meme stock.
Investors were also preparing themselves for the beginning of the fourth-quarter earnings season, with BlackRock, JP Morgan Chase, Citigroup and Wells Fargo all scheduled to report on Friday.
Friday newspaper round-up: Energy prices, Google, Ofcom, TPG
The global surge in demand for energy could spark another three years of market volatility and record power plant pollution unless countries make major changes to how they generate electricity, the world’s energy watchdog has warned. The International Energy Agency recorded the steepest ever increase in electricity demand last year, which triggered blackouts in major economies and led to historic energy price highs and record emissions. – Guardian
Google has announced a $1bn (£871m) deal to buy the London development Central Saint Giles, calling the move a show of confidence in the return to more office working. The US tech firm currently rents space in the brightly coloured development designed by the architect Renzo Piano, which is located in the centre of the capital, near Oxford Street. – Guardian
The chairman of BT’s network arm Openreach has emerged as the frontrunner in the race to oversee Ofcom, in a process being led by Sue Gray even as she investigates parties in Downing Street. Mike McTighe has applied to head up the board at the media and telecoms regulator after previous attempts by Boris Johnson to install Paul Dacre, the former editor of the Daily Mail, triggered a political storm.- Telegraph
Jaguar has reported a collapse in sales, including of the I-Pace, its sole zero-emission vehicle. The company, which aims to be Britain’s leading electric carmaker, delivered only 14,400 vehicles in the fourth quarter of last year, 48 per cent down on the final three months of 2020 and 25 per cent lower than the third quarter of 2021. – The Times
One of America’s most prominent private equity firms landed on the public markets with a bang yesterday, with its shares jumping by 15 per cent after its initial public offering. TPG was valued at more than $10 billion by a robust flotation that is likely to reassure investors trying to gauge the mood on Wall Street towards new company listings. – The Times
