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London open: Stocks tick up but recruiters slump after Hays profit warning
London stocks edged up in early trade on Tuesday following solid gains on Wall Street, but recruiters were under the cosh after a profit warning from Hays.
At 0835 GMT, the FTSE 100 was up 0.2% at 7,709.23.
Richard Hunter, head of markets at Interactive Investor, said: “The next leg of the interest rate debate will follow later in the week, with the release of the [US] consumer price index reading on Thursday and the producer price index on Friday.
“Investors will be keen to see whether there is further progress towards the Fed’s 2% stated aim, or indeed whether the last mile towards hitting the target will be the hardest, as some fear.
“At the same time, the full-year reporting season will begin in earnest on Friday, as some of the major banks unveil their latest trends, where focus will turn towards the likes of any increase in consumer impairments, shareholder returns, the progress of deal-making activity and the outlook for the coming quarters.”
On home shores, industry data showed that retailers ended 2023 on the back foot despite a modest uptick in demand in the week leading up to Christmas.
According to the latest BRC-KPMG Retail Sales Monitor, UK total sales increased by just 1.7% in the five weeks to 30 December, compared to a 6.9% rise a year previously.
The increase was below the three-month average of 2.3%, and the 12-month average of 3.6%.
December is the most important month of the year for many retailers, as consumers splash out on homewares, presents and festive food.
Helen Dickinson, chief executive of the British Retail Consortium, said there had been a “slight” uptick in the week leading up to Christmas.
But she added: “The festive period failed to make amends for a challenging year of sluggish retail sales growth, as weak consumer confidence continue to hold back spending.
“The post-Christmas sales were unsuccessful in enticing spend in areas such as furniture and homewares, with households remaining cautious about making larger purchases.
“2024 looks to be another challenging year for retailers and their customers, and spending will continue to be constrained by high living costs.”
In equity markets, GSK gained as it announced the acquisition of Aiolos, a clinical-stage biopharmaceutical company focused on treatment of respiratory and inflammatory conditions, for up to $1.4bn.
B&M European Value Retail was in the red even as it reiterated full-year guidance, declared a special dividend and posted a 5% jump in third-quarter sales. The discount retailer said it still expects group adjusted EBITDA of between £620m and £630m for FY24, up from £573m a year earlier.
Recruiter Hays tumbled as it warned on profits after a hiring slowdown in December. In an update for the three months to the end of December, the company said group net fees were down 10%, having fallen 15% in December.
As a result, and despite ongoing actions to reduce costs, the recruiter now expects first-half pre-exceptional operating profit of around £60m, which is below consensus expectations of around £73m.
Fellow recruiters PageGroup and SThree also lost ground.
Jupiter Fund Management suffered heavy losses as it warned that net outflows for 2023 would be higher than expected.
Warhammer maker Games Workshop fell even as it posted a sharp jump in half-year profits driven by the launch of new products and said the company was “in great shape”.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Scottish Mortgage Investment Trust Plc | +1.44% | +11.00 | 773.40 |
| 2 |  |
Bae Systems Plc | +1.09% | +12.50 | 1,157.50 |
| 3 |  |
Smith & Nephew Plc | +0.93% | +10.00 | 1,080.50 |
| 4 |  |
Rolls-royce Holdings Plc | +0.92% | +2.80 | 308.00 |
| 5 |  |
Bp Plc | +0.86% | +3.95 | 465.40 |
| 6 |  |
Coca-cola Hbc Ag | +0.69% | +16.00 | 2,337.00 |
| 7 |  |
Gsk Plc | +0.58% | +9.00 | 1,558.00 |
| 8 |  |
Astrazeneca Plc | +0.50% | +54.00 | 10,826.00 |
| 9 |  |
Hikma Pharmaceuticals Plc | +0.40% | +7.50 | 1,869.50 |
| 10 |  |
Sse Plc | +0.30% | +5.50 | 1,865.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Persimmon Plc | -1.99% | -29.00 | 1,425.00 |
| 2 |  |
3i Group Plc | -1.64% | -38.00 | 2,281.00 |
| 3 |  |
Kingfisher Plc | -1.51% | -3.50 | 227.60 |
| 4 |  |
Rio Tinto Plc | -1.28% | -73.00 | 5,612.00 |
| 5 |  |
Barratt Developments Plc | -1.27% | -7.00 | 546.20 |
| 6 |  |
Experian Plc | -1.24% | -39.00 | 3,106.00 |
| 7 |  |
Bhp Group Limited | -1.15% | -29.50 | 2,544.00 |
| 8 |  |
Standard Chartered Plc | -1.14% | -7.40 | 642.60 |
| 9 |  |
Rightmove Plc | -1.11% | -6.20 | 553.60 |
| 10 |  |
Marks And Spencer Group Plc | -1.10% | -3.20 | 287.30 |
US close: Tech rally drives gains as S&P 500 nears record high
Huge gains from tech stocks and falling oil prices and bond yields ignited stocks on Monday, with the S&P 500 coming within 36 points of its all-time closing high.
The S&P 500 finished 1.4% or 66 points higher at 4,764 by the close, inching closer to the record level of 4796.56 reached in January 2022. The Nasdaq meanwhile surged 2.2% to 14,844, though the Dow rose only 0.6% to 37,683, held back by a heavy fall from aircraft maker Boeing.
Economic data was thin on the ground on Monday, though things will pick up later in the week with the consumer price index (CPI) due out on Thursday. The yield on a 10-year US Treasury was at 4.027% by the close, but dipped below the 4% level earlier on, compared with a previous close of 4.046%.
Oil stocks were hit as major producer Saudi Arabia cut prices across the board, sending benchmark crude sharply lower on Monday. Brent crude was down 3.91% to $75.68 a barrel, while West Texas Intermediate fell 4.46% to $70.52.
Producer Saudi Aramco cut the official selling price for its flagship Arab Light crude to a $1.50-a-barrel premium to the regional benchmark for February, its lowest level since November 2021. The $2-a-barrel reduction was bigger than expected.
Chris Beauchamp, chief market analyst at IG, said the oil-price slump “helped the mood” on Wall Street by raising hopes that inflation will continue to ease.
“Friday’s post-[jobs report] bounce struggled to maintain momentum into the weekend, but with oil prices slumping again traders have managed to rediscover their bullish mood. Saudi Arabia’s move to reduce the official selling price for oil sends worrying signals for the crude market, but stocks will be grateful for any sign that inflation will keep abating,” Beauchamp said.
“But the pending US CPI figure and upcoming earnings means inflows could remain limited for the time being.”
This week will see the start of fourth-quarter earnings season in the US with banking giants JPMorgan Chase, Bank of America, Citigroup and Wells Fargo all due to unveil their latest figures on Friday.
Boeing tanks, tech stocks jump
Aircraft manufacturer Boeing shares were in free fall after the US aviation watchdog said 171 Boeing 737 Max 9 planes would remain grounded until it was satisfied that the planes were safe. The Federal Aviation Administration’s investigation into the jets comes after part of an Alaska Airlines plane’s fuselage fell off on Friday.
In contrast, American Airlines was flying higher after Morgan Stanley analysts lifted their rating on the stock from ‘equal weight’ to ‘overweight’, following a “decent” holiday season. The stock was also helped by the fact that it doesn’t have any Boeing 737 Max 9 aircraft in its fleet.
Tech stocks were performing well, rebounding after driving much of last week’s declines. Apple, Salesforce, Intel, IBM and Microsoft were all putting in decent gains.
Oil stocks underperformed the wider market with Chevron one of only the six stocks on the Dow to register losses as oil prices fell. Exxon Mobil and Devon Energy also declined.
Johnson & Johnson rose strongly after agreeing to buy clinical-stage biopharmaceutical company Ambrx for around $2bn. J&J said the planned acquisition presents a distinct opportunity for it to design, develop and commercialise targeted oncology therapeutics.
Tuesday newspaper round-up: Post Office, Barclays, income tax revenues
Ministers have drawn up urgent plans to clear the names of hundreds of post office operators who were wrongly convicted of theft and fraud in the Horizon IT scandal as the government scrambled to get on the front foot over the major miscarriage of justice. The justice secretary, Alex Chalk, will hold talks with the senior judiciary to confirm how the convictions can be overturned as soon as possible, so victims can have speedier access to millions of pounds of compensation. – Guardian
The top director responsible for safety and security at Sellafield is to leave the vast nuclear waste dump in north-west England, it has emerged. Mark Neate, the Sellafield environment, safety and security director, is to leave the organisation later this year. – Guardian
Barclays cut its workforce by around 5,000 last year as part of an ongoing push to strip costs from the lender. The bank confirmed the size of the job losses for the year ending December 2023 after reports emerged that it was planning to cut 2,000 jobs in a £1bn cost-cutting drive. Investors are awaiting an update in February from chief executive CS Venkatakrishnan, also known as Venkat, which could lay out further cost reduction plans. – Telegraph
Income tax revenues have leapt by more than 70 per cent since 2010 to £264 billion, illustrating the sharp rise in the tax burden overseen by successive Conservative administrations since the party came to power more than a decade ago. Analysis of figures from HM Revenue & Customs by The Times revealed that Rishi Sunak and Jeremy Hunt have been raising income tax receipts without actually lifting headline rates. – The Times
The American entertainment group that was backing a 21,500-capacity Sphere venue in east London has pulled the plug on the project after claiming it had become a “political football” between the government and the mayor of London. Sphere Entertainment has withdrawn its planning application for the “glowing orb” near the Olympic Park in Stratford, saying that the process had descended into a turf war between Sadiq Khan and Michael Gove, the levelling-up secretary. – The Times
