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London open: Stocks dip after World Bank warning; Sainsbury’s in the red
London stocks fell in early trade on Wednesday following a downbeat growth forecast from the World Bank, and as investors eyed the latest US inflation data this week.
At 0830 GMT, the FTSE 100 was down 0.2% at 7,668.49.
Sentiment took a hit after the World Bank warned the global economy was on course for the weakest growth since the pandemic.
In its latest ‘Global Economic Prospects’ report, the Bank said global growth was expected to slow to 2.4% in 2024 from 2.6% a year earlier.
World Bank chief economist and senior vice president Indermit Gill said: “Without a major course correction, the 2020s will go down as a decade of wasted opportunity.”
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “With the World Bank forecasting that geo-political crises will drag global growth back to the slowest pace since the pandemic, there is little momentum for the internationally focused FTSE 100.
“The Bank is forecasting that trade and investment will also be stifled by conflict. Although oil has ticked back up with supply issues rearing up again amid fears the Gaza-Israel war will escalate, metals prices have largely fallen back, putting pressure on mining stocks.”
In equity markets, Sainsbury’s slumped despite holding full-year profit guidance and saying that strong volume growth had helped lift Christmas grocery sales by 8.6%.
CMC Markets analyst Michael Hewson noted that there had been a fair degree of optimism over pre-Christmas trading numbers for the major supermarkets in the lead-up to the latest retail updates this week.
“In truth there may have been a little too much optimism with Sainsbury share price pushing up to its highest levels since August 2021 yesterday, while Tesco has also seen strong gains in the past few months its shares pushing up to 1-year highs last week,” he said.
“All in all, today’s numbers are a solid performance however markets had been expecting a little bit more given recent declines in the cost of living and the big jump in UK retail sales seen in November.”
Elsewhere, Persimmon rallied as the housebuilder beat guidance on new home completions in 2023 after a decent fourth quarter, and said it hade entered 2024 in a strong position with private forward sales ahead of last year.
New home completions totalled 9,922 last year, down 33% on 2022 on the back of challenging market conditions with the whole industry being impacted heavily by rising mortgage rates. However, that was ahead of the 9,500 target given in November.
Greggs surged as it backed its full-year guidance and posted a jump in fourth-quarter sales, with seasonal lines in high demand.
In broker note action, Intertek gained after an upgrade to ‘outperform’ at RBC Capital Markets.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Persimmon Plc | +3.70% | +51.50 | 1,443.00 |
| 2 |  |
Intertek Group Plc | +1.60% | +67.00 | 4,263.00 |
| 3 |  |
Informa Plc | +1.36% | +10.60 | 789.60 |
| 4 |  |
Berkeley Group Holdings (the) Plc | +1.36% | +65.00 | 4,851.00 |
| 5 |  |
Anglo American Plc | +1.29% | +23.60 | 1,847.40 |
| 6 |  |
Segro Plc | +1.15% | +10.00 | 879.40 |
| 7 |  |
Barratt Developments Plc | +1.14% | +6.20 | 551.00 |
| 8 |  |
St. James’s Place Plc | +1.11% | +7.00 | 640.20 |
| 9 |  |
3i Group Plc | +1.10% | +25.00 | 2,305.00 |
| 10 |  |
Taylor Wimpey Plc | +0.99% | +1.45 | 147.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Sainsbury (j) Plc | -4.84% | -14.80 | 291.10 |
| 2 |  |
Admiral Group Plc | -3.31% | -90.00 | 2,632.00 |
| 3 |  |
Ashtead Group Plc | -1.81% | -90.00 | 4,892.00 |
| 4 |  |
Marks And Spencer Group Plc | -1.78% | -5.10 | 281.20 |
| 5 |  |
Dcc Plc | -1.68% | -96.00 | 5,604.00 |
| 6 |  |
Bhp Group Limited | -1.67% | -42.50 | 2,500.50 |
| 7 |  |
Hikma Pharmaceuticals Plc | -1.58% | -30.00 | 1,864.50 |
| 8 |  |
Direct Line Insurance Group Plc | -1.53% | -2.75 | 176.80 |
| 9 |  |
Mondi Plc | -1.43% | -21.50 | 1,479.50 |
| 10 |  |
Flutter Entertainment Plc | -1.35% | -180.00 | 13,135.00 |
US close: Stocks mostly lower as nerves kick in ahead of CPI, earnings
US stocks finished mostly lower on Tuesday with the Dow falling for the first time in four sessions as investors took profits ahead of a crucial inflation report and the start of earnings season later in the week.
The Dow declined 0.4% but remains close to its record high, while the S&P 500 finished 0.2% lower, pulling back after its biggest one-day gain in two months. The Nasdaq, however, inched 0.1% higher.
“Most major global stock indices couldn’t capitalise on Monday’s tech-driven rally and instead consolidated ahead of Thursday’s US CPI release and the start of US Q4 earnings season on Friday,” said Axel Rudolph, senior market analyst at IG. “Real estate, materials, industrials and utilities were the worst performing sectors amid ongoing sector rotation despite the US small business and economic optimism indices edging higher.”
The National Federation of Independent Business’ small business optimism index hit 91.9 in December, its highest reading in five months, compared to 90.6 in November and beating consensus expectations for a reading of 90.7. However, 23% of small business owners said inflation was still their single most important problem in operating their business, up one point from the prior month.
In other economic news, the US trade deficit unexpectedly fell by 2% to $63.2bn in November as imports slid, with the economy on track to register its smallest annual deficit in 2023 for three years. The forecast was for a rise to $65bn, from a revised $64.5bn the month before.
Comments from Federal Reserve governor Michelle Bowman were also in focus on Tuesday after she said the central bank’s interest rate hikes were likely over with but also warned that she was not ready to begin trimming just yet. Bowman highlighted the Fed’s progress on reining in inflation through tight policy and said: “Based on this progress, my view has evolved to consider the possibility that the rate of inflation could decline further with the policy rate held at the current level for some time.”
Also drawing an amount of investor attention, US politicians struck a 2024 spending deal on Monday, seemingly avoiding a government shutdown and pulling the yield on the benchmark ten-year Treasury note back over the 4% line.
Juniper Networks and Match Group jump
Shares in Juniper Networks surged over 20% following a report that Hewlett Packard Enterprise is close to striking a $13bn deal to buy the network gear maker. According to The Wall Street Journal, HPE is in advanced talks with Juniper and a deal could be announced as early as this week. HP, however, saw shares drop nearly 9%.
Match Group shares rose strongly following a Wall Street Journal report that Elliott Investment Management has taken a significant stake in the online dating company thought to be worth $1bn. In a report late on Monday, the WSJ said activist investor Elliott intends to push for changes to boost its stock.
Microsoft edged higher despite the news that the European Commission announced it was looking into competition within virtual worlds and generative artificial intelligence. The EC said it was examining agreements made between major digital market players and generative AI developers/providers to gauge their impact on market dynamics, and added that a review was underway to assess whether Microsoft’s investment in OpenAI complied with the EU Merger Regulation.
Wednesday newspaper round-up: Post Office, Danone, Ryanair
MPs have called in bosses from Fujitsu to answer questions in parliament about the company’s role in the Post Office scandal. The Commons business and trade select committee has asked the company to take part in an evidence session in a week’s time after an ITV drama helped put the miscarriage of justice back in the spotlight. – Guardian
The baby milk seller Danone has agreed to cut the wholesale price of its Aptamil infant powdered formula by 7% from Monday after the UK’s competition watchdog launched an investigation into high inflation in the market. The French company, which also owns the Cow & Gate brand, accounts for 71% of the baby formula market in the UK, where manufacturers have been found by the Competition and Markets Authority (CMA) to have raised prices by 25% in two years. – Guardian
Former chancellor George Osborne’s family wallpaper and fabric business has blamed inflation and soaring interest rates for a 98pc collapse in its pre-tax profits. Osborne & Little, a wallpaper and fabric business co-founded by the former chancellor’s father, saw its pre-tax profits slump to £30,000 in the year to March 31 2023, down from £1.5m the year before. – Telegraph
The Abu Dhabi investor bidding to take over the Telegraph broke promises of editorial independence at the Arabic business channel that it launched in partnership with CNN, it has been claimed. International Media Investments (IMI) is seeking to take control of the Telegraph titles in a bid fronted by Jeff Zucker, the former president of CNN, and has promised to maintain editorial freedoms to secure clearance from the UK government. – The Times
Michael O’Leary, chief executive of Ryanair, has warned that the airline’s profits will be hit and passenger fares will rise amid manufacturing woes at Boeing and Airbus. Both manufacturers are struggling to meet demand amid a worldwide shortage of planes. Boeing faces a further problem after a part fell off one of its 737-9 Max aircraft during an Alaska Airlines flight last week, while United Airlines discovered loose bolts on its 737-9 Max aircraft during subsequent inspections. – The Times
