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London open: Stocks gain ahead of US inflation; Tesco, M&S in focus
London stocks rose in early trade on Thursday following gains in the US and Asia, with supermarkets in focus after trading updates from Tesco and Marks & Spencer.
At 0830 GMT, the FTSE 100 was up 0.4% at 7,683.50, as investors eyed the US consumer price index for December at 1330 GMT.
CMC Markets analyst Michael Hewson said the inflation numbers have the potential to either add to the expectation of a rate cut in March, or push it out until later in the year, “with expectations of a tick higher to 3.3%, even as lower gasoline prices exert a loosening of financial conditions to the US consumer”.
In equity markets, Antofagasta was the standout gainer on the FTSE 100 after an upgrade to ‘outperform’ from ‘sector perform’ at RBC Capital Markets, which hiked its price target on the stock to 1,800p from 1,300p. It pointed out that a rapid tightening in expected copper supply has brought forward a medium-term bull market.
Premier Inn owner Whitbread advanced as it maintained full-year guidance after a strong rise in accommodation sales during the third quarter, with momentum continuing into the final three months of the financial year.
Tesco gained as it lifted its profit guidance for the full year and delivered an impressive set of third-quarter results, with sales growth picking up sharply during the key Christmas trading period.
Taylor Wimpey nudged higher as the housebuilder said full-year profits would be towards the top of guidance but also cautioned that market remains “uncertain” despite a recent reduction in mortgage rates.
Marks & Spencer was in the red, however, after saying it was set to deliver annual results in line with expectations and reporting an 8.1% rise in sales of the Christmas quarter but warning over higher costs.
Richard Hunter, head of markets at Interactive Investor, said: “The initial share price reaction to the update contains an element of inevitable profit taking after what has been a blistering share price performance, culminating in the group’s return to the FTSE 100 in September.
“In addition, and from here on in, expectations and indeed comparatives are likely to become tougher, although at these levels the shares are not looking especially expensive based on historic valuations. This follows a meteoric rise of 97% in the share price over the last year, as compared to a dip of 0.9% for the wider FTSE 100. The more recent upgrade of the market consensus to a buy is also reflective that investors still have high hopes for a recovery story which is clearly in place.”
Trustpilot surged as it announced the launch of a share buyback of up to £20m and said 2023 adjusted underlying earnings were set to be above the top end of market expectations.
Direct Line and Admiral were in focus again, having tumbled on Wednesday amid speculation of a potential clampdown on premium finance. The Financial Conduct Authority said earlier that it has launched an investigation into historical commission agreements at motor finance companies after it found that they were rejecting most of the complaints received.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Easyjet Plc | +3.14% | +16.00 | 525.20 |
| 2 |  |
Antofagasta Plc | +2.08% | +33.00 | 1,616.00 |
| 3 |  |
Anglo American Plc | +1.92% | +35.00 | 1,858.20 |
| 4 |  |
Johnson Matthey Plc | +1.86% | +30.00 | 1,644.50 |
| 5 |  |
Scottish Mortgage Investment Trust Plc | +1.57% | +12.20 | 790.20 |
| 6 |  |
Fresnillo Plc | +1.49% | +7.80 | 532.00 |
| 7 |  |
Legal & General Group Plc | +1.48% | +3.70 | 253.10 |
| 8 |  |
Halma Plc | +1.47% | +32.00 | 2,209.00 |
| 9 |  |
Whitbread Plc | +1.46% | +52.00 | 3,602.00 |
| 10 |  |
Hikma Pharmaceuticals Plc | +1.43% | +27.00 | 1,917.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Marks And Spencer Group Plc | -4.79% | -13.30 | 264.40 |
| 2 |  |
Informa Plc | -3.41% | -26.80 | 758.40 |
| 3 |  |
Wpp Plc | -1.90% | -14.40 | 745.00 |
| 4 |  |
Rolls-royce Holdings Plc | -1.58% | -4.90 | 304.30 |
| 5 |  |
Barclays Plc | -1.48% | -2.26 | 150.38 |
| 6 |  |
Ocado Group Plc | -1.28% | -8.80 | 677.00 |
| 7 |  |
Associated British Foods Plc | -1.16% | -27.00 | 2,309.00 |
| 8 |  |
Itv Plc | -1.06% | -0.66 | 61.78 |
| 9 |  |
Sse Plc | -1.05% | -19.50 | 1,843.50 |
| 10 |  |
Severn Trent Plc | -0.73% | -19.00 | 2,601.00 |
US close: Markets gain ahead of CPI data, Meta leads tech stocks higher
After a tentative start, US stocks finished with decent gains on Wednesday with the S&P 500 inching ever closer to its record high, though market sentiment was still cautious ahead of latest inflation figures due out the following session.
The Dow finished 0.5% higher, the Nasdaq rose 0.8%, while the S&P 500 gained 0.6% to 4,783.45, just a handful of points away from the all-time high of 4,796.56 reached in January 2022.
Investors were looking ahead to the latest consumer price index report, due out on Thursday, with economists expecting to see CPI rising 3.2% year-on-year in December, up from 3.1% the month before. Core inflation, however, is expected to ease to 3.8% from 4.0%.
Market participants will thumb over the data in search of any hints as to exactly when the central bank may see fit to start cutting interest rates, with expectations being reeled back in recent days.
“An upside surprise has the potential to undermine the narrative of an early Fed rate cut, as well as pushing yields back up again,” said analyst Michael Hewson from CMC Markets.
On a similar vein, New York Fed president John Williams said rates could need to stay elevated “for some time” until inflation comes closer to the Fed’s 2% target. “We still have a ways to go,” he said in a speech on Wednesday.
In other news, 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.
Meanwhile, US mortgage application volume rose 9.9% in the week ended 5 January, according to the Mortgage Bankers Association, the biggest increase in a year. Applications to refinance a home loan surged 19% week-on-week and were 30% higher year-on-year, while applications for a mortgage to purchase a home rose 6% week-on-week but were 16% lower than at the same time a year ago.
Meta leads tech stocks higher
Retailers and tech stocks were leading the risers on Wednesday, with Home Depot, Microsoft, Walmart, Salesforce, IBM and Apple among the best performers on the Dow.
Meta shares rose 3.7% to hit their highest level in over two years after positive comments from analysts at Mizuho Financial Group, which hiked its target price for the shares from $400 to $470, up from $370.47 by the close. Mizuho said the market’s current revenue growth forecast for 2024 “appears conservative, considering tailwinds from product improvements, increased engagement (AI content distribution), and rising demand of Chinese advertisers”.
Intuitive Surgical was a high riser, jumping over 10% after the medtech company beat forecasts with its fourth-quarter results due to a rise in surgeries using its robotic device da Vinci.
Thursday newspaper round-up: Post Office, Boeing, Darktrace
Pressure is mounting on the government to review more than £2bn in new contracts awarded to Fujitsu since a court ruling in 2019 found its Horizon IT system caused accounting errors that were blamed on more than 900 post office operators who were then wrongly prosecuted by the Post Office. The Japanese company, which continues to hold the prestigious status of being a key “strategic supplier” making more than £100m annually from government work despite the scandal, has won 101 new contracts worth £2.04bn since the landmark legal ruling. – Guardian
The US transportation secretary announced on Wednesday afternoon that no grounded Boeing 737 Max 9 would return to service “until it is safe”, after Alaska Airlines announced the cancellation of all flights on its 737 Max 9 planes at the direction of the Federal Aviation Administration. Pete Buttigieg said he was “not putting a timeline” on when the FAA will allow the planes to resume flights. – Guardian
Funds that allow Bitcoin to be traded more easily have been approved for the first time by Wall Street’s regulator in a hotly anticipated move. The Securities and Exchange Commission (SEC) announced on Wednesday evening that it had authorised the trading of a number of Bitcoin exchange traded funds, while refusing to endorse them as a good investment. – Telegraph
Poppy Gustafsson, the boss of Darktrace, looks set to face fresh questions about more than 100 deals she was involved with while working in the accounts department at Autonomy, as she is drawn into the US criminal trial of Mike Lynch, the Cambridge technology entrepreneur. The deals include multimillion-dollar transactions with household names including JP Morgan, BP, Deutsche Bank and Tottenham Hotspur FC in a far more extensive list put forward by the prosecution than the 21 deals originally outlined last October. – The Times
The boss of a company that helps to fund charities has attacked a legal system that allows Sir Stelios Haji-Ioannou to bring endless “bullying” lawsuits. James Moir, the chief executive of easyfundraising, said his business had been served with a “ludicrous” High Court claim from the billionaire easyJet founder over the use of the “easy” name, which he said could cost “towards £1 million” to fight. – The Times
