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London open: Stocks rise as shop price inflation eases; WPP surges
London stocks rose in early trade on Tuesday, taking their cue from a solid session on Wall Street, as data showed that UK shop price inflation eased sharply in January.
At 0840 GMT, the FTSE 100 was up 0.3% at 7,655.98, as investors looked ahead to a raft of data releases.
Net lending figures for December are due at 0930 GMT, along with consumer credit, mortgage approvals and money supply.
Tickmill Group said: “Before the Bank of England’s update on Thursday, today’s readings on money supply and lending will provide insights into how past interest rate hikes have impacted the economy. Of particular interest will be the figures on lending in the housing market, as there are indications that recent decreases in market interest rates are benefiting this sector. Expect that mortgage approvals will increase for the third consecutive month in December, reaching their highest level in four months.
“Stateside, a crucial measure of consumer confidence is expected to increase for the third consecutive month in January, reaching its highest level since last July. This likely reflects the impact of lower inflation rates and expectations of interest rate cuts.”
Industry data out earlier showed that shop price inflation slowed notable at the start of the year, as price growth reached its lowest level since May 2022.
The British Retail Consortium (BRC) and NielsenIQ shop price index for 1 January to 7 January showed a significant drop in annual shop price inflation to 2.9%, from 4.3% in December.
Within the index, non-food inflation saw a substantial decrease, falling to 1.3% in January from 3.1% in December.
That marked a sharp drop below the three-month average rate of 2.4%, and positioned non-food inflation at its lowest point since February 2022.
Food inflation experienced a deceleration as well, declining to 6.1% in January from 6.7% in December.
The reduction in food inflation was part of a consistent trend, with January marking the ninth consecutive month of deceleration in the category.
It also brought food inflation to its lowest level since June 2022.
“Some New Year cheer as January shop price inflation slid to its lowest level since May 2022,” said British Retail Consortium chief executive officer Helen Dickinson. “Non-food goods drove the fall, as many retailers offered heavily discounted goods in their January sales to entice consumer spend amidst weak demand.
“Good news for the morning brew as the price of tea and milk fell, while evening tipples remained more expensive on the back of increased alcohol duties.”
Looking at the specific fresh food and ambient food categories, both also demonstrated notable declines in inflation rates.
Fresh food inflation slowed to 4.9% in January from 5.4% in December, with that rate being below the three-month average of 5.6%.
Similarly, ambient food inflation decelerated from 8.4% in December to 7.7% in January, falling below the three-month average rate of 8.5%.
The current ambient food inflation rate represented the lowest level recorded since July 2022.
In equity markets, WPP jumped to the top of the FTSE 100 as the advertising group backed its full-year guidance and set out its targets for 2024.
Art and antique online marketplace operator Auction Technology racked up strong gains after saying it expects annual results to be in line with expectations after an 11% increase in revenue for the first three months of the year.
HSBC was in focus as the bank was fined £57.4m by the Bank of England after admitting serious failings in protecting customer deposits.
Travel food outlet operator SSP Group gained as it held full-year guidance after a strong rise in first-quarter sales as rail and air passenger numbers continued to recover after the Covid pandemic.
Saga shot higher after saying it expects full-year underlying pre-tax profit to more than double on the previous year as it hailed an “outstanding” year for the cruise and travel businesses.
Diageo fizzed lower as the drinks group said first-half profits fell by more than a tenth as weakness in the Latin American and Caribbean (LAC) regions persisted, but pointed to improving trading conditions in the latter part of the financial year.
Pets at Home slumped as it cut its full-year profit outlook after a weaker-than-expected performance at its retail business in the third quarter. Pets now expects FY24 group underlying pre-tax profit of around £132m, down from previous guidance of £136m.
Deliveroo was under the cosh after Delivery Hero sold its entire 4.5% stake in the company.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Wpp Plc | +3.61% | +28.20 | 808.80 |
| 2 |  |
Carnival Plc | +2.60% | +30.00 | 1,186.00 |
| 3 |  |
3i Group Plc | +2.14% | +52.00 | 2,485.00 |
| 4 |  |
Auto Trader Group Plc | +2.05% | +14.80 | 735.40 |
| 5 |  |
Rolls-royce Holdings Plc | +2.04% | +6.20 | 310.20 |
| 6 |  |
Ashtead Group Plc | +1.96% | +102.00 | 5,316.00 |
| 7 |  |
Hargreaves Lansdown Plc | +1.85% | +14.00 | 772.40 |
| 8 |  |
Taylor Wimpey Plc | +1.79% | +2.60 | 147.65 |
| 9 |  |
Compass Group Plc | +1.67% | +36.00 | 2,186.00 |
| 10 |  |
Intercontinental Hotels Group Plc | +1.64% | +122.00 | 7,578.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Diageo Plc | -3.91% | -111.00 | 2,730.50 |
| 2 |  |
Mondi Plc | -2.05% | -30.20 | 1,441.60 |
| 3 |  |
Smurfit Kappa Group Plc | -1.05% | -32.00 | 3,022.00 |
| 4 |  |
Burberry Group Plc | -1.04% | -14.00 | 1,329.00 |
| 5 |  |
Fresnillo Plc | -0.91% | -5.00 | 543.60 |
| 6 |  |
Antofagasta Plc | -0.62% | -10.50 | 1,695.50 |
| 7 |  |
Persimmon Plc | -0.59% | -8.50 | 1,441.50 |
| 8 |  |
Barratt Developments Plc | -0.41% | -2.20 | 537.60 |
| 9 |  |
Glencore Plc | -0.33% | -1.40 | 423.55 |
| 10 |  |
Rio Tinto Plc | -0.32% | -18.00 | 5,560.00 |
US close: Stocks hit new records ahead of hectic week
US stock markets performed strongly on Monday, kicking off a busy week on the front foot, with both the Dow and S&P 500 continuing to set fresh record highs and the Nasdaq Composite nearing its all-time peak.
The Dow finished 0.6% higher at a new high of 38,333.45, while the S&P 500 gained 0.8% to another new record of 4,927.93.
Meanwhile, the Nasdaq Composite is now under just 3% from its all-time closing high of 16,057.44 reached in November 2021, while the Nasdaq 100 continues to set new records.
Helping lift risk appetite was optimistic comments from investment giant BlackRock, which upgraded its stance on US stocks from ‘neutral’ to ‘overweight’, predicting that the upward trajectory of the S&P 500 should continue for the next six to 12 months as inflation eases and the Federal Reserve finally cuts interest rates.
Investors were largely shrugging off further escalation in the Middle East, after new attacks on shipping in the Red Sea by Houthi rebels and a drone attack on a US service base killed three American soldiers.
Nevertheless, oil prices pulled back on Monday, having risen nearly 10% since the start of the year. WTI crude was down 1.3% at $76.98 a barrel, though still markedly higher than the $70 level seen at the end of December.
Busy week ahead
No major results or economic data were due on Monday. However, Microsoft, Apple, Alphabet, Amazon and Meta Platforms will report their results over the next three sessions and have the potential to move markets since the five blue chip tech stocks represent 22% of the S&P 500 by market cap.
Meanwhile, the Fed’s two-day policy meeting culminates on Wednesday but is widely expected to see the central bank stand pat on interest rates. However, investors will be on the lookout for more clarity on the outlook for rates since market expectations of a cut in March have been recently pushed back following resilient economic data.
“Between elevated inflation, strong economic growth, and a resilient jobs market, there should be little reason to believe that the Fed will move before the likes of the ECB,” said analyst Joshua Mahony from Scope Markets.
Finally, the week will be capped off by the all-important US jobs report on Friday, which is currently expected to show that non-farm payrolls came in at 180,000 in January, down from 216,000 in December, while hourly earnings growth eased to 0.3% from 0.4%.
Amazon and iRobot call off merger
Amazon finished in positive territory despite agreeing with Roomba maker iRobot to terminate their planned merger amid opposition from EU regulators, while iRobot shares dropped 9%.
Amazon announced in August 2022 that it had agreed to buy iRobot in a $1.7bn deal. However, in a statement on Monday the companies said the proposed deal “has no path to regulatory approval” in the European Union, preventing them from moving forward together.
Financial services group SoFi Technologies was a standout riser, surging over 20% after beating analysts’ estimates with both revenues and profits in its fourth quarter.
McGrath RentCorp was also rising strongly, jumping nearly 11% on the back of a WillScot Mobile Mini offer to buy the B2B rental firm for $3.8bn.
Tuesday newspaper round-up: Neuralink, BP, EY, VAT-free shopping
The UK has fallen to its lowest-ever position in Transparency International’s corruption perceptions index, which ranks countries by experts’ views of possible corruption in public services. The UK fell from 18th (out of 181 countries) in 2022 to 20th in 2023, its lowest position since the research was revamped in 2012. It means that, according to the research, Britain is seen as more corrupt than Uruguay and Hong Kong. – Guardian
Elon Musk, Neuralink’s billionaire founder, said the first human received an implant from the brain-chip startup on Sunday and is recovering well, in a post on Twitter/X on Monday. The US Food and Drug Administration (FDA) had given the company clearance last year to conduct its first trial to test its implant on humans. – Guardian
BP is facing fresh demands to scrap “irrational” net zero commitments championed by former chief executive Bernard Looney, after an activist investor claimed they have left shareholders £40bn poorer. The FTSE 100 oil giant was on Monday accused of pursuing an unrealistic strategy by Bluebell Capital Partners, the investor that has taken a minority stake in BP after previously taking on blue chip heavyweights Glencore and Danone. – Telegraph
EY has started to track more closely how often its UK staff are coming into the office amid concerns that many of its accountants and consultants are ignoring its hybrid working guidelines. In recent weeks some senior partners and team managers at the Big Four firm have been granted access to anonymised swipe card entry data showing how frequently its 21,000 UK staff are attending its offices. – The Times
The government’s decision to scrap VAT-free shopping for tourists is costing the economy £11.1 billion in lost GDP and deterring about two million foreign visitors each year, according to an analysis by the Centre for Economics and Business Research (CEBR). The number of tourists coming to the UK still remains around one million visitors short of pre-pandemic levels and spending by tourists in real terms has also failed to recover fully. – The Times
