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London open: Stocks fall after UK retail sales, borrowing data; US inflation eyed
London stocks fell in early trade on Friday as investors mulled a smaller-than-expected rise in UK retail sales but better-than-expected borrowing figures, ahead of a key US inflation reading.
At 0825 GMT, the FTSE 100 was down 0.3% at 8,077.58.
Data released earlier by the Office for National Statistics showed that retail sales ticked up 0.2% in November. This was an improvement on the 0.7% decline seen in October, but was below analysts’ expectations of a 0.5% jump.
The ONS said growth in supermarkets and other non-food stores was partly offset by a fall in clothing retailers.
Hannah Finselbach, senior statistician at the ONS, said: “Retail sales increased slightly in November following last month’s fall.
“For the first time in three months there was a boost for food store sales, particularly supermarkets. It was also a good month for household goods retailers, most notably furniture shops.
“Clothing store sales dipped sharply once again, as retailers reported tough trading conditions.
“With November’s retail sales survey covering the four weeks to the 23 November, Black Friday itself will fall within December’s figures. However, our figures account for this shift in timing to give us the best picture of what is happening in the shops.”
Separate figures released by the ONS showed that borrowing was £11.2bn in November, comfortably below the consensus forecast of £13bn, and £3.4bn lower than in November 2023. It was also the lowest November borrowing figure in three years.
Jessica Barnaby, deputy director for public sector finance at the ONS, said: “Borrowing this month was over £3bn less than this time last year and the lowest November borrowing for three years.
“Central government tax receipts grew compared with last year, while increased spending on public services and on benefits were offset by lower debt interest payable.”
Still to come, the US personal consumption expenditure index for November is due at 1330 GMT.
Derren Nathan, head of equity research at Hargreaves Lansdown, said it was “likely to be the key driver of sentiment”.
“The expectation is that this key inflation measure has risen by 0.1 percentage points since October to 2.9%,” he said.
“Getting to the 2% target is proving to be harder than expected and if inflation comes in north of consensus, that’s likely to set investor nerves further on edge.”
Corporate news was thin on the ground as the Christmas lull began to set in, but International Distribution Services was in focus after the UK government cleared the £3.6bn sale of the Royal Mail parent company to Czech billionaire Daniel Kretinsky’s EP Group.
EP Group said in a statement that it had met requirements under Britain’s National Security and Investment Act to “provide services that are in support of UK national security”.
IP Group gained as it said two of its life science portfolio companies, Intelligent Ultrasound Group and Abliva, had received cash offers, resulting in anticipated total cash proceeds of £13.8m.
GSK was a touch weaker despite announcing positive results from a phase III trial of its ovarian cancer treatment, which met its primary endpoint of progression free survival.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bp 8%pf | +1.84% | +2.50 | 138.50 |
| 2 |  |
Rentokil Initial Plc | +1.30% | +5.10 | 396.70 |
| 3 |  |
Segro Plc | +1.06% | +7.20 | 689.20 |
| 4 |  |
Smith (ds) Plc | +0.47% | +2.50 | 539.50 |
| 5 |  |
South32 Limited | +0.18% | +0.30 | 165.10 |
| 6 |  |
Haleon | +0.16% | +0.60 | 381.20 |
| 7 |  |
Bunzl Plc | +0.12% | +4.00 | 3,260.00 |
| 8 |  |
Sainsbury (j) Plc | +0.07% | +0.20 | 271.60 |
| 9 |  |
Marks And Spencer Group Plc | +0.03% | +0.10 | 378.30 |
| 10 |  |
Sant Uk.8fepf | +0.00% | +0.00 | 135.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
United Utilities Group Plc | -2.73% | -29.00 | 1,035.00 |
| 2 |  |
Smurfit Westrock Plc | -2.46% | -102.00 | 4,036.00 |
| 3 |  |
Severn Trent Plc | -2.45% | -63.00 | 2,511.00 |
| 4 |  |
Barclays | -2.04% | -5.30 | 254.95 |
| 5 |  |
Melrose Industries Plc | -1.86% | -10.20 | 538.20 |
| 6 |  |
Ck Infrastructure Holdings Limited | -1.77% | -9.65 | 535.10 |
| 7 |  |
Natwest | -1.73% | -6.90 | 393.10 |
| 8 |  |
Standard Chartered Plc | -1.61% | -15.80 | 967.80 |
| 9 |  |
Rolls-royce | -1.59% | -9.20 | 570.40 |
| 10 |  |
Bt Group Plc | -1.47% | -2.15 | 144.25 |
US close: Markets stabilise after dramatic sell-off
US stocks gave up earlier gains to finish flat on Thursday, pausing after a huge sell-off the previous session, as investors continued to digest hawkish comments from the Federal Reserve and a barrage of economic data.
The S&P 500 and Nasdaq both ended the day down 0.1%, following drops of 3.0% and 3.6% on Wednesday, respectively.
The Dow closed just 0.04% higher but managed to close in positive territory for the first time in 11 sessions – its longest losing streak in nearly 50 years – having fallen 6% since 4 December. The Dow shed more than 1,100 points (-2.6%) the previous session after the Fed scaled back its projections for interest-rate cuts in 2025.
“The shockwaves from last night’s ‘hawkish cut’ by the Federal Reserve continue to reverberate. Investors had hoped for an eventful meeting, but the FOMC’s shift to a more cautious outlook caught the market napping, and the resulting sell-off was as quick as it was ugly,” said Chris Beauchamp, chief market analyst at IG.
While the central bank cut its benchmark overnight lending rate by 25 basis points to a target range of 4.25%-4.50%, Powell indicated that the Federal Reserve was now only likely to cut interest rates twice in 2025 – for a total of just 50 basis points – compared with current market expectations for four more cuts.
“The sell-off created opportunities to buy the dip, but the atmosphere was still subdued as if traders were waking up to the potential that a Donald Trump Presidency is likely to create downsides as well as up,” said AJ Bell head of financial analysis, Danni Hewson. “Risk appetite has been pared back. Trump 2.0 is a known unknown and no one wants to be overexposed if the climate proves inhospitable.”
Economic data
On the macro front, the Labor Department reported that initial jobless claims fell by 22,000 to 220,000 last week, beating expectations for a smaller drop to 230,000. Outstanding claims, on the other hand, eased by a smaller reading of 5,000 to 1.87m, while the four-week-moving average, which aims to strip out week-to-week volatility, edged higher by 225,500.
US gross domestic product grew 3.1% in the third quarter, according to the Commerce Department, above consensus estimates for a 2.9% increase, while the personal consumption expenditures index rose 3.7% during the three months ended 30 September to $29.4trn.
Aativity in the US mid-Atlantic region weakened at the end of 2024, according to the Federal Reserve Bank of Philadelphia’s manufacturing sector index, which slipped from a reading of -5.5 in November to -16.4 for December. Economists had forecast a reading of 3.0.
Finally, US existing home sales data rose by 4.8% in November to a seasonally adjusted rate of 4.15m, according to the National Association of Realtors, the highest reading in eight months.
Market movers
Shares in chipmaker Micron Technology were down 16% after the company posted weaker-than-expected guidance for the second quarter.
Soho House & Co soared 47% after the private members club revealed that it had received a takeover offer valuing the company at around $1.8bn, an 83% premium to Wednesday’s closing price.
Olive Garden owner Darden Restaurants was up nearly 15% after upping its full-year revenue forecast following a better-than-estimated performance in the second quarter.
Friday newspaper round-up: Aldi, Richard Desmond, Collateral
The grocery industry watchdog is to make a rare intervention in a Yorkshire sprout grower’s £3.7m legal case against Aldi over the discount chain’s decision to terminate a long-term supply deal. In papers filed at the high court, W Clappison Ltd, which produced sprouts for Aldi’s UK arm for 13 years, said its supply agreement was ended in February last year at planting time without reasonable notice so it was unable to find new clients immediately. It said it was forced to cease sprout production and sell off its machinery. – Guardian
The media tycoon Richard Desmond is set for a courtroom showdown with the Gambling Commission that could cost good causes tens of millions of pounds, the Guardian has learned, after he rejected a settlement offer linked to his failed bid to run the National Lottery. Desmond launched a high court challenge in 2022 after the commission awarded the 10-year National Lottery licence to the Czech operator Allwyn, rejecting bids from his Northern & Shell business, as well as the incumbent Camelot. – Guardian
More than half of people in the UK receive more in benefits than they contribute in taxes, official figures show. A total of 52.6pc lived in households that received more from the state than they paid to the Treasury last year, according to the Office for National Statistics (ONS). The figures underscore the challenge facing Sir Keir Starmer and Rachel Reeves as they try to tackle a ballooning sickness benefit bill and pressures from an ageing population. – Telegraph
The City regulator has invited hundreds of people caught up in an investment scandal to come forward to receive an apology and compensation after admitting it was guilty of “material” failings including allowing false information to be published on its own register for two years. The Financial Conduct Authority said it was sorry for its mishandling of a fraud at Collateral, a failed peer-to-peer lending platform, and is offering modest payments to investors in recognition of the “distress and inconvenience” caused by its errors. – The Times
The number of cars rolling off British production lines fell by almost a third in November to the lowest level for the month since 1980, amid industry upheaval and weak consumer demand. A total of 64,216 units were manufactured in the month, down 27,711 on November 2023, in the ninth consecutive month of decline, according to the Society of Motor Manufacturers and Traders (SMMT). – The Times
