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London open: Stocks gain as retail sales disappoint
London stocks gained in early trade on Friday as weaker-than-expected retail sales data underpinned rate cut expectations.
At 0830 GMT, the FTSE 100 was up 0.9% at 8,466.87.
Figures released earlier by the Office for National Statistics showed that retail sales fell 0.3% on the month in December following a downwardly-revised 0.1% increase in November. Economists were expecting a 0.4% jump.
ONS senior statistician Hannah Finselbach said: “This was driven by a very poor month for food sales, which sank to their lowest level since 2013, with supermarkets particularly affected.”
The ONS said falls in supermarkets were partly offset by a rise in non-food stores, such as clothing retailers, which rebounded from falls in recent months.
For the fourth quarter, sales volumes fell by 0.8% compared with the third quarter, but rose by 1.9% versus the same period a year earlier.
The retail sales figures rounded off a trio of disappointing releases from the ONS this week. On Thursday, data showed the economy grew 0.1% in November following contractions of 0.1% in October and September. This was below expectations of 0.2% growth, however.
On Wednesday, it was revealed that UK inflation unexpectedly eased in December after two months of increases.
Consumer price inflation rose 2.5%, down from 2.6% in November, and versus expectations for it to remain unchanged.
Meanwhile, core inflation – which excludes food and energy – declined to 3.2% from 3.5%, versus expectations for a smaller drop to 3.4%.
Services inflation eased to 4.4% in December from 5% the month before. Economists were expecting 4.8%.
In equity markets, Ladbrokes owner Entain jumped to the top of the FTSE 100 after William Hill and 888 owner Evoke said that FY24 EBITDA was set to be at the high end of guidance and “well above” market expectations after a strong performance in the fourth quarter. Evoke shares surged 10%.
Smiths Group was also a high riser as US activist investor Engine Capital called on the diversified engineer to explore a breakup.
In a letter sent to the board, Engine Capital – which holds a 2% stake in Smiths – said Smiths should launch a strategic review.
““We believe that Smiths has significant value that is currently unrealised due to its conglomerate structure, and that it is time for the board to announce a strategic alternatives process to maximise value for shareholders,” it said.
Engine Capital said a sale of the entire company or its four business could deliver a significant premium to the current share price.
Housebuilders were among the best performers again amid rate cut hopes, with Persimmon, Taylor Wimpey, Barratt Redrow and Berkeley all up.
Elsewhere, automated testing company Spirent Communications rose despite saying it expects full-year revenues to be lower after a “challenging” year, as it reported a strong uptick of order growth in the fourth quarter.
Ninety One gained as it said third-quarter assets under management rose to £130.2bn as at the end of the December from £127.4bn at the end of September.
Big Yellow was also in the black even as the self-storage group delivered a cautious outlook on trading reporting a drop in occupancy levels over the third quarter, and said it plans to cut jobs as it deals with higher National Insurance payments to employees from April.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Smiths Group Plc | +4.36% | +77.00 | 1,842.00 |
| 2 |  |
Spirax Group Plc | +4.04% | +280.00 | 7,205.00 |
| 3 |  |
Antofagasta Plc | +3.19% | +55.50 | 1,793.50 |
| 4 |  |
Glencore Plc | +2.69% | +9.95 | 380.00 |
| 5 |  |
Banco Santander S.a. | +2.51% | +10.00 | 408.00 |
| 6 |  |
Anglo American Plc | +2.36% | +58.00 | 2,518.00 |
| 7 |  |
Prudential Plc | +2.21% | +13.80 | 638.60 |
| 8 |  |
Pershing Square Holdings Ltd | +2.09% | +88.00 | 4,290.00 |
| 9 |  |
Barratt Redrow Plc | +2.07% | +8.80 | 433.00 |
| 10 |  |
Wpp Plc | +2.00% | +14.60 | 745.80 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ck Infrastructure Holdings Limited | -1.79% | -10.35 | 569.10 |
| 2 |  |
Wise Plc | -1.15% | -12.00 | 1,032.00 |
| 3 |  |
Aib Group Plc | -0.76% | -3.50 | 460.00 |
| 4 |  |
Smurfit Westrock Plc | -0.69% | -30.00 | 4,287.00 |
| 5 |  |
Vodafone Group Plc | -0.58% | -0.40 | 69.10 |
| 6 |  |
Haleon | -0.27% | -1.00 | 368.70 |
| 7 |  |
Imperial Brands Plc | -0.08% | -2.00 | 2,595.00 |
| 8 |  |
Next Plc | -0.04% | -4.00 | 9,266.00 |
| 9 |  |
Auto Trader Group Plc | -0.03% | -0.20 | 795.80 |
| 10 |  |
Gen.acc.7se.pf | -0.00% | -0.00 | 120.00 |
US close: Stocks lower as earnings take centre stage
Wall Street stocks were in the red at the close of trading on Thursday as Q4 earnings season began to pick up steam.
At the close, the Dow Jones Industrial Average was down 0.16% at 43,153.13, while the S&P 500 lost 0.21% to 5,937.34 and the Nasdaq Composite saw out the session 0.89% weaker at 19,338.29.
The Dow closed 68.42 points lower on Thursday, taking a small bite out of strong gains recorded in the previous session following the release of last month’s tamer-than-expected consumer price index and solid Q4 bank earnings.
Thursday’s primary focus was another batch of quarterly earnings from the nation’s largest names in banking, with Morgan Stanley reporting that profits had more than doubled on the back of a solid dealmaking performance, while Bank of America reported results that topped expectations on both the top and bottom lines thanks to better-than-expected investment banking and interest income.
UnitedHealth reported revenues that missed Wall Street expectations in its first set of quarterly results since the fatal shooting of the head of its insurance business last month, while retailer Target hiked its Q4 outlook on the back of a solid holiday trading period.
The yield on the benchmark 10-year Treasury note shed almost four basis points to 4.618% in the session after slumping 14 basis points on Wednesday.
On the macro front, Americans lined up for unemployment benefits at an accelerated pace in the week ended 11 January, according to the Department of Labor. Initial jobless claims rose by 14,000 to 217,000, firmly above market expectations for a reading of 210,000 and marking a sharp increase from the upwardly revised, 11-month low in the previous week. Continuing claims unexpectedly fell to 1.85m, while the four-week moving average came to 212,750, a decrease of 750 from the previous week’s revised average.
Elsewhere, retail sales increased 0.4% month-on-month in December, according to the Census Bureau, the lowest reading in four months compared to an upwardly revised 0.8% increase in November and below forecasts for a reading of 0.6%.
On another note, the Philadelphia Fed manufacturing index climbed to 44.3 in January, the highest reading since April 2021, up from a revised reading of -10.9 in December and better than market forecasts for a reading of -5.
Moving on, US import prices increased to 141.50 in December, according to the Bureau of Labor Statistics, up from 141.30 in November, while export prices rose to 149.20 points last month, up from 148.80 points a month earlier.
Still on data, US business inventories rose by 0.1% in November, according to the Census Bureau, up from a revised flat reading in October and matching market expectations. Stocks increased at manufacturers and retailers, up 0.3% and 0.2%, respectively, but fell 0.2% at wholesalers. On an annualised basis, inventories were up 2.6%.
Finally, the National Association of Housebuilders’ housing market index increased to 47 in January, the highest reading in nine months and up from 46 in the previous two months. The current sales conditions gauge rose three points to 51 but sales expectations for the next six months fell six points to 60, principally due to the current elevated interest rate environment.
Friday newspaper round-up: Pint prices, Nissan, SpaceX
Rachel Reeves’s tax raid on employers will push up the price of a pint, the boss of pub chain Young’s has warned. Simon Dodd, the chief executive, said Young’s plans to increase prices between 3pc and 3.5pc because of the increased cost of National Insurance (NI) contributions paid by employers, which comes into effect from April. – Telegraph
Nissan is to open a £50m factory making transmissions for its electric cars at a site previously used as a Nightingale hospital during Covid. A 140,000sq ft facility next to the carmaker’s sprawling Sunderland plant will produce transmissions for three models as Nissan seeks to boost electric vehicle (EV) production and fend off competition from Chinese rivals. – Telegraph
Millions of consumers will be protected from “nasty surprises” from Friday as new rules take effect that mean telecoms firms must tell people upfront – in “pounds and pence” – about any future price rises. It means mobile phone, broadband and pay-TV companies are now banned from imposing mid-contract price increases linked to unknown future rates of inflation. – Guardian
SpaceX launched its Starship rocket on its latest test flight Thursday, but the spacecraft was destroyed following a thrilling booster catch back at the pad. Elon Musk’s company said the spacecraft’s six engines appeared to shut down one by one, with contact lost just 8min 30sec into the flight. – Guardian
Trade conflicts threaten to strengthen inflation and keep interest rates high this year while stalling growth among the world’s poorest nations will hamper efforts to reduce poverty, World Bank researchers have said. Global economic growth has slowed to such an extent that it “will be insufficient to foster sustained economic development” in the coming decades, the World Bank warned in its latest forecasts. – The Times
