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London open: FTSE edges up ahead of US inflation reading; Smiths Group surges
London stocks edged up in early trade on Friday, taking their cue from a positive session on Wall Street, as investors mulled house price data from Nationwide and eyed the latest US inflation reading.
At 0825 GMT, the FTSE 100 was up 0.2% at 8,663.20.
Richard Hunter, head of markets at Interactive Investor, said the US personal consumption expenditures report due at 1330 GMT “will provide further colour, with core inflation expected to have risen by 2.5% in the fourth quarter, up from 2.2% in the previous, and representing a gain of 2.8% year on year”.
On home shores, data from Nationwide showed that growth in house prices eased in January.
House prices ticked up 0.1% on the month in January following a 0.7% increase in December 2024, missing expectations for 0.3% growth. On the year, house prices rose 4.1% in January following a 4.7% jump the month before.
The average price of a home was £268,213, down from £269,426.
Nationwide chief economist Robert Gardner said: “The housing market continues to show resilience despite ongoing affordability pressures. As we highlighted in our recent affordability report, while there has been a modest improvement over the last year, affordability remains stretched by historic standards.
“A prospective buyer earning the average UK income and buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 36% of their take-home pay – well above the long-run average of 30%.
“Furthermore, house prices remain high relative to average earnings, with the first-time buyer house price to earnings ratio standing at 5.0 at the end of 2024, still well above the long run average of 3.9. Consequently, the deposit hurdle remains high.
“This is a challenge that has been made worse by the record increase in rents in recent years, which, together with the cost-of-living crisis more generally, has hampered the ability of many in the private rented sector to save.”
Alex Kerr, UK economist at Capital Economics, said: “Although the muted 0.1% m/m rise in Nationwide house prices in January was slightly worse than expected (consensus +0.3% m/m, CE forecast +0.2% m/m), it is not too surprising given the rise in quoted mortgage rates at the end of last year. But we doubt that price growth will continue to disappoint and instead think prices will rise by more than most expect this year.
“Looking ahead, house price growth may remain muted over the next few months given that swap rates point to mortgage rates climbing higher. That said, prices may be supported by a potential surge in demand ahead of the expiry of the temporary increase to the stamp duty nil band thresholds after 31st March.
“Either way, our forecast that Bank Rate will be cut from 4.75% now to 3.50% in early 2026, rather than the low of 4.00% that investors currently anticipate, suggests mortgage rates will fall from 4.6% in December to around 4.0% in 2026. That explains our view that house prices will grow by an above-consensus 3.5% in Q4 2025 and 4.5% in Q4 2026.”
In equity markets, engineering business Smiths Group surged as it said it was selling its interconnect unit and planned to demerge or offload the detection operation as part of a strategic review that includes extending its share buyback to £500m.
Smiths added that the recent cyber attack was limited to internal enterprise systems, and it had “made good progress in the recovery of these, with most critical systems being back online”.
Fashion and homeware retailer Next jumped to the top of the FTSE 100 after an upgrade to ‘buy’ from ‘neutral’ at UBS, which said the company was at an “inflection point” when it comes to growth and valuation. The target price was lifted to 11,700p from 10,500p.
On the downside, Sainsbury’s fell after a downgrade to ‘hold’ by HSBC, while Admiral was knocked lower by a downgrade to ‘reduce’ by Peel Hunt.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Smiths Group Plc | +11.64% | +217.00 | 2,082.00 |
| 2 |  |
Next Plc | +1.68% | +164.00 | 9,940.00 |
| 3 |  |
Rolls-royce | +1.61% | +9.60 | 605.60 |
| 4 |  |
Bae Systems Plc | +1.53% | +18.50 | 1,227.00 |
| 5 |  |
St. James’s Place Plc | +1.36% | +14.00 | 1,044.00 |
| 6 |  |
Scottish Mortgage Investment Trust Plc | +1.21% | +13.00 | 1,085.00 |
| 7 |  |
Ferguson Enterprises Inc. | +1.17% | +170.00 | 14,710.00 |
| 8 |  |
Ashtead Group Plc | +1.13% | +60.00 | 5,380.00 |
| 9 |  |
Smurfit Westrock Plc | +1.09% | +46.00 | 4,270.00 |
| 10 |  |
Melrose Industries Plc | +1.05% | +6.40 | 613.80 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ck Infrastructure Holdings Limited | -2.14% | -12.20 | 557.80 |
| 2 |  |
Smith (ds) Plc | -2.04% | -12.00 | 576.50 |
| 3 |  |
Sainsbury (j) Plc | -1.47% | -3.80 | 254.40 |
| 4 |  |
Segro Plc | -1.14% | -8.20 | 713.20 |
| 5 |  |
Antofagasta Plc | -0.74% | -13.00 | 1,732.00 |
| 6 |  |
Barratt Redrow Plc | -0.74% | -3.40 | 456.40 |
| 7 |  |
Admiral Group Plc | -0.66% | -18.00 | 2,689.00 |
| 8 |  |
Auto Trader Group Plc | -0.58% | -4.60 | 790.40 |
| 9 |  |
Bt Group Plc | -0.38% | -0.55 | 143.10 |
| 10 |  |
Wise Plc | -0.36% | -4.00 | 1,111.00 |
US close: Stocks higher as tech earnings remain in focus
Major indices turned in a positive session on Thursday as market participants digested quarterly earnings from several big-name tech firms.
At the close, the Dow Jones Industrial Average was up 0.38% at 44,882.13, while the S&P 500 advanced 0.53% to 6,071.17 and the Nasdaq Composite saw out the session 0.25% firmer at 19,681.75.
The Dow closed 168.61 points higher on Thursday, reversing losses recorded in the previous session after the Federal Reserve Bank opted to keep its benchmark overnight interest rate unchanged following its two-day policy meeting, as expected.
In the corporate space, shares in Facebook parent company Meta Platforms traded higher after its Q4 numbers beat on both the top and bottom lines, while software giant Microsoft headed south after Azure cloud computing revenues narrowly missed consensus estimates and electric carmaker Tesla shares accelerated despite its Q4 results falling short of Wall Street expectations.
Elsewhere, trade bellwether Caterpillar was in the red after posting a Q4 revenue miss, while Comcast shares also traded lower on the back of declining broadband and cable TV subscriber numbers.
American Airlines was also in focus after one of its regional passenger jets collided with a United States Army Black Hawk helicopter over Washington DC and crashed down into the Potomac River. All 67 people on board both aircraft are feared dead.
After the close, tech behemoth Apple said overall sales were up 4% in Q4 to $124.3bn, driving profits 7% higher year-on-year to $36.3bn, even as it said iPhone sales had slipped as its rollout of a number of new AI features seemingly failed to excite potential customers.
On the macro front, the US economy grew at a slower-than-expected clip in Q4, according to the Bureau of Economic Analysis, which said its advance GDP estimate showed the economy expanded at an annualised rate of 2.3%, below the 2.6% increase expected by economists and the 3.1% growth seen in Q3. Consumer and government spending increases drove economic growth in the quarter, while decreases in investment offset gains. For the year as a whole, the US economy grew at 2.8% clip, slightly below the 2.9% number seen in 2023 but ahead of the 2.5% seen in 2022.
On another note, US jobless claims fell more than expected in the week ended 25 January, according to the Labor Department, marking a sharp pull-back from the previous week’s two-month high. Initial jobless claims fell by 16,000 week-on-week to 207,000, well and truly missing expectations for a reading of 220,000. Continuing claims fell by 42,000 from the prior week’s more than three-year high to 1.85m, while the four-week moving average, which aims to strip out week-to-week volatility, was up by 6,000 at 1.87m.
Finally, US pending home sales fell 5.5% month-on-month in December, marking the first contraction since July. On an annualised basis, pending home sales decreased by 5% in December, according to the National Association of Realtors.
Also in focus, the yield on the benchmark 10-year Treasury note dropped more than two basis points to 4.519% on Thursday, providing a tailwind for major indices.
Friday newspaper round-up: Apple, Daily Mail, OpenAI, Homebase
Apple slightly beat analysts’ expectations in its first-quarter earnings for fiscal year 2025 on Thursday. The iPhone-maker’s revenue rose by 4%, coming in at $124.30bn, barely above estimates of $124.12bn. Earnings per share were $2.40, just ahead of analysts’ expectations of $2.35. Shares rose more than 8% in extended trading after CEO Tim Cook indicated in an earnings call on Thursday that Apple is on the trajectory for revenue growth next quarter. – Guardian
Staff at the Daily Mail and MailOnline have been told to expect job cuts by the publisher as it unveiled plans to combine its digital and print editorial and commercial teams into one seven-day operation. In a letter to colleagues on Thursday, the Daily Mail’s editor-in-chief, Ted Verity, and the publisher and chief executive of parent group DMG media, Danny Groom, announced a shake-up that would “result in a number of job losses”. – Guardian
The Abu Dhabi fund that was blocked from taking control of The Telegraph is pursuing a potentially less controversial tie-up with ITV’s production arm as it attempts to build a global media empire. RedBird IMI has stepped up discussions to merge All3Media, the independent production house behind The Traitors, which it acquired for £1.2bn last year, with ITV Studios to create a film and TV powerhouse worth almost £3bn. – Telegraph
Plans to fly millions more passengers from London City Airport have triggered a row over noise in a sign of the challenges that Rachel Reeves faces in putting aviation at the heart of her growth plans. London City Airport has been accused of using “backdoor tactics” to get around strict noise limits after announcing plans for full-sized airliners to use its short runway. The airport said on Monday it had submitted an application to the aviation regulator seeking permission to run flights using Airbus A320 planes that can carry more than 180 passengers. – Telegraph
OpenAI is in talks for an investment round to raise nearly $40 billion that would value the ChatGPT maker at up to $340 billion. The Microsoft-backed company was last valued at $157 billion in October when it raised $6.6 billion. However, under discussions reported by the Wall Street Journal, the AI company’s valuation has almost doubled. OpenAI did not respond to a request for comment. – The Times
Homebase collapsed into administration owing more than £650 million to unsecured creditors including the retailers AO World, Halfords and the Hut, it has been disclosed. A document filed with Companies House reveals the extent of the DIY and garden retailer’s debts to its creditors when Teneo was appointed as administrator in November. – The Times
