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London open: Stocks rise as BP surges on results
London stocks rose in early trade on Tuesday, with BP leading the charge after results, as investors eyed a speech by US Federal Reserve chair Jerome Powell.
At 0835 GMT, the FTSE 100 was up 0.6% at 7,880.29.
Powell is due to speak later in the day at the Economic Club of Washington.
Lukman Otunuga, senior research analyst at FXTM, said: “After last week’s freakishly strong US jobs data, market expectations around the Fed switching to rates cuts later in 2023 have taken a massive hit. The robust strength of the US labour force is expected to fuel fears over inflation remaining stubbornly high, ultimately empowering the Fed hawks.
“Given the latest developments, much attention will be directed on Powell’s tone, messaging and whether fresh insight is offered over monetary policy for 2023, especially after the market’s dovish reaction to his recent FOMC press conference. Should the central bank head signal that rate cut bets were misplaced, this could boost dollar bulls along with Treasury yields.”
On home shores, investors were digesting industry data showing that UK retail sales growth slowed last month as the festive boost faded.
According to the latest BRC-KPMG Retail Sales Monitor, total sales rose 4.2% year-on-year in January, or by 3.9% on a like-for-like basis.
It was a marked slowdown on January 2022, when retail sales strengthened 11.9% on both a total and like-for-like sales basis. It was also down on December, when total sales rose 6.9% and underlying sales by 6.5%.
Helen Dickinson, chief executive of the British Retail Consortium, said: “As Christmas cheer subsided, retailers felt the January blues as sales growth slowed.
“Many retailers discounted heavily to entice consumer spend, and while there were bargains to be had in the January sales, retailers continue to be hit by lower margins and falling volumes.
“The coming months will continue to be challenging for retailers and their customers. Consumer confidence remains stubbornly low and looming rises in household bills and mortgages mean discretionary spending will remain weak.”
Market participants were also mulling over the latest survey from mortgage lender Halifax, which showed that house prices stabilised in January following four months of falls.
Prices were broadly flat on the month at £281,684, following a 1.3% decline in December and a 2.4% drop in November. On the year, price growth slowed to 1.9% from 2.1% in December and 4.6% in November.
The average house price is now around £12,500 or 4.2% below its peak in August last year, but around £5,000 higher than in January 2022.
In equity markets, BP surged to the top of the FTSE 100 after saying it more than doubled annual profits to a record $27.6bn as it cashed in on soaring gas prices, fuelling more calls for the government to change windfall tax arrangements on energy companies as consumers face a 40% rise in household bills in April.
The full-year result compares with $12.8bn a year earlier. In the final three months of 2022 underlying replacement cost profit – its preferred measure – came in at $4.80bn, missing estimates of $5.04bn and well below $8.15bn in the third quarter.
BP’s results follow those from rival Shell, which last week posted record yearly profits of almost $40bn as gas prices took off as Russia invaded Ukraine.
Auction Technology also gained after it announced the acquisition of US estate sales listing site Vintage Software for $40m.
On the downside, manufacturing company Morgan Advanced Materials slumped as it warned that disruption from a previously-disclosed cyber incident meant FY2023 adjusted operating profit was likely to be 10% to 15% lower than expected.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bp Plc | +3.67% | +17.55 | 495.90 |
| 2 |  |
Gsk Plc | +1.44% | +21.00 | 1,482.00 |
| 3 |  |
Hsbc Holdings Plc | +1.33% | +7.90 | 603.90 |
| 4 |  |
Carnival Plc | +1.24% | +10.80 | 883.60 |
| 5 |  |
Ocado Group Plc | +1.04% | +7.40 | 721.20 |
| 6 |  |
Hiscox Ltd | +0.93% | +10.50 | 1,133.50 |
| 7 |  |
Marks And Spencer Group Plc | +0.88% | +1.40 | 160.00 |
| 8 |  |
Prudential Plc | +0.85% | +11.00 | 1,300.50 |
| 9 |  |
Shell Plc | +0.83% | +20.00 | 2,418.50 |
| 10 |  |
Bhp Group Limited | +0.79% | +21.50 | 2,759.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Smurfit Kappa Group Plc | -0.82% | -29.00 | 3,527.00 |
| 2 |  |
St. James’s Place Plc | -0.79% | -10.00 | 1,250.00 |
| 3 |  |
Easyjet Plc | -0.69% | -3.40 | 491.60 |
| 4 |  |
Centrica Plc | -0.68% | -0.66 | 96.30 |
| 5 |  |
Sage Group Plc | -0.68% | -5.40 | 789.20 |
| 6 |  |
Dcc Plc | -0.66% | -31.00 | 4,661.00 |
| 7 |  |
Unilever Plc | -0.65% | -27.00 | 4,136.50 |
| 8 |  |
Barratt Developments Plc | -0.56% | -2.60 | 463.50 |
| 9 |  |
Admiral Group Plc | -0.52% | -12.00 | 2,279.00 |
| 10 |  |
Vodafone Group Plc | -0.52% | -0.47 | 90.19 |
US close: Stocks lower ahead earnings-filled week
Wall Street stocks were in the red at the end of trading on Monday as traders prepped for another week jam-packed with earnings and comments from Federal Reserve chairman Jerome Powell.
At the close, the Dow Jones Industrial was down 0.10% at 33,891.02, while the S&P 500 slipped 0.61% to 4,111.08 and the Nasdaq Composite saw out the session 1.00% softer at 11,887.45.
The Dow closed 34.99 points weaker on Monday, extending losses recorded in the previous session.
Earnings from the likes of Disney, Chipotle, Dupont, and PepsiCo will all be on deck this week, the halfway point of an already somewhat disappointing Q4 earnings season, while investors will also be looking ahead to a speech by Powell on Tuesday after the central banker’s comments on disinflation saw market participants push shares higher last week and ignore yet another rate hike from the Fed.
Also in focus, Beijing’s foreign ministry confirmed that a balloon flying over Latin America was Chinese, after a similar device was shot down by the US over the weekend. The detection of the balloon over the US led Secretary of State Antony Blinken to cancel a planned visit to China on Sunday. China later expressed anger over the downing of the balloon, which it claimed was an unmanned weather surveillance aircraft that had veered off course.
In terms of earnings, Energizer revealed quarterly earnings and sales had declined amid lower volumes, while Tyson Foods posted quarterly numbers that fell well and truly short of expectations.
Activision Blizzard reported record net bookings but said costs had weighed down its balance sheet, Take-Two Interactive outlined an earnings miss, and Pinterest provided some weak guidance as quarterly revenues missed estimates.
No major data points were released on Monday.
Tuesday newspaper round-up: Digital pound, bus services, Royal Mail
Consumers could be using a new digital pound as an alternative to cash by the end of the decade under plans being drawn up by the Bank of England and the Treasury. The government is speeding up its response to the rise of privately issued cryptocurrencies and stable coins with a four-month public consultation process on a “Britcoin” starting on Tuesday. – Guardian
Hundreds more of England’s dwindling bus services could be axed next week with a funding shortfall looming, transport authorities have warned. Labour said the government had “just 10 days to act” before operators start having to cut routes because of the expiry of post-pandemic state support. – Guardian
Strike-breaking rail managers were paid £50 an hour on top of their salaries to work on the front line during walkouts over Christmas, leaked documents show. Salaried workers could get as much as £6,500 in extra pay if they swapped the office for shifts on trains on strike days between Dec 19 and Jan 3. – Telegraph
Union leaders have been forced to call off a two-day postal strike following a legal challenge by Royal Mail bosses. The Communication Workers Union (CWU) blamed laws that are “heavily weighted against working people” for scrapping planned walkouts on Feb 16 and Feb 17. – Telegraph
The battle between Santander and the financier who was once in line to run the Spanish bank is set to continue after a Spanish court cut the compensation the lender should pay for rescinding its job offer. It emerged yesterday that a court in Madrid had upheld Andrea Orcel’s claim against Santander, but had lowered the payout he should receive by €8 million to €43.4 million. Santander immediately said that it intended to appeal against the ruling in the Spanish Supreme Court. – The Times
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