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London open: FTSE gains as weak retail sales boost rate cut hopes
London stocks rose in early trade on Friday as weak retail sales figures boosted rate cut hopes.
At 0900 GMT, the FTSE 100 was up 0.6% at 7,501.78.
Figures released earlier by the Office for National Statistics showed that retail sales volumes fell 3.2% on the month in December following a 1.4% increase in November. This marked the worst decline since January 2021 and was much bigger than the 0.5% drop forecast by economists.
Heather Bovill, deputy director for surveys and economic indicators at the ONS, said: “Food stores performed very poorly, with their steepest fall since May 2021 as early Christmas shopping led to slow December sales.
“Department stores, clothing shops and household goods retailers reported sluggish sales too as consumers spent less on Christmas gifts, but had also purchased earlier during Black Friday promotions, to help spread the cost.
“The longer-term picture remains subdued, with quarterly sales dipping, while annual sales volumes fell for the second consecutive year, to their lowest level in five years.”
Capital Economics said: “Today’s release would subtract around 0.15 percentage points from real GDP growth in December, which increases the chances the economy may have ended 2023 in the mildest of mild recessions.
“Looking ahead, some of the drag from higher interest rates on existing mortgage holders may result in a further modest decline in real consumer spending in Q1. But we think interest rate cuts from June and the further boost to real household incomes from falling inflation will support a recovery in real consumer spending in the second half of this year.”
In equity markets, 4imprint Group surged after the promotional merchandise maker said it expected annual earnings to be slightly above forecasts after a strong trading performance during 2023. Group revenue was forecast to rise 16% to $1.33bn with pre-tax profit of at least $140m, slightly above the upper end of the current range of analysts’ forecasts and 2022’s $104m.
Endeavour Mining was in focus as it said former chief executive Sébastien de Montessus, who was abruptly sacked earlier this month for serious misconduct, will miss out on $17.6m in bonuses and share awards. Furthermore, the company said it is clawing back an additional $11.5m in share awards and bonuses paid in respect of the past three years’ service.
Takeaway delivery company Deliveroo was also in the spotlight as it said annual earnings would be “slightly” ahead of guidance, with gross transaction value (GTV) up 7% year-on-year in the UK and Ireland, despite the cost-of-living crisis.
Outside the FTSE 350, logistics firm Wincanton rocketed after agreeing to be taken private by Ceva Logistics, a subsidiary of French shipping specialist CMA CGM, in a £566.9m deal.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Persimmon Plc | +2.28% | +32.50 | 1,457.50 |
| 2 |  |
British American Tobacco Plc | +1.59% | +36.50 | 2,325.50 |
| 3 |  |
Flutter Entertainment Plc | +1.58% | +240.00 | 15,465.00 |
| 4 |  |
Smith & Nephew Plc | +1.46% | +16.00 | 1,113.50 |
| 5 |  |
Aviva Plc | +1.38% | +5.90 | 432.90 |
| 6 |  |
3i Group Plc | +1.38% | +32.00 | 2,358.00 |
| 7 |  |
Segro Plc | +1.34% | +11.00 | 834.00 |
| 8 |  |
Informa Plc | +1.33% | +9.80 | 748.20 |
| 9 |  |
Melrose Industries Plc | +1.31% | +7.60 | 587.00 |
| 10 |  |
Vodafone Group Plc | +1.27% | +0.84 | 66.75 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Sage Group Plc | -0.52% | -6.00 | 1,154.50 |
| 2 |  |
Marks And Spencer Group Plc | -0.51% | -1.30 | 252.70 |
| 3 |  |
Pearson Plc | -0.46% | -4.40 | 953.40 |
| 4 |  |
Kingfisher Plc | -0.36% | -0.80 | 219.00 |
| 5 |  |
Associated British Foods Plc | -0.31% | -7.00 | 2,263.00 |
| 6 |  |
Hargreaves Lansdown Plc | -0.27% | -2.00 | 748.60 |
| 7 |  |
Glencore Plc | -0.23% | -0.95 | 418.90 |
| 8 |  |
Standard Chartered Plc | -0.14% | -0.80 | 576.00 |
| 9 |  |
Whitbread Plc | -0.11% | -4.00 | 3,631.00 |
| 10 |  |
Hiscox Ltd | -0.10% | -1.00 | 1,044.00 |
US close: Stocks higher as Apple buoys Nasdaq
Wall Street stocks were higher at the end of trading on Thursday as major indices reclaimed some of their recent losses.
At the close, the Dow Jones Industrial Average was up 0.54% at 37,468.61, while the S&P 500 advanced 0.88% to 4,780.94 and the Nasdaq Composite saw out the session 1.35% stronger at 15,055.65.
The Dow closed 201.94 points higher on Thursday, reclaiming losses recorded in the previous session.
Market participants have grown worried that a strong December retail sales report could result in fewer-than-anticipated rate cuts from the central bank, with traders currently pricing in an approximately 56% chance of a quarter percentage point rate cut in March. Of note, the yield on the benchmark ten-year Treasury note was up almost four basis points at the close of trading to sit at 4.146% following some fresh jobs data.
On the macro front, Americans lined up for state assistance at a decelerated pace in the week ended 18 January, according to the Labor Department. Initial jobless claims fell by 16,000 week-on-week to 187,000 for the lowest reading since September 2022 and well below market expectations for a print of 207,000. Continuing claims fell by 26,000 to 1.8m in the earlier week, the least since October 2023, indicating that Americans were having a somewhat easier to get into new positions, while the four-week moving average, which aims to strip out week-to-week volatility, fell by 4,750 to 203,250.
Elsewhere, housing starts in the US fell less than expected in December while building permits rose strongly, according to data released on Thursday by the Census Bureau. On a seasonally adjusted annual rate, privately‐owned housing starts fell 4.3% over the month to 1.460m, reversing sharply after 10.8% growth in November. However, this was 7.6% ahead of December 2022 and above the consensus estimate of 1.426m.
Finally, the Philadelphia Fed‘s manufacturing index rose 2.2 points in January to a reading of -10.6 for an 18th negative reading in the past 20 months. The indices for current new orders and current shipments both rose in January but also remained in negative territory.
On another note, Atlanta Fed president Raphael Bostic said he expects the central bank to start cutting rates in the third quarter, a slower pace than the market currently anticipates.
In the corporate space, Apple shares were up in after the tech behemoth was on the receiving end of an upgrade from analysts at Bank of America.
Friday newspaper round-up: Tax cuts, Endeavour Mining, Google
Jeremy Hunt has dangled the prospect of big tax cuts in his March budget, in what is seen as one of the last opportunities for the Conservatives to claw back Labour’s huge opinion poll lead. In his first public comments on his budget strategy, the chancellor made clear that only unexpected bad news would prevent him from answering the call from Tory MPs for a substantial giveaway before an expected autumn general election. – Guardian
The gold producer Endeavour Mining is to clawback more than $29m in pay and awards after firing its chief executive this month for alleged “serious misconduct” over allegations of a multimillion-dollar “irregular payment”. London-headquartered Endeavour said on Thursday that Sébastien de Montessus, who had led the FTSE 100 company since 2016, would be forced to forfeit $29.1m (£22.9m) in remuneration. – Guardian
A Norfolk couple have won a battle with one of the world’s richest men over the name of their home and gardening business. A tribunal ruled in favour of Victoria and Lawrence Osborne, L V Bespoke, this week after the French luxury goods giant LVMH launched a trademark dispute against the couple. LVMH, whose brands include Louis Vuitton and Dior, is owned by Bernard Arnault who vies with Elon Musk for title of the world’s richest man. – Telegraph
Google has announced a billion-dollar investment in a UK data centre in a move hailed by the government as a “huge vote of confidence in Britain”. The data centre, which will be built on a 33-acre site in Hertfordshire, will power Google’s cloud and AI services for British customers and will be the company’s third big site around the capital, after King’s Cross and Central Saint Giles in London. – The Times
Recycling Lives processes end-of-life vehicles for scrap metal, as well as electronic waste for customers such as BT, British Gas and Sharp. The company, which was owned by Three Hills Capital Partners, a private equity firm, appointed EY as administrator to its metals business, which employs more than 300 people, with most of those transferring on Thursday to a new, undisclosed owner via a pre-pack administration. – The Times
