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London open: FTSE falls; Lloyds, Centrica results in focus
London stocks fell in early trade on Thursday as investors mulled a slump in consumer confidence and results from the likes of Lloyds and Centrica.
At 0830 GMT, the FTSE 100 was down 0.3% at 8,689.26.
Investors were mulling a survey out earlier from the British Retail Consortium, which showed that consumer confidence worsened this month, with views about the economic situation and personal finances taking a hit.
The BRC Consumer Sentiment Monitor for February showed that 50% of people expect the state of the UK economy to worsen over the next three months, up from 48% in January and 42% in December.
With just 13% of consumers expecting better conditions and 32% predicting no change, that nets out to a balance of -37, down from -34 the month before.
This was the fifth straight month of worsening expectations, and a sharp drop since the summer, when more people predicted an improvement in conditions than a deterioration.
“People’s expectations of the economy reached a new low, having fallen almost 40 points since July 2024,” said the BRC’s chief executive Helen Dickinson.
Consumer views of their own financial situation fell to a balance of -11 in February from -4 in January, and while personal retail spending expectations rose to -5 from -9, this may have been driven by expectations of higher prices in the coming months, the BRC said.
“With many businesses warning of the impact that April’s employer NIC’s increase will have on hiring, and the rising energy price cap pushing up the cost of domestic bills, it is little surprise that many households are worried,” Dickinson said.
Two-thirds of retailers have said that prices will have to rise due to £7bn of additional costs coming their way, which include higher employer national insurance contributions and a new packaging levy, the BRC said.
“With many businesses warning of the impact that April’s employer NIC’s increase will have on hiring, and the rising energy price cap pushing up the cost of domestic bills, it is little surprise that many households are worried. And while there was a positive increase in expectations of personal retail spending, this may be largely driven by the expectations of higher prices in the future,” Dickinson said.
In equity markets, British Gas owner Centrica surged as it hiked its dividend and announced a £500m share buyback after full-year earnings beat forecasts.
Anglo American was also a high riser despite posting a full-year loss of $3.1bn after a large impairment related to its De Beers diamond operation as it continued restructuring plans to focus on copper and iron ore.
The loss attributable to shareholders compared to a profit of $283m in 2023, while the dividend was cut to 64 cents a share, from 96 cents.
Lloyds Bank gained even as it said annual profit fell 20.4%, worse than expected, and set aside an extra £700m to cover potential claims against motor finance commission deals.
Pre-tax profit came in at £5.97bn, compared to £7.5bn a year earlier and consensus estimates of £6.39bn.
Net interest margin – the difference between savings and loan rates – fell 16 basis points to 2.95%.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said the £700mn motor finance charge “tarnishes a strong final quarter”.
“Lloyds has capped off a strong year with a clouded fourth-quarter result, setting aside a hefty £700m provision for potential charges related to the ongoing motor finance saga. While you could argue the provision is overly cautious, Lloyds holds the largest exposure of any major UK bank, and the outcome remains uncertain. Despite this, the stock is up over 40% in the past year, reflecting a solid banking outlook and robust performance,” he said.
“Beneath the surface, Lloyds is delivering strong results. Excluding the motor finance charge, fourth-quarter figures exceeded expectations, thanks to borrowers performing better than anticipated. Remarkably, Lloyds has managed to improve its loan quality over the course of the year, defying fears that borrowers would buckle under the pressure of persistent inflation.”
On the downside, opioid addiction treatment maker Indivior tanked after results.
Recruiter Hays lost ground as it reported a drop in first-half profit amid “challenging” market conditions, as economic and political uncertainty weighed on client and candidate confidence.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Centrica Plc | +8.79% | +11.95 | 147.85 |
| 2 |  |
Lloyds Banking Group Plc | +3.91% | +2.46 | 65.30 |
| 3 |  |
Anglo American Plc | +3.54% | +84.00 | 2,454.00 |
| 4 |  |
Wheaton Precious Metals Corp. | +2.96% | +160.00 | 5,560.00 |
| 5 |  |
Banco Santander S.a. | +1.78% | +8.50 | 486.50 |
| 6 |  |
Natwest | +1.52% | +6.70 | 446.40 |
| 7 |  |
South32 Limited | +1.47% | +2.70 | 185.90 |
| 8 |  |
Antofagasta Plc | +1.38% | +25.50 | 1,876.00 |
| 9 |  |
Bhp Group Limited | +1.38% | +28.00 | 2,061.00 |
| 10 |  |
Glencore Plc | +1.30% | +4.25 | 332.05 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Imperial Brands Plc | -2.34% | -65.00 | 2,713.00 |
| 2 |  |
Bp Plc | -2.20% | -10.20 | 453.10 |
| 3 |  |
Astrazeneca Plc | -1.86% | -218.00 | 11,486.00 |
| 4 |  |
Rolls-royce | -1.81% | -11.60 | 631.00 |
| 5 |  |
Gsk Plc | -1.32% | -19.00 | 1,418.50 |
| 6 |  |
Hsbc Holdings Plc | -1.04% | -9.30 | 886.10 |
| 7 |  |
Bae Systems Plc | -0.97% | -13.00 | 1,332.00 |
| 8 |  |
Haleon | -0.79% | -3.10 | 387.40 |
| 9 |  |
British American Tobacco Plc | -0.73% | -22.00 | 3,008.00 |
| 10 |  |
Scottish Mortgage Investment Trust Plc | -0.67% | -7.50 | 1,117.50 |
US close: Gains limited but S&P 500 notches another record
Stocks finished higher on Wednesday with the S&P 500 booking another record close, though gains were only modest as ongoing uncertainty around trade policies kept a lid on risk appetite.
The Dow finished 0.16% higher, while the Nasdaq rose 0.07%, edging closer to its peak registered in December. The S&P 500, however, gained 0.24% to a new high of 6,144.15 – surpassing a previous record set on Tuesday.
“It’s fair to say that the records were hit without fanfare, and that the S&P and NASDAQ have yet to break out decisively from their current consolidation patterns which have been building since December,” said David Morrison, senior market analyst at Trade Nation.
“The two indices are up 4.0% and 5.5% respectively since the beginning of this year. And yet the performance of the individual constituents of the ‘Magnificent Seven’, a group which has led the overall market for many years, both up and down, has proved patchy. ”
Uncertainty abounds
Concerns regarding sticky inflation and Donald Trump’s trade policies remained in focus on Wednesday after the president floated the idea of imposing a 25% tariff on automotive, semiconductor and pharmaceutical imports into the US. The news caused stocks in Europe – and Germany in particular which is heavily reliant on its auto sector – to drop sharply on Wednesday.
Back on home shores, minutes from the latest Federal Open Market Committee meeting offered few surprises for markets, with policymakers showing caution in regards to any possible near-term rate cuts.
“A majority of participants observed that the current high degree of uncertainty made it appropriate for the committee to take a careful approach in considering additional adjustments to the stance of monetary policy,” minutes from the 28-29 January meeting showed.
In economic news, US mortgage applications fell 6.6% in the week ended 14 February, according to the Mortgage Bankers Association of America. The Census Bureau said US housing starts dropped 9.8% to a seasonally adjusted annual rate of 1.37m, below the 1.4m expected by analysts. Building permits, on the other hand, rose 0.1% over the month to 1.48m, ahead of the 1.46m consensus forecast.
Market movers
Shares in American ecommerce marketplace Etsy fell sharply as sales over the key holiday-shopping season missed the mark. Gross merchandise sales were down 6.8% year-on-year at $3.7bn in the fourth quarter, with the company guiding to a similar decline in the first quarter of 2025.
Apple finished flat after unveiling its iPhone 16E, which will retail at $599, compared with the $799 price of the iPhone 16. However, in other news, Bank of America analysts said the tech giant would have to raise prices across the board by 9% to make up for the negative impact of Trump’s trade tariffs given its reliance on parts from international manufacturers.
Southwest Airlines edged higher after allowing activist investor Elliott Investment Management to increase its economic exposure in the airline from 14.9% to 19.9%.
Online dating firm Bumble was down 30% after first-quarter guidance disappointed investors, with forecasts for revenue, margins, operating profits and user growth all coming in below estimates.
Arista Networks shares also traded 6% lower despite quarterly earnings and revenue topping Wall Street expectations.
Thursday newspaper round-up: British Steel, public services, Microsoft
British Steel should get an extra £200m from the government to support it in keeping the UK’s two remaining blast furnaces open until electric replacements are built, according to a proposal put forward by unions. Chinese-owned British Steel has said it will replace its polluting blast furnaces at Scunthorpe with electric arc furnaces, which can be used to make much cleaner, recycled steel. – Guardian
Britain’s crumbling public services are bad for business, and spending more taxpayers’ money to fix them is a pro-growth policy, the pensions minister, Torsten Bell, has argued. Rachel Reeves has been accused by business lobby groups of clobbering the economy with the £25bn increase in employer national insurance contributions imposed in her October budget. – Guardian
Microsoft has invented a new state of matter separate to solids, liquids and gases in a scientific breakthrough the technology giant says could create the world’s most powerful computer. The company unveiled a quantum computer chip on Wednesday that generates new types of particles existing in a “topological” state. Topological states have previously only existed in theory and require a delicate combination of magnetic fields, new materials and temperatures near absolute-zero to bring about. The state does not occur naturally and its existence has only been made possible through advances in quantum physics. – Telegraph
The US arm of KPMG has removed reports on its diversity, equity and inclusion initiatives from its website after similar programmes were criticised by President Trump. The accounting and consulting firm has withdrawn years of annual “transparency reports” from its website that detailed the representation of women and minorities across the organisation. Similar reports produced for KPMG’s UK business remain available to view online. – The Times
The chief financial officer of John Wood Group has resigned after it emerged that his professional qualifications had been misstated. Arvind Balan said it had been an “honest oversight” that he was described as a chartered accountant rather than a certified practising accountant. Balan, 44, was hired in November 2023 and formally joined the energy engineering consultancy in April last year. He was described as a chartered accountant in official announcements by the company. – The Times
