Yahoo Finance FTSE 100 Live 25 January: London blue-chips close flat after US GDP crushes expectations
The FTSE 100 got a lift this afternoon as markets reacted to shockingly strong figures on the US economy and the European Central Bank's slightly more dovish comments following its latest interest rate hold.
The US's fourth-quarter GDP figures came in well ahead of all economists' expectations, while at the same time a key gauge of prices showed inflation is already at the Fed's target rate. That suggests the US is in for a "goldilocks scenario", where it could escape the inflation crisis without a notable economic slowdown.
China’s central bank earlier stepped up efforts to support the world’s second largest economy by lowering its reserves requirement for banks.
Today’s session in London has also seen a flurry of trading updates, including by Halfords, Wizz Air, Foxtons, Dr Martens, Britvic and Fevertree Drinks.
FTSE 100 Live Thursday
US GDP soars ahead of expectations
ECB holds as expected
Halfords sales impacted by mild weather
Dr Martens warns on currency pressure
FTSE 100 closes up two points
Thursday 25 January 2024 16:41 , Daniel O'Boyle
The FTSE 100 closed up two points today at 7,529.73, getting an afternoon bump after the ECB rates decision and US economic data.
It was as low as 7507 before a rise on the double whammy of dovish ECB language and a US soft landing.
The top riser of the day was .Intermediate Capital Group. St James's Place was the biggest faller.
Consumers drive US GDP growth
Thursday 25 January 2024 16:25 , Daniel O'Boyle
Mark Sherlock, Head of US Equities at Federated Hermes Limited, following today’s US GDP reading, said: “US GDP grew at a 3.3% annualised rate in Q4 2024, above consensus, and at 2.5% for all 2023. The figure illustrates the strength of the US economy and importantly the resilience of the US consumer, considering the main growth driver was personal spending. While GDP growth is unlikely to remain at this level through 2024, a continuingly robust employment backdrop will likely mitigate against the dramatic economic downturn feared by some.”
Lloyds Bank to cut 1,600 jobs across branches in shift to online banking
Thursday 25 January 2024 16:08 , Daniel O'Boyle
Lloyds Banking Group has said it is cutting about 1,600 jobs across its branch network, as part of an ongoing shift towards online banking.
The overhaul will also see the banking giant create 830 roles in an expanded “relationship growth” team, where more staff will be available to talk to customers in branches, through video meetings or over the phone.
The redundancies are not expected to affect the most junior employees, and in some situations staff will be offered voluntary redundancy.
Elon Musk loses $9bn from his fortune as Tesla shares tumble after profits fall
Thursday 25 January 2024 15:45 , Daniel O'Boyle
Elon Musk saw almost $9 billion (£7 billion) wiped off his net worth as Tesla shares plunged by 10% following disappointing financial results yesterday.
Following market close on Wednesday, Tesla reported its first ever annual profit decline. Earnings per share fell by 23% for the year as revenue came in below expectations.
Kathleen Brooks, research director at XTB, said: “Tesla missed earnings estimates yet again in Q4. Its adjusted EPS came in at $0.71, vs. $0.73 expected. A weaker quarter for earnings growth was expected by analysts, however, the revenue miss was a shock.”
Microsoft cutting 1,900 gaming staff in post-Activision Blizzard deal layoff round, report claims
Thursday 25 January 2024 15:02 , Daniel O'Boyle
Microsoft is to lay off 1,900 gaming employees this week, mostly at the recently acquired business Activision Blizzard, according to a report.
The Verge reports that the tech giant - which crossed the $3 trillion barrier in market cap earlier this week - is planning to cut around 8% of its 22,000-strong gaming workforce. Most of the reductions will be at Activision Blizzard, which Microsoft acquired late last year in a massive $68.7 billion deal following a contentious competition probe. However, some of the cuts will be at Xbox and Zenimax.
Microsoft Gaming CEO reportedly sent staff a memo that said: “It’s been a little over three months since the Activision, Blizzard, and King teams joined Microsoft. As we move forward in 2024, the leadership of Microsoft Gaming and Activision Blizzard is committed to aligning on a strategy and an execution plan with a sustainable cost structure that will support the whole of our growing business. Together, we’ve set priorities, identified areas of overlap, and ensured that we’re all aligned on the best opportunities for growth.
London home sales have busiest start to year since pre-Covid — Foxtons
Thursday 25 January 2024 14:49 , Daniel O'Boyle
The boss of London’s largest residential property agency Foxtons today said the sales market was seeing its busiest start to the year since before the pandemic, with buyers flooding to take advantage of lower mortgage rates.
CEO Guy Gittins said headline mortgage fixed deals falling below 4% “is certainly stimulating the market” in January after a “challenging” year when sales revenues fell 14%. It was overshadowed by the spike in interest rates that followed the mini-Budget in autumn 2022 and the inflation surge. In the year to date, buyer applications at Foxtons are up 30%, while new offers are 20% higher than in 2023.
Market snapshot: FTSE 100 slightly up for the day
Thursday 25 January 2024 14:04 , Daniel O'Boyle
The FTSE 100 has returned to slightly positive territory for the day following the double-whammy of dovish ECB comments and signs of a US soft landing.
Take a look at our full market snapshot
Good news on GDP and inflation give Fed 'plenty to think about'
Thursday 25 January 2024 13:53 , Daniel O'Boyle
Neil Birrell, Chief Investment Officer at Premier Miton Investors, says: “The US economy rarely surprises on the downside and that remains the case: the fourth quarter GDP numbers blew estimates away, coming in much stronger than expected. However, there was good news on inflation, with the GDP price index falling well below estimates. These somewhat ambiguous numbers will give the Fed plenty to think about, but with the consumer sector remaining particularly strong, there is scope for disappointment regarding early rate cuts.”
Fed's favourite inflation measure on target
Thursday 25 January 2024 13:37 , Daniel O'Boyle
Alongside the strong GDP reading, the core PCE price index - the US Federal Reserve's favourite measure of inflation in the US - came in at 2%.
Combined with the strong inflation reading, that suggests the US 'soft landing' is all but secured.
US GDP grows by 3.3% annualised rate in final quarter
Thursday 25 January 2024 13:31 , Daniel O'Boyle
The US economy grew by an annualised rate of 3.3% in the final quarter of 2023, blowing expectations out of the water again.
That equates to growth of about 0.8% during the quarter.
The figure was well ahead of the expected 2.0%. In a Bloomberg survey of 68 economists, the highest prediction was 2.5%.
It's also a major contrast to the expected figure for the UK, which is likely to be very close to the zero mark.
US GDP reading imminent
Thursday 25 January 2024 13:27 , Daniel O'Boyle
While markets digest the latest ECB decision, we're also only minutes away from the latest US GDP reading.
Annual growth of around 2.3% is expected, with the world's largest economy growing at an annualised rate of about 2.0% in Q4. That's much slower than the previous quarter, but remains very strong.
Stronger growth figures could be the latest sign that the US is in for a 'soft landing', while weaker figures will raise questions about whether the country is still in for a gentle escape from the inflation crisis.
ECB 'may soon have no choice' but to cut
Thursday 25 January 2024 13:24 , Daniel O'Boyle
Richard Carter, head of fixed interest research at Quilter Cheviot, says signs of decline within the Eurozone may soon force the European Central Bank's hand.
He said: “As was expected, the European Central Bank has once again held interest rates, reiterating its reluctance to begin making cuts despite the ever mounting pressure to do so.
“Inflation had been falling consistently in the Eurozone but saw an unwanted uptick to 2.9% in December, adding fuel to the ECB’s relatively hawkish position. Markets have been anticipating cuts to begin as early as the spring, but the ECB appears fearful that cutting rates too soon could do more harm than holding them higher for too long. However, the weakening economic outlook will be of grave concern and could prompt a move towards cuts sooner than the ECB might have hoped in an attempt to stimulate growth.
“The ECB will also be keeping a watchful eye on the labour market in the coming months. Wage inflation is a real concern given it currently sits at almost double headline inflation, while unemployment is running at a record low of 6.4%, so any signals from the labour market will be important factors in its decision making going forward.
“Given it took such a cautious stance at the beginning of the rate hiking cycle, the ECB will likely be reluctant to take a decisive lead in making cuts – though soon it may have no choice. However, it will want to ensure inflation is well under control and that there wouldn’t be any unintended consequences from its actions, so it is likely to cling to its higher for longer message for as long as possible.”
ECB: "Declining trend" in inflation has continued
Thursday 25 January 2024 13:21 , Daniel O'Boyle
The ECB says it's still seeing a promising trend on inflation, in a sign of dovishness that may signal cuts might not be too far away.
The bank said: "Aside from an energy-related upward base effect on headline inflation, the declining trend in underlying inflation has continued, and the past interest rate increases keep being transmitted forcefully into financing conditions.
"Tight financing conditions are dampening demand, and this is helping to push down inflation."
ECB holds rates
Thursday 25 January 2024 13:16 , Daniel O'Boyle
The European Central bank has held its interest rates as expected.
The central bank for the Eurozone said it is "determined to ensure inflation returns to 2% in a timely way"
" Based on its current assessment, the Governing Council considers that the key ECB interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to this goal," it added.
Next UK government faces biggest debt challenge since 1950s – report
Thursday 25 January 2024 12:29 , Daniel O'Boyle
Sluggish economic growth and high national debt will leave the next UK government facing one of the bleakest fiscal challenges since the 1950s, experts have warned.
Whichever party wins the election this year may be unable to fund existing public services if politicians are not transparent about the trade-offs they face, according to an Institute for Fiscal Studies (IFS) report.
Prime Minister Rishi Sunak and Chancellor Jeremy Hunt have for months dropped hints about tax cuts featuring in the spring Budget in March.
Fuller’s in ‘great shape’ as pub chain’s festive sales jump a fifth
Thursday 25 January 2024 12:13 , Daniel O'Boyle
Pub giant Fuller’s has said it is in “great shape” after Christmas and New Year sales surged by more than a fifth.
The Chiswick-based company, which runs 370 venues across the UK, told investors that sales jumped 21.6% over the five-week period around Christmas and New Year, compared with the same period a year earlier.
It said the rise was driven by “great performance” across both its pubs and hotels.
Digital pound launch undecided amid privacy concerns, says Bank of England
Thursday 25 January 2024 11:48 , Daniel O'Boyle
The Bank of England and the Government have said they have not yet decided whether to launch a digital pound after months of gathering feedback from about 50,000 responses.
The Bank and the Treasury launched a consultation in February last year over the so-called central bank digital currency (CBDC).
A design for the system is currently being drawn up, which could see digital money used by households and businesses in the UK alongside cash and bank deposits.
Lego to look at future London office options
Thursday 25 January 2024 10:54 , Daniel O'Boyle
Lego is looking at the potential for a new London headquarters in the future, appointing a firm to advise on options should the toymaker need to significantly build up its office presence in the capital.
The toy bricks maker, whose products include Star Wars and Harry Potter kits, has reportedly appointed property agent JLL to search for between 150,000 -200,000 sq ft of office space in London.
Large companies typically look at plans for potential moves well in advance to prepare for a scenario where they may want to expand space in the future, although it is not uncommon for businesses to remain where they are.
Halfords and Fevertree shares under pressure, FTSE 100 holds firm
Thursday 25 January 2024 10:28 , Graeme Evans
A weather-related setback for Halfords and tougher European trading for Fevertree Drinks today kept their shares in the City’s slow lane.
The retailer fell 3% or 4.6p to 169.4p, near its lowest level since April, after mild conditions contributed to a 15.3% sales decline in retail motoring during December.
Boss Graham Stapleton also reported signs that drivers have delayed essential maintenance, leading to “a worrying increase in potentially unsafe vehicles on the road”.
He described the group’s overall performance as resilient after more strong growth in its Autocentres business offset a weaker result in cycling in the third quarter.
House broker Peel Hunt backs the shares to hit 275p, believing the retailer is well-placed for an earnings recovery when demand conditions normalise.
Today’s fall for shares in Fevertree came despite the mixers firm delivering a 6% rise in fourth quarter sales to £364.4 million. The performance was led by the US, now the company’s biggest market following a 22% jump to £117 million.
UK sales dipped 1% to £114.8 million, although this was ahead of guidance due to demand in bars and restaurants. Its European performance was impacted by recession in Germany, where a “refocusing” of its range is set to reduce this year’s revenues by £7 million.
Fevertree’s AIM-listed shares dropped 10.6p to 1001.4p, leaving them down 25% since the summer.
In the FTSE 100 index, shares in wealth manager St James’s Place were back under pressure after reporting quarterly net flows short of City expectations. The stock has fallen 48% since July, including today’s fall of 59p to a multi-year low of 617p.
Scottish Mortgage Investment Trust also dropped 10.6p to 770p following last night’s disappointing earnings update by portfolio company Tesla.
London’s top flight stood 3.98 points higher at 7531.65, aided by gains of 1% for BP and Shell after Brent Crude returned above $80 a barrel.
The FTSE 250 index dropped 27.59 points to 19,144.09, although Royal Mail owner IDS continued its strong week with a gain of 5% or 14.6p to 289.8p.
'We could be in for a difficult earnings season'
Thursday 25 January 2024 09:51 , Daniel O'Boyle
Russ Mould, investment director at AJ Bell, says: “Numerous UK stocks got the thumbs-down vote from investors as they updated on trading. For example, Fevertree’s full-year sales growth missed expectations and Halfords had a tough December.
“High interest rates are causing longer lasting pain for consumers and businesses than many people thought, meaning we could be in for a difficult corporate earnings season as management teams become cautious about the outlook."
St James' Place plunges to bottom of FTSE 100 despite £5bn net inflows
Thursday 25 January 2024 09:26 , Daniel O'Boyle
Shares in St James’ Place have plunged despite net inflows £5.1 billion, in the latest sign of difficulty for fund managers.
The shares lost as much as 9.7% to 610p before a slight recovery, sending it to the bottom of the FTSE 100. Peel Hunt slashed its target price for the firm but kept its buy recommendation.
Boss Mark FitzPatrick said: “As we build on the strong foundations we have established over three decades, we continue to see a huge opportunity to support more clients who need help and advice. I want SJP to capture this long-term opportunity, so as we start planning our vision for 2030 I am reviewing all elements of our business to ensure we are fully fit for the future and best placed to keep delivering for all our stakeholders.”
Yesterday, Abrdn announced 500 job cuts after reporting massive outflows. Baillie Gifford also cut jobs yesterday.
Bank of England 'could take first step towards cutting rates' next week
Thursday 25 January 2024 09:07 , Daniel O'Boyle
Ahead of the ECB's rates decision today, Paul Dales, chief UK economist at Capital Economics, says the Bank of England could take the first step towards rate cuts at its own meeting next week.
He said: "At the policy meeting on Thursday 1st February, the Bank of England will probably throw in the towel on the pretence that interest rates could rise further and take the first steps towards cutting rates from 5.25%. We’ve pencilled in the first rate cut for June and think that rates will fall to 3.00% in 2025 rather than to 3.50-3.75% as priced into the market."
Oil stocks rally on $80 Brent Crude, Fevertree shares down 3%
Thursday 25 January 2024 08:38 , Graeme Evans
European stock markets are trading in the red, with the FTSE 100 index down 8.87 points at 7518.80 and the FTSE 250 index off 48.25 points at 19,123.43.
Banking stocks have taken the biggest hit in the top flight after Lloyds declined 0.6p to 41.6p and Standard Chartered fell 11.2p to 598.2p.
On the risers board, BP and Shell are up by 1% after the Brent Crude price topped $80 a barrel. Intermediate Capital leads the FTSE 100, up 4% or 58.5p to 1695.5p after the alternative asset manager’s third quarter update.
In the FTSE 250, trading statements by IG Group and Wizz Air sent their shares down by 9% and 5% respectively. Dr Martens shares lifted 3% or 2.55p to 77.9p.
All-Share stock Halfords fell 2% or 3.2p to 170.8p after its sales warning while AIM-listed Fevertree Drinks weakened 3% or 32.25p to 979.75p.
Market snapshot: FTSE 100 slightly lower
Thursday 25 January 2024 08:34 , Daniel O'Boyle
Take a look at our early market snapshot with the FTSE 100 a little lower in early trading
Fevertree results fail to sparkle
Thursday 25 January 2024 08:33 , Simon Hunt
Shares in soft drinks maker Fevertree fell flat this morning after strong sales in the US were offset by a mixed performance elsewhere.
US revenues jumped by almost a quarter to £117 million in 2023, overtaking sales in the UK for the first time, which declined slightly to £115 million. Sales in Europe rose 4% but turnover fell by 14% outside Europe and the US.
Fevertree said it only expected total sales to grow by 8% in 2024, in part because of a “refocusing” of the range of drinks sold in Germany, which it said would lead to a £7 million revenue fall. Shares fell 3% to 981p.
ChapStick lip balm being sold in deal worth $530 million
Thursday 25 January 2024 07:53 , Michael Hunter
One of the most famous names in facial skincare is changing hands in a $530 million (£400 million) deal.
ChapStick – the lip balm accessory with a history dating back to the 1890s – is being sold by UK firm Haleon to Suave Brands.
The buyer owned by US private equity firm Yellow Wood Partners, which invests exclusively in consumer products firms.
The cash component of the deal is worth $430 million. Haleon will also get "a passive minority interest" in Suave Brands worth around $80 million. It will use the cash proceeds to pay down debt.
Brian McNamara, Haleon's CEO, said: "While ChapStick is a great brand, much loved by consumers around the world, it is not a core focus for Haleon. Selling the brand allows us to simplify our business."
Doc Martens puts the boot in with latest warning on currency
Thursday 25 January 2024 07:44 , Daniel O'Boyle
Boot maker Dr. Martens warned it could take another £10 million hit from currency changes, as it continues to deal with difficulties in the US.
The iconic brand saw American revenue fall by 31% in the three months to 31 December, which it blamed on weak consumer sentiment.
“The new Americas leadership team continue to take action, particularly in marketing execution and ecommerce trading capabilities, to drive revenue and grow the brand,” the business said.
That meant overall revenue was down 21% to £267.1 million.
That decline was expected, but the business put the boot in when it warned it could face another £10 million hit due to the strength of the pound.
It said: “The appreciation of sterling since the end of H1 means that, if current FX rates persist, we anticipate a currency headwind to the P&L of approximately £5m, together with a non-cash Balance Sheet translation charge, also of approximately £5m.”
Halfords festive season sales 'much weaker' in mild winter weather
Thursday 25 January 2024 07:40 , Michael Hunter
Halfords, the motoring and cycling accessories chain, blamed "mild winter weather" today for sales in December that were "much weaker than expected".
The 400-strong chain also said customers were "balancing difficult spending decisions in the run up to Christmas". It meant like-for-like sales in the "retail motoring" part of the unit fell 15.3%.
October and November sales helped offset the plunge in the peak-season. The company said those months were "strong".
Halfords, which was at the centre of takeover speculation last year, stood by its profit guidance for the full-year, pointing to the need to keep cars safe and roadworthy.
It said: "Assuming that markets do not weaken further in Q4, we continue to expect profit before tax to fall within the previously communicated range of £48 million to £53 million."
Graham Stapleton, chief executive officer, added: "Trading in Q4 has begun strongly and we remain focused on everything that we can control".
And he pointed out that "we are still seeing drivers delay essential maintenance and there is a worrying increase in potentially unsafe vehicles on the road.
"Recent TyreSafe data estimates that one-in-four tyres on Britain’s roads could be illegal, equating to just over 10 million tyres."
Wizz Air boss: Demand to remain subdued
Thursday 25 January 2024 07:34 , Daniel O'Boyle
There are more signs travel recovery may have run its course as low cost carrier Wizz Air says "overall market capacity is likely to remain subdued for some time".
Revenue grew to €1.07 billion (£914 million) in the three months to 31 December., but the business swung to a €105 million loss. Its load factor remains well below pre-pandemic levels at 87.6%.
CEO József Váradi said: “We remain committed to effective cost management, utilization of assets and productivity, all of which are paramount in the coming periods, and we are confident in our ability to manage these factors. There are opportunities for us to optimize operations and achieve better trading yields, as overall market capacity is likely to remain subdued for some time due to both the macro-economic environment, and other external pressures.”
Wizz says the ongoing conflict in Israel and Gaza cost it €0.10 of "unit revenue", which likely means a total hit of around €30 million.
The results follow big losses from easyJet yesterday.
Asia shares surge on bank support, Tesla lower as focus moves to US GDP
Thursday 25 January 2024 07:21 , Graeme Evans
Asia markets have risen sharply after China’s central bank lowered its reserve requirement ratio in an effort to boost bank lending.
Its latest support for the country’s struggling economy, which is expected to free up around $140 billion (£110 billion) in long-term capital, sent the Shanghai Composite up 3% and the Hang Seng index 2% higher.
Europe’s central bank is also in focus today, with today’s monetary policy meeting set to reveal no change in interest rates. However, traders will be looking for any signal on when rates might begin to fall.
While President Christine Lagarde has said it is too soon for the ECB to lower its guard on inflation. Deutsche Bank reported today that investors still see a 64% chance of a cut by the April meeting.
On Wall Street, the main event took place after a broadly flat session as Tesla missed earnings and revenue expectations for the fourth quarter.
The car maker also warned that 2024 volume growth may be “notably lower” than last year, sending shares down 3% in after-hours dealings.
The FTSE 100 rose 0.6% or 41.94 points yesterday but CMC Markets expects London’s top flight to open 19 points lower at 7,508 ahead of this afternoon’s fourth quarter US GDP reading.
Traders expect a slower annual growth rate for the quarter of around 2%.
Recap: Yesterday's top stories
Thursday 25 January 2024 06:46 , Simon Hunt
Good morning from the Standard City desk
Investing in airlines shares is not for the risk averse.
In 2007, legendary investor Warren Buffett warned that getting caught up in the romance of air travel was a fool’s errand for the smart investor.
He changed his mind later and took multi-billion-dollar positions in some of America’s biggest carriers — American, Delta and United. Then he reverted to his original stance and sold off the shares.
When things are going well for air travel, competition is so intense that profits are thin on the ground. When they are going badly, well, that is usually a sign of some calamity or other.
EasyJet results yesterday show why Buffett is so unsure about airline stocks. Most of the things buffeting the business are far outside of its control — CEO Johan Lundgren can’t solve Middle East political tensions and run a successful airline at the same time (the first task is beyond seemingly anyone).
EasyJet is a brilliantly run business that has helped make air travel available to a wider section of the population than was ever once thought possible.
This doesn’t make flying easyJet a consumer joy — sometimes it is flat-out awful.
For that reason alone it feels like a company to endure as a customer and avoid as an investor.
Here's a summary of our other top stories from yesterday:
City job fears as Abrdn confirms 500 jobs to go, mostly in its investments arm where customers have pulled out £12.4bn OBOYLE
Profit warnings from Revolution Bars amid slump in January trading after bumper Christmas while Wetherspoons sales continue to grow but Tim Martin bemoans competition from supermarkets
String of London’s largest landlowners, from Grosvenor to Cadogan, reveal sales and footfall growth on their huge estates over Christmas, despite retail challenges
Tech services provider Computacenter hints at big returns for shareholders as it ends the year with £450m in cash
Subtitling firm Zoo digital warns it’s “taking longer than expected” to get back to business as usual following last year’s Hollywood strikes - says losses will be bigger than thought
