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FTSE 100 Live: FTSE 100 hits 3-year high, Gas prices plunge 20%; House prices down 1.5%

 (Evening Standard)
(Evening Standard)

The FTSE 100 has closed up 66 points to 7,699, hitting a 3-year high as it edges closer towards the all-time high of 7,900.

Gas prices fell 20% in the final week of December, according to new data released by the Office for National Statistics this morning, amid unusually mild temperatures at the start of the new year.

Meanwhile, mortgage lender Halifax today revealed the average UK house price dropped 1.5% in December.

The decline, which follows a 2.4% fall in November, means the annual growth in prices now stands at 2% compared with 4.6% the previous month.

FTSE 100 Live Friday

  • House prices fall 1.5% in December

  • Samsung reveals quarterly profits slide

  • Shell hit by $2bn windfall tax blow

That’s all folks. On Monday: ES City desk share tips for 2023

Friday 6 January 2023 18:30 , Simon Hunt

That concludes our liveblog coverage for today, on the day the FTSE 100 index finally recovered to pre-pandemic levels as it hovered around 7,700.

The Evening Standard City desk will be back at 7am on Monday where we’ll unveil the team’s share tips for 2023.

FTSE 100 hits 3-year high; closes just shy of 7,700

Friday 6 January 2023 16:44 , Simon Hunt

London’s top stock index pushed to its highest point since 2019 on Friday, as it capped off a strong opening week to the year with a solid performance.

The FTSE 100 peaked a point above the 7,000-point mark for the first time in years, but ended the day at 7,699.49, a rise of 66 points.

The 0.9% rise helped push the FTSE to its highest single point since the start of August 2019, well before the pandemic hit and ripped through the economy.

The move upwards was driven by the UK’s natural resources sector, a major component of the FTSE 100.

US could ease off rate rises

Friday 6 January 2023 16:32 , Simon English

Is the Federal Reserve going to slow its pace of interest rate rises?

That looked likely today when the latest US jobs report showed slower wage growth, suggesting inflation is coming under control.

In return, markets began to bet the next Fed rate rise will be a quarter percentage point, but no more.

That in turn could encourage the Bank of England to follow suit. In December the Bank put rates up by 0.5 percentage points to 3.5%.

That was the ninth increase in a row.

Why overseas capital still views London as a takeover prospect

Friday 6 January 2023 15:33 , Simon Hunt

With the economy sliding into recession, no sign of an end to the war in Ukraine and the spiralling cost-of-living crisis, you would be forgiven for thinking that the world of business mergers and acquisitions in the United Kingdom would be grinding to a halt.

In fact, it is quite the opposite, with recent figures released by the Office for National Statistics confirming that the value of takeovers of UK companies more than doubled to £25 billion in the third quarter of 2022, compared with £12.5 billion in the third quarter of 2021 and £11.1 billion in the second quarter of this year.

Read more City Voices here

Bet365 boss Denise Coates takes home more than £200m despite big pay cut

Friday 6 January 2023 15:17 , Simon Hunt

Bet365 boss Denise Coates comfortably managed to make more than £200 million last year despite taking a more than £36 million pay cut.

The company’s financial accounts show that the best-paid director at the gambling company – believed to be majority owner Ms Coates – took home more than £213 million in pay last year, not including her dividends.

The figure makes her one of the best-paid employees in the world, and means that she pockets about a third of the total that the business pays to all its nearly 6,100 employees.

As the majority owner of the business, Ms Coates also received tens of millions of pounds in dividends. It is unclear exactly how much of the dividend she pocketed, however, she is entitled to more than half of the £100 million payments.

Wall Street stocks rise after moderate US jobs growth data

Friday 6 January 2023 14:47 , Simon Hunt

Stocks made gains in the opening minutes of trade on Wall Street today, after moderate US jobs growth reduced the chances of a steeper interest rate rise when the Federal Reserve next meets.

After the opening bell, The Dow Jones rose 0.38%, while the S&P 500 was up 0.40% and the Nasdaq Composite index gained 0.57%.

Total nonfarm payroll employment increased by 223,000 in December, and the unemployment rate edged down to 3.5 percent, the U.S. Bureau of Labor Statistics reported today. That increase was higher than the 200,000 consensus forecasts by economists, according to the Reuters news agency.

The employment figures also pushed US treasury yields down, with two-year yields sliding 5.1 basis points to 4.401%.

Eurozone inflation falls more than expected

Friday 6 January 2023 13:11 , Simon Hunt

Eurozone inflation fell more than expected, figures released today show, as energy prices came off their mid-2022 peaks.

Consumer price growth slowed from 10.1% in November to 9.2% in December, significantly lower than market expectations of 9.7%, according to a poll by news agency Reuters.

However, core inflation, a measure which excludes a number of more volatile prices such as energy, rose from 6.6% to 6.9%, intensifying the challenge facing the European Central Bank in bringing inflation down to its target of 2% and raising the prospects of further interest rate rises in the months ahead.

Bert Colijn, senior economist at ING, said: “While supply-side shocks are fading – not just energy, but also think of container prices and various production inputs – core inflation is still adjusting with a lag.

“The ECB has taken a very hawkish stance towards this development and has indicated that it will hike through a mild recession to bring inflation structurally down to 2%.

“With energy inflation dropping quickly and energy supply forecasts improving, 2% could be reached much sooner than expected. Still, rising core inflation will be enough for the ECB to continue to hike by 50bp in February and March.”

FTSE 100 up 26 points: lunchtime update

Friday 6 January 2023 12:30 , Simon Hunt

Five hours into the day’s trading session in London, the FTSE 100 is up 26 points to 7,659.

Here’s a look at some of the biggest moves so far today.

Gas prices drop 20% amid milder winter temperatures

Friday 6 January 2023 11:28 , Simon Hunt

Gas prices fell 20% in the final week of December, according to new data released by the Office for National Statistics this morning, amid unusually mild temperatures at the start of the new year.

The System Average Price (SAP) of gas fell by 20% in the week to 1 January 2023 compared with the previous week, and was broadly unchanged when compared with the level of the equivalent week of 2022, and 64% below the peak level recorded on 28 August 2022.

Caterer Sodexo hails return to pre-Covid levels

Friday 6 January 2023 11:12 , Simon Hunt

Sodexo is back on the up as workers return to offices and students to classrooms.

The French catering giant says revenues are now at pre-pandemic levels. Group sales hit €6.3 billion  for the year, better than expected.

Chief executive Sophie Bellon said the On-Site Services arm “continued to benefit from a higher level of attendance, in all geographies, in the workplace, in stadiums, in convention centers and in universities”.

Catering companies are trying to renegotiate tariffs and supplier agreements as the sector faces rising costs. Sodexo had previously flagged difficulties in contractual negotiations in France.

Finance chief Marc Rolland said: “It’s improving, but discussions are still tense. We intervened with the government... but certain municipalities find it hard to accept renegotiations or discussions.”

JP Morgan analysts saw the results as solid and “further evidence of Sodexo’s improving topline momentum and roadmap to recovery”.

Sodexo confirmed its forecast of organic revenue growth of 8% to 10% and an underlying profit margin close to 5.5% for 2023. That will be taken as a good sign for investors in big UK outsourcing firms, especially with central government looking for ways to cut costs.

FTSE 100 consolidates new year gains, Rentokil falls 6%

Friday 6 January 2023 10:16 , Graeme Evans

New year cheer for London investors continued today as the FTSE 100 index shrugged off storm clouds elsewhere to stay at an eight-month high.

This week’s run of gains has been driven by signs across Europe that inflation pressures are easing, as well as the support of Next’s robust festive trading update.

The performance has been in sharp contrast to losses seen on Wall Street, where traders are increasingly fearful that a tight labour market will make it harder for the Federal Reserve to ease the pace of interest rate rises.

UBS Global Wealth Management warned today: “We believe central banks are still some way from declaring victory in the effort to curb inflation.”

The S&P 500 index fell more than 1% yesterday, while the US dollar has continued its recent resurgence amid the increased chance of another 0.5% rates hike in February.

The impact of a weaker pound on overseas earners meant the FTSE 100 index added another 0.2% or 15.51 points to 7648.96, having risen in every session so far this year.

Commodity stocks including Anglo American and Rio Tinto were among those 1.5% higher, alongside gains for widely-held Rolls-Royce, BT Group and BAE Systems.

London’s resilience came despite weaker sessions for other European benchmarks after figures showed a bigger-than-expected slump in German factory orders.

The FTSE 100 fallers board was led by Rentokil Initial, with the pest control and hygiene services firm down 6% or 30.4p to 490p. Standard Chartered also fell back 9.8p to 695.4p as interest in the Asia-focused banking giant cooled after yesterday’s disclosure of takeover interest from First Abu Dhabi Bank.

The FTSE 250 index weakened 87.54 points to 19,375.89, ending the UK-focused benchmark’s strong start to the year as profit taking left ASOS shares 20.5p lower at 556.5p and Currys down 2p at 59.5p.

On the risers board, shipping specialist Clarkson jumped 5% or 160p to 3305p after upgrading expectations for 2022 results. The company, which brokers deals for the huge tankers that carry crude or for dry cargoes or iron ore or grain, said profits will be at least £98 million.

Construction slump increases economy fears

Friday 6 January 2023 09:54 , Simon English

FRESH fears that the UK is heading for recession emerged today when a closely watched business index turned negative.

The UK construction sector fell into decline in December, following a three-month growth spurt that had offered some optimism.

While the retail sector seems to be in decent shape after Christmas, other parts of the economy are being buffeted by strikes and falling business confidence.

Today the CIPS UK Construction PMI Index fell to 48.8 in December, down from 50.4 in November. Any number below 50 indicates a contraction.

Both the residential and civil engineering sectors saw declines. There were lower levels of new orders for work. The rate of contraction was the fastest since May 2020.

Dr John Glen, Chief Economist at the Chartered Institute of Procurement & Supply, said: "The construction sector was stuck in the mud in December with the steepest fall in activity since the beginning of the pandemic in May 2020 and a similarly fast drop in pipelines of new work. House building saw a notable change of direction, with a mix of higher inflation for raw materials and transportation and the squeeze on affordability rates for mortgages resulting in fewer house sales.”

City economists are predicting a long, if fairly shallow recession. The British Chambers of Commerce predicts an “anaemic” recovery in 2024, and even that at the end of the year.

Lewis Cooper, Economist at S&P Global Market Intelligence, which compiles the survey said: "The challenging environment in December was subsequently reflected in pessimism amongst firms towards activity levels over the coming year, with business confidence downbeat for only the sixth time since the survey began in April 1997. With the outlook turning negative, staffing levels declined for the first time since the start of 2021 in December.”

Shell taxes tax hit

Friday 6 January 2023 09:38 , Simon English

Shell warned investors today that it will pay about $2 billion (£1.7 billion) in windfall taxes for the last four months of 2022.

For parts of last year the oil giant managed to avoid a windfall tax due to strong investment in the North Sea, a controversial loop hole.

The windfall tax plan was unveiled last year and the terms increased by chancellor Jeremy Hunt in November. Critics say the oil giants have benefitted from the surging cost of energy while their own expenses have mostly stayed the same.

The firm said that it would face a hit to earnings for the final quarter of 2022 because of the increased UK energy profits levy and additional EU taxes.

In the third quarter, Shell benefited from an 80% investment allowance linked to the UK windfall tax. This allowance was significantly reduced as part of the autumn budget.

In the previous quarter, it said its adjusted earnings more than doubled to $9.5bn in the three months to the end of September when compared with the year before.

The oil giant also revealed that trading in its chemicals business is expected to have been “significantly lower” in the final quarter of 2022 compared with the previous quarter.

The shares moved up 25p to 2335p.

Oil stocks drive FTSE 100 higher, Clarkson jumps 9%

Friday 6 January 2023 08:56 , Graeme Evans

The new year outperformance of London’s FTSE 100 index is continuing after the top flight rose another 0.2% or 17.89 points to 7651.34.

In contrast, Wall Street closed sharply lower last night and European benchmarks lost ground this morning after figures showed a bigger-than-expected slide in German factory orders.

A recovery for BP and Shell shares benefited the blue-chip index, with BT and consumer healthcare business Haleon among other risers.

Standard Chartered featured among the fallers as interest in the Asia-focused banking giant cooled after yesterday’s disclosure of takeover interest from First Abu Dhabi Bank. Shares fell 16.8p to 688.4p, having spiked to 794p during the previous session.

The FTSE 250 index weakened 35.76 points to 19,427.67, but shipping broker Clarkson surged 9% or 275p to 3420p after an upgrade to its profits guidance.

US markets focused on payrolls update

Friday 6 January 2023 08:09 , Graeme Evans

US non-farm payrolls rose by 263,000 last month, with the figure due to slow to around 200,000 when December’s report is published this afternoon. The unemployment rate is expected to remain steady at 3.7%.

Any signs of continued tightness in the labour market data will prompt investors to price in a more aggressive path of rate hikes from the Federal Reserve, putting further pressure on US share prices.

Deutsche Bank reported today that Wall Street already thinks there’s a 44% chance that the Fed will continue hiking by half a percentage point at their meeting next month. Looking further out, the rate priced in for June is now at a six-week high of 5.03%.

As well as non-farm payrolls and the unemployment rate, traders will be keeping a close eye on average hourly earnings growth. Deutsche Bank economists are expecting a step down to 0.3%, having come in at a 10-month high of 0.6% last month.

US markets down ahead of payrolls report, FTSE 100 seen higher

Friday 6 January 2023 07:49 , Graeme Evans

A strong start to the year for European stock markets hasn’t been matched in the US, where the Dow Jones Industrial Average and S&P 500 index closed more than 1% lower last night.

The selling came amid fears that tightness in the labour market will be shown in today’s non-farms payroll report, making it harder for Federal Reserve policymakers to ease the pace of interest rate rises.

The Wall Street weakness failed to derail European markets, which has been boosted by signs this week that inflation is near its peak.

Amid strong updates from retailers Next and B&M European Value Retail, the FTSE 100 index last night closed higher for the third day in a row at an eight-month high. CMC Markets expects the top flight to add another 22 points at 7655 this morning.

Samsung profits sink to 8-year low as demand dwindles

Friday 6 January 2023 07:36 , Simon Hunt

Quarterly profits at Samsung fell to an 8-year low at the end of 2022, the firm announced this morning, as dwindling demand for electronic devices and memory chips helped squeeze margins.

The South Korean firm said its its October-December operating profit likely fell 69% to 4.3 trillion won (£2.8 billion) from 13.87 trillion won a year earlier.

“For the memory business, the decline in fourth-quarter demand was greater than expected as customers adjusted inventories in their effort to further tighten finances...,” Samsung said in the statement.

Average house price forecast to fall 8% in 2023

Friday 6 January 2023 07:34 , Graeme Evans

Mortgage lender Halifax today revealed that annual house price growth slowed to 2% in December, having been in double digits earlier this year and at 4.6% in November.

With prices down 1.5% in December on top of November’s 2.4% fall, the cost of the average UK home now stands at £281,272. That’s still 11% more than the beginning of 2021 after a big jump in prices between January and August.

Since then, uncertainties about the extent to which cost of living increases will impact household bills, alongside rising interest rates, has slowed the market.

Halifax expects that prices will fall by around 8% this year as economic conditions fuel caution among buyers and sellers.

Director Kim Kinnaird added: “It’s important to recognise that a drop of 8% would mean the cost of the average property returning to April 2021 prices, which still remains significantly above pre-pandemic levels.”