Wall Street down and European stocks mixed as China suffers sharp fall in consumer prices

The FTSE and EU stocks were flat as China’s consumer price index fell 0.8% year-on-year in January. (amer ghazzal)

The FTSE 100 (^FTSE) was underperforming against its European peers Thursday amid news that China has suffered its sharpest fall in consumer prices since the global financial crisis. Wall Street followed its lead later in the afternoon with stocks in the red.

According to the National Bureau of Statistics, the country’s consumer prices index fell by 0.8% in January, marking the fourth straight month of deflation, and the steepest fall since 2009. It was larger than the 0.5% decline forecast by analysts.

The inflation rate was dragged down by falling food prices, which dropped by 5.9% year-on-year. Pork prices dropped by 17%, and were a major drag on inflation, while fresh vegetables were 12.7% cheaper than a year ago, and fruit cost 9.1% less.

• London's benchmark index closer

• 0.4% lower

• Germany's DAX (^GDAXI) climbed 0.3% and the CAC (^FCHI) in Paris headed 0.7% into the green

• The pan-European STOXX 600 (^STOXX) ended 0.1% down

• China’s consumer price index fell 0.8% year-on-year in January

• Unilever (ULVR.L) posts rise in fourth-quarter sales while British American Tobacco (BATS.L) swings to an annual loss

• Wall Street indexes were also in the red by the time of the European close

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Blog close and recap

Thu, 8 February 2024 at 11:29 am GMT-5, LaToya Harding

Well that's all from us today, thanks for following along. Be sure to join us again tomorrow for our final live markets blog of the week.

Here's a quick recap of some of the stories from today...

• BAT suffers loss as it shifts away from cigarettes

• Unilever posts rise in fourth-quarter sales

• Ford to cut 2,700 jobs in Germany

• US jobless benefit claims fall

• CBI boss warns against large-scale tax cuts

• Bitcoin price tops $44,000 triggering sharp rise in short liquidations

• Used car market up as EV sales reach record levels

Have a good evening all!

How much the major broadband providers are increasing their prices by

Thu, 8 February 2024 at 11:06 am GMT-5, LaToya Harding

Broadband and mobile phone customers can yet again expect to see inflation-based prices rises this April to the tune of 7.9%.

BT, Vodafone, Virgin Media O2 and TalkTalk all use a version of the mechanism, which usually takes the consumer prices index (CPI) measure of inflation – currently at 4% – plus about 3.9%.

However, Virgin Media O2 uses the higher figure of retail price inflation (RPI) taken from the rate published for January.

There have been calls to scrap the controversial above-inflation price rises, particularly amid a cost of living crisis but most operators have stuck to their mid-contract price increases for customers.

Read the full article here

CBI boss warns against large-scale tax cuts

Thu, 8 February 2024 at 10:35 am GMT-5, LaToya Harding

The Confederation of British Industry (CBI) boss has urged British politicians to steer away from “large-scale” and instead focus on funding public services.

Speaking at a conference in Westminster, director general Rain Newton-Smith said that companies do not want to see tax reductions “driven by short-termism”.

She argued:

"Business investment is set to fall five per cent this year, in part because of higher interest rates needed to bring inflation down. As one business leader told me, they don’t want to see tax cuts driven by short-termism which leads to higher interest rates.

"They want stability so they can invest for the future. To fund our public services with an ageing population, we must keep large-scale tax cuts off the table."

Maersk shares fall as Red Sea disruption weighs

Thu, 8 February 2024 at 9:44 am GMT-5, LaToya Harding

Shipping containers being unloaded from a Maersk ship, Algeciras, Andalusia, Spain (Jeremy Horner)

Shipping company Maersk revealed fourth-quarter profits below expectations on Thursday, stating that 2024 earnings are set to come in well below 2023's level thanks to the crisis in the Red Sea.

It expects underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of between $1bn and $6bn (£790m to £4.8bn) this year, compared with $9.6bn (£7.6bn) last year.

“High uncertainty remains around the duration and degree of the Red Sea disruption with the duration from one quarter to full year reflected in the guidance range,” Maersk said in a statement.

Underlying profits dropped to $839m in the fourth quarter from $6.5bn a year earlier, well below analysts’ expectations of $1.1bn.

Vincent Clerc, CEO of A.P. Moller-Maersk, said:

"The current market remains one of robust volumes, but while the Red Sea crisis has caused immediate capacity constraints and a temporary increase in rates, eventually the oversupply in shipping capacity will lead to price pressure and impact our results.

"The ongoing disruptions and market volatility emphasize the need for supply chain resilience, further confirming that Maersk’s path toward integrated logistics is the right choice for our customers to effectively manage these challenges."

It comes after the firm announced 10,000 job cuts in November due to a drop in demand caused by the global economic slowdown.

See what other tickers are trending here

Wall Street set to open lower as US jobless benefit claims fall

Thu, 8 February 2024 at 9:17 am GMT-5, LaToya Harding

Stocks on Wall Street are set to open in the red in New York as the number of Americans filing for jobless claims fell last week.

According to the latest figures from the Labour Department, unemployment benefits fell by 9,000 to 218,000 for the week ending 3 February.

Meanwhile, the four-week average of claims rose by 3,750 to 212,250.

In total, 1.87 million Americans were collecting jobless benefits during the week that ended 27 January, a decrease of 23,000 from the previous week.

Ford to cut 2,700 jobs in Germany

Thu, 8 February 2024 at 8:50 am GMT-5, LaToya Harding

Ford will cut around 2,700 jobs from a plant in Germany as it looks to switch electric vehicle production to Spain.

The jobs will be lost at the Saarlouis plant once production of the Ford Focus stops there next year.

The union said on Thursday that approximately 1,000 jobs at the plant would be retained after 2025, adding that there would be no forced redundancies until 2032.

Joerg Koehlinger, district manager of IG Metall Mitte, said:

“We could not achieve the best solution so we decided to make do with the second-best option: to make job cuts as expensive as possible for Ford.”

Oil prices continue to rise

Thu, 8 February 2024 at 8:22 am GMT-5, LaToya Harding

Ricardo Evangelista, senior analyst at ActivTrades, said:

“Brent oil prices continued their ascent during early Thursday trading, maintaining the momentum from previous sessions. This upward trend finds support from escalating geopolitical tensions and a weakening dollar. Concerns persist in the Middle East, particularly with the latest developments in Gaza, where the Israeli Prime Minister rejected a proposed ceasefire.”

“While Gaza remains the focal point of the crisis, its repercussions extend throughout the region, raising the spectre of a broader conflict with potential intervention from other parties. Such a scenario could disrupt the Suez shipping route and impact oil production in Gulf nations like Iran.”

“In this context, the heightened tensions contribute to the upward trajectory of oil prices, further bolstered by the recent weakening of the dollar. Given that crude oil is priced in USD, a depreciation of the currency against its counterparts results in an increase in the dollar cost of oil.”

Where Primark is opening its five new UK stores

Thu, 8 February 2024 at 8:01 am GMT-5, LaToya Harding

Primark (ABF.L) is set to open five new stores over the next two years as it invests more than £100m in its UK stores this year.

The fashion and home retailer said the investment, which marks 50 years of Primark on the British high street, would create over 700 new jobs ranging from retail assistants to store manager positions.

Combining the new store locations and extensions, Primark is set to reach 195 stores and almost 8 million square feet of selling space by the end of the year.

Kari Rodgers, UK retail director at Primark said: “We’ve changed a lot in the fifty years since we opened the doors on our first store in Great Britain in Derby back in 1974, but at our heart, we are still the same. We’re as committed as ever to offering the very best value on the high street and making great fashion more affordable and accessible for everyone.

“This latest investment will mean bigger and better stores, hundreds of new jobs across the country and shows our ongoing commitment to the UK high street.”

Find out where they are here

German residential property has sharpest fall on record

Thu, 8 February 2024 at 7:27 am GMT-5, LaToya Harding

And more on the property sector once again...

House prices in Germany have fallen at the fastest pace on record.

The German Real Estate Index, published by the Kiel Institute for the World Economy, revealed that property prices dropped sharply in Europe’s largest economy last year.

Sale prices of apartments fell by 8.9% during 2023, while single-family home price fell 11.3%. The price of multi-family homes dropped 20.1% during the year.

The report said:

The speed and extent of the current fall in real estate prices in Germany are historically unprecedented. Never since the expert committees started recording prices in the 1960s, have real estate prices fallen so quickly and sharply.

German residential property dropped sharpest on record in 2023 https://t.co/Aira4c0A2i via @laura_malsch pic.twitter.com/rROOtFrAQF

— Zoe Schneeweiss (@ZSchneeweiss) February 8, 2024

Number of homeowner mortgages in arrears rises

Thu, 8 February 2024 at 6:55 am GMT-5, LaToya Harding

The ongoing cost-of-living crisis, as well as higher interest rates. have pushed more mortgage holders into arrears on their loans, new data has shown.

According to UK Finance, the number of homeowner mortgages in arrears increased by 7% to 93,680 in the last quarter of 2023.

There was an 18% increase in buy-to-let mortgages in arrears, up to 13,570, as more landlords struggled to cope with higher borrowing costs.

Although arrears are on the up, the number of homeowner mortgaged homes being taken into possession did fall by 14% to 540 in the last three months.

Some 500 buy-to-let mortgaged properties were taken into possession in Q4, 11% greater than the previous quarter.

This combined total of 1,040 repossessions in the final quarter of last year is almost half the nearly 2,000 repossessed in the last three months of 2019, before the COVID pandemic.

Pensioners need £8,000 more a year to retire comfortably

Thu, 8 February 2024 at 6:34 am GMT-5, LaToya Harding

The annual cost of enjoying a moderate standard of living in retirement has risen by £8,000 in a year, my colleague Pedro Gonçalves writes...

The Pensions and Lifetime Savings Association's (PLSA) latest Retirement Living Standards found the price of a moderate retirement for a single person was £31,300 for 2023 to 2024, up from £23,300.

For a couple the cost grew to £43,100, up from £34,000 the year prior.

The increase is primarily the result of rising food and energy costs, researchers said.

The PLSA says a single person needs an income of £14,400, up from £12,800, a 12.5% rise, for the “minimum” living standard in retirement, according to the report.

This is more than the full new state pension, which will increase by 8.5% to just over £11,500 in April.

This living standard includes around £95 for a couple's weekly groceries, a week's holiday in the UK, eating out about once a month and some affordable leisure activities about twice a week.

Read the full article here

Unilever posts rise in fourth-quarter sales

Thu, 8 February 2024 at 6:08 am GMT-5, LaToya Harding

range of Dove brand shower gels on the shelves of a cosmetic store (Iryna Izviekova)

Shares in Unilever (ULVR.L) rose as much as 3% after the Dove soap maker posted a rise in fourth-quarter sales and launched a €1.5bn (£1.3bn) share buyback program.

The consumer goods firm reported underlying sales growth of 7.0% for 2023 thanks to a 6.8% increase in prices, particularly for its nutrition and ice cream products, and just a marginal 0.2% rise in sales volumes.

Underlying price growth decelerated from 10.7% in the first quarter of last year to 2.8% in the fourth quarter, due to a slowdown in raw material inflation during 2023.

However, the company's new boss said that Unilever's competitiveness “remains disappointing.

Hein Schumacher, chief executive, said:

“Today’s results show an improving financial performance, with the return to volume growth and margins rebuilding.

"However, our competitiveness remains disappointing and overall performance needs to improve. We are working to address this by improving our execution to unlock Unilever’s full potential.”

Used car market up as EV sales reach record levels

Thu, 8 February 2024 at 5:39 am GMT-5, LaToya Harding

UK used car transactions grew 5.1% in 2023, with 7,242,692 changing hands as improving new car market re-energises supply, the Society of Motor Manufacturers and Traders (SMMT) revealed on Thursday.

Four straight quarters of growth saw 351,915 more motorists get behind the wheel of a second hand car than in 2022 as the previous year’s supply constraints receded, delivering more choice to buyers.

Superminis and black paint were the most popular used car style choices, taking 32.1% and 21.4% of the market respectively.

Across the year, battery electric car sales almost doubled, up by 90.9% to 118,973 units – but at just 1.6% of the market, up from 0.9% in 2022. The uplift is in line with growth in the new car sector and demonstrates keen demand for zero emission motoring in this naturally more affordable price bracket.

However, it comes amid industry calls for a VAT cut on new EVs so future supply can grow to meet second hand demand.

James Hosking, Managing Director of AA Cars said:

“With household budgets still under pressure from the rising cost of living and high interest rates, many drivers who need to replace their car are looking to the value of the used market.

"...while the cost of some used EVs remains high compared to their petrol and diesel counterparts, more incentives may be needed in the future to persuade cash-strapped consumers to go electric. Speeding up the rollout of the charging network will also help convince drivers that now is the time to switch.”

BAT suffers loss as it shifts away from cigarettes

Thu, 8 February 2024 at 5:11 am GMT-5, LaToya Harding

British American Tobacco (BATS.L) swung to an annual loss last year after it took a higher-than-expected charge on its US business.

The cigarette and vape company, which owns brands such as Lucky Strike and Dunhill, slumped to a pre-tax loss of £17.1bn in 2023 against profits of £9.3bn the previous year.

It followed a £27.3bn writedown on its US brands, which came in higher than the £25bn hit it warned about in December.

It said the charge was due to its long-term strategy to shift away from traditional cigarettes, as well as lower sales amid wider economic uncertainty and “the growth of illicit single-use vapour products and uncertainty around a potential menthol ban in the US”.

BAT said sales by volume in the global tobacco industry are now expected to fall by around 3% in 2024, but backed its previous guidance for “low single digit” organic revenue and underlying earnings growth for the year.

Shares were almost 7% higher in London, climbing to the top of the FTSE 100.

Bitcoin price tops $44,000 triggering sharp rise in short liquidations

Thu, 8 February 2024 at 4:47 am GMT-5, LaToya Harding

Bitcoin's price increased above the $44,000 mark on Thursday, triggering a spike in short liquidations.

The rebound comes as data from Bloomberg Intelligence shows that BlackRock's (BLK) spot bitcoin exchange traded fund (ETF) has now made it into the top five of this financial asset class in terms of year-to-date flows.

In a recent post on X.com, Bloomberg ETF analyst Eric Balchunas described the performance of BlackRock's spot bitcoin ETF, which goes by the $IBIT ticker, since it's launch in January.

"$IBIT is now in the top five in YTD flows, which means it's taken in more cash than 99.98% of ETFs. Not bad for 17 days old," Balchunas said in a post.

A spot bitcoin ETF is a type of investment fund that allows investors to buy shares representing ownership in actual bitcoin, providing a way to gain exposure to the cryptocurrency's price movements without directly owning the digital assets.

Also $IBIT now in Top 5 in YTD flows, which means it's taken in more cash than 99.98% of ETFs. Not bad for 17 days old. pic.twitter.com/ehAsZWRoqK

— Eric Balchunas (@EricBalchunas) February 6, 2024

See the full article here

Asia and US stocks

Thu, 8 February 2024 at 4:02 am GMT-5, LaToya Harding

Stocks in Asia were mixed overnight, with the Nikkei (^N225) surging 2.1% on the day in Japan, driven by gains in tech shares. Meanwhile a fresh central bank comment about maintaining an easy monetary environment encouraged buyers.

The Shanghai Composite (000001.SS) was 1.3% up by the end of the session after China replaced its top stock market regulator, but the Hang Seng (^HSI) fell 1.3% in Hong Kong.

Across the pond, Wall Street rose to the edge of another record-breaking milestone as big stocks climbed following a slew of earnings reports.

The S&P 500 (^GSPC) got within a fraction of a point of the 5,000 level before ending the day 0.8% higher at 4,995.06. The Dow Jones Industrial Average (^DJI) added 0.4% to finish at 38,677.36, and the Nasdaq Composite index (^IXIC) gained 0.9% to 15,756.64.

In the bond market, US Treasury yields held relatively steady. The yield on the benchmark 10-year Treasury bonds edged up to 4.11% from 4.09% late on Tuesday.

Coming up...

Thu, 8 February 2024 at 3:37 am GMT-5, LaToya Harding

Good morning, and welcome back to our markets live blog. Here we'll be taking a deep dive into what's moving markets today, and what's happening across the global economy.

Let's see what's on the agenda:

• 12.01am: RICS Housing Market Survey

• 7am: Trading updates: British American Tobacco, Unilever, AstraZeneca

• 9.30am: Latest weekly data on UK economic and business activity

• 1.30pm: US weekly jobless claims figures

• 3pm: BoE's Catherine Mann speech: “Mind the Gap(s): Inflation Data and Prospects”

Watch: How does inflation affect interest rates?

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