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Global stocks rise as UK inflation beats forecasts and eurozone avoids recession

A look at how markets performed this Wednesday

A person holding a shopping basket in a supermarket. The FTSE was in the green on Wednesday
The FTSE climbed higher as UK inflation unexpectedly remained unchanged at 4% in January. (Julien Behal, PA Images)

The FTSE (^FTSE) and European stocks pushed higher on Wednesday as UK inflation unexpectedly remained unchanged at 4% in January, and Eurozone growth held steady at 0%. Stocks on Wall Street later followed suit, recovering from a sell-off the session before.

Economists had predicted a small inflation increase to 4.2%, so the reading came in softer reading than expected. This possibly opens the door to earlier interest rate cuts from the Bank of England (BoE).

  • London's benchmark index finished 0.7% higher, buoyed by a weaker pound.

  • Germany's DAX (^GDAXI) rose 0.4% up and the CAC (^FCHI) in Paris closed 0.7% higher.

  • The pan-European STOXX 600 (^STOXX) ended the session 0.5% higher.

  • The Office for National Statistics (ONS) said prices for food and non-alcoholic beverages fell by 0.4% between December and January, compared with a rise of 0.6% a year ago.

  • Statistics office Eurostat confirmed that the eurozone narrowly avoided a recession in the final three months of 2023.

  • Wall Street pushed higher with the S&P 500 (^GSPC) up 0.4%, the tech-heavy Nasdaq (^IXIC) 0.5% higher, and the Dow Jones (^DJI) advancing 0.1%.

Follow along for live updates:

  • Blog close and recap

    Well that's all we have time for today, thanks for following along. Be sure to join us again tomorrow when we will be back for more.

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

    • UK inflation holds steady at 4%

    • Food prices down for first time in two years

    • Eurozone GDP holds steady at 0%

    • UK house prices fall at slower pace

    • UK rental prices rise 6.2%

    • Bitcoin hits $1 trillion valuation again

    Have a good evening all!

  • Virgin Media and O2 customers hit with 8.8% bill increase

    An O2 mobile phone store in Slough High Street, Berkshire
    An O2 mobile phone store in Slough High Street, Berkshire (Maureen McLean)

    Virgin Media O2 mobile customers are set to hit with an 8.8% bill rise, the largest increase in in the UK telecoms market this year.

    Most of the main operators have mid-contract bill rises written into contracts that are linked to the consumer prices index (CPI) measure of inflation for December, plus an added increase of 3.9 percentage points.

    Last month, BT (BT-A.L), which owns mobile operator EE, Vodafone (VOD.L) and Three, unveiled a 7.9% increase in customers’ bills which will start from around April. Sky also announced an increase of 6.7%.

    However, Virgin Media O2, which merged in 2021, follows the January rate of the higher retail price index (RPI) measure, plus an additional 3.9 percentage points. This means that a typical customer is facing an 8.8% increase in their bills from this Spring.

    A spokesman for Virgin Media O2 said:

    "We are investing heavily to ensure we continue to provide the fast and reliable connectivity our customers rely on, and the amount we receive from price increases is greatly outweighed by the £5m we invest every single day to upgrade our networks and services to give customers a better overall experience.

    "It’s clear that we continue to offer excellent value, with customers paying less and receiving more.”

    However, Rocio Concha, director of policy and advocacy at consumer group Which?, said:

    This month’s RPI announcement will confirm the worst fears of O2 and Virgin Media customers who now face the biggest broadband and mobile price hikes by any major provider this April. This comes on top of a more than 17% increase last year. That’s a huge overall increase that most people would not have anticipated when they first took out their broadband or phone deal.”

  • Wall Street opens higher

    US stock markets have opened higher in New York, with fairly strong gains after a selloff in the previous session.

    Here are the opening snaps:

    • S&P 500 UP 28.94 POINTS (0.58%) AT 4,982.11

    • NASDAQ UP 124.33 POINTS (0.79%) AT 15,779.93

    • DOW JONES UP 125.54 POINTS (0.33%) AT 38,398.29

  • Oil steady on OPEC demand forecast and U.S. fuel stocks

    Oil prices were holding steady on Wednesday on the back of a robust demand growth forecast from OPEC, as well as a sharp decline in US fuel stocks.

    Brent crude futures rose by 0.1% to $82.89 a barrel while U.S. West Texas Intermediate (WTI) crude futures were up 0.06% at $77.92.

    "Currently events around Israel and Gaza, together with Russia’s war against Ukraine, weighs more on sentiment than disappointing US inflation data," said PVM analyst Tamas Varga told Reuters.

    The Organisation of the Petroleum Exporting Countries (OPEC) said in its monthly report on Tuesday that global oil demand will rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025. Both forecasts were unchanged from last month.

  • Train drivers back strike mandate

    Train drivers at five UK rail operating companies have voted to back a mandate that will allow them to continue striking for the next six months.

    Drivers from Chiltern Railways, c2c, East Midlands Railway and TransPennine Trains, all voted in support of the move.

    It comes just two weeks after strikes by Aslef caused disruption for travellers across the country, with several services cancelled.

    Mick Whelan, general secretary of Aslef, said:

    These results show – yet again – a clear rejection by train drivers of the ridiculous offer put to us in April last year by the Rail Delivery Group on behalf of the train operating companies with whom we are in dispute.

    But we remain open and willing, as ever, to talk about a revised offer.

    That’s why we are asking the secretary of state for transport, or the rail minister Huw Merriman, to come and meet us. Mr Harper hasn’t seen fit to talk to us since December 2022; Mr Merriman has not been in the room with us since January 2023; and the RDG has not talked to us since April last year.

  • Bitcoin hits $1 trillion valuation again

    Illustration - bitcoin, cryptocurrency, investment, growth, decline, ETF, finance, economy, digital currency, value of bitcoin (CTK Photo/Petr Svancar
    Illustration - bitcoin, cryptocurrency, investment, growth, decline, ETF, finance, economy, digital currency, value of bitcoin (CTK Photo/Petr Svancar (CTK, CTK)

    The value of bitcoin (BTC-USD) surged past $51,000 (£40,500) today, giving the world’s largest cryptocurrency a $1 trillion market capitalisation for the first time since December 2021.

    It is the first time bitcoin has passed this level since the collapse of Sam Bankman-Fried’s now bankrupt trading platform FTX.

    The rise comes amid increased confidence in the sector following the approval of crypto exchange traded funds in the US.

    The value of bitcoin has surged by 130% over the last year.

  • Heineken warns on profits and high inflation

    Heineken (HEIA.AS) stock slumped 5% on Wednesday after it warned profits could fall below estimates, and that high inflation would impact demand for beer, thanks to geopolitical and economic volatility.

    The Dutch brewer, which is the world’s second-biggest brewer after AB InBev (ABI.BR), said volumes fell by 4.7% last year, with more than 60% of that driven by declines in Vietnam and Nigeria, where economic and political conditions hurt sales.

    Dolf van den Brink, chief executive, said: "We remain cautious about the global economic and geopolitical outlook."

    Last year, beer brewers raised prices significantly to offset steep increases in costs, which saw overall sales figures of €36.3bn, up on the previous year’s €35bn. However, profits came in at €2.3bn, compared to the €2.7bn the year before.

    “This year, Heineken had to prioritise pricing to offset unprecedented levels of commodity and energy inflation," it said.

    Heineken added that this inflationary pressure tailed off towards the second half of the year, but highlighted that the economic climate would “remain a factor of uncertainty” into 2024.

    It forecast future operating profits to be in the “low- to high-single-digit” range, with net profits lower than that due to currency and tax impacts.

  • Eurozone GDP holds steady at 0%

    The eurozone narrowly avoided a recession in the final three months of 2023, with the latest data from statistics office Eurostat confirming that gross domestic product (GDP) grew 0% that quarter. This is in line with the preliminary reading.

    Two quarters of consecutive declines in output are counted as a technical recession, meaning that the bloc has avoided this.

    It was also confirmed that output had declined by 0.1% in the previous quarter, while employment increased more than expected.

    However, Germany’s economy, which is the largest in Europe, contracted by 0.3% in the final quarter of last year, while the Spanish economy grew by 0.6%. Portugal rose by 0.8%.

  • UK rental prices rise 6.2%

    Selly Oak, Birmingham, 4th February 2024 - Houses for rent in Selly Oak, Birmingham, England as the UK Housing Market continues to fluctuate. Credit: Stop Press Media/Alamy Live News
    Selly Oak, Birmingham, 4th February 2024 - Houses for rent in Selly Oak, Birmingham, England as the UK Housing Market continues to fluctuate. Credit: Stop Press Media/Alamy Live News (Stop Press Media)

    The Office for National Statistics has also revealed that UK rental prices rose by 6.2% in the year to January, staying at the fastest rate of growth since the measure was introduced in 2016.

    It said:

    • Annual private rental prices increased by 6.1% in England, 7.0% in Wales and 6.8% in Scotland in the 12 months to January 2024.

    • Within England, London had the highest annual percentage change in private rental prices in the 12 months to January 2024, at 6.9%, while the North East saw the lowest, at 4.7%.

  • Sony cuts forecasts for PS5 sales

    Sony has updated its forecasts for sales of its PlayStation 5 in the year to the end of March, according to reports.

    The Japanese company said it will now sell 21 million consoles, down from 25 million previously, after sales during the end-of-year holiday season disappointed. This was despite big spending on promotions to lure in buyers, as well as Marvel’s Spider-Man 2 selling 2.5 million copies in its first 24 hours, making it the fastest-selling debut from Sony’s in-house studios.

    Bloomberg News reports that Naomi Matsuoka, Sony’s senior vice president, said:

    Looking ahead, PS5 will enter the latter stage of its life cycle. As such, we will put more emphasis on the balance between profitability and sales. For this reason, we expect the annual sales pace of PS5 hardware will start falling from the next fiscal year.

  • UK house prices fall at slower pace

    The fall in UK house prices slowed in the year to December, the Office for National Statistics revealed on Wednesday amid an improvement in the property market.

    The average home was worth £285,000 during the month, down £4,000 or 1.4%, on the same month a year earlier.

    However, it still marks a slowdown from the 2.3% fall in November.

    Average house prices over the 12 months to December 2023 decreased in England to £302,000 (down 2.1%), decreased in Wales to £214,000 (down 2.5%), but increased in Scotland to £190,000 (up 3.3%) and in Northern Ireland to £178,000 (up 1.4%).

  • What happens if you miss a debt payment?

    At this time of year, there’s a pretty good chance you’re carrying debts. Hargreaves Lansdown research shows that the average person who borrows to pay for Christmas will still have debt repayments due in February.

    But with our finances stretched so thin, there will be some people for whom those payments are a step too far. In fact, 2.4 million people missed a payment of one sort or another in January this year, according to Which?.

    So it’s worth understanding what happens if you do, and how you can protect yourself.

    Find out more here

  • Rachel Reeves on inflation data

    Rachel Reeves, Labour’s shadow chancellor, said:

    After 14 years of economic failure working people are worse off.

    Prices are still rising in the shops, with the average households’ costs up £110 a week compared to before the last election. Inflation is still higher than the Bank of England’s target and millions of families are struggling with the cost of living.

    The Conservatives cannot fix the economy because they are the reason it is broken. It’s time for change. Only Labour has a long-term plan to get Britain’s future back by delivering more jobs, more investment and cheaper bills.

  • Food prices down for first time in two years

    Monthly prices for food and non-alcoholic beverage fell by 0.4% between December and January, compared with a rise of 0.6% a year ago. Monthly prices for food (excluding non-alcoholic beverages) also fell by 0.4%.

    It was the first fall since September 2021, and the largest fall since July 2021.

    Grant Fitzner, ONS chief economist said:

    Inflation was unchanged in January reflecting counteracting effects within the basket of goods and services.

    The price of gas and electricity rose at a higher rate than this time last year due to the increase in the energy price cap, while the cost of second-hand cars went up for the first time since May.

    Offsetting these, prices of furniture and household goods decreased by more than a year ago and food prices fell on the month for the first time in over two years. All of these factors combined resulted in no change to the headline rate this month.

  • UK inflation holds steady at 4%

    The UK rate of inflation unexpectedly remained unchanged at 4% in January, according to official figures.

    Inflation, which measures how prices rise over time, stood at 4% in the year to January, said the Office for National Statistics.

    It was the same as in December and came in below economists' expectations, including the Bank of England. Economists had expected prices to rise by 4.1% compared to the same month last year.

    Keeping prices rising was the energy price cap, which rose in January, bringing up the cost of gas and electricity.

    The new energy price cap meant the typical annual household bill went up to £1,928, an increase of £94.

    However, higher energy prices were offset by falls in the cost of furniture and household goods, and food and non-alcoholic drinks.

    Chancellor Jeremy Hunt said:

    “Inflation never falls in a perfect straight line, but the plan is working; we have made huge progress in bringing inflation down from 11%, and the Bank of England forecast that it will fall to around 2% in a matter of months.”

    Read more here

  • Stocks in Asia and US

    Stocks in Asia were mixed overnight, with Japan tracking a sell-off on Wall Street.

    The Nikkei (^N225) fell 0.7% on the day in Tokyo, while the Hang Seng (^HSI) rose 0.8% in Hong Kong as it reopened after an extended break for the Lunar New Year, and the Shanghai Composite (000001.SS) was 1.3% up by the end of the session.

    In the US, shares fell sharply after disappointing data on inflation made investors worry that interest rates may stay high for months longer.

    The S&P 500 (^GSPC) fell 1.4% to 4,953.17 while the Dow Jones Industrial Average (^DJI) also slipped 1.4% to 38,272.75. The tech-heavy Nasdaq Composite (^IXIC) ended 1.8% lower at 15,655.60

    The dimming prospects of a dovish turn by the Federal Reserve also sent the dollar surging against the yen, forcing Japanese officials to warn they would intervene in forex markets to support the country’s currency. The dollar held on to most of its gains against its peers.

    Meanwhile, the yield on benchmark 10-year US Treasury bonds rose to 4.31% compared with 4.17% on Monday.

  • Coming up...

    Good morning, and welcome back to our live markets blog where we will be covering what's happening across the global economy, and take a look at what's moving markets.

    Here's a quick look at what's on the agenda for today:

    • 7am: Trading updates: Coca-Cola HBC, Dunelm, Bloomsbury

    • 7am: UK consumer price index inflation

    • 10am: Eurozone GDP growth rate

    • 10am: Eurozone industrial production

    • 12pm: US MBA mortgage applications

    • 3.30pm US crude oil inventories

Watch: How does inflation affect interest rates?

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