Wall Street higher with focus on earnings stocks as FTSE finishes in the red

US stocks rose on Wednesday as investors digested a fresh inflow of quarterly earnings (Reuters / Reuters)

The FTSE 100 (^FTSE) and European stock markets finished lower on Wednesday even as UK property prices rose last month thanks to falling mortgage rates.

According to the Halifax house price index, house values increased by 1.3% in January when compared to the previous month.

It comes as Housebuilder Barratt Developments (BDEV.L) is set to merge with rival developer Redrow (RDW.L), creating a combined group which will be renamed as Barratt Redrow.

• London's benchmark index slipped 0.6% to close at 7,629 points

• Germany's DAX (^GDAXI) dipped 0.6% and the CAC (^FCHI) in Paris finished 0.3% into the red

• The pan-European STOXX 600 (^STOXX) closed 0.3% lower

• UK house prices rose for a fourth consecutive month amid lower mortgage rates

• Barratt struck £2.5bn merger with Redrow

• German industrial production suffers longest downturn since 1990s

• In Wall Street, the Dow Jones Industrial Average (^DJI) rose 0.3%, while the S&P 500 (^GSPC) popped almost 0.5%. The Nasdaq Composite (^IXIC) was up more than 0.5%.

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Blog close and recap

Wed, 7 February 2024 at 11:27 am GMT-5, LaToya Harding

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

Here's a quick recap of what we covered today...

• UK house prices rise for fourth month running

• Barratt strikes £2.5bn merger with Redrow

• Uber posts first operating profit

• German industrial production suffers longest downturn since 1990

• Sainsbury's to cut clothing aisles as it seeks to save £1bn a year

• Women need to work extra 19 years to close pensions gap

• US trade deficit contracted in 2023

Have a good evening!

US trade deficit contracted in 2023

Wed, 7 February 2024 at 11:12 am GMT-5, LaToya Harding

The US trade deficit contracted sharply last as imports declined and exports rose.

According to the latest data, the US goods and services deficit decreased by $177.8bn, or 18.7%, to $773.4bn, down from $951.2bn in 2022.

Exports increased by $35bn or 1.2%, while imports decreased by $142.7bn or 3.6%.

In December alone, the trade deficit rose to $62.2bn, up £300m on November’s $61.9bn.

S&P 500 hits fresh record high

Wed, 7 February 2024 at 10:46 am GMT-5, LaToya Harding

Photo by: NDZ/STAR MAX/IPx 2024 2/5/24 Atmosphere at the New York Stock Exchange (NYSE) on February 5, 2024 in New York City. (NDZ/STAR MAX/IPx, Associated Press)

The S&P 500 has hit a fresh record high after opening in New York as stock markets across Wall Street were boosted by megacap and chip stocks.

The benchmark index opened 8.82 points, or 0.4%, higher at 4,973.05, while the Dow Jones Industrial rose 0.2% and the tech-heavy Nasdaq gained 0.5% at the opening bell.

How to talk about money with a potential partner

Wed, 7 February 2024 at 9:33 am GMT-5, LaToya Harding

It’s the season of heart-shaped-everything, when the pressure on every date is dialled up to the max. So with Valentine's Day approaching, it’s going to come as no help to learn that in among all the other dating stresses you face at this time of year, you have to keep watch for financial red flags too.

Financial services firm Hargreaves Lansdown recently ran a piece of research asking people to name the worst financial secrets to find out on a date. Some 16% would be most put off by someone not expecting to have to work for a living while being in a lot of debt would be a red flag for 15% of respondents.

Discovering someone was bad with money generally would be a deal-breaker for 7% of people.

The results varied across the age groups — 21% of those aged 55 and over would be put off if someone had a lot of debt, compared to 8% of those aged 18-34.

Find out more here

Gas prices falling in milder weather

Wed, 7 February 2024 at 9:11 am GMT-5, LaToya Harding

Wholesale gas prices have fallen amid milder winter weather and a reduction in demand for heating.

Europe’s benchmark contract fell as much as 2.6% today and was last down 0.2% to less than €29 per megawatt hour.

Prices have dropped more than 30% since October as temperatures stay above usual their levels, keeping already extra-full storage sites well stocked.

The UK equivalent contract was down 0.7%, having fallen as much as 3% in early trade.

Uber posts first operating profit

Wed, 7 February 2024 at 8:47 am GMT-5, LaToya Harding

Headquarters of Uber in San Francisco. (AP Photo/Eric Risberg, File) (Eric Risberg, Associated Press)

Uber (UBER) has posted its first full-year of operating profits since it floated on the stock market five years ago.

It made income from operations of $1.11bn in 2023, up from a loss of $1.832bn in 2022, beating expectations. Revenue grew 17%, lifted by a 24% jump in trips in Uber vehicles, as well as a rise in bookings in the run-up to Christmas.

Gross bookings, which includes deliver orders, ride hailing and driver earnings, grew 22% to $37.6bn in the final three months of 2023.

The number of trips and monthly active platform consumers grew 24% and 15%, respectively, compared to the same period the previous year.

Chief executive Dara Khosrowshahi said: "2023 was an inflection point for Uber, proving that we can continue to generate strong, profitable growth at scale. Our audiences are larger and more engaged than ever, with our platform powering an average of nearly 26 million daily trips last year."

Uber predicts that core profits and gross bookings will be strong in the first quarter of this year.

How to save money on your council tax as bills set to rise by at least 5%

Wed, 7 February 2024 at 8:29 am GMT-5, LaToya Harding

Households across England face a 5% or more council tax increase in April as local authorities impose inflation-busting bills on residents.

Town halls across the country have started to announce the increase to be applied to council tax in April and many are going with the maximum possible of 4.99%. The Treasury expects around 95% of them to do so.

Councils have the freedom to raise tax by 3% – plus another 2% for social care – without holding a referendum.

Such rises will add around £100 to typical Band D council tax bills, taking them to an average of more than £2,100.

For those in the most expensive Band H houses, it will mean a rise of £200 to £4,200 a year.

Last year, the Local Government Association warned that one in six councils – about 60 – were at risk of effective bankruptcy. Grant Thornton UK warned that four in 10 risked going bust in the next five years.

By raising council tax, many have alerted that the burden of the financial crisis in councils is being shifted to the poorest households.

Read the full article here

How mortgage costs have fallen

Wed, 7 February 2024 at 8:04 am GMT-5, LaToya Harding

New figures from Rightmove this morning show how mortgage costs have fallen over the last year:

• The average 5-year fixed mortgage rate is now 4.64%, down from 4.77% a year ago

• The average 2-year fixed mortgage rate is now 4.97%, down from 5.10% a year ago

• The average 85% LTV 5-year fixed mortgage rate is now 4.58%, down from 4.79% a year ago

• The average 60% LTV 5-year fixed mortgage rate is now 4.10%, down from 4.41% a year ago

Sainsbury's to cut clothing aisles as it seeks to save £1bn a year

Wed, 7 February 2024 at 7:41 am GMT-5, LaToya Harding

Sainsbury's store. Credit: Maureen McLean/Alamy (Maureen McLean)

Sainsbury’s has revealed plans to overhaul its supermarkets with a focus on creating more food space.

In its strategy update, the UK’s second biggest supermarket chain said it would slash its general merchandise and clothing offering across several sites to create more space for food and also ensure it is providing full grocery ranges.

The new plan, dubbed Next Level Sainsbury’s, comes as a bid to slash costs by £1bn over the next three years.

The group added that it will also “tighten the focus” of its non-food ranges such as technology investments to deliver automation and savings., with more changes for its Argos store estate.

Simon Roberts, chief executive said:

“We’re going to build on what’s driven our success since 2020. We’re determined to be First Choice for Food, ensuring more customers in more of our stores can enjoy more brilliant Sainsbury’s food.

That means more space for our food offer, while still delivering the general merchandise products customers want from us. That way, not only will we find more ways to delight new and existing customers, we will also continue growing volume market share.

It will also improve its loyalty card scheme, Nectar, to offer “personalised, rewarding and integrated loyalty and market-leading retail media capabilities”.

German industrial production suffers longest downturn since 1990s

Wed, 7 February 2024 at 6:50 am GMT-5, LaToya Harding

German industrial production fell for a seventh consecutive month in December, according to the latest official data. It marked the longest series of declines since the 1990s.

Output plunged by 1.6% month-on-month after a revised 0.2% fall in November, federal statistics agency Destatis said,

The decline, which was worse than the 0.35% drop predicted by analysts, was was driven by steep falls in the chemical industry and the construction sector.

However the car sector meanwhile saw a 4% rise in production.

For the whole of 2023, industrial output was 1.5% lower than a year earlier, and still below pre-pandemic levels.

Women need to work extra 19 years to close pensions gap

Wed, 7 February 2024 at 6:03 am GMT-5, LaToya Harding

According to a new report, women may need to work for an extra 19 years to retire with the same pension savings as men.

Females retire on average with pension savings of £69,000, compared with £205,000 for men, the research by pensions provider NOW: Pensions and the Pensions Policy Institute (PPI) found.

Career gaps, caring responsibilities, childcare costs and lower earnings contribute to them often having less money saved for retirement..

As automatic enrolment into workplace pensions starts at the age of 22, the 19-year gender pension gap means a girl would need to start saving for retirement from three years old in order to have kept up with men by retirement age, researchers suggest.

But women often live longer than men, meaning their retirement pots also need to last for longer.

NOW: Pensions said the £10,000 earnings trigger for people to be automatically enrolled into a workplace pension should be removed.

Barratt strikes £2.5bn merger with Redrow

Wed, 7 February 2024 at 5:42 am GMT-5, LaToya Harding

Housebuilder Redrow (Gareth Fuller, PA Images)

More property sector news this morning...

Housebuilder Barratt is set to merge with rival developer Redrow, creating a combined group which will be renamed as Barratt Redrow.

The deal will offer Redrow shareholders 1.44 of new Barratt shares at a premium of 27.2% of last night's closing price, valuing the developer at £2.5bn.

It comes as the property sector consolidates after the downturn caused by high UK interest rates.

Once the takeover is complete, Redrow shareholders will hold approximately 32.8% of the combined group and Barratt shareholders will hold around 67.2%.

Redrow founder Steve Morgan said that Barratt was a home builder he has “long admired,” while chief executive Matthew Pratt said the combined companies “creates a leading UK homebuilder”

Meanwhile, David Thomas, chief executive of Barratt, added that the deal will lead to more ‘high-quality’ homes being built.

He said:

“We have great respect for Redrow, its overall strategy, its leadership and employees, and its high-quality homes and communities.

This is an exciting opportunity to bring together two highly complementary companies, creating an exceptional homebuilder in terms of quality, service and sustainability, able to build more of the high-quality homes this country needs.

The Combined Group would leverage the respective strengths of both Barratt and Redrow, delivering significant benefits to our people, our supply chains, and - most importantly - our customers.”

The tie-up is expected to eventually lead to savings of at least £90m a year, in three year’s time, the companies said.

UK housing market makes 'positive start' to 2024

Wed, 7 February 2024 at 5:25 am GMT-5, LaToya Harding

Kim Kinnaird, director at Halifax Mortgages, said:

“The recent reduction of mortgage rates from lenders as competition picks up, alongside fading inflationary pressures and a still-resilient labour market has contributed to increased confidence among buyers and sellers. This has resulted in a positive start to 2024’s housing market.

"However, while housing activity has increased over recent months, interest rates remain elevated compared to the historic lows seen in recent years and demand continues to exceed supply.

"For those looking to buy a first home, the average deposit raised is now £53,414, around 19% of the purchase price. It’s not surprising that almost two thirds (63%) of new buyers getting a foot on the ladder are now buying in joint names.

"Looking ahead, affordability challenges are likely to remain and further modest falls should not be ruled out, against a backdrop of broader uncertainty in the economic environment.”

UK house prices rise for fourth month running

Wed, 7 February 2024 at 4:59 am GMT-5, LaToya Harding

UK house prices rose for the fourth consecutive month in January to the highest level since October 2022 as falling mortgage rates boosted the market.

Average house prices increased to £291,029 in January, which was £3,900 more than last month, according to the Halifax house price index.

The survey showed that property values increased by 1.3% in January compared to the previous month.

Compared to the same month last year, property prices grew by 2.5%, which was the highest annual growth since January 2023.

It was the fourth monthly gain in a row after six consecutive falls before that.

• In London, the average price was down 0.4% year-on-year at £529,528, bucking the wider trend of growth.

• Northern Ireland recorded the strongest growth across all the nations or regions within the UK – house prices here increased by 5.3% on an annual basis. Properties in Northern Ireland now cost on average £195,760, which is £9,761 higher than the same time in January 2023.

• Scotland and Wales both saw growth, 4% on an annual basis to £206,087 and £219,609 respectively. North West (3.2%), Yorkshire and Humber (2.8%), North East (2.0%) and East Midlands (0.5%) also recorded house price increases over the last year.

• The South East fell the most last month when compared to other UK regions, with homes selling for an average £379,220 (-2.3%), a drop of £8,866.

Read the full article here

Fed interest rate cuts

Wed, 7 February 2024 at 4:38 am GMT-5, LaToya Harding

Michael Hewson, chief market analyst at CMC Markets, said:

While Powell’s candour in ruling out a rate cut in March caught markets by surprise this week also offers an opportunity to see if other members of the FOMC share his mindset.

So far, we’ve heard from Neel Kashkari of the Minneapolis Fed who isn’t a voting member this year, urge caution when it comes to cutting rates. Yesterday Cleveland Fed President Loretta Mester followed suit by also urging caution on rate cuts, and says she still leans towards three rate cuts in 2024.

Today we get to hear from the new Federal Reserve Governor Adriana Kugler, Richmond Fed governor Barkin and Federal Reserve Governor Michelle Bowman.

Bowman is already on the record as saying that she thinks it’s too soon for the Fed to consider cutting rates in comments made at the end of last week, while the views of the other two aren’t yet known in light of the recent strength of the economic data, although Barkin prior to last week didn’t want to rule March out completely. Given recent data he may well have revised that view.

Asia and US stocks overnight

Wed, 7 February 2024 at 4:17 am GMT-5, LaToya Harding

Stocks in Asia were mixed overnight as investors weighed up Beijing’s efforts to prop up its share markets.

It comes as China’s regulators have announced further curbs on short selling and state investors said they were expanding their stock buying plans.

Bloomberg News also reported President Xi Jinping would discuss the stock market with financial regulators, though there was no confirmation this had happened or what was discussed.

The Nikkei (^N225) slipped 0.1% on the day in Japan, while the Hang Seng (^HSI) fell 0.3% in Hong Kong. But the Shanghai Composite (000001.SS) was 1.4% up by the end of the session.

Across the pond, Wall Street drifted higher as the bond market calmed down after some sharp swings.

The S&P 500 (^GSPC) rose 0.2%, to 4,954.23, nearly returning to its all-time high set at the end of last week. The Dow Jones (^DJI) gained 0.4% during the session, ending at 38,521.36, while the Nasdaq Composite index (^IXIC) edged up 0.1%, to 15,609.00.

In the bond market, the yield on the 10-year Treasury bonds eased to 4.09% from 4.17% late on Monday.

Coming up...

Wed, 7 February 2024 at 3:43 am GMT-5, LaToya Harding

Hello, and welcome back to our rolling coverage of what's moving markets and happening across the global economy.

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

• 7am: Halifax house price index for January

• 7am: Trading announcements: Barratt Developments, Redrow, Pz Cussons, Future

• 7am: German industrial production for December

• 8.40am: Bank of England’s deputy governor Sarah Breeden to give keynote speech at UK women in economics annual event

• 12pm: US weekly mortgage approvals

• 2.15pm: MPs question PRA over banks’ use of Amazon Web Services and Google

Watch: How does inflation affect interest rates?

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