FTSE closes flat and Wall Street dips as Powell warns against rate cuts

Fed chair Jerome Powell scared markets after warning it was too early to cut interest rates, with Wall Street and FTSE 100 struggling on Monday. (REUTERS / Reuters)

The FTSE and European stocks were a mixed bag on Monday, after the chairman of the US Federal Reserve pushed back on hopes of interest rate cuts in March during a US television interview.

• The FTSE 100 (^FTSE) was just under the flatline, closing at 7,612 % in what was a choppy trading session for London's premier index.

• Germany's DAX (^GDAXI) slipped 0.2% to 16,891 points and the CAC (^FCHI) in Paris lost 0.1% to 7,581.

• The pan-European STOXX 600 (^STOXX) closed 0.1% lower after a good start to the session.

• Vodafone (VOD.L) said it is in talks to sell its Italian business days after it emerged it had rejected an offer by billionaire telecoms tycoon Xavier Niel to merge their Italian operations in a €10.5bn (£9bn) deal.

• In Wall Street, The S&P 500 (^GSPC) fell 0.6%, signalling a pullback from the benchmark's record-setting run. The Dow Jones Industrial Average (^DJI) shed roughly 1%, the tech-heavy Nasdaq 100 (^NDX) fell 0.7%.

• Key companies reporting this week include Caterpillar (CAT), McDonald's (MCD), Spotify (SPOT), BP (BP.L), UBS (UBS), Paypal (PYPL) and Disney (DIS).

Follow along for live updates throughout the day:

LIVE COVERAGE IS OVER18 updates

• Featured

  Mon, 5 February 2024 at 4:08 am GMT-5

  Pedro Goncalves

  Powell warns against moving too soon on rate cuts

  

  US Fed chairman Jerome Powell (Reuters / Reuters)

  Federal Reserve chair Jerome Powell said Americans may have to wait beyond March for the central bank to cut interest rates as officials look for more economic data to confirm that inflation is headed down to 2%.

  Powell told CBS’s 60 Minutes that the Fed was alert to the danger of moving too soon and cutting rates before inflation was fully tamed.

  He warned:

  The danger of moving too soon is that the job’s not quite done, and that the really good readings we’ve had for the last six months somehow turn out not to be a true indicator of where inflation’s heading.

  We don’t think that’s the case. But the prudent thing to do is to, is to just give it some time and see that the data continue to confirm that inflation is moving down to 2% in a sustainable way.

Mon, 5 February 2024 at 11:29 am GMT-5, Pedro Goncalves

That's all from us but to keep tabs on what's moving markets across the pond do follow our US blog

Hope you'll join us again tomorrow for more market and economic news,

PHG

US services sector grows for 13th consecutive month

Mon, 5 February 2024 at 10:52 am GMT-5, Pedro Goncalves

The services sector in the US continues to grow at a steady pace in a further sign interest rate cuts are likely to be further away.

The Institute for Supply Management (ISM) Services PMI reached 53.4pc in January — meaning the sector has grown in 43 of the last 44 months. The lone exception came in December 2022.

Sunak insists there is ‘brighter future ahead’ amid doubts over economic growth

Mon, 5 February 2024 at 9:58 am GMT-5, Pedro Goncalves

UK prime minister Rishi Sunak (REUTERS / Reuters)

Rishi Sunak has acknowledged it is “on the wire” whether he will meet his pledge to grow the economy but insisted there is a “brighter future ahead”.

The prime minister said he was making progress with his plan for the country but admitted that he has failed on another of his pledges, to cut NHS waiting lists.

On his promise to achieve economic growth, Sunak acknowledged it was not clear whether there would be a small increase in gross domestic product (GDP) or whether it had been stagnant — but either outcome was better than the recession some had feared, he said.

He told TalkTV’s Piers Morgan Uncensored: “We are on the wire of ‘has it grown a little bit, has it broadly stayed flat’, but fundamentally what was predicted was a year-long recession where the economy shrank by quite a lot.

“That has not happened and we have outperformed European countries like Germany and others.”

Official statistics later this month will show whether Sunak has met his promise to grow the economy.

US stocks dip at open

Mon, 5 February 2024 at 9:50 am GMT-5, Pedro Goncalves

US stocks slipped on Monday after Federal Reserve chair Jerome Powell put a chill on prospects for an early interest rate cut, raising the stakes for a packed week of corporate earnings to keep the recent rally alive.

The S&P 500 (^GSPC) fell 0.2%, signalling a pullback from the benchmark's record-setting run. The Dow Jones Industrial Average (^DJI) shed roughly 0.3%, the tech-heavy Nasdaq 100 (^NDX) hugged the flatline.

Société Générale to cut nearly 1,000 jobs

Mon, 5 February 2024 at 8:08 am GMT-5, Pedro Goncalves

French banking group Société Générale has announced plans to slash 947 jobs at its head office as part of a cost-cutting programme.

The job reductions will be carried out "through internal transfers, end-of-year support or voluntary departures", the bank said.

The job cuts will mostly target IT and other support functions at the lender's headquarters in La Defense business district in the French capital.

The planned cut represents around 2% of the bank's total workforce and about 5% of staff at its headquarters.

Hundreds of post offices to stop selling scratchcards after lottery ownership change

Mon, 5 February 2024 at 6:34 am GMT-5, Pedro Goncalves

The UK's Post Office has said its branches will stop selling lottery tickets and scratchcards as a default, giving outlets a choice on what they stock.

Lottery operator Allwyn outlined low sales and religious beliefs as reasons for the decision, which has led to a fifth — or around 900 — fewer shops supporting the money-spinning tickets. Meanwhile, the National Federation of SubPostmasters blamed high prices for the slowing sales.

Allwyn told the PA news agency that more than 600 branches had chosen not to continue selling, while up to 200 were unable to because of county court judgements.

Read the full story here

State pension age needs to jump to 71, says think tank

Mon, 5 February 2024 at 6:33 am GMT-5, Pedro Goncalves

The UK state pension age needs to rise by around four years to 70 or 71 as early as 2040 in order to maintain the status quo of the constant number of workers per state pensioner, a longevity-focused think tank has claimed.

At the moment, anyone born on or after 6 April 1977 will have to work to the age of 68, and there’s still the chance that date could be brought forward, which means there will be some people who may not be able to work up until they get their state pension.

Read the full article here

UK will suffer the highest level of inflation of all the G7 countries, warns OECD

Mon, 5 February 2024 at 5:24 am GMT-5, Pedro Goncalves

The UK is set for the highest inflation of the world’s G7 advanced economies this year despite the cost of living rising at a far slower pace, according to new forecasts.

The Organisation for Economic Co-operation and Development (OECD) revised down its predictions for headline UK inflation to average at 2.8% in 2024 and 2.4% in 2025, from the 2.9% and 2.5% forecast respectively in November.

It added in its latest outlook that inflation is projected to be back to target across most G20 countries by the end of next year.

But the UK predictions would still see the UK suffer the highest level of inflation of all the G7 countries, above Canada at 2.6%, France at 2.7%, Germany at 2.6%, Italy at 1.8%, Japan at 2.6% and the United States at 2.2%.

The OECD also warned over the risk to inflation globally from geopolitical tensions, “particularly if the conflict in the Middle East were to disrupt energy markets”.

It downgraded its UK growth forecast for 2023 to 0.3% from 0.5% previously predicted in November, but held firm on its forecasts for gross domestic product (GDP) to expand by 0.7% in 2024 and 1.2% in 2025.

Services sector grows amid stronger consumer spending

Mon, 5 February 2024 at 4:47 am GMT-5, Pedro Goncalves

The UK’s services sector continued to rebound in January, with business activity rising at the fastest rate since May last year, according to a new survey.

The S&P Global/CIPS UK services PMI survey showed a reading of 54.3 in January, up from 53.4 in December. Previous estimates had shown a reading of 53.8 for January.

The score is above the crucial 50.0 threshold for the third month in a row, which indicates that activity in the sector is growing rather than shrinking.

Tim Moore, economics director at S&P Global Market Intelligence, said:

“The revival in UK service sector performance gained momentum at the start of 2024, with output growth accelerating to its fastest for eight months amid stronger business and consumer spending.

“New orders have also rebounded this winter as receding recession risks and looser financial conditions led to greater willingness-to-spend among clients.

“Another uplift in business confidence in January provides a signal that elevated levels of geopolitical uncertainty have yet to exert much of a constraint on service sector growth projections for 2024.”

Vodafone at the bottom of FTSE 100 after earnings report

Mon, 5 February 2024 at 4:17 am GMT-5, Pedro Goncalves

Vodafone (VOD.L) has said it is in talks to sell its Italian business days after it emerged it had rejected an offer by billionaire telecoms tycoon Xavier Niel to merge their Italian operations in a €10.5bn (£9bn) deal.

Chief executive Margherita Della Valle said the company is “in active discussions in Italy” after last week shunning Niel’s Iliad Group, which had tabled a proposal to combine their Italian businesses.

In a trading update, Vodafone revealed revenues slipped by 2.3% in the third quarter to €11.3bn (£9.7bn), although organic service revenue grew 4.7%, ahead of analyst estimates of 4.3%.

It said it remains on track for an underlying annual profit of €13.3bn (£11.4bn).

Matt Britzman, equity analyst at Hargreaves Lansdown, said:

“Vodafone’s third quarter had some pockets of optimism for investors to cling to. Growth was in line with the second quarter, arguably a better result than some had feared.The key German market managed to scrape its way into growth territory but saw a slowdown. Comparisons to the second quarter were always going to be tough, with some non-recurring revenue streams not repeating.Regulatory changes in Germany are set to kick in this year, adding a layer of uncertainty to operations in the region.

Shares in Vodafone have dropped over 1% at the start of trading, to the bottom of the FTSE 100 leaderboard.

CBI settles case against ousted boss

Mon, 5 February 2024 at 4:12 am GMT-5, Pedro Goncalves

The Confederation of British Industry (CBI) has settled legal action brought by its former director-general who was fired last year following allegations about his behaviour.

The business group said it and Tony Danker have agreed an “undisclosed settlement” following his sacking from the post in April 2023.

Danker’s sacking came after he faced allegations about his behaviour in the workplace.

The claims were reported in the Guardian, and later other, more serious, allegations against different CBI staff emerged. That led to the biggest crisis in the organisation’s history.

When dismissing Mr Danker from his post, the CBI said his conduct “fell short of that expected” of its boss.

It was not clear from the trade body’s statement what Danker had included in his legal action.

The CBI said: “The CBI has today settled legal action brought against the organisation by Tony Danker after his dismissal in April 2023.

“The CBI board has agreed an undisclosed settlement with Danker.

“The CBI board also reiterates that Mr Danker is not associated in any way with the historical allegations reported in the media concerning matters which pre-date his tenure at the CBI and rejects any such association.”

The allegations against CBI staff, which included two accusations of rape, pushed the group into a deep crisis.

Asda opens 110 new convenience stores as part of goal to reach 1,000 UK sites

Mon, 5 February 2024 at 4:04 am GMT-5, Pedro Goncalves

Asda in expansion drive across the UK (ASSOCIATED PRESS)

Supermarket chain Asda plans to open 110 stores in the UK in February as part of its goal to reach 1,000 shops across the country.

Asda, previously owned by Walmart, will convert 109 Co-op and EG Group convenience sites to Asda Express stores as part of a multimillion-pound investment. The business said it wants to become the second largest grocery retailer in the UK.

Asda plans to turn all 470 convenience sites acquired from the Co-op and EG Group into Express stores by the end of March.

Wall Street overnight

Mon, 5 February 2024 at 4:00 am GMT-5, Pedro Goncalves

In Wall Street, US stocks closed the week with a warm embrace after a good January jobs report and a series of positive market-moving earnings.

The Dow Jones (^DJI) rose 0.35% to 38,654 points. The S&P 500 (^GSPC) climbed 1.07% to 4,958 points and the tech-heavy NASDAQ (^IXIC), gained 1.74% to 15,628.

Asia overnight

Mon, 5 February 2024 at 3:56 am GMT-5, Pedro Goncalves

China markets are struggling. (REUTERS / Reuters)

China stocks slumped for a sixth straight session, with small-cap companies leading the plunge, as investor pessimism worsened on the lack of a clear signal for policy support. the Shanghai Composite (000001.SS) lost over 1% to 2,702 points.

The Hong Kong market remained relatively stable, with The Hang Seng (^HSI) only down by 0.15%.

Tokyo stocks (^N225) closed 0.54% higher as Japanese exporters benefited from a weaker yen.

Millionth pure battery electric new car registered in the UK

Mon, 5 February 2024 at 3:49 am GMT-5, Pedro Goncalves

The millionth pure battery electric new car has been registered in the UK, industry figures show.

This milestone was reached in January, the Society of Motor Manufacturers and Traders (SMMT) said.

Only around 674,000 pure battery electric cars were licensed for use in the UK by the end of 2022.

The SMMT expects pure battery electrics to account for more than one in five new cars registered this year.

Preliminary SMMT figures show the total number of new cars registered last month was around 8% more than in January 2023.

CMC to axe 200 jobs amid cost-cutting drive

Mon, 5 February 2024 at 3:46 am GMT-5, Pedro Goncalves

Online trading platform CMC Markets has said it plans to cut 200 jobs worldwide as part of aims to slash costs by £21m a year.

The London-headquartered company founded by Tory peer Peter Cruddas said it was cutting its workforce by about 17%.

It comes after a slump in deals last year, which has prompted investment banks to cut jobs and sparked a consolidation among City brokerages.

CMC said: "Cost reductions have been primarily achieved by merging support functions across multiple business lines, streamlining reporting lines and automating processes.

"The group will continue to seek opportunities to drive efficiencies and control costs while remaining committed to investing in growth opportunities and ensuring its technology remains market leading. "

UK jobless rate lower than first thought but inactivity jumps

Mon, 5 February 2024 at 3:43 am GMT-5, Pedro Goncalves

Britain’s rate of unemployment was lower than first thought in the three months to November, according to official figures.

The Office for National Statistics (ONS) said changes to the way that it gathers information on the UK labour force has seen it revise the unemployment rate down to 3.9% for the quarter, from the 4.2% previous estimate.

It has also revised up the inactivity rate to 21.9% in the three months to November, from the 20.8% recorded previously.

The changes follow an overhaul to the ONS labour force survey after low responses meant the data was too unreliable.

Watch: Federal Reserve's Powell, on '60 Minutes,' signals March rate cut unlikely

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