JP Morgan reported record profits despite taking a hit from the Silicon Valley Bank failure but Wall Street is mixed. (VIEW press via Getty Images)
FTSE and European markets were higher on Friday as official figures showed the UK economy returned to growth in November and Wall Street powered through a stream of big bank results.
The FTSE 100 (^FTSE) rose 0.7% to close at 7,626 points, while the CAC 40 (^FCHI) in Paris gained 1% to 7,458 points. In Germany, the DAX (^GDAXI) gained 0.9% to 16,686. Europe’s Stoxx 600 (^STOXX) advanced 0.8%.
On Wall Street, US stocks backtracked, shedding earlier gains as big bank results failed to lift hopes for a robust quarterly earnings season.
The Dow Jones (^DJI) lost 0.5% to 37,521 points. The S&P 500 (^GSPC) was hovering just above the flatline at 4,7983 points. The tech-heavy NASDAQ (^IXIC) climbed 0.2% to 14,992.
Wall Street lenders kicked off fourth-quarter earnings, seen as a crucial chance for stocks to shake off the losses built in the year so far. JPMorgan Chase (JPM), Bank of America (BAC), and Wells Fargo (WFC) all posted decent results on Friday.
In Asia, the Hang Seng (^HSI) in Hong Kong slipped 0.6%o 16,211 points, while the Shanghai Composite (000001.SS) lost 0.2% to 2,881 points.
Tokyo stocks ended higher, extending gains from the previous day’s session when the benchmark Nikkei index closed above 35,000 for the first time since 1990. The Nikkei 225 (^N225) rose 1.5% to 35,577 points.
The pound’s (GBPUSD=X) was higher against the dollar, trading at $1.2780. The sterling (GBPEUR=X) was also stronger against the euro, trading at €1.1639.
Meanwhile, Brent crude (BZ=F) surged and was trading at over $78/barrel after touching $80.5 amid concerns that fuel prices could increase.
Tensions in the Middle East escalated as the US and the UK carried out strikes against Houthi military targets in Yemen in retaliation for attacks by the Iran-backed group on shipping in the Red Sea starting from late last year.
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Pedro Goncalves
UK economy bounces back in November but recession fears persist
The UK economy returned to growth in November, with gross domestic product (GDP) expanding by 0.3% during the month, according to the Office for National Statistics (ONS), but the country is is still teetering on the brink of a recession.
It follows the 0.3% contraction in October and is slightly stronger than the 0.2% predicted by economists.
However, looking at the three months to November, the UK economy actually shrank by 0.2%, stoking recession fears. Output in services grew by 0.4% during the month.
This blog is now closed but keep following the latest moving markets across the pond via our US team.
Thanks and hope you'll join us again on Monday.
Pedro Goncalves
Citigroug reports $1.8bn loss for last quarter of 2023
Citigroup(C) has posted a $1.8bnn fourth-quarter loss after booking several large charges tied to overseas risks, last year’s regional banking crisis and CEO Jane Fraser’s overhaul plan.
Earnings were hit by $1.3bn being set aside to cover risks related to Russia and Argentina, and an $880m hit from the devaluation of the Argentinian peso last year.
Citi is also paying $1.7bn into the US Federal Deposit Insurance Corporation, through the levy to recapitalise this fund after the regional banking crisis last year.
Also, there is a $780m restructuring charge, as Citi looks to eliminate up to 20,000 jobs.
Fraser called her company’s performance “very disappointing”.
Pedro Goncalves
That's a 10 ... followed by 12 zeros for BlackRock
BlackRock (BLK) announced Friday its assets under management topped $10,000,000,000,000 at the end of the fourth quarter, with last year's rally in markets bringing client assets over this threshold for the first time in two years.
The firm's AUM tallied $10,008,995,000,000, to be precise, as of Dec. 31.
During 2023, BlackRock saw $289bn of net inflows, with the $96bn in assets that flowed into the firm's products during the fourth quarter marking the second best quarter of the year. In Q1, some $110 billion in net assets moved into BlackRock vehicles.
Alongside its quarterly results on Friday, BlackRock also reported it acquired infrastructure fund manager GIP for $12.5bn. GIP has over $100bn in assets under management.
Pedro Goncalves
JP Morgan reports record profits despite hit from Silicon Valley Bank failure
Last year JP Morgan Chase (JPM)earned more profits than it ever has before, even as its results dipped in the final quarter.
The largest lender in the US reported Friday that it raked in a record $49.6bn in annual net income, the most ever in the history of the American banking industry. And it happened during a year that was the scariest for the industry since the financial crisis of 2008.
That result — buoyed by better loan margins and the acquisition of failed regional lender First Republic — was 31% better than its bottom line in 2022.
Vistry ‘optimistic’ lower mortgage rates will boost demand in housing market
Housebuilder Vistry (VTY.L) has said it is hopeful that the recent easing of mortgage costs will boost demand in the housing market this year, as it said it had a better 2023 than some of its rivals.
The affordable homes provider also expects housing shortages to be at the top of the political agenda in the lead up to a general election.
Vistry said demand in the property market was “suppressed” throughout the year, “reflecting the higher interest rate environment and inflationary cost pressures on household income”.
But it went on to provide a more positive outlook, telling investors: “The easing of mortgage rates in recent weeks is encouraging and we are optimistic that this will help stimulate demand in the 2024 financial year.”
Major lenders in the UK, including Barclays, HSBC UK, Halifax and First Direct, have marked the start of the new year by reducing their available rates.
Pedro Goncalves
Trending tickers: Burberry, Oil, Vistry and DocuSign
The latest investor updates on stocks that are trending on Friday:
Burberry (BRBY.L)- Burberry has said the slowdown in demand for its luxury goods worsened in December as wealthy shoppers tightened their belts.
Brent oil (BZ=F) -Oil prices jumped as Britain and the US launched airstrikes against Houthi rebels in Yemen in response to the attacks on ships in the Red Sea that have disrupted global trade.
Vistry (VTY.L) - Housebuilder Vistry said it expects profits to come in £8m higher than its previous forecast months after it said it would switch its entire focus onto affordable homes.
DocuSign (DOCU) - Shares in DocuSign were higher in premarket trading amid reports that Bain Capital and Hellman & Friedman are competing to acquire the provider of online signature services.
China's consumer prices fall for third month, fuelling interest rate cut hopes
Pork prices fell in China. (STR via Getty Images)
China’s consumer price index fell 0.3%, less than a 0.4% drop expected by a Reuters poll of economists, and also lower than the 0.5% fall seen in November.
The National Bureau of Statistics (NBS) said pork prices, the main factor impacting year-on-year CPI, fell 26.1%, narrowing the rate of decline by 5.7 percentage points.
Services inflation, however, rose steadily with tourism and hotel accommodation prices increasing by 6.8% and 5.5%, respectively.
Ken Cheung Kin Tai, chief Asian FX strategist at Mizuho Bank, said: “The lingering deflationary pressure justifies the expectation of an imminent rate cut, which is widely expected to materialise in the one-year medium-term policy facility yield decision next Monday.”
Pedro Goncalves
HelloFresh fined £140,000 over millions of spam texts and emails
Food delivery firm HelloFresh (HFG.DE) has been fined £140,000 for a seven-month spamming campaign of 79 million emails and one million texts.
Customers were also not given enough information that their data would be used for marketing for up to 24 months after cancelling their subscriptions, the Information Commissioner’s Office (ICO) said.
The ICO began its investigation in March 2022 following 14 complaints made directly to the regulator as well as 8,729 to the 7726 spam message reporting service.
The investigation found the company continued to contact some individuals even after they had asked it to stop.
Pedro Goncalves
Bigger pictures is one of 'sluggish growth', says NIESR
The National Institute of Economic and Social Research (NIESR) has warned on the "sluggish growth" of the UK economy. Paula Bejarano Carbo, NIESR associate economist, said:
“Today’s ONS data indicate that monthly GDP grew by 0.3% in November, following a contraction of 0.3% in October, driven by growth in the services and production sectors.
"Though this may seem positive, GDP is estimated to have fallen by 0.2% in the three months to November compared with the previous three-month period, due to contractions in manufacturing and construction outputs, as well as failure to sustain growth in the services sector.
"These three-monthly data, which are less volatile than the monthly figures, suggest that the bigger picture remains one of sluggish growth. This is consistent with the recent ONS quarterly national accounts revisions to GDP estimates, which revised the growth figures for 2023Q2 and 2023Q3 downwards from 0.2% and no growth, respectively, to no growth and -0.1%."
Pedro Goncalves
Markets snapshot
Here's head of markets at Interactive Investor Richard Hunter's take on today's trading session:
"The premier index also opened with a sprightly step, adding 0.8%, although also unable to arrest the harm of the last few trading sessions, leaving the FTSE 100 (^FTSE) trailing by 1.2% in January.
The index was held back by a trading update from Burberry (BRBY.L) which was released early, and which was accompanied by a lowering of the group’s guidance. The shares fell by some 9% in early trade. Some solace was found in the housebuilders following recent releases implying that demand may be beginning to return, with Barratt Developments (BDEV.L) and Taylor Wimpey (TW.L) moving higher.
There was also an uptick in certain selected miners, suggesting that some traders could be taking the opportunity to buy on the dip with a potential uptick in global demand later in the year in mind.”
Pedro Goncalves
Technical recession still in the cards, warns KPMG
KMPG UK chief economist Yael Selfin has warned that a technical recession is "still potentially on the cards". She said:
"New year but old problems for the UK economy.
"The economic outlook currently remains gloomy, with a technical recession still potentially on the cards in the second half of 2023, especially given the expected impact from the industrial action in December.
"Nonetheless, even if the economy manages to avoid a recession, it is expected to remain in stagnation territory.
"Manufacturing recovered somewhat after it was hit by the impact of high interest rates and weakening global economic activity, while construction is experiencing difficulties from a slowdown in housebuilding.
"The hope is that the outlook ahead will brighten as mortgage rates continue to fall, improving affordability dynamics.
"The second half of the year could see fortunes changing for the UK economy, with inflation expected to continue to normalise.
"This could raise the prospect of earlier interest rate cuts, with the Bank of England likely to be wary about the risk of overtightening given the weak economic backdrop."
Pedro Goncalves
Burberry slashes profit targets as luxury demand weakens further
Burberry (BRBY.L) has said the slowdown in demand for its luxury goods worsened in December as wealthy shoppers tightened their belts.
The London-based fashion house slashed its profit guidance for the year as a result.
It said trading has been affected by a continued “slowdown in luxury demand” after rises in the cost of living and increases to interest rates globally.
Jonathan Akeroyd, chief executive officer of the company, said it saw a “further deceleration in our key December trading period” which will weigh on its profitability.
Burberry had already seen its shares slump following its previous update in November, when it warned sales growth was lagging behind targets due to pressure in the luxury market.
On Friday, Burberry revealed retail revenues for the three months to December 30 slid by 7% to £706m.
It said like-for-like store sales dropped by 4% over the key trading period.
Pedro Goncalves
Shell tops ranking of most expensive fuel station brands
Shell (SHEL.L)fuel stations are typically the most expensive in the UK, new figures show.
The British oil and gas company’s branded UK forecourts charged an average of 142.6p per litre for petrol and 151.2p per litre for diesel on Thursday, according to analysis by motoring research charity the RAC Foundation.
That is more than all other major retailers.
Supermarket-branded fuel remains the cheapest despite savings compared with that sold by other companies narrowing in recent years.
Morrisons was found to have the lowest price for fuel, with its forecourts charging an average of 136.9p per litre for petrol and 145.5p per litre for diesel.
The figures suggest filling a 55-litre family petrol car is typically £3.14 cheaper at Morrisons compared with Shell.
Watch: Hotter-than-expected US inflation numbers could delay Fed rate cuts
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