The FTSE 100 had its worst day since August on Wednesday sliding to its lowest levels since late November. (WireStock, Wirestock, Inc.)
The FTSE 100 (^FTSE) and European stock markets managed to recover some of its losses on Thursday after a heavy red day the session before. This was due to heightened expectations that interest rates will be cut later than previously hoped as UK and European inflation rose in December.
London's benchmark index rose 0.3% to close at 7,465 points, while the CAC (^FCHI) gained 1.2% in Paris, and the Frankfurt DAX (^GDAXI) advanced 0.7% despite uneven sectorial performances.
"European markets posted their third successive daily decline as markets continued their New Year hangover, after the pre-Christmas euphoria of what was perceived as a December rate pivot from the Federal Reserve," Michael Hewson of CMC Markets said.
"The FTSE 100 had its worst day since August sliding to its lowest levels since late November, dragged down by a combination of poor performance from real estate, basic resources and energy after disappointing Chinese economic data, and the prospect of rate cuts getting pushed further into 2024.
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"In the last few days, we’ve seen a concerted effort from assorted central bankers in Europe, as well as the US to dial back the expectation of early rate cuts, while a surprise uptick in UK inflation and some solid US retail sales numbers torpedoed the idea that we would see early rate cuts in March."
Across the pond US stocks tipped higher, eyeing a rebound from recent losses as investors looked to fresh quarterly earnings for inspiration amid dwindling hopes for an early 2024 interest rate cut.
The S&P 500 (^GSPC) added around 0.4%, while the tech-heavy Nasdaq Composite (^IXIC) led gains, rising 1%. The Dow Jones Industrial Average (^DJI) dropped about 0.3%.
Well that's all from us today, thanks for following along. Be sure to join us again tomorrow when we'll be back for more market news and updates across the global economy.
Here's a quick recap of some of the top headlines from today...
Tata Steel to cut 3,000 jobs at Port Talbot
Newly agreed property sales reach highest since March 2022
UK house prices to rise by 3% in 2024
Paddy Power owner to list in New York
Oil demand to take hit this year
Sainsbury's to wind down its banking division
US job claims lowest since late 2022
Have a good evening all.
LaToya Harding
Tata Steel to cut 3,000 jobs at Port Talbot
And there it is...
Tata Steel has confirmed that it will go ahead with plans to close both blast furnaces at its Port Talbot works in south Wales.
The move is expected to lead to the loss of up to 3,000 jobs, sources told the PA news agency.
It comes after a meeting between Tata executives and the Community, GMB and Unite unions at a London hotel earlier today.
LaToya Harding
US job claims lowest since late 2022
The number of Americans filing for unemployment benefit claims fell last week to the lowest level since late 2022, new figures have shown.
The Labour Department said that initial claims for state unemployment benefits dropped 16,000 to a seasonally adjusted 187,000 for the week ended 13 January, the lowest level since September 2022.
This came in below economists’ forecasts of 207,000.
The report also revealed that continuing claims decreased 26,000 to 1.806 million during the week ending 6 January.
Continuing claims have mostly increased since mid-September, largely due to difficulties adjusting the data for seasonal fluctuations after a surge in filings early on in the pandemic.
LaToya Harding
Wall Street set to open mixed
We have just a few short minutes until the opening bell in New York, so here's a quick look at how things are shaping up across the pond.
S&P 500 futures (ES=F) are up 0.3%, Dow futures (YM=F) have lost 0.2%, and Nasdaq futures (NQ=F) are 0.8% higher an hour before the opening bell in New York.
Seems to be a mixed picture so far...
LaToya Harding
Oil demand to take hit this year
Demand for oil will rise this year, by half the pace of 2023, according to the International Energy Agency (IEA).
Weakening global economies and shifts toward energy efficiency will cut demand for crude from 2.3 million barrels per day last year to 1.2 million this year.
Meanwhile, global oil supply is set to surge to a record high of 103.5mb/d this year, as production is ramped up in the United States, Brazil, Guyana and Canada.
Ricardo Evangelista, senior analyst at ActivTrades, said:
“Brent oil prices hedged up during early Thursday trading, but remain close to the average price of the last two weeks, just below $80 per barrel.”
“On the one side, prices are supported by geopolitical turbulence, with supply threatened by escalating tensions in the Red Sea and by OPEC forecasts for 2024, which predict an increase in global demand of 2.25 million bpd.
"However, this support has been counterbalanced by worries over slowing Chinese economic activity, a strengthening dollar, and growing US crude inventories.”
“Against this background, the short-term outlook for the barrel price entails more of the same, with prices stuck within a relatively narrow range, between $75 and $82.”
LaToya Harding
Tata Steel to possibly shut down bulk of production at Port Talbot
A steel worker wearing a badge on his jacket outside the UK's largest steel works in Port Talbot, South Wales. (Ben Birchall, PA Images)
Tata is expected to announce job losses at its Port Talbot plant as it moves to a greener form of steelmaking to cut emissions and shore up its losses.
Unions representing steelworkers will meet industry giant Tata for talks about the future of the company.
Charlotte Brumpton-Childs, GMB national officer, said unions had produced a “well thought-out and researched” alternative proposal aimed at saving jobs.
She said: “Our position remains any compulsory job losses are wholly avoidable and the people of South Wales, as well as the industry as a whole, deserve the support and consideration that our plan outlines.”
LaToya Harding
More on Sainsbury's banking wind down
Simon Roberts, the chief executive of Sainsbury’s, said:
We have been clear since we launched our Food First strategy in 2020 that we would concentrate our efforts on our core retail businesses and today’s announcement reflects that strategic focus. It’s business as usual for now at Sainsbury’s Bank and there will be no immediate changes to products and services as a result of today’s announcement.
We will, of course, communicate directly to customers well in advance of any changes to their products and services.
LaToya Harding
Sainsbury's to wind down its banking division
Sainsbury’s (SBRY.L) has revealed it will wind down its banking division as part of plans to focus its efforts on the retail business.
The company said it was exploring several options as part of a “phased withdrawal” from the banking business in a move which could its 1.9 million Sainsbury’s Bank customers.
Sainsbury’s Bank currently offers loans, credit cards and savings accounts from its own bank.
Sainsbury’s stressed it will be “business as usual for now” at the bank, with nothing immediately changing for customers or the products and services it offers.
There is no current timeline for how long the exit will take.
Mortgage rates are continuing to fall, providing some relief to UK households and prospective homebuyers, with deals under 4% now available on the market.
The average rate on a two-year fixed deal this week stood at 4.83% while for a five-year deal, rates came down to 4.49%, according to figures from Uswitch.
The big lenders have cut mortgage rates this year as competition between banks heats up and borrowing costs ease.
HSBC and NatWest have both reduced rates this week, with Metro Bank (MTRO.L)and TSB also announcing cuts.
Mortgage rates have risen substantially as the Bank of England increased the interest rates to a 15-year high in a bid to tackle inflation.
However, the consensus is that interest rates have peaked and that 2024 will see the Bank of England will begin to cut rates as inflation eases.
The BoE's interest rate is currently set at 5.25%. Markets are expecting interest rates to fall to 5% by May, 4.75% in June, 4.5% in August and 4% in November.
However, a surprise increase in inflation is forcing market analysts to reprice their bets, with some saying that cuts will only start in August.
If the Bank of England cuts interest rates as expected, mortgage rates will continue to come down throughout 2024.
About 1.6 million existing borrowers have relatively cheap fixed-rate deals expiring this year.
LaToya Harding
Paddy Power owner to list in New York
Paddy Power owner Flutter Entertainment (FLTR.L) has confirmed it will list in New York by the end of the month as it posted a rise in fourth-quarter revenue.
The world's largest online betting company said its move to Wall Street was on track for January 29 as it revealed revenues grew 11% to £2.7bn in the fourth quarter, driven by 19% growth in UK and Ireland.
The company, which runs FanDuel, the biggest sportsbook in the US with 43% gross revenue market share, said US fourth-quarter revenues were up 26% year-on-year.
CEO Peter Jackson said: We are very excited that the addition of a US Flutter listing is now just days away. This is a pivotal moment for the group as we make Flutter more accessible to US based investors and gain access to deeper capital markets.”
Shares surged more than 12% on the back of the news.
LaToya Harding
Markets stabilise but bumpy ride in store
“After a difficult day yesterday as a result of poor inflation data, stock markets have stabilised somewhat today," Lindsay James, investment strategist at Quilter Investors, said. "Investors will have likely come to terms with the fact rate cuts are not coming quite as soon as they first thought, and that we really are in a higher for longer scenario for now."
She added:
“That said, the economic data continues to paint a murky picture, with conflicting data points making the jobs of central bankers especially tough at the moment. For example, more firms are warning on supply chain disruption from ongoing Red Sea hostilities, and with the COVID induced disruption still fresh in the mind, this could see a return of inflationary pressures.
"Rolling manufacturing shut downs in Europe look likely, with disruption across numerous industries. Autos has been one of the earliest sectors to warn of disruption, although currently markets seem to be focussed on freight rates which although higher, are well below levels seen during covid. This is however likely to mask the significant operational disruption firms are likely to face in coming months, without a quick resolution.
“Yesterday’s market reaction to the inflation figures shows there are fears that inflation remains embedded in the economy. What gives us some reassurance is that by April energy prices under the price cap will be around 15% lower, whilst food prices are also seeing disinflation.
"Along with a weakening jobs market, which will reduce the impact of wage inflation over time, the path for inflation still looks significantly better than it did for much of 2023. Consumers and investors will need to be prepared for what will be a very bumpy ride.”
LaToya Harding
Bitcoin price falls a week after ETF approval
Bitcoin's price has fallen by over 7% in the week since the US Securities and Exchange Commission, SEC, approved multiple spot ETF filings.
A spot bitcoin ETF is a financial product that investors hope will open the gateway for mainstream capital to flood the crypto market.
There has been over $11bn (£8.67bn) in spot bitcoin ETF trading volume in the four days of trading since the funds were launched from Wall Street players, such as BlackRock (BLK) and Franklin Templeton (BEN).
However, over most of the past week the price of bitcoin (BTC-USD) has traded just below the $43,000 mark.
Bitcoin's value has dropped by more than 7% from the brief highs observed shortly after the approval of the ETF, when the price exceeded $46,000 last Thursday.
The World Economic Forum is still going on at Davos, and chancellor Jeremy Hunt is set to attend today. The UK finance minister will be speaking on a panel about "technology in a turbulent world".
The Treasury revealed that he will be championing British excellence in science and technology, and will “bang the drum on investment” into the UK.
He said:
“I’ll be in Davos to tell the world that Britain, a nation of great innovation, is on the up and open for business.
“We boast some of the best and brightest businesses in sectors of the future like digital technology and life sciences. It’s these areas of strength that are going to drive growth across the UK economy in years to come.”
LaToya Harding
UK house prices to rise by 3% in 2024
And sticking with housing, Andrew Wishart, senior property economist at Capital Economics, said:
The December RICS Housing Market survey showed sales volumes rising and buyer demand recovering even before the further sizeable drop in mortgage rates in January.
That’s encouraging for our view that house prices will rise by 3% in 2024 in contrast to the consensus forecast of a 1% fall.
We suspect the average quoted mortgage rate will drop from 4.8% in December to 4.2% in January, which will support a further strengthening in demand and transactions.
LaToya Harding
Newly agreed property sales reach highest since March 2022
Newly agreed property sales hit their highest level since March 2022 in December, according to the Royal Institution of Chartered Surveyors (RICS) on Thursday.
Buyer inquiries also recovered for the fourth month in a row, with demand at its highest level since April 2022 when higher interest rates and the cost of living crisis started to weigh buyer demand.
Tarrant Parsons, senior economist at RICS, said: “Supported by an easing in mortgage interest rates of late, buyer demand has now stabilised, and this is expected to translate into a slight recovery in residential sales volumes over the coming months.”
LaToya Harding
Train tickets from station twice as expensive as online
Travellers buying tickets at train station ticket machines are being charged up to double the price of a booking online, research shows.
A same-day, one-way ticket from Holmes Chapel in Cheshire to London cost £66 at the station’s ticket machine but online the same trip was £26, a 156% difference, according to consumer group Which?.
Someone buying a same day, one-way ticket from Northampton to Cardiff would have paid £107 for their ticket from the machine, 148% more than buying online, where the price was just £43.
Overall, fares purchased online were cheaper around three-quarters of the time, and on average, same day journeys cost 52% more from machines. In 2022, around 12% of tickets were purchased from a machine — some 150 million journeys.
Services offered by different ticket machines could vary significantly, with passengers often facing restricted choice and, as a result, higher prices.
One of the key reasons why tickets from machines are often more expensive is because most don’t offer "advance" fares — cheaper tariffs which are available to buy in advance of travel. Depending on the route, these can even be available up to 10 minutes before departure.
Asian shares were mixed overnight as investors weighed up the latest inflation figures from the UK and Europe and what that meant for interest rate cuts.
The Nikkei (^N225) closed flat on the day in Japan, despite support from a relatively cheaper yen, while the Hang Seng (^HSI) rose 0.8% in Hong Kong. The Shanghai Composite (000001.SS) was 0.4% higher by the end of the session.
Meanwhile, across the pond, losses were fairly contained despite the sharp rebound in yields. The S&P 500 (^GSPC) slipped 0.6%, and the tech-heavy Nasdaq (^IXIC) was 0.6% lower. The Dow Jones (^DJI) lost almost 0.3% on the day.
US Treasury yields were pressured upwards by strong retail sales figures combined with an unexpected rise in UK inflation. Benchmark 10-year bonds last rose to 4.1% from 4.066% late on Tuesday.
The US dollar which initially rallied strongly to one-month highs, gave up most of its gains to close flat on the day.
LaToya Harding
Coming up...
Good morning, and welcome to our markets live blog. Please follow along to stay up-to-date on what is moving markets and happening across the global economy.
Here's a quick look at what's on the agenda for today:
12:01am: RICS Housing Market Survey
7am: Trading announcements: Currys, Dunelm, Flutter Entertainment, AJ Bell
10am: EU consumer price index
1:30pm: US initial jobless claims
Watch: How does inflation affect interest rates?
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