The FTSE 100 was trading 0.5% higher after opening, with mining stocks dominating the risers board, while the Frankfurt Dax was 0.9% up. (Jochen Tack)
European stock markets were in positive territory on Wednesday, and Wall Street followed suit, as the UK private sector grew at its fastest pace in seven months and new data revealed that the German economy will grow less than expected this year.
In London, the FTSE 100 (^FTSE) was up 0.6% by the end of the session, with mining stocks dominating the risers board, and the pound (GBPUSD=X) pushing higher. Meanwhile the CAC (^FCHI) gained 0.9% in Paris, and the Frankfurt DAX (^GDAXI) advanced 1.6%.
According to S&P Global's Flash Composite purchasing managers index (PMI), January's reading hit 52.5, up from 52.1 in December, the third consecutive month it came in above the 50 mark, which separates growth from contraction.
ADVERTISEMENT
However, private sector firms recorded the steepest rise in input costs since August, driven by renewed cost pressures in the manufacturing sector, as bosses reported higher freight costs in the wake of the Red Sea crisis.
It came as the Ifo Institute forecast 0.7% growth in Europe’s largest economy, which is on the brink of a recession, compared to a prediction of 0.9% last month.
The pound rose on the back of the news on Wednesday as economists also warned that the latest PMI survey data indicated that interest rates could remain higher for longer amid concerns over inflation.
Sterling has gained 0.6% against the dollar to move towards $1.28 and has risen 0.1% versus the euro, which is worth 85p.
Across the pond, US markets underwent another record-breaking session with the Nasdaq 100 (^IXIC) up 0.9% and the S&P500 (^GSPC) securing new record highs, up 0.6% by the time of the European close. The Dow (^DJI) was up 0.3% as Netflix (NFLX) beat expectations on its Q4 numbers, and other tech stock rallied.
"Last night’s positive finish in the US [has seen] markets in Europe open higher again today, though we could well struggle to hang onto the gains if recent experience is any guide," said Michael Hewson, chief markets analyst at CMC Markets.
!If the ECB ever had a reason to think about cutting rates, then today’s manufacturing and services PMIs would offer a compelling reason but for the fact that headline inflation is at 2.9% and core inflation is at 3.4%, and policymakers have insisted that tackling prices is their priority.
Let’s see how if that consensus holds out tomorrow when the ECB meets for the first time this year."
LIVE COVERAGE IS OVER21 updates
LaToya Harding
Blog close
Well that's all folks! Thanks as always for following along, and be sure to join us again tomorrow — we'll be bringing you all the latest news across the global economy.
Here are a few articles that may be of interest for you this evening:
The Bank of America has contacted its home-working staff threatening them with disciplinary action if they fail on their minimum office attendance.
Employees are expected to meet the required number of working days in the office, and the US lender has sent letters those who have avoided requests to return.
One letter shared online by a current employee said: “Failure to follow the workplace excellence expectations applicable to your role within two weeks of the date of this notification may result in further disciplinary action.”
The bank has been writing to affected staff since last autumn, the Financial Times said.
Bank of America has required most of its employees to be in the office at least three days a week since October 2022. The back-to-the office push is targeted mainly at its branches across the US rather than its international operations, including London.
LaToya Harding
Apple scales back electric car plans
Apple has pushed back the launch date of its rumoured electric vehicle (EV) and scaled back self-driving features.
According to Bloomberg, the Californian tech firm has delayed its internal target to launch a car from 2026 to 2028.
The vehicle will also have fewer advanced autonomous driving capabilities than first expected. The revisions come as Apple finds the push into cars more challenging than hoped.
LaToya Harding
Oil prices rise
Oil prices have risen today amid events in the Middle East and efforts by China to stimulate its economy.
Brent Crude (BZ=F), the global benchmark, crept higher by as much as 0.5% during the session, edging closer towards $80 a barrel.
Meanwhile US-produced West Texas Intermediate gained 0.8% to nearly $75.
Prices have ticked higher as China said it would force banks to lend more of their reserves in an effort to revive its struggling economy.
LaToya Harding
S&P 500 hits fresh intra-day record high
The S&P 500 has hit a new record high thanks to a rally fuelled by excitement over AI. It gained 0.6% at the opening bell in New York to reach a 4,893.23
Well with Christmas now a month behind us, and with the 70th anniversary of the UK Toy Fair underway at Olympia London, here's a quick run down of some industry insights:
The UK toy market was worth £3.5bn in 2023, a decline of 5% in value
More than 63.5% of toys purchased in the UK markets were priced under £10
Toys priced between £15 and £20 gained the most sales
Kidults (12+ age group) trend powers the UK toy market, contributing to 28.7% of the market's value.
Buoyed by top toy movie blockbusters, licensed toys continued to play a vital role in the market last year
Kerri Atherton, head of public affairs at the BTHA, said: "With people facing difficult times financially, these figures are not surprising and are in common with many other similar goods industries.
The sustained growth in key caterogies, like plush, licensed toys, as well as grwoth in games and puzzles, abd building sets, illustrate continued strong demand for toys and illustrates the resilience of the UK toy market.
Looking ahead to 2024, this shows there are opportunities for toy companies launching new and exciting products, with a focus on value for money and affordability a key trend."
LaToya Harding
Wall Street set to open higher
We have around an hour until the opening bell in New York. Let's have a quick look at how things are shaping up across the pond...
S&P 500 futures (ES=F) are up 0.%, Dow futures (YM=F) have gained 0.4%, and Nasdaq futures (NQ=F) are 0.9% higher an hour before the opening bell in New York.
LaToya Harding
Dutch chipmaker shares surge amid strong profit
Shares in ASML (ASML), the Dutch chip equipment maker, surged over 6% after it reported fourth quarter profits that beat estimates.
Net profit at Europe's biggest technology company by market value rose 9% to €2bn (£1.7bn/$2.2bn) on sales of €7.2bn in the fourth quarter.
Net sales for the fourth quarter rose 12.5% year-on-year, while the company reported a gross margin of 51.4% in the fourth quarter.
The company said it was maintaining a “conservative view” for the year and expects 2024 revenue similar to 2023, when ASML reported revenue of €27.56bn.
The group makes a machine required in the manufacturing of the world’s most advanced chips.
“ASML appears to have a promising 5-8 years ahead, capitalising on the EUV wave and the ongoing trend in fab capacity expansion and construction,” Albie Amankona, analyst at Third Bridge, said.
The FTSE 100 (^FTSE) could see a boost if Donald Trump becomes president, Goldman Sachs (GS) said on Wednesday.
In a note to clients, it said “defensive” markets like London's benchmark index, and the Swiss stock exchange, which included more companies with stable dividends and steady growth such as utilities, would be more resilient.
“For FTSE 100 companies, roughly half of dividends are paid in dollars. Moreover, greater fiscal expansion may add to US growth (although there is some prospect of higher rates offsetting a portion of this).”
Goldman’s foreign exchange analysts also believe that a united government “would most likely allow for greater spending—steeper curves, higher real yields and a stronger dollar."
LaToya Harding
How to get help with your energy bills in the cold weather
Freezing couple covered with a blanket. Man and a woman wrapped in a warm blanket in a cold room. (Andor Bujdoso)
Two in five people who pay energy bills say it’s difficult to stretch to the cost, and one in 20 say they’re behind on bills. The fact there’s no universal payment to cover higher energy bills this year means those who don’t qualify for any other help are finding bills particularly painful.
We’re already doing what we can to stay warm without putting the heating on. Previous government research found that the most common step was to put more clothes on, or huddle under blankets. This was followed by only heating the rooms we’re using, using hot water bottles, and going to bed earlier.
Taking steps to increase energy efficiency and cut waste is incredibly sensible at any time, including draught-proofing our homes and adding insulation. But despite everything we’re doing, the most recent data shows that one in five people are either only very occasionally warm at home right now – or they’re never warm enough to be comfortable.
More people have been forced to turn the heat off and cope with the consequences – and those consequences can be severe – especially for those who are already frail or in poor health. A cold home can be bad for your health and wellbeing, and anyone who is already struggling with mobility, lung problems or circulatory issues could face real risks.
It means we may need to look beyond simply cutting our energy use for a solution. There are a few schemes in place.
UK private sector grows at its fastest pace in seven months
Private sector activity in the UK grew at its fastest pace in seven months at the start of this year, according to S&P Global's Flash Composite purchasing managers index (PMI).
The reading hit 52.5 in January, up from 52.1 in December, which was the third consecutive month it came in above the 50 mark, which separates growth from contraction.
However, private sector firms recorded the steepest rise in input costs since August, driven by renewed cost pressures in the manufacturing sector, as bosses reported higher freight costs in the wake of the Red Sea crisis.
Survey respondents mostly commented on improved confidence among clients and some cited a turnaround in demand due to lower borrowing costs.
In contrast to the positive trend in the service economy, manufacturing production fell for the eleventh month running and at the fastest pace since last October. This was often attributed to weak order books and overstocked customers.
Total new work across the private sector increased moderately in January and the rate of growth edged up to its strongest since May 2023. A number of firms suggested that improving optimism with regards to the UK economic outlook had helped to support business and consumer spending, despite constraints on budgets from elevated inflationary pressures.
Export sales remained a weak spot, however, with a sustained decline in the manufacturing sector offsetting modest growth in the service economy.
Chris Williamson, chief business economist at S&P Global, said:
The survey data point to the economy growing at a quarterly rate of 0.2% after a flat fourth quarter, therefore skirting recession and showing signs of renewed momentum.
Businesses have also become more optimistic about the year ahead, with confidence rebounding to its highest since last May.
Business activity and confidence are being in part driven by hopes of faster economic growth in 2024, in turn linked to the prospect of falling inflation and commensurately lower interest rates
eBay headquarters in San Jose, California, USA (JHVEPhoto)
Ebay has said it will cut 1,000 jobs, amounting to 9% of staff members, in the midst of a “challenging macroeconomic environment”.
It said it would also reduce its work for outside contracts.
In a statement sent to staff, eBay said it needs to be “more nimble” and that “overall headcount and expenses have outpaced the growth of our business”.
The announcement is its second round of job cuts in a year. Last February it said it would cut about 500 employees.
LaToya Harding
Netflix shares set to surge to two-year highs
Netflix's last two quarters saw the streaming giant soar past expectations with a big surge in new subscribers.
"Fears that the crackdown on password sharing would prompt a slowdown in subscriber numbers have proved to be unfounded, after last night’s Q4 results saw another 13.1m subscribers added on top of the 8.76m added in Q3 taking the total number of paying subscribers to 260.28m, pulling further ahead from its deeper pocketed rivals of Disney, Apple, Amazon and Paramount Global," said Michael Hewson, chief market analyst at CMC Markets UK.
"On guidance Netflix was also bullish projecting Q1 revenues of $9.24bn, a jump in operating margin to 26.2% and profits of $4.49c a share.
"For the full year, Netflix raised its operating margin forecast to 24%, with the intention that this will improve year on year as the FX hedging model evolves over time.
"All this positive news helped the shares surge in after-hours trading in the US with the expectation that they open at 2-year highs when US markets open later today."
LaToya Harding
Wetherspoon blames staff costs for raising price of beer
Wetherspoon (JDW.L)reported higher sales in the last 25 weeks, with the group’s boss claiming that rising wages are forcing pubs to put up prices more than supermarkets.
In its trading update, the FTSE 250 company said like-for-like sales in the 25 weeks to January 21 rose 10.1% on an annual basis. Bar sales increased by 11.8%, food by 7.9% and slot/fruit machines 10.4%. Hotel room sales were up 3.1%.
The group’s chairman Tim Martin said pubs were being forced to increase the price of a pint, which typically costs about £4.50, by 13.5p to cover extra costs of staff, which are covered by about 30% of sales.
He said: “The price of a pint in a supermarket is about £1, so a 10% in labour costs (which are around 10 pence per pint) necessitates a one pence increase in the selling price to cover costs.
“However, for pubs, the average selling price of a pint is around £4.50. The labour per pint is therefore around £1.35 (30% of £4.50), necessitating 13.5 pence increase in the selling price to cover extra costs.”
He added: “The inevitable consequence is that increased labour costs raise the differential in prices between the hospitality industry and supermarkets”
Royal Mail could reduce number of days it delivers
There is a possibility that Royal Mail could reduce the number of days it delivers letters, cutting down from six per week to five or even three.
Under proposals to reform the service, a report from Ofcom has said the postal service was "getting out of date" and that action needed to be taken.
However, for this to happen the government would have to change the law but the move could save Royal Mail between £100m and £650m, the regulator said.
The other option proposed was to make changes to slow down letter deliveries, meaning that it would take three or more days for most letters to arrive, although next-day deliveries would still be available when required. This could save the company £150m to £650m.
Dame Melanie Dawes, Ofcom's chief executive, told BBC Breakfast: "Something's got to give, or the service is going to be too costly, and either stamp prices will go up or it will become unsustainable".
LaToya Harding
Tesla to build new EVs in mid-2025
Tesla (TSLA) has announced plans to start production of a new mass market electric vehicle (EV) in mid-2025, according to reports.
It has been codenamed "Redwood" with forecast weekly production volume of 10,000 vehicles, two sources told Reuters.
Production is set to begin in June 2025.
It comes as fourth quarter earnings are due after the bell later today. Elon Musk's firm is expected to report top-line revenue of $25.87bn (per Bloomberg estimates), a 6.4% rise from a year ago.
From a profitability standpoint, the Street is expecting adjusted EPS of $0.73, translating to adjusted net income of $2.61bn, which would be a 36.4% drop compared to a year ago.
The drop in profitability is due to downward pressure on margins since Tesla began its cost-cutting efforts late in 2022.
Last quarter, Tesla reported gross margin of 17.9% with operating margin dipping to 7.6%, both slipping sequentially and compared to a year ago. Investors will be looking for that long-awaited margin "trough" — or bottom — in Q4, with an expectation that margins could slightly improve.
Why you aren’t getting a full state pension and what you can do
The state pension forms the very backbone of our retirement income. Currently standing at around £10,600 per year, a full new state pension can go a long way towards helping us meet our day-to-day expenses but not everyone gets the full amount.
Our state pension entitlement is based on our national insurance record. As it currently stands you need 10 years’ worth to qualify for a state pension and 35 years’ worth to get the full amount.
Many people don’t get a full state pension because they have gaps in their national insurance record because they spent time out of the workforce caring for children, for instance, or living abroad.
You can find out what you are on course to receive by getting a state pension forecast. This will also show you if there are any gaps in your record that you may wish to fill.
EasyJet (EZJ.L) has advanced as much as 5% in London after it revealed it had reduced its losses before tax in the final three months of last year. This dropped to £126m, down from £133m in October to December 2022.
Passenger numbers over the period also increased by 14% despite a £40m hit due to the Hamas-Israel conflict.
The budget airline has paused flying to Israel and Jordan, as well as seeing a softening of demand for trips to Egypt.
We delivered an improved performance in the quarter which is testament to the strength of demand for our brand and network," chief executive Johan Lundgren said.
The popularity of easyJet holidays also continues to grow, with 48% more customers in the period. We see positive booking momentum for summer 2024 with travel remaining a priority for consumers.
Flight and holidays bookings took off strongly during the traditional busy turn of year sales period, as customers opted to secure their summer holidays to firm favourites like Spain and Portugal alongside destinations further afield like Greece and Turkey.
He also indicated that summer airfares across the sector could face upwards pressure as flight capacity “will probably be tight because of the challenges that some of our competitors have to get their aircraft”.
LaToya Harding
Abrdn to cut 500 jobs
Exterior view at night of abrdn offices in St Andrew Square Edinburgh, Scotland, UK (Iain Masterton)
Abrdn (ABDN.L) has warned it will cut around 500 jobs in a bid to cut costs by approximately £150m per year.
The investment firm said most of its savings would be from “non-staff costs”, mainly across its group functions and support services, but that it would remove management layers.
It expects the savings “to result in the reduction of approximately 500 roles.”
Stephen Bird, chief executive, said:
"Market conditions have remained challenging for our mix of business. The board and I are committed to taking these significant cost actions now to restore our core Investments business to a more acceptable level of profitability."
LaToya Harding
US and Asian shares
Shares in Asia were mixed overnight after Japan reported its exports jumped nearly 10% last month.
Exports in the country grew nearly 3% in 2023 while imports fell 7%, leaving a trade deficit of 9.2 trillion yen. This was a sharp drop from the 20.3 trillion yen deficit reported the year before.
The Nikkei (^N225) slipped 0.8% in Japan on the back of the news as traders also mulled the Bank of Japan’s decision to maintain its long-standing ultra-loose policies.
Meanwhile, the Hang Seng (^HSI) surged 3.6% in Hong Kong, boosted by gains in technology companies, and the Shanghai Composite (000001.SS) was 1.8% higher by the end of the session.
Across the pond, US markets recorded another record-breaking session as the earnings reporting season for big companies picked up the pace.
The Nasdaq 100 (^IXIC) and S&P500 (^GSPC) secured new record highs, while the Dow (^DJI) finished the day lower, a day after topping 38,000 for the first time, as Netflix (NFLX) beat expectations after the closing bell on its Q4 numbers.
The yield on 10-year US Treasury bonds rose to 4.14% from 4.11% late on Monday, although it remains well below its 5% level last October.
LaToya Harding
Coming up...
Good morning, and welcome back to our live markets blog. Here we take a deep dive into what's moving markets and happening across the global economy.
Here's a quick look at what's on the agenda for today:
7am: Ofcom publishes review of Royal Mail’s service
7am: Trading updates: Easyjet
9am: Eurozone flash PMI report for January
9.30am: UK flash PMI report for January
11am: CBI industrial trends survey of UK manufacturing
12pm: USMBA mortgage applications
3:30pm: US crude oil inventories
Watch: How does inflation affect interest rates?
Download the Yahoo Finance app, available for Apple and Android.
Gemma Collins has revealed she was advised by doctors to terminate her pregnancy after they found out the baby was intersex, leaving her devastated and 'in shock'
It should come as little surprise that the boss of British Gas is pushing for the mandatory installation of smart meters. They are the means by which energy firms could hike bills with Uber-style surge pricing. The energy industry will probably tell us it is all about helping Britain reach its net zero commitments, but the vested interest is plain to see.
Prince Harry was in London to attend a service of thanksgiving at St Paul's Cathedral to mark the 10th anniversary of the Invictus Games and was greeted by hundreds of fans
Prince William was the only member of the Royal Family to speak at the King Charles III Coronation Concert, where he appeared to take a swipe at his brother and sister-in-law
Prince Harry and Meghan Markle could be set to have new bombshells revealed about them in a German documentary, as journalist Ulrike Grunewald uncovers 'fresh secrets' about the couple
Martin Lewis has issued a warning to Santander customers and bank account holders as the bank is set to cut the rate on its popular easy-access savings account
BBC Breakfast hosts Jon Kay and Sally Nugent were forced to apologise to viewers after the TV show was inundated with complaints following a segment about punctuation
Could this be the worst thing since sliced bread? According to more and more research, ultra-processed food is at the root of much of our ill health – with the highest consumers 24 per cent more likely to suffer heart attacks and strokes, and 39 per cent more likely to develop high blood pressure.
A crisp-lover has claimed that they found a 'brown surprise' in their packet of Walkers Sensations - and people have been left horrified by the image as it was shared on Reddit
Yahoo Finance 
