In London, the FTSE 100 (^FTSE) slipped 0.9% by the end of the day, reversing earlier gains as rising metal prices initially boosted miners. The CAC (^FCHI) lost 0.5% in Paris, and the Frankfurt DAX (^GDAXI) was down 0.8%.
The STOXX 600 (^STOXX) tumbled 0.75%. Industrial metal miners gained the most among the various sectors, with an early rise of a much as 1.8% before dropping. Prices of base metals like copper and nickel rose on a softer dollar, and Chinese government support for the yuan.
It came as US inflation rose more than expected last month, up by 3.4% in the year to December, according to the US Bureau of Labour Statistics.
This was up from an annual rate of 3.1% in November, when cheaper gas prices slowed the rising cost of living in America.
Economists had expected prices to increase 0.2% month over month and rise 3.2% year over year, according to Bloomberg data, but American households were hit by pricier housing costs and energy.
In December alone, prices rose by 0.3%, including a 0.2% rise in food costs.
However, core inflation, which excludes volatile food and energy prices, edged down further from 4% to 3.9%.
"I don't think it's enough to delay cuts," Bank of America US economist Stephen Juneau told Yahoo Finance Live. "We're looking for a March cut to kind of kick of the cutting cycle. This kind of keeps the door open, it definitely doesn't slam the door shut."
The S&P 500 (^GSPC) was 0.75% down at the time of the European close, while the tech-heavy Nasdaq (^IXIC) was 0.9% down, after its fourth positive day in a row yesterday. The Dow Jones (^DJI) lost 0.6% in New York.
Richard Garland, chief investment strategist at Omnis Investments, said: “Although we have seen a tick up in inflation in December, the big picture is US inflation is on a downward trend and that prices in the service sectors are beginning to contribute as wage growth moderates.
"Goods prices should start to stabilise by the summer meaning the path to 2% headline inflation won’t be a straight line. This will still provide sufficient cover for the Fed to cut rates, but the real question is – have market expectations for rate cuts in 2024 gone too far? Cuts totalling nearly 1.5% could be a stretch.”
Elsewhere, thenumber of Americans applying for unemployment benefits fell to its lowest level in nearly three months last week.
Jobless claim applications declined to 202,000 for the week ending 6 January, down 1,000 from the previous week, the Labour Department said.
The four-week average of claims, which evens out some of the week-to-week volatility, dropped by 250 to 207,750.
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LaToya Harding
Blog close and recap...
Well that's us finished for the day — thanks for following along. Be sure to join us again tomorrow for the final blog of the week.
Here's a quick recap of some of the top headlines from today:
Tesco raises profit outlook after record Christmas
M&S staff to receive bumper payout after strong Christmas sales
US inflation rises to 3.4%
Microsoft beats Apple as world's largest company
Petrol prices fall to lowest since October 2021
Boohoo put 'Made in UK' labels on clothes made in Asia
NS&I to cut top prizes on premium bonds
Have a good evening folks!
LaToya Harding
Bitcoin predicted to rise above $100,000 in 2024
Bitcoin is set to leap above $100,000 this year, according to economists, after US regulators approved wider trading for the cryptocurrency.
Geoff Kendrick, head of digital assets research at Standard Chartered, said that bitcoin’s ‘halving’ in April, which cuts the currency’s supply and historically kick-starts price rises, could send it to $100,000 (£78,300) by the end of the year.
He added: “If ETF-related inflows materialise as we expect, we think an end-2025 level closer to $200,000 is possible.”
LaToya Harding
Whitbread up 3% after maintaining full-year guidance
Premier Inn owner Whitbread (WTB.L)rose 3% on Thursday as it maintained full-year guidance after a strong rise in accommodation sales during the third quarter.
For the 13 weeks to November 30, Whitbread said Premier Inn UK sales rose 11% with strong demand in both London and the regions.
Overall, accommodation revenues rose 13% year on year, driven by a 47% jump in German sales. Food & beverage operations were up 7%. On a like-for-like basis, total sales were up 8% for the quarter, it reported.
"Given the structural shift in UK hotel supply, positive current trading, a clear commercial plan and our ongoing focus on driving cost efficiencies, we remain confident in the outlook," chief executive Dominic Paul said, pointing to fiscal 2025.
The company also said it it is “on track” to complete a £300m share buy-back with 6.8m shares purchased so far.
LaToya Harding
Microsoft beats Apple as world's largest company
Microsoft briefly surpassed Apple as the world’s largest company as the two tech giants continue their race to develop artificial intelligence.
Microsoft’s market capitalisation touched $2.875trn in early trading, overtaking Apple as its share price rose 2.1%. Recently it has been riding the wave of optimism about the development of AI, becoming the largest backer of ChatGPT maker OpenAI.
Its share price has risen 63% over the last year to $383.56.
Meanwhile, Apple has made a poor start to the year amid concerns that demand for its products could weaken due to poor consumer demand.
According to Reuters, this is the first time since 2021 that Apple’s valuation has fallen below Microsoft's.
LaToya Harding
US jobless claims fall
Photo: Mario Tama/Getty Images (Mario Tama via Getty Images)
Sticking with news from across the pond...
The number of Americans applying for unemployment benefits fell to its lowest level in nearly three months last week.
Jobless claim applications declined to 202,000 for the week ending 6 January, down 1,000 from the previous week, the Labour Department said.
The four-week average of claims, which evens out some of the week-to-week volatility, dropped by 250 to 207,750.
LaToya Harding
US inflation rises to 3.4%
US inflation has risen in the year to December, up by 3.4%, new data has shown.
This was up from an annual rate of 3.1% in November, when cheaper gas prices slowed the rising cost of living in America.
Economists had expected a smaller rise to 3.2%, however, American households were hit by pricier housing costs and energy.
In December alone, prices rose by 0.3%, including a 0.2% rise in food costs.
The US Bureau of Labour Statistics said on Thursday:
The index for shelter continued to rise in December, contributing over half of the monthly all items increase. The energy index rose 0.4 percent over the month as increases in the electricity index and the gasoline index more than offset a decrease in the natural gas index.
The price of petrol has hit its lowest level in over two years, according to latest figures from the AA.
The average pump price has fallen below 140p a litre for the first time since mid October 2021.
On Wednesday, it averaged 139.97p a litre across the UK, the cheapest since it averaged 139.55p on 13 October 2021.
Petrol is now more than 50p per litre cheaper than in July 2022, when it hit a record high of 191.53p. This means it now costs £77 to fill up the average 55-litre tank, down from £105 at the peak.
Diesel prices have also dropped to the lowest level since early August, at an average of 147.83p.
Luke Bosdet of the AA said:
“While the dramatic improvement in pump prices gives big savings to families and businesses, and also redirects millions of pounds from fuel sales potentially back to the high street, pump prices remain historically very high.
Before COVID and the Ukraine war, the worst drivers faced was 142.48p record set in April 2012.”“The danger is that current pump-price levels are baked in as the new normal.”
LaToya Harding
Bitcoin SEC commentary
Lindsay James, investment strategist at Quilter Investors, said:
“Across the Atlantic, and after a false start earlier in the week due to a hacked X account, the SEC approved the first spot bitcoin ETFs in what could prove to be an important milestone.
It appeared to have been done somewhat begrudgingly following lawsuits, with the SEC Chair issuing a statement to clarify that whilst certain bitcoin ETP (exchange traded product) shares had been approved, bitcoin itself had not been.
However in working with providers which include giants such as BlackRock and Fidelity, this will ultimately lower trading costs whilst improving liquidity, and will see numerous product launches now follow suit.
For investors, however, Bitcoin remains an incredibly speculative product subject to sharp sentiment-driven price swings. This decision from the SEC could bring about fresh volatility in the price of Bitcoin whilst the significant number of risks associated with wider cryptocurrencies remain unresolved.”
LaToya Harding
Bitcoin price swings dramatically as SEC approves cryptocurrency for ETFs
A spot bitcoin ETF is a financial product that investors hope will open the gateway for mainstream capital to flood the crypto market.
On Wednesday, the SEC approved ETF applications from some of the biggest names on Wall Street, from BlackRock (BLK) to Franklin Templeton (BEN).
Major market participants, such as JPMorgan Chase (JPM) and Goldman Sachs (GS), have offered to help these asset managers in creating and redeeming shares for their new bitcoin-based funds. Most of the ETFs are expected to begin trading Thursday, issuers said.
Fewer big money prizes will be available in NS&I’s Premium Bonds prize draw from March as the Treasury adjusts to falling interest rates.
Savings giant NS&I said there will be fewer big money prizes from March's draw to adjust for falling interest rates. The prize fund rate will be reduced, from 4.65% to 4.4%.
The changes will mean that an estimated 85 prizes of £100,000 will be up for grabs in March, down from 91 in January, although the odds of any £1 Premium Bond number winning a prize will remain the same, at 21,000 to one.
Laura Suter, director of personal finance at AJ Bell, said:
This is the biggest sign yet that the rates bonanza enjoyed by savers is coming to an end. This rate cut marks the end of 18 months of Premium Bond prize fund increases from NS&I.
The Government-backed provider has been increasing the prize fund on Premium Bonds consistently since 2022 as base rate rose and the saving war heated up. But that has reached its peak.
LaToya Harding
Google scraps jobs in cost-cutting drive
Google is set to axe hundreds of staff members from its digital assistant, hardware and engineering teams in a bid to cut costs.
Staff working on its voice-based Google Assistant are among those affected as the business takes on rival artificial-intelligence products from the likes of Microsoft and ChatGPT-creator OpenAI.
It comes after Google’s parent company Alphabet revealed last year that it would cut around12,000 jobs, more than 6% of its global workforce.
A Google spokesman said:
Throughout the second half of 2023, a number of our teams made changes to become more efficient and work better, and to align their resources to their biggest product priorities.
Some teams are continuing to make these kinds of organisational changes, which include some role eliminations globally.
LaToya Harding
UK's top property hotspots revealed
Sandbanks in Poole, Dorset, has been named the price hotspot of 2023, beating Hulme and South Moor for the number one spot.
The affluent neighbourhood of Sandbanks has seen average asking prices surge by 20% over the past year from £.1.59m to £1.9m, according to property site Rightmove.
Hulme in Greater Manchester comes in second, after seeing a price increase of 16% last year. The average asking price for a property here is £275,886. South Moor, in County Durham takes the third spot when it comes to price hotspots, with prices surging 15% to £106,671.
Steve Isaacs, director at Luxury and Prestige Realty in Poole said:“It’s been a very successful year selling prime waterfront properties on Sandbanks, which have outperformed the wider market.
“In fact, the Sandbanks market has continued to strengthen throughout the year. The strong market has been due to a limited supply of suitable properties combined with an increase in demand. The lifestyle element is not to be under-estimated, and the allure of living on the waterfront continues to attract buyers from out of the area.”
Boohoo put 'Made in UK' labels on clothes made in Asia
Boohoo (BOO.L) has come under fire again for placing "Made in the UK" labels on clothes made in Asia.
The BBC reported that the company removed the original labels on T-shirts and hoodies at its factory at Thurmaston Lane in Leicester between January and October last year.
A spokesman for Boohoo said:
This was an isolated incident, which impacted less than 1% of the group’s global garments intake. These errors were found to be the result of human error and we have taken steps to ensure this does not happen again.
Boohoo said it was considering closing its Leicester factory and relocating operations.
The company said fewer than 100 employees at the Thurmaston Lane factory may be affected by the closure and it expects “some roles will be relocated”.
LaToya Harding
Festive gains: Lidl only grocer to win customer spend from every competitor
Well there certainly is a lot of news in the grocery sector this morning...
Kantar has just revealed that Lidl was the only supermarket to win customer spend from every competitor over the festive period.
Shoppers switched over £116m to Lidl, the group said, which included securing £12.2m spend from Aldi, and gains of £51.6m from Tesco, Sainsbury’s, Morrisons and Asda.
Lidl CEO Ryan McDonnell, said:
“I’m incredibly proud of our performance this Christmas in what was the busiest trading period in our history.
As the fastest-growing supermarket in the country, we welcomed more customers through our doors than ever before and ensured that we delivered the quality and price promise they have come to expect from us.
It’s testament to the incredible contribution of our colleagues and suppliers who worked so hard to provide a fantastic Christmas for the communities we serve.”
LaToya Harding
M&S staff to receive bumper payout after strong Christmas sales
Liverpool One M&S entrance (Ed Rooney)
And sticking with supermarkets, Marks and Spencer's (MKS.L) has also issued a trading update today. Here's what they posted this morning...
Marks & Spencer has also revealed solid like-for-like sales growth, up 8.1% across the UK in the last 13 weeks of the year.
Like-for-like sales lifted 9.9% across its food arm, while comparable store sales were 4.8% higher in its clothing and home division in the quarter to December 30. Third quarter UK sales hit £3.57bn, up 8.1% like-for-like.
Stuart Machin, chief executive of M&S, said: “We enter 2024 with a spring in our step, but clear eyed on the near-term challenges.”
The group added a note of caution over the outlook: “As we enter the new year and 2024-25, expectations for economic growth remain uncertain, with consumer and geopolitical risks.
“We also face additional cost increases from higher than anticipated wage and business rates related cost inflation.
“Nevertheless, the strong Christmas trading performance provides confidence that the results for the year will be consistent with market expectations.”
Meanwhile, more than 9,200 staff, most customer service workers, are set to benefit from bumper payouts in February under the company's share save scheme thanks to its performance on the stock market driven by impressive trading.
An employee saving a typical £150 a month into the scheme will gain more than £10,000, according to the group.
Michael Hewson, chief market analyst at CMC Markets UK, said.
Having seen Sainsbury share price slide sharply after failing to raise its guidance yesterday, Tesco is slightly more optimistic doing what Sainsbury couldn’t after a similarly solid quarter and pre-Christmas trading update, raising its full year retail adjusted operating profit outlook to £2.75bn, up from £2.6bn to £2.7bn.
This upgrade has seen the shares edge higher in early trading, but the lift has been modest at best.
LaToya Harding
Tesco raises profit outlook after record Christmas
Shopper walking through the aisle of a Tesco supermarket. (Yui Mok, PA Images)
Tesco (TSCO.L) has said it is on track for bigger-than-expected profits this year after record sales over Christmas.
Bosses at the supermarket giant said its growth was boosted by investment to keep prices low, as it has sought to stop shoppers switching to fast-growing German discount rivals Aldi and Lidl.
The retailer said it has cut “nearly 2,700 prices” as part of this strategy to attract customers who have faced a surge in the cost of living.
On Tuesday, Tesco said like-for-like retail sales across the group rose by 6pc over the six weeks to January 2024, compared with the same period a year earlier.
In the UK, sales across it stores grew by 6.8pc over the Christmas period, with the company hailing a sharp rise in demand for its Finest premium range of food and drink products.
It came as the company also reported that like-for-like retail sales grew by 6.6pc over the previous 13 weeks, the quarter to November 25, as it was boosted by strong growth in its UK and Ireland shops.
Tesco said it now expects a retail-adjusted operating profit of £2.75bn for the year, up from a previous range of between £2.6bn and £2.7bn.
Chief executive Ken Murphy said:
As part of our focus on value, we offered a full Christmas dinner for just £2.09 per person, helping to drive record sales in the weeks leading up to Christmas and further market share gains.
We put a strong focus on quality and innovation too, with over 550 new and improved festive products. Over 18 million customers took the opportunity to treat themselves by shopping from our Finest range, which saw sales growth of nearly 17%.
Over the period we cut nearly 2,700 prices, with a further 150 prices cut just this week, cementing our position as the UK’s cheapest full-line grocer.
LaToya Harding
Asia and US stocks
Asian stocks rose overnight ahead of US inflation data that could influence the US Federal Reserve’s future moves on rate cuts.
The Nikkei (^N225) rose 1.7% on the day in Japan, breaching 35,000 for the first time since February 1990, while the Hang Seng (^HSI) jumped 1.3% in Hong Kong. The Shanghai Composite (000001.SS) was 0.3% higher by the end of the session.
"US markets...managed to finish the session higher with the S&P500 coming to within touching distance of last year’s high, while the Nasdaq 100 closed higher for the 4th day in a row, with this weeks’ focus being very much on today’s US CPI report," Michael Hewson of CMC Markets said.
The S&P 500 (^GSPC) rose 0.6% to at 4,783.45, and the tech-heavy Nasdaq (^IXIC) was 0.75% higher. The Dow Jones (^DJI) also gained 0.45%, closing at 37,695.73.
The yield on benchmark 10-year US Treasury bonds advanced one basis point to 4.03%, while the crypto world got a boost after exchange-traded funds (ETFs) to track bitcoin were approved in the United States.
LaToya Harding
Coming up...
Good morning, and welcome back to our live blog where we will be looking at 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: Tesco, Whitbread, Marks and Spencer
9.30am: Latest ONS business insights survey
1.30pm: US inflation report for December
1:30pm: US initial jobless claims and continuing claims
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