The S&P 500 hit an all-time high at the open on Friday. The FTSE gained. (Michael M. Santiago via Getty Images)
The FTSE 100 rose and European stocks ended the week down on Friday, with news that UK retail sales data had been disappointing in December.
London's premier index (^FTSE) was 0.1% higher by the closing bell, while the DAX (^GDAXI) in Germany fell 0.1% and Paris's CAC (^FCHI) lost 0.5%. The pan-European Stoxx 600 (^STOXX) fell 0.3% having risen earlier.
Over in the US, the S&P 500 (^GSPC) was trading 0.5% higher hitting an all-time high. The Dow (^DJI) and Nasdaq (^IXIC) also gained 0.5% and 0.7% respectively in early trade.
"As the Nasdaq 100 is hitting new all-time record highs European stock indices have seen their second, or in case of the FTSE 100 their third, weekly loss since the beginning of the year. Pared back rate cut expectations to the second half of the year have impacted European stocks more negatively as their economies look less healthy than their US counterpart," said Axel Rudolph, senior market analyst at IG.
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UK retail sales volumes are estimated to have fallen by 3.2% in December 2023, from a rise of 1.4% in November 2023 (revised up from an increase of 1.3%), according to the Office for National Statistics (ONS).
December's decrease was the largest monthly fall since January 2021, when coronavirus restrictions affected sales.
The fall makes it more likely that the economy was in negative territory over the fourth quarter of the year, heightening the risk of recession.
“Food stores performed very poorly, with their steepest fall since May 2021 as early Christmas shopping led to slow December sales," said Heather Bovill deputy director for surveys and economic indicators at the ONS.
"Department stores, clothing shops and household goods retailers reported sluggish sales too as consumers spent less on Christmas gifts, but had also purchased earlier during Black Friday promotions, to help spread the cost," she added.
Non-food store sales volumes fell by 3.9% in December 2023, following a 2.7% increase in November 2023 when earlier Black Friday sales, and wider discounting, increased sales.
While the FTSE rose, the pound (GBPUSD=X) headed south, falling 0.3% against the dollar. It was trading around the $1.26 mark by the close in London.
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Lucy Harley-McKeown
UK stocks round-up
Here's Michael Hewson of CMC Markets on the movers this week in London:
The FTSE100 especially has had a poor start to the year, down over 3% posting 3 weekly declines in succession, with retailers seeing most of the early year weakness.
JD Sports, Ocado, Burberry and Frasers Group are all down heavily, with weakness in basic resources as well with Glencore amongst the main decliners.
Today’s attempt at a rebound has been led by health care along with further gains for Flutter Entertainment after the positive response to yesterday’s numbers, prompted a price target upgrade from Deutsche Bank.
Lucy Harley-McKeown
Tata Steel to cut 2,800 jobs
PORT TALBOT, WALES - JANUARY 18: A general view of the Tata Steel site on January 18, 2024 in Port Talbot, Wales. Closing the two blast furnaces at Port Talbot will lead to the loss of 3,000 jobs. Tata is planning to replace the blast furnaces with a modern electric arc furnace. (Photo by Matthew Horwood/Getty Images) (Matthew Horwood via Getty Images)
Port Talbot steelworks owners Tata have rejected a proposal made by unions which would keep the plant up and running, putting 3,000 jobs at risk.
The company said that it could no longer afford to continue production as it completes a four-year transition to make its operations greener.
The blast furnaces at the site will be replaced by an electric arc furnace, which produces less CO2 but requires fewer workers to maintain.
The move sets the UK on a course to be the only major global economy which does not make steel from scratch, and follows a pledge of £500m in funding from the British government to implement the £1.25bn environmentally friendly plan.
"Today is an incredibly difficult day for Wales," Welsh Conservative leader in the Senedd Andrew RT Davies said, as reported by the BBC.
"I remain unconvinced that a blast furnace could not be kept open during the transition to the arc furnaces, protecting many jobs in the short to medium term," he added.
Tata said it is cutting 2,500 at the Port Talbot plant and 2,800 across all UK operations by 2027.
Lucy Harley-McKeown
Inflation is coming down, says ECB's Legarde
European Central Bank President Christine Lagarde attends the "Technology in a turbulent world" panel discussion during the annual meeting of the World Economic Forum in Davos, Switzerland, Thursday, Jan. 18, 2024. The annual meeting of the World Economic Forum is taking place in Davos from Jan. 15 until Jan. 19, 2024. (AP Photo/Markus Schreiber) (ASSOCIATED PRESS)
ECB president Christine Legarde signalled hope of a reprieve from spiralling prices on Friday as she spoke on the last of three panels featuring her at the World Economic Forum in Davos. Her message was that inflation is coming down, and the job market is loosening up, but declined to comment on specifics of the bloc's monetary policy.
As such, markets are still watching for rate cut signals. Earlier in the week, on a panel hosted by Bloomberg, she noted that “it is likely that we will cut rates by the summer.” Before, markets had been pricing in an earlier cut. ECB rates were held at the last two central bank meetings.
Trillions at risk in Red Sea conflict, as oil prices whipsaw
Oil prices were wavering on Friday as analysts warned that $3tn (£2.37tn) in value is at risk if the Suez Canal is blocked because of attacks in the Red Sea.
Yesterday, Houthi forces launched a new missile attack on a US-owned vessel, after US president Joe Biden said American strikes have not deterred the militants' campaign. The attack followed a fifth round of US strikes in Yemen earlier on Thursday.
The White House said US forces "took out a range of Houthi missiles" that were to be fired towards the Red Sea.
Analysts at Russell said that trade in the Red Sea represents around 12% of all world trade, and that blocking the Suez Canal would result in a shortage of valuable commodities. This would mean an estimated $780bn (£615bn) dollars' worth of crude oil, clothing and cars is disrupted.
"There is a persistent squeeze on living standards across many economies, including the UK, so it will not be welcome news for consumers, policymakers and businesses to hear of more potential price rises due to shortage of key commodities," said Suki Basi Russell Group's managing director.
Crude (CL=F) was trading at around $74.07 while brent crude (BZ=F) was hovering at $79.12. Both were relatively flat having pared earlier gains.
Lucy Harley-McKeown
Trending tickers
Yahoo Finance UK reporter Pedro Goncalves has the low down on today's trending tickers.
Apple shares jumped in premarket trading, after Bank of America analysts raised their price target on the stock and said that the tech giant could gain from evolving artificial intelligence (AI) technology.
The bank upgraded Apple on Thursday to "Buy" from "Neutral" and increased its price target to $225 (£117) from $208. Bank of America had downgraded Apple to "Neutral" in September 2022.
Bank of America sees the upcoming launch of the Vision Pro mixed reality headset as a catalyst for the stock. In a note to clients, the team wrote it expects a "stronger multi-year iPhone upgrade cycle driven by need for the latest hardware to enable Generative AI features to be introduced in 2024/2025."
"Apple should continue to see upgrade demand from older device owners, especially as AI enabled Apps will require higher processor power," Bank of America analyst Wasmi Mohan said.
Other highlights from today: JP Morgan (JPM), Deliveroo (ROO.L) and Wincanton (WIN.L)
Lucy Harley-McKeown
Davos wrap
It's the fourth day of the World Economic Forum in Davos, and macro matters are in focus, with a panel featuring key figures including Ngozi Okonjo-Iweala, director-general of the World Trade Organization, and Christine Lagarde, president of the European Central Bank on the global economic outlook.
Overnight there was also news that Google (GOOG) will invest $1bn in a new UK data centre in Waltham Cross. The 33-acre site will create construction and technical jobs for the local community, Google said.
Lucy Harley-McKeown
Overnight in the US and Asia
Asian stocks rounded out the week on a mixed note, with the Nikkei (^N225) finishing the session up 1.4%, and Chinese stocks in the red. The Hang Seng (^HSI) in Hong Kong finished 0.7% lower, while the SSE Composite (000001.SS) was down 0.5%.
Fresh data showed that Japan’s inflation slowed for a second straight month, increasing the chance that the Bank of Japan will keep interest rates on hold at its meeting next week. The country’s annual headline inflation rate has remained above the BOJ’s 2% target since April 2022, with a gradual decline observed from its peak of 4.3% last year to the rate of 2.6% in December that was reported Friday.
Earlier in the week Chinese stocks had experienced a more punishing sell off after China’s fourth-quarter gross domestic product growth missed estimates. There have been worries for some time now about stalling growth across China, which is typically seen as one of the world's growth engines.
Over in the US, indexes told a different story, with the S&P 500 (^GSPC) up 0.9%, the Dow (^DJI) rising 0.5% and the Nasdaq (^IXIC) gaining 1.4% in Thursday's session.
Hello! It's Lucy Harley-McKeown here in London, looking forward to another day of markets news. We've already had ONS retail sales figures which signalled a dour Christmas period for the high street. Later we will have more updates from Davos. Let's get to it.
Watch: Inflation predicted to slow in 2024, but it doesn't mean prices will drop
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