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London open: FTSE rises as investors mull house price data
London stocks rose in early trade on Monday, taking their cue from a positive finish on Wall Street at the end of last week as investors continued to mull the Bank of England’s latest rate hike.
At 0915 GMT, the FTSE 100 was up 0.4% at 7,544.71.
Richard Hunter, head of markets at Interactive Investor, said: “The FTSE 100 is maintaining its contrarian stance in terms of performance, as it continues to benefit inter alia from the strength of an oil price which has now risen by 20% in the year to date. In addition, the mature, cyclical and to some extent defensive nature of its components have also attracted renewed interest from investors given the turmoil being seen elsewhere.
“Whereas high growth stocks have felt the full force of investor rotation in anticipation of higher rates within an inflationary environment, these very factors have highlighted the attraction of certain stocks which display protection against inflation through strong pricing power.
“While volatility is most likely to continue at least until the Federal Reserve announcement in March, investors will continue to search for alternative investment destinations until some of the global economic tightening concerns settle. With its own rise in the year to date of 2.3%, the FTSE 100 could continue to be on the radar for such investors.”
Market participants were digesting the latest survey from mortgage lender Halifax, which showed that house prices are expected to slow “considerably” over the next 12 months as households face a cost-of-living squeeze.
Price in January rose 0.3% month on month, the slowest pace since last June in a further confirmation that the post-Covid pandemic recovery is running out of steam as soaring consumer prices dampen sentiment. Year on year, prices were 9.7% higher.
“This situation is expected to become more acute in the short-term as household budgets face even greater pressure from an increase in the cost of living, and rises in interest rates begin to feed through to mortgage rates,” said Halifax managing director Russell Galley.
He added that it remained likely that the rate of house price growth “will slow considerably over the next year” and, despite affordability at historically low levels, price rises were outpacing wage growth with younger buyers also struggling to raise deposits.
In equity markets, Reckitt Benckiser edged higher after Bloomberg reported that the consumer goods company was considering options for its infant nutrition unit, including a potential sale.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Next Plc | +2.60% | +186.00 | 7,328.00 |
| 2 |  |
Bhp Group Limited | +2.11% | +51.00 | 2,471.00 |
| 3 |  |
Scottish Mortgage Investment Trust Plc | +1.74% | +18.50 | 1,080.00 |
| 4 |  |
Itv Plc | +1.67% | +1.90 | 115.40 |
| 5 |  |
Centrica Plc | +1.67% | +1.28 | 77.76 |
| 6 |  |
International Consolidated Airlines Group S.a. | +1.60% | +2.48 | 157.56 |
| 7 |  |
Anglo American Plc | +1.60% | +53.00 | 3,375.50 |
| 8 |  |
Melrose Industries Plc | +1.45% | +2.15 | 150.30 |
| 9 |  |
Pearson Plc | +1.44% | +8.80 | 618.40 |
| 10 |  |
Prudential Plc | +1.39% | +17.00 | 1,237.50 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Evraz Plc | -4.73% | -23.10 | 465.20 |
| 2 |  |
Barratt Developments Plc | -1.40% | -8.60 | 604.40 |
| 3 |  |
Bt Group Plc | -1.04% | -2.00 | 190.45 |
| 4 |  |
Wpp Plc | -0.93% | -11.00 | 1,172.50 |
| 5 |  |
Taylor Wimpey Plc | -0.90% | -1.35 | 148.00 |
| 6 |  |
Ashtead Group Plc | -0.86% | -43.00 | 4,965.00 |
| 7 |  |
Bp Plc | -0.78% | -3.15 | 402.75 |
| 8 |  |
Halma Plc | -0.66% | -16.00 | 2,416.00 |
| 9 |  |
Sage Group Plc | -0.65% | -4.60 | 706.60 |
| 10 |  |
Berkeley Group Holdings (the) Plc | -0.60% | -25.00 | 4,119.00 |
Europe open: Shares up as investors eye ECB for more rate clues
European shares rose at the start of the week’s first session as investors continued to look for interest rate moves from central banks.
The pan-European Stoxx 600 index was up 0.56% in early deals, with all major regional bourses higher after a mixed close in Asia.
Last week, the European Central Bank kept interest rates unchanged despite record inflation levels across the euro zone, while the Bank of England lifted rates for the second time in two months – the back-to-back rises since 2004.
Despite the unchanged policy stance, the ECB signalled a possible policy “recalibration” in March.
“The shift in inflation risks to the upside prompted ECB Governing Council member Klaas Knot to comment at the weekend he expected the first interest rate rise from the ECB as early as October,” said CMC Markets analyst Michael Hewson.
“While he is acknowledged as one of the more hawkish members of the governing council, inflation in the Netherlands is still well above the EU headline rate of 5.1% at 7.6%, he is still the first governing council member to break ranks and deviate to a much more hawkish stance.”
Investors will be looking for more clues on Monday when ECB President Christine Lagarde appears before the European Parliament’s Economic and Monetary Affairs Committee.
In the UK, data from mortgage lender Halifax showed British house prices were expected to slow “considerably” over the next 12 months as households face a cost-of-living squeeze.
Meanwhile in Germany, industrial production dipped in December, according to official data, as supply chain bottlenecks and a fall in construction hampered Europe’s largest economy at the end of last year.
The Federal Statistics Office said the country’s industrial output fell by 0.3% on the month after an upwardly revised increase of 0.3% in November.
In equity news, shares in French automotive group Faurecia gained as the company said it was targeting sales of more than €33bn in 2025, at an operating profit margin of more than 8.5%.
US close: Stocks mixed after nonfarm payrolls
Wall Street stocks put on a mixed showing on Friday as market participants digested January’s nonfarm payrolls report.
At the close, the Dow Jones Industrial Average was down 0.06% at 35,089.74, while the S&P 500 was 0.52% firmer at 4,500.53 and the Nasdaq Composite saw out the session 1.58% stronger at 14,098.01.
The Dow closed 21.42 points lower on Friday, narrowly extending the previous session’s losses.
Friday’s primary focus was January’s all-important nonfarm payrolls report, which revealed the US economy unexpectedly added 467,000 payrolls in January, much better than analysts’ expectations for a print of 150,000. According to the Bureau of Labor Statistics, the nonfarm payrolls report showed employment growth continued in leisure and hospitality, up 151,000 month-on-month, while increases were also seen in professional and business services, retail trade, transportation and warehousing. The unemployment rate, on the other hand, increased from 3.9% to 4.0%, while average hourly earnings increased to 0.07% from 0.05% a month earlier.
Investors also thumbed over a slew of corporate earnings from the night before, with Ford shares in the red after missing estimates by a country mile, while Amazon, Pinterest and Snap stocks were all higher following strong quarterly results.
In terms of Friday’s earnings, Bristol-Myers Squibb posted slightly better than expected fourth-quarter earnings, while Royal Caribbean Cruises posted a loss of $1.36bn in its fourth quarter.
Also in focus, WTI crude oil prices topped $91.93 per barrel, adding to inflation concerns, while the yield on the benchmark 10-year Treasury note increased to 1.913%.
Monday newspaper round-up: Fintechs, food prices, UK growth
Investment in financial tech firms in the UK grew sevenfold last year to $37.3bn (£27.5bn), according to KPMG, with London attracting more fintech funding than the rest of Europe, the Middle East and Africa (EMEA) put together. The investment total was boosted by 601 deals that were finalised in the UK in 2021, the financial services firm said, up from 470 the year before. – Guardian
The chairman of Britain’s biggest supermarket chain has warned that “the worst is yet to come” on food price inflation, as he predicted it will soon hit 5%. John Allan, who has chaired Tesco since 2015, told the BBC’s Sunday Morning programme that he was well aware people on very tight budgets were having to choose between food and heating. He said the idea that this was happening was very troubling. – Guardian
Rampant inflation will curb UK growth in the coming months after a bigger-than-expected bounceback last year, according to a new report. The EY ITEM Club has downgraded its predictions for growth in its Winter Forecast to 4.9pc for the year, compared with the 5.6pc it predicted in the autumn. It estimates the economy grew an upgraded 7.3pc last year. – Telegraph
Surging inflation risks adding £34bn to Britain’s debt interest bill this year in a jump that will pile pressure on the Treasury to tackle price rises. The Retail Price Index, an outmoded inflation gauge that is still used for determining repayments costs on a large chunk of Government debts, is expected to soar above 9pc in the coming months based on financial market indicators in a significant blow for Rishi Sunak, the Chancellor. – Telegraph
Mike Ableson spent years rising through the ranks at General Motors, one of America’s biggest carmakers, before he joined a British start-up plotting to revolutionise the automotive industry. His base will soon shift from Detroit, Michigan, the historical home of America’s car industry, to a city 600 miles south. The UK electric vehicle maker Arrival is hailing the dawn of a new era for transportation and delivery on both sides of the Atlantic. The US heart of its ambitious operation is about to start beating in Charlotte, North Carolina’s largest metropolis. – The Times
