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London open: FTSE nudges lower; Next surges after update
London stocks nudged lower in early trade on Thursday as investors mulled hawkish minutes from the US Federal Reserve, but retailers were on the rise after positive updates from the likes of Next and B&M European Value Retail.
At 0825 GMT, the FTSE 100 was down 0.1% at 7,575.47.
Derren Nathan, head of equity research at Hargreaves Lansdown, said: “The minutes noted that the inflation data received for October and November showed welcome reductions in the monthly pace of price increases, but the committee stressed that it would take substantially more evidence of progress to be confident that inflation was on a sustained downward path.”
Still to come on the macro front, investors will eye the S&P Global/CIPS December services PMI for the UK at 0930 GMT, while in the US, the ADP jobs report is at 1315 GMT and initial jobless claims are at 1330 GMT.
In equity markets, retailer Next surged after it lifted its full-year profit guidance as it reported better-than-expected sales over the Christmas period.
In the nine weeks to 30 December, full price sales rose 4.8% versus last year. This was £66m ahead of the company’s previous guidance of a 2% decline for the period. Next said that both the retail and online segments had exceeded its expectations, with retail “particularly strong”.
“We think that we underestimated the negative effect Covid was having on our retail sales last year,” it said. “We may have also underestimated the effect improved stock levels would have on both businesses (stock levels were exceptionally low last year as a result of widespread supply chain disruption).”
The company upgraded its full-year pre-tax profit guidance by £20m to £860m, up 4.5% on the year.
Discount retailer B&M also rallied as it upgraded profit expectations and said it would pay a special dividend after a 12.3% rise in third quarter revenue.
The company, with operations in the UK and France, now expects annual adjusted core earnings to be in the range of £560m-580m, ahead of current analysts’ consensus estimates of £557m.
Greggs was also in focus after the bakery chain – famous for its sausage rolls – backed its full-year expectations as it posted an 18.2% jump in fourth-quarter like-for-like sales.
Elsewhere, Prudential was the worst performer on the FTSE 100 after a downgrade to ‘underperform’ at Exane.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
|||||||
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Next Plc | +7.25% | +442.00 | 6,540.00 |
| 2 |  |
Marks And Spencer Group Plc | +4.22% | +5.55 | 137.20 |
| 3 |  |
Easyjet Plc | +4.20% | +14.90 | 369.60 |
| 4 |  |
International Consolidated Airlines Group S.a. | +3.64% | +4.90 | 139.44 |
| 5 |  |
Associated British Foods Plc | +3.35% | +56.00 | 1,728.50 |
| 6 |  |
Antofagasta Plc | +2.77% | +43.00 | 1,597.00 |
| 7 |  |
Kingfisher Plc | +2.71% | +6.70 | 254.00 |
| 8 |  |
Anglo American Plc | +2.34% | +74.50 | 3,254.50 |
| 9 |  |
Rolls-royce Holdings Plc | +2.33% | +2.36 | 103.76 |
| 10 |  |
Ocado Group Plc | +2.18% | +15.40 | 722.60 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Pearson Plc | -4.97% | -47.40 | 907.00 |
| 2 |  |
Croda International Plc | -2.46% | -166.00 | 6,572.00 |
| 3 |  |
Prudential Plc | -1.94% | -24.00 | 1,215.50 |
| 4 |  |
Gsk Plc | -1.49% | -21.60 | 1,426.20 |
| 5 |  |
Informa Plc | -1.10% | -7.00 | 630.00 |
| 6 |  |
Imperial Brands Plc | -1.09% | -23.00 | 2,082.00 |
| 7 |  |
Relx Plc | -0.97% | -23.00 | 2,342.00 |
| 8 |  |
Unilever Plc | -0.95% | -40.00 | 4,187.00 |
| 9 |  |
Spirax-sarco Engineering Plc | -0.83% | -90.00 | 10,735.00 |
| 10 |  |
Halma Plc | -0.72% | -15.00 | 2,061.00 |
US close: Stocks rise as investors sift through Fed minutes
Wall Street finished above the waterline on Wednesday, as market participants digested a set of Federal Reserve meeting minutes that put the prospect of interest rate cuts well and truly beyond the horizon.
At the close, the Dow Jones Industrial Average was up 0.4% at 33,269.77, as the S&P 500 added 0.75% to 3,852.97 and the Nasdaq Composite was ahead 0.69% at 10,458.76.
The Dow closed 133.4 points higher on Wednesday, easily reversing the modest losses it recorded on Tuesday when major indices struggled for direction on the first trading day of the new year.
“One session is a blip, but two might be a trend – at least, that is what many investors will be hoping about the relationship between US and European stocks,” said IG chief market analyst Chris Beauchamp earlier.
“After years in which it was folly to do anything but buy American stocks, there are signs perhaps that non-US equities are coming into their own once again.
“While US stocks will have been kept in check today because of Fed minutes and then the run of job data, it still looks like investors are much keener on putting their money to work this side of the Atlantic.”
Wednesday’s focus was the release of minutes from the Federal Open Market Committee’s most recent meeting late in the session, which showed none of its members were expecting a rate cut to be appropriate in 2023.
The minutes from the FOMC’s December meeting, at which rate setters decelerated to a 50-basis point increase in the federal fund rate target, showed the FOMC wanting more evidence of slowing inflation after some recent hopeful data.
Members said easing too early could “complicate” efforts to restore price stability.
The minutes showed 17 of the FOMC’s 19 officials seeing interest rates rising above 5% this year, with a possible terminal peak of 5.25% pencilled in by most members.
Positive inflation data out of Europe boosted sentiment earlier in the day, including a better-than-expected fall in France’s consumer price index and a decline in import prices in Germany.
Elsewhere on the economic front, US mortgage applications fell 10.3% to a 27-year low in the week ended 30 December, according to the Mortgage Bankers Association of America, driven by a 12% crash in the purchase index and a 4.4% drop in refinancing applications.
A key gauge of labour market tightness meanwhile was little changed towards the end of 2022, contrary to expectations, according to a closely-followed survey.
The US Department of Labor reported that in seasonally-adjusted terms, the number of job openings dipped to 10.458 million in November from 10.512 million in October.
That was better than the drop to 9.9 million anticipated by economists.
Staying stateside, activity in the US manufacturing sector cooled a bit more but roughly as expected during the last month of 2022 according to another survey.
The Institute for Supply Management‘s factory sector PMI dipped to 48.4 in December from 49.0 for the month before, just shy of expectations for a print of 48.5.
Comments from purchasing managers focused on weaker demand, staffing shortages and improved supply chain conditions.
In equities, cryptocurrency exchange operator Coinbase Global rocketed 12.2% after it reached a settlement with New York state regulators.
Coinbase agreed to pay $50m in penalties over previous compliance allegations, and pledged to invest another $50m in ongoing compliance.
Elsewhere, Salesforce gained 3.57% after announcing a restructuring that would see 10% of its workforce laid off and some offices closed, while GE HealthCare Technologies jumped 8.02% on its first day of trading after spinning out from General Electric.
GE itself ended the session 5.86% firmer.
Thursday newspaper round-up: FTSE bosses, Wilko, energy bills, Amazon
The bosses of Britain’s biggest companies will have made more money in 2023 by Thursday afternoon than the average UK worker will earn in the entire year, according to analysis of vast pay gaps amid strike action and the cost of living crisis. The High Pay Centre, a thinktank that campaigns for fairer pay for workers, said that by 2pm on the third working day of the year, a FTSE 100 chief executive will have been paid more on an hourly basis than a UK worker’s annual salary, based on median average remuneration figures for both groups. – Guardian
The discount retailer Wilko has borrowed £40m from restructuring specialist Hilco and rejigged its leadership team as it faces a cash squeeze after falling to a loss and struggling to pay suppliers. Lisa Wilkinson, a member of the family which controls the 400-plus store chain, is stepping down as chair to be replaced by the former Bensons for Beds chair Chris Howell. Another former Bensons executive, Mark Jackson, stepped in as chief executive before Christmas, the group’s third in three years. The managing director, Alison Hands, will also leave the company this month about 18 months after taking the job. – Guardian
Investors in a £3.5bn UK property fund are being asked to wait longer for their money back after the world’s biggest money manager extended a withdrawal pause. BlackRock, which manages nearly $8 trillion (£6.6 trillion) in assets, has suspended withdrawals by investors in the fund in a move that highlights the strains placed on the sector by difficult market conditions. – Telegraph
Household energy bills are forecast to be hundreds of pounds a year lower than expected in the second half of this year, falling below the government’s £3,000 price guarantee after a sharp drop in wholesale prices. Annual energy bills for a typical household are now estimated at £2,640 from July and £2,704 from October, according to Investec, while Cornwall Insight forecasts £2,800 a year from July and £2,835 from October. – The Times
Amazon is cutting more than 18,000 employees in the biggest round of lay-offs by a technology giant yet. The world’s largest retailer, which rode a surge in demand at the height of the pandemic, is now moving to cut costs amid cooling demand and fears of recession. – The Times
