City on watch for recession as latest growth data looms
19:54 , Daniel O’Boyle
Tomorrow, all eyes in the City will be on the UK’s GDP reading for November.
A negative reading would leave the UK on a collision course with a technical recession – after October GDP fell and revised figures showed the economy shrank in Q3. Strong growth would mean the UK looks set to escape the R word, for 2023 at least.
Modest growth – such as the 0.2% figure being projected by surveys of economists – would mean attention will turn to December’s reading next month.
Read our preview here
Market snapshot as FTSE 100 closes down 1%
16:58 , Daniel O’Boyle
Take a look at our end-of-day market snapshot as the FTSE 100 fell in the afternoon.
The index is now down more than 150 points since the start of the year.
FTSE closes down 1%
16:38 , Daniel O’Boyle
The FTSE 100 closed at 7,576.59, down almost one percent, as early gains faded with hopes that US rate cuts are coming soon dashed.
London’s top flight was as high as 7692 early in the day before declining. The decline accelerated as US inflation came in ahead of expectations.
M&S was among the big fallers, while Whitbread was one of the top risers, on a day where both companies published results.
Record breaking revenue for London-founded retailer Wolf & Badger
16:08 , Daniel O’Boyle
Wolf & Badger, the fashion and gifts retailer, has reported record-breaking Christmas trade and reached its highest annual revenue figure since launching in London in 2010
The company was founded by brothers Henry and George Graham in 2010, and sells products with a focus on ethically-sourced goods, online and from stores in King’s Cross, New York and Los Angeles.
Unaudited figures show that in 2023 net revenue improved 15% to £34 million. It added that an underlying profit was achieved compared with a £5 million loss in the prior year when Wolf & Badger strategically targeted further growth and invested in opening a third flagship store.
Read more here
Microsoft overtakes Apple to become world’s most valuable company
14:52 , Simon Hunt
Microsoft has now become the world’s most valuable business after overtaking Apple.
Microsoft shares rose around 1% after the opening bell on Wall Street, while Apple shares fell by a similar amount.
Apple has had its worst start to the year in recent memory amid continued concerns over waning demand for its iPhones.
Apple became the first company to reach a one-trillion valuation, hitting the milestone back in 2018. Last summer, that rose to $3 trillion, but has since come down to around $2.8 trillion.
Market got ‘overexcited’ on US rate cuts
13:58 , Daniel O’Boyle
Seema Shah, Chief Global Strategist, Principal Asset Management, says: “Today’s inflation report reinforces the notion that the market had gotten a little overexcited around the timing of rate cuts. These are not bad numbers, but they do show that disinflation progress is still slow and unlikely to be a straight line down to 2%. Certainly, as long as shelter inflation remains stubbornly elevated, the Fed will keep pushing back at the idea of imminent rate cuts. Yet, while the market was probably overenthusiastic in its initial expectations, the stars should finally align for Fed cuts – most likely around mid-year.”
Market snapshot: FTSE slightly down
13:57 , Daniel O’Boyle
The FTSE 100’s gains disappeared as higher US inflation dampened hopes of rate cuts from the Fed coming soon.
Take a look at our market snapshot:
US inflation rise ‘unsurprising’
13:38 , Daniel O’Boyle
Richard Flynn, Managing Director at Charles Schwab UK says: “Today’s figures show an increase in the rate of inflation – a change that will likely be interpreted by the market as unwelcome, but unsurprising. Recent higher than expected earnings growth set alarm bells ringing for many investors who are hoping for interest rate cuts. While strong activity in the jobs market is a sign of a healthy economy and is good for workers, it can also be a contributing factor to inflation, so this likely played into the price rises we have seen today.
“Inflation figures in recent months have been promising and a single number is not a trend, but if today’s report is the start of an upward pattern, there is a good chance that the Fed will delay rate cuts until later than previously expected. It looks like the market may have jumped the gun in pencilling in as many as six Federal Reserve rate cuts in 2024.”
US inflation rises to 3.4%
13:31 , Daniel O’Boyle
US inflation rose to 3.4% in a setback to hopes of a ‘soft landing’ for the world’s largest economy.
Inflation was expected to rise slightly, but the figure is ahead of the 3.2% figure predicted by economists.
Core inflation ticked down to 3.9%, slightly ahead of expectations.
US inflation reading imminent
13:29 , Daniel O’Boyle
The US is set to publish its latest CPI reading, with inflation expected to tick up.
Ahead of the reading, Wall Street futures are slightly higher.
City on watch for recession as latest growth data looms
12:20 , Daniel O’Boyle
The official verdict is looming on whether or not the UK’s faltering economy is moving nearer full-blown recession, and it is likely to add to calls for interest rate cuts to help flatlining growth.
Mortgage holders, first-time home buyers, City traders and politicians are all braced for gross domestic product data due on Friday morning at 7.00 am. Experts expect that value of all the goods and services produced by the economy in November will remain around the flatline – showing growth of just 0.1% year-on-year – leaving it on the brink of shrinking.
Read more here
The MSG Sphere was a chance to invest in London’s cultural life
11:30 , Daniel O’Boyle
The withdrawal of London’s MSG Sphere is more than just a let down for fans—it’s a massive blow to our economy.
The experience economy is booming, with more people than ever choosing unforgettable experiences over material possessions. And MSG Sphere should never have become a political bargaining chip.
The success of Beyoncé and Taylor Swift’s recent tours highlight the economic effects these mega events can have, it’s been widely reported the stars brought in $10bn to the US economy and helped dodge an economic turn-down. Innovating in the UK with projects like the MSG Sphere is a gateway to boost the impact these events have on the UK economy and set the UK as a European Hub for live events.
Read more here
City Comment: Restaurants and bars need a new ‘Eat Out to Help Out’
11:19 , Simon English
Did every supermarket “win” Christmas, asks a sceptical colleague.
Well, pretty much, yes. Supermarkets always do well over the festive period and which ones did slightly better than others is something for the grocer CEOs and the City analysts who keep score to fight over.
For the rest of us, what the figures show is that our grocery sector remains fiercely competitive and we are all the beneficiaries of that.
The wider issue for the economy must be that all that money being spent at supermarkets plainly isn’t being spent somewhere else.
So if you want a Christmas loser, the likely answer is the hospitality sector.
Read more here
Trustpilot and Darktrace lead FTSE 250, copper miners rally
10:16 , Graeme Evans
Trustpilot got more five-star treatment in the City today as the consumer review platform’s latest update triggered a fresh surge for shares.
The FTSE 250-listed stock charged almost a fifth higher to 171.1p, having upgraded earnings guidance on the back of 18% revenues growth in 2023.
The shares are up more than 150% since the summer, although still short of the 2021 debut price of 265p when the Copenhagen-based firm was valued at more than £1 billion.
Peel Hunt analysts upped their price target to 200p and said the update supported their view that Trustpilot is well placed to grow strongly with improving margins.
Another of 2021’s stock market newcomers also performed well today, with AI-led cyber security business Darktrace up 9% or 30.7p to 366.3p after reporting half-year revenues growth of 27%.
The pair’s momentum and gains of 3% for easyJet and JD Wetherspoon helped London’s FTSE 250 index to post an improvement of 57.78 points to 19,337.86.
The biggest mid-cap faller was Ukraine-based iron ore pellets firm Ferrexpo, down 4p to 77.5p as its latest production figures caused shares to reverse the previous day’s gains.
The FTSE 100 index rose 3.39 points to 7655.15, but this was weaker than elsewhere after a strong finish on Wall Street ahead of today’s US inflation reading.
In Asia trading, the Hang Seng index lifted 1.3% while hopes of continued ultra-loose monetary policy meant Japan’s Nikkei 225 rose another 1.7% to top 35,000 for the first time in 34 years.
Broker comment on Antofagasta meant the copper miner led the FTSE 100 with a rise of 30.5p to 1613.5p, with Anglo American also 41.8p stronger at 1865p.
On the fallers board, Rolls-Royce suffered a bout of profit-taking as shares retreated 7.3p to 301.9p. Events and academic publisher Informa also fell 28.6p to 756.6p, having announced a major deal to combine its digital businesses with Nasdaq’s TechTarget.
Recruitment firm Robert Walters cuts 220 jobs as hiring slows
09:45 , Daniel O’Boyle
Recruitment firm Robert Walters has axed 220 jobs amid a slowdown in global hiring.
The London-listed company said it has reduced its total staff headcount to 3,980 from 4,200 at the end of September.
Robert Walters told shareholders on Thursday it has been impacted by “continued challenging macro-economic conditions across many” of its markets.
Read more here
Market snapshot: Miners rise, M&S falls
08:53 , Daniel O’Boyle
Take a look at today’s market snapshot
Tesco higher after upgrade but M&S shares fade, Darktrace up 7%
08:25 , Graeme Evans
Tesco and Marks & Spencer have experienced contrasting stock market fortunes following the publication of their Christmas trading updates.
The supermarket rose 2.5p to 298.9p after nudging up full-year profit guidance, whereas M&S retreated 3% or 8.8p to 268.9p after its warning of cost pressures offset an otherwise robust festive statement.
Among other blue-chip companies reporting today, Premier Inn owner Whitbread rose 2% or 80p to 3630p and housebuilder Taylor Wimpey edged 0.3p higher at 148.7p.
Last night’s strong finish on Wall Street helped the FTSE 100 index to improve 0.5% or 36.17 points to 7687.93, while the FTSE 250 index added 77.48 points to 19,357.56.
Strong trading updates meant shares in consumer reviews business Trustpilot rose 11% or 15.4p to 161p and cyber security technology firm Darktrace by 7% or 24.9p to 360.5p at the top of the FTSE 250.
Darktrace jumps on guidance upgrade
08:13 , Simon Hunt
Shares in Darktrace jumped as much as 7.5% as markets opened this morning after the firm said its strategy of attracting big clients was paying off.
The Cambridge-based business said it expected annualised recurring revenue in the six months to 31st December 2023 of at least $701.7 million, representing year-over-year growth of at least 24.3%.
The firm narrowed its guidance range for ARR growth to between 21.5% and 23.0% (previously 21.0% to 23.0%), raising its midpoint expectation by approximately $1.6 million.
CFO Cathy Graham said: “We expect to emerge from a period of relative market uncertainty in an even stronger position, and well-placed to capitalise on the large market opportunity for our AI-powered cyber security products as attackers capitalise on the availability of increasingly sophisticated tools and tactics, including generative AI.”
City watchdog to deepen its scrutiny of car loan complaints as scandal looms
08:08 , Michael Hunter
The Financial Conduct Authority is stepping up its scrutiny of a looming scandal over car loans, amid a rise in complaints over the cost of them and how they were sold to consumers.
There is a high number of complaints over the loans, which paid out more commission to salespeople for higher interest rates charged. The FCA banned the practice of linking commission to interest rates in 2021.
It said today that that a large number of complaints were being rejected by firms, with some then being upheld by the Financial Ombudsman an in the courts.
The FCA said it would now use its powers to look into historical commission arrangements.
Some reports into the legal action taken against car finance firms have said that there could be as many as one million people affected, who took on car loans between October 2015 and late January 2021 when the FCA ban came in.
The FCA has paused the eight-week deadline for firms to deal with complaints made to them “to prevent disorderly, inconsistent and inefficient outcomes for consumers and knock-on effects on firms and the market.”
It also widened the deadline for complaints to the referred to the Financial Ombudsman to 15 months.
Savills hit hard in 2023, but says worst is over
07:55 , Daniel O’Boyle
Estate agent Savills saw “a significant reduction in profits for the year” for its transactional arm as interest rate rises and uncertainty over the future of offices hit sales, but it believes “peak uncertainty” has passed.
The firm warned its transactional business was hit hard by clouds over the economic environment in general and the property market in particular.
“The consequence of this was that global market conditions remained extremely subdued for longer than originally anticipated at the start of 2023, and resulted in the Group’s Transactional businesses experiencing a significant reduction in profits for the year,” the business said.
Prime residential properties in London were an exception, performing well.
But Savills was positive about 2024.
“Whilst it is too early to determine the 2024 outlook with clarity, we believe that H1 2024 will see underlying market improvements, which should set the course for broader recovery in most of our markets during the second half of the year,” it said.
For the group as a whole, profits are set to tumble by 45% from 2022 to about £91 million, but this is in line with analysts’ expectations.
Shares closed yesterday at 972p.
London Metric to buy LXI in £1.9 billion merger of real estate investment trusts
07:40 , Michael Hunter
London Metric announced plans to acquire fellow real estate investment trust LXi for £1.9 billion today.
The all-stock deal’s value represents a premium of around 9%, and offers investors 0.55 of a new London Metric share for every one they hold in LXi.
The deal will create the UK’s fourth-biggest REIT, with a net-asset value of around £4.1 billion and a combined portfolio of £6.2 billion.
Sales climb for Christmas winner Marks & Spencer
07:38 , Joanna Bourke
Marks & Spencer cemented its status as a “Christmas winner” today, with the High Street stalwart reporting higher sales and bumper demand for festive food and party clothes.
It saw total sales growth of 7.2% to £3.9 billion in the 13 weeks to December 30.
Like for like food sales were up 9.9% and clothing and homeware was 4.8% higher. That was ahead of analyst expectations.
Tesco ups profit guidance after strong Christmas
07:23 , Simon English
More colleagues on the shop floor and a full Christmas dinner for just £2.09 each helped Tesco to a strong festive trading period according to chief executive Ken Murphy.
Sales in the third quarter rose 7.3% while Christmas sales rose 6.4% –a bit lower than arch rival Sainsbury reported yesterday.
Murphy said: “The Tesco team has worked harder than ever to help customers celebrate this Christmas, with our strongest ever range of great value, fantastic quality food. I want to say a huge thank you to all of our colleagues for their relentless dedication and energy. We stepped up our investment in service over the key festive period, with more colleagues on the shop floor, helping to deliver market-leading availability.”
The traditional big grocers have been fighting off a growing threat from German discount giants Aldi and Lidl for years now.
Overall retail sales in the third quarter rose 6.6%. Tesco, like Sainsbury, claims it is outperforming the market with price cuts on 2700 products and an Aldi Price Match deal.
It says it has the strongest market share since 2015 with especially strong performance in fresh food.
Tesco now expects to make profit for the year of £2.75 billion, above previous guidance of £2.6 billion to £2.7 billion.
That should give a bounce to the shares today.
Taylor Wimpey sees recent good levels of enquiries
07:22 , Joanna Bourke
Taylor Wimpey today said there are recent good levels of buyer enquiries and welcomed lenders lowering mortgage rates, in a boost for the housebuilding giant after a challenging period.
The company gave the update alongside reporting that in 2023 it completed on 10,438 UK home sales (including through joint ventures). That was a slump from 13,773 a year earlier but at the higher end of the firm’s 10,000 to 10,500 guidance.
Demand across the industry was knocked last year by factors such as soaring interest rates and cost of living pressures
Boss Jennie Daly said: “Looking ahead, it is encouraging to see a reduction in mortgage rates, however, in the short term the market remains uncertain and the planning backdrop extremely challenging.”
She also said: “Despite the difficult market conditions throughout the year, we maintained a sharp operational focus and delivered a good performance.”
Premier Inn owner says it continues to beat rivals
07:22 , Daniel O’Boyle
Premier Inn owner Whitbread said it makes about £6 more per UK room than rival budget hotel chains, after UK hotel sales grew by 11% in the three months to 30 November.
Total sales for the group, which also owns Beefeater restaurants, came to £788.1 million, up 8%.
Occupancy in London came to 86.3%, roughly flat compared to the previous quarter and ahead of the rest of the UK.
CEO Dominic Paul said: “Our teams have delivered another strong set of results. In the UK, we continued to see robust demand for our hotels driving high levels of occupancy and strong pricing. Our focus on delivering a high quality proposition at a great price meant that Premier Inn UK has continued to outperform the [midscale and economy] market.
“In Germany, we performed well in what is an important trading period with a large number of leisure and business events; we remain on course to break-even on a run-rate basis during calendar year 2024.”
Markets rally ahead of US inflation release, Nikkei 225 up again
07:18 , Graeme Evans
Expectations that US interest rates are due to fall in the spring will be tested today with the release of the country’s inflation rate for December.
November’s headline figure fell to 3.1% but Wall Street economists are forecasting 3.2% or 3.3% when the latest reading is published later today.
Deutsche Bank strategist Jim Reid said: “For now at least, markets remain confident that the Federal Reserve is about to pivot soon, with futures still pricing in a 69% likelihood of a cut by March. But so far, officials have generally been talking about later moves.”
US markets were in upbeat mood ahead of the inflation release, with the Nasdaq up 0.75% and the S&P 500 index 0.6% stronger.
Several of the Magnificent Seven stocks fared well, led by gains of 3.7% for Facebook owner Meta Platforms and 2.3% for Nvidia.
In Asia trading, the Hang Seng index is up 1.4% while hopes of continued ultra-loose monetary policy meant Japan’s Nikkei 225 rose another 1.8% to top 35,000 for the first time in 34 years.
CMC Markets expects the FTSE 100 index to open 23 points higher at 7674, having fallen by 32 points in yesterday’s session.
Recap: Yesterday’s top stories
06:40 , Simon Hunt
Good morning from the Standard City Desk.
The US Securities and Exchange Commission approved 11 Bitcoin-spot exchange-traded funds last night in a major advance for crypto adoption.
The move allows retail investors access to cryptocurrencies without having to hold them directly.
A number of firms on the approved list say they plan to launch the ETFs as soon as tomorrow.
Rajeev Bamra, SVP, Digital Finance, Moody’s Investors Service, said: “The approval of spot bitcoin ETFs by the SEC has the potential to simplify and secure Bitcoin investments for a broader investor base, which may reshape the dynamics of cryptocurrency investments.
“It could lead to substantial inflows from institutions interested in entering the cryptocurrency market as it may provide a reliable and transparent price discovery mechanism. This could result in a more stable and liquid crypto market, representing a positive development for the digital finance ecosystem.”
Bitcoin prices nudged up to around $47,000 on the back of the news.
Elsewhere, Bank of England governor Andrew Bailey seemed less bullish on crypto, complaining that ‘inefficient’ Bitcoin was ‘not taking off’ as a financial service.
Here’s a summary of our other top stories from yesterday:
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