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Thursday, November 21

Global stocks rise as Fed’s favoured inflation measure dips to 2.4%

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By on Inflation

The FTSE was up on Thursday, recovering from the previous session. (anutr tosirikul)

The FTSE 100 (^FTSE) and European stocks rose on Thursday, with Wall Street following its lead, as investors digested a slew of UK earnings as well as US inflation data.

The central bank’s favoured inflation measure dipped slightly, coming in at 2.4% in the year to January, down from 2.6% in December.

The core PCE index, excluding food and energy costs, shows prices rose by 2.8% in the year to January, down from 2.9% a month earlier.

It also came as US jobless claims rose. The number of initial claims for unemployment support rose by 13,000 last week, to 215,000, from 202,000 the previous seven days. Economists had expected a smaller rise, to 209,000.

Neil Wilson, chief market analyst at Finalto, said: “US PCE inflation is the key data point today and has the potential to move market expectations.

“Core PCE is set to rise 0.4% month-on-month and 2.8% year-on-year in January. Slowing disinflation should help push out bets for rate cuts beyond May more firmly … quite frankly I find it hard to buy into a May cut anymore.”

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  • Blog close and recap

    Well, that’s all folks! Thanks for following along. Be sure to join us again tomorrow when we’ll be back for more.

    Here’s a quick recap of some of the top stories from today:

    • Mortgage approvals hit highest level in over a year

    • Bitcoin blasts through $63,000

    • Core US inflation stays resilient despite rate cut signals

    • Sainsbury’s to cut 1,500 jobs amid cost cutting push

    • House sales see 15% uptick as property market rebounds

    • Ireland inflation nears EBC’s 2% target

    • Business hiring picks up

    • Ocado losses narrow

    Have a good evening!

  • Sainsbury’s to cut 1,500 jobs amid cost cutting push

    Sainsbury’s (SBRY.L) is planning to cut around 1,500 jobs as part of its efforts to reduce costs by £1bn.

    The move comes as the UK’s second-largest supermarket chain seeks cost savings to invest back into the business.

    The jobs will go at its store support centre, its contact centre operations in Widnes, Cheshire, in its in-store bakeries and at some local fulfilment centres.

    Sainsbury’s said that it will find alternative roles for impacted staff where possible, and that the job cuts are subject to consultation.

  • Best UK mortgage deals of the week

    Mortgage rates have stopped their downward trend as more mortgage providers increase their rates on new fixed deals and bring an end to the sub-4% offers.

    The average rate on a two-year fixed deal last week stood at 5.66%, while for a five-year deal, rates came in at 5.11%, according to figures from Uswitch.

    The market appears to be more volatile, as higher costs faced by providers to fund mortgage lending pushing many to raise rates again in recent days.

    This follows the Bank of England’s (BoE) decision to leave UK interest rates on hold at their current 16-year high of 5.25% for a fourth consecutive time.

    Kellie Steed, Uswitch mortgage expert, said:

    “Since the base rate decision at the beginning of the month, we’ve seen a number of lenders repricing their fixed-rate products, with the vast majority choosing to slightly raise rates for the time being.

    “Average 2 and 5 year fixed rates have edged up over the past week, with none of the big six currently offering the sub 4% deals that were seen in January. However, Halifax chose to go against their competitors, instead choosing to cut some of their fixed products.

    Read more here

  • Core US inflation stays resilient despite rate cut signals

    US personal consumption expenditure data is out…

    On a month-on-month basis it is running at 0.4% and 2.8% on an annual basis. This is the fastest pace of month-on-month price growth in the past year, though on an annual basis it is an improvement on the 2.9% recorded last month.

    Lindsay James, investment strategist at Quilter Investors, said:

    “While this was largely anticipated, given recent signals from CPI data, it underlines how sticky inflation has become in the services sector, while goods are largely seeing prices falling back.

    “Housing costs continue to be a key driver, alongside household utilities, healthcare, recreation and financial services – by no means a short list.

    “With the Federal Reserve at pains to deliver a data dependent message, while also acknowledging rate cuts are nearing, it seems that the last mile is providing difficult for core inflation figures despite lower energy prices helping bringing headline inflation data closer to target more quickly.

    “While market expectations for rate cuts to begin in June are unlikely to change, the months ahead will need to show clearer signs that core inflation is falling sustainably.”

  • The Body Shop update

    A person walks past The Body Shop store on Regent Street, central London, which is one of another 75 UK stores due to shut within the next six weeks, with the loss of 489 jobs. The high street skincare and cosmetics chain tumbled into administration earlier this month. Picture date: Thursday February 29, 2024.

    A person walks past The Body Shop store on Regent Street, central London. (Lucy North, PA Images)

    Some 489 staff are to be made redundant over next four to six weeks as a further 75 stores are set close on top of the seven already announced.

    Accounting firm FRP, the administrators, said 116 stores will still remain open.

    It comes as The Body Shop was bought by restructuring firm Aurelius for an initial payment of £117m in a deal agreed in November, which was finalised in early January.

  • Ireland inflation nears EBC’s 2% target

    Prices in Ireland have risen by 2.2% in the 12 months to February 2024, on an EU-harmonised basis.

    This brings annual inflation in the Republic down to near the European Central Bank’s (EBC’s) 2% target.

    However, on a monthly basis, consumer prices are estimated to have risen by 0.9% in February alone.

    • Energy prices are estimated to have risen by 0.5% in the month, but fell by 6.3% over the last year.

    • Food prices are estimated to have increased by 0.5% in the last month, and risen by 3.7% in the last 12 months.

    • Annual core inflation in Ireland, which strips out energy and food, dropped to 3.1% from 3.8% in January.

  • Oil prices ease

    Ricardo Evangelista , senior analyst at ActivTrades, said:

    “Brent oil prices eased in early trading, prompted by the latest US stock inventory report revealing an unexpected surge in reserves. This development has heightened concerns regarding a potential slowdown in demand.”

    “Over the last few weeks, the price per barrel has remained relatively stable within a narrow range.”

    “On the one hand, apprehensions persist regarding the impact of prolonged restrictive monetary policies on economic activity, potentially leading to reduced demand. On the other hand, supply pressures continue to loom large, exacerbated by ongoing tensions in the Middle East that pose threats to the global oil supply chain.”

    “Given this backdrop, market participants will closely monitor the upcoming release of US personal consumption expenditure figures, which serve as a key inflation metric for the Federal Reserve.

    “The interpretation of these figures could solidify expectations regarding the timing of the first Fed rate cut, with many now speculating it could occur as late as June. Such speculation may further contribute to downward pressure on oil prices.”

  • Is there an ethical way to invest in property?

    Everything you need to know about the property schemes that allow you to make a profit and a positive change.

    What is ethical property investing?

    Ethical property investing is the practice of considering environmental, social and community factors when putting money into property.

    “Ethical property schemes encompass a range of options, from environmentally sustainable developments to initiatives focused on affordable housing and community regeneration,” says Sarah Walker, founder of Lessons In Lettings.

    “Some examples include investing in energy-efficient buildings, supporting social housing projects, or backing developments that prioritise green spaces and sustainable materials.”

    This type of investment is becoming increasingly popular as investors look to balance their moral conscience along with their bank balance.

    “With increased awareness and concerns about sustainability, investors are more aware of the impact of their investments and are seeking out opportunities that align with their values,” says Michelle Niziol, owner of IMS Property Group.

    “Demand from millennial and Gen Z investors are driving more ethical property investments, and there are huge changes in government policies that are prioritising sustainability initiatives and shaping investment landscapes, so there are increased opportunities and tenders within this area that are becoming more attractive to property investors.”

    Find out more here

  • London Stock Exchange – solid results but margins light

    The London Stock Exchange Group has announced its full year results for 2023:

    • Total income up 8.3% on a constant currency basis

    • Good growth across all divisions with Data & Analytics growing by 7.3%

    • EBITDA margin of 47.2%, slightly below guidance range

    Charlie Huggins, manager of the ‘Quality Shares Portfolio’ at Wealth Club, said:

    “These are solid results from LSE in a difficult environment. Total income came in at the top end of the guidance range with broad based growth across each division, although EBITDA margins were a little lower than expected.

    The Refinitiv deal transformed LSE’s data capabilities, creating a financial powerhouse to rival Bloomberg. While it appears to be on track, with LSE exceeding its synergy targets, this is a highly complex and expensive integration. It is simply too early for LSE to declare victory.

    The real test of whether the Refinitiv merger has delivered on its promise will be whether LSE can accelerate its revenue growth, while improving its profitability. For now the jury is still out.”

  • Mortgage approvals hit highest level in over a year

    UK mortgage approvals reached their highest level in more than a year in a sign the property market slump is over.

    There were 55,227 mortgages in January, up from 51,506 in December, according to the latest figures from the Bank of England (BoE).

    It was the highest reading since October 2022, when interest rates still stood at 2.25%.

    Since then, Threadneedle Street has hiked borrowing costs to record highs of 5.25% as it fights to rein in runaway inflation.

  • Ocado losses narrow

    Online retailer Ocado (OCDO.L) received a boost on Thursday after it revealed it narrowed losses last year. It made a pre-tax loss of £394m in 2023, up from a £500m loss in 2022.

    Meanwhile, revenues rose almost 10% to £2.8bn, boosted by its Technology Solutions arm which sells robotic grocery warehouse kit worldwide.

    Adjusted earnings before interest and charges reached £51.6m, up £125.7m from a loss of £74.1m in 2022.

    Ocado Retail, the group’s grocery venture with Marks & Spencer (MKS.L), returned to an underlying profit and also increased revenues by 7%.

    Overall group revenues increased by 9.9% to £2.8bn over the year.

    Last summer Archie Norman, the chairman of M&S, told shareholders that he was “not happy” with the performance of the joint venture and said there was “work to do” to improve the business.

    On Thursday, Ocado chief executive Tim Steiner said:

    “I am pleased to report good progress across the group in 2023.Our technology is transforming the way people shop for food as we help some of the world’s best and most innovative retailers set the bar for excellence in grocery ecommerce worldwide.

    “Ocado Retail, our joint venture with M&S in the UK, has had significant success growing customer numbers, taking online grocery market share and rebuilding profitability, proving, once again, the attractions of our online model.”

  • BoE gets new deputy governor

    OECD Chief Economist Clare Lombardelli and the Secretary of State for the Economy and Business Support, Gonzalo García Andrés, during the presentation of the OECD Economic Survey of Spain 2023, at the headquarters of the Ministry of Economic Affairs and Digital Transformation, on October 25, 2023, in Madrid (Spain). This Survey examines the performance of the Spanish economy in the face of domestic and global challenges and addresses issues such as fiscal consolidation, productivity and the ecological transition. It also contains a chapter specifically dedicated to ways to increase opportuniti

    Clare Lombardelli (Eduardo Parra, Associated Press)

    OECD economist Clare Lombardelli has been appointed deputy governor of the Bank of England (BoE), succeeding Ben Broadbent.

    She will take up her role at Threadneedle Street on 1 July, or a term lasting five years, after the appointment was approved by His Majesty The King.

    As the new deputy governor for monetary policy, she will be responsible for overseeing the formulation and implementation of UK monetary policy and will lead the Bank’s research, data and analytics.

    She will be a member of the Monetary Policy Committee (MPC), the Financial Policy Committee, the Court of the Bank of England, and will be part of the executive team charged with running the Bank to deliver its statutory objectives.

    Jeremy Hunt, chancellor of the exchequer, said:

    “I am delighted to appoint Clare Lombardelli as the next deputy governor for monetary policy at the Bank of England. Clare brings significant experience to the role tackling financial and economic issues both domestically and internationally.”

    “I would like to thank Ben for his decade of service as Deputy Governor of Monetary Policy at the Bank of England. Ben has played a vital role in helping the Bank maintain monetary and financial stability and I wish him the best in the next stage of his career.”

    Andrew Bailey, Governor of the Bank of England, said:

    “I’m really pleased to welcome Clare Lombardelli back to the Bank as Deputy Governor for Monetary Policy. Clare’s impressive career means she brings a huge amount of relevant experience and expertise to the Monetary Policy Committee, and the Bank more broadly, at a time of great importance for the UK economy.

  • Property market on track for 1.1 million sales this year

    Richard Donnell, executive director at Zoopla, said:

    “The housing market has proved very resilient to higher mortgage rates and cost of living pressures.

    “More sales and more sellers show growing confidence amongst households and evidence that 4-5% mortgage rates are not a barrier to improving market conditions.

    “The momentum in new sales being agreed has been building for the last five months and the sales market is on track for 1.1 million sales over 2024 supported by new sellers coming to the market.

    “While sales are set to increase, we don’t expect house price growth to accelerate further in 2024.”

  • House sales see 15% uptick as property market rebounds

    The property market is rebounding, with an uptick in the number of buyers and sellers resulting in more sales this February.

    House sales agreed in London are up 16% annually, according to Zoopla, more than double the UK average, with only the North East of England seeing a high number of sales at 17%.

    The latest Zoopla House Price Index shows that the number of homes for sale are a fifth (21%) higher than a year ago, with buyer demand also up 11% and – crucially – sales agreed 15% higher than this time last year.

    Agreed sales jumped as demand from buyers was up by 11% and the number of homes for sale 21% higher than a year ago. House prices slipped 0.5% compared to a year earlier.

    The average London house price is now £534,600, over twice that of the national average of £263,600.

    In the Southern England regions – covering the Eastern, South East and South West regions, outside London – the average home price now sits at £344,000, 30% above the UK average.

    Across the rest of the UK house price growth has slowed a lot over the last year, but in areas where house prices are at or below average, prices have not generally been falling.

  • Business hiring picks up

    Businesses are expecting to increase staff numbers to their highest level in almost two years, new research has found.

    According to Lloyds’ latest Business Barometer, the difference between those planning to hire and fire means staffing expectations are at their highest since May 2022.

    It comes as confidence has remained well above average in the first two months of 2024, although it slipped two points from January to 42%.

    Businesses are also the second-most optimistic about their trading prospects and the economy at any point since April 2017, amid hopes that interest rates will begin to fall.

    Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said:

    “This month’s data still reflects a positive mood among businesses despite a marginal fall in overall confidence. Firms appear to be upbeat about their prospects and the economy, supporting their positive staffing expectations.”

  • Bitcoin blasts through $63,000

    Suqian, China. 27th Feb, 2024. SUQIAN, CHINA - FEBRUARY 26, 2024 - Illustration Bitcoin spot crosses $57,000 in Suqian, Jiangsu province, China, February 27, 2024. (Photo by CFOTO/Sipa USA) Credit: Sipa US/Alamy Live News

    Suqian, China. 27th Feb, 2024. SUQIAN, CHINA – FEBRUARY 26, 2024 – Illustration Bitcoin spot crosses $57,000 in Suqian, Jiangsu province, China, February 27, 2024. (Photo by CFOTO/Sipa USA) Credit: Sipa US/Alamy Live News (Sipa US, Sipa US)

    Bitcoin (BTC-USD) has rallied above the $63,000 (£49,745) mark, for the first time since November 2021 when the digital asset reached its all-time high of over $68,000.

    In the past 24 hours, the largest digital asset by market capitalisation has increased in value by over 8% to change hands for $63,108, as of the time of writing.

    The price appreciation has been driven by record inflows into multiple US-based spot bitcoin exchange-traded funds (ETFs) which were approved in January of this year.

    A spot bitcoin ETF is a financial product that investors hope will pave the way for mainstream capital to flood the crypto market. Currently, the indications are favourable, with fund managers, such BlackRock (BLK) and Franklin Templeton (BEN), having allocated a record $673m into spot bitcoin ETFs on Wednesday.

    Read more here

  • Asia and US stocks

    Asian stocks were mostly in the red overnight ahead of crucial US inflation data that could provide clues on when the US Federal Reserve will cut interest rates.

    The Nikkei (^N225) fell 0.1% on the day in Japan, while the Hang Seng (^HSI) fell almost 0.2% in Hong Kong. The Shanghai Composite (000001.SS), however, managed to jump 1.9% by the end of the session, on track for its best month since November 2022.

    On Wall Street, the S&P 500 (^GSPC) slipped 0.2% to 5,069.76, continuing its quiet and listless run since setting a record last week.

    The Dow Jones Industrial Average (^DJI) dipped 0.1% to 38,949.02 while the tech-heavy Nasdaq Composite index (^IXIC) sank 0.5%, closing at 15,947.74.

    In the bond market, the yield on the benchmark 10-year US Treasury bonds slipped to 4.26% from 4.31% late on Tuesday.

  • Coming up…

    Good morning and welcome back to our live markets blog. Here we take a look at what’s moving markets and happening across the global economy.

    Let’s take a quick look at what’s on the agenda for today:

    • 7am: Trading updates: Ocado, Weir Group, Hammerson,

    • 8am: Switzerland’s Q4 2023 GDP report

    • 8.55am: Germany’s unemployment rate for February

    • 9.30am: Bank of England data on mortgage approvals and consumer credit

    • 12pm: India’s Q4 2023 GDP report

    • 1pm: Germany’s inflation report for February

    • 1.30pm: US weekly jobless report

    • 1.30pm: US PCE measure of prices

Watch: How does inflation affect interest rates?

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