- FTSE 100 up 28 points at the close
- US stocks lower ahead of Powell remarks
- BP up after record profits, another buy-back
4.40pm: FTSE 100 ahead but off record highs
At the close, the FTSE 100 had pulled ahead to finish 0.4% higher at 7,865 points.
Investors on both sides of the Atlantic are waiting to hear from US Fed chair Jerome Powell after last week's jobs data blew past expectations, which could signal a more hawkish tone.
Powell is scheduled to be interviewed by billionaire Carlyle Group co-founder David Rubenstein at the Economic Club of Washington DC later this evening.
Equities are losing traction, as Jerome Powell resurfaces with a fresh post-NFP appearance, says Joshua Mahony of IG.
“Jerome Powell looks to ensure market sentiment remains heavily central bank focused, with todays scheduled appearance at the Economic Club of Washington raising uncertainly for traders," Mahoney noted.
"With the Federal Reserve looking to remain data dependant, traders are faced with a swift opportunity to see how Friday’s bumper jobs report and services sector rebound impacts the outlook going forward. For the most part this strength would be deemed an enabler for any central bankers seeking to drive down inflation, with the so-called soft landing potentially bringing a higher for longer approach to monetary policy.”
3.55pm: Numis seeing equities business uptick
Shares in London brokerage firm Numis Corporation PLC got a boost on Tuesday after it highlighted an uptick in its equities business which has delivered revenue slightly ahead of the second-half run-rate last year, even though overall market conditions remain tough.
Numis noted subdued levels of equity issues and deal-making and, as a result, it said its overall revenue run-rate outcome in the four months to January 31, 2023, was similar to the second half of the prior year helped by a significant rally in UK small and mid-cap indices, as well as improved investor sentiment.
The company said that it is well-positioned for when volumes do recover and is encouraged by the recent market performance, which has contributed to improve institutional appetite for both primary and secondary offerings.
The AIM-listed firm's shares were up 9.1% at 239p in late Tuesday afternoon trading.
3.40pm: Yellow circles at dawn
Supermarket giant Tesco PLC and German-owned discount chain Lidl GB Ltd have begun a High Court fight over the use of a yellow circle logo, according to news reports.
Lidl is claiming that a trademark and copyright has been infringed, while Tesco has made a counterclaim. Lidl uses a yellow circle in its main logo, and Tesco uses one to highlight offers available to members of its Clubcard scheme.
Barrister Benet Brandreth, who is leading Lidl's legal team, said the "protection available to Lidl's core brand" is "at the heart of this claim", the Retail Gazette reported.
Meanwhile, Hugo Cuddigan, who is leading Tesco's legal team, said that to establish infringement Lidl would need to satisfy the judge that "creating a yellow circle involves sufficient artistic skill and labour to comprise the author's own intellectual creation", it said.
The hearing at the High Court in London began on Tuesday and is due to end next week.
3.20pm: Antennas extended
Filtronic PLC saw its shares add nearly 6% on Tuesday afternoon after the Leeds-based antenna maker posted revenue of £8.4mln for the six months to November 30, 2022, up 5.0% from the £8.0mln recorded a year earlier.
Operating profit, however, fell to £483,000 from £721,000 a year earlier due to an adverse first-half sales mix, offset by "brief advantage from strong US dollar sales, and a higher cost base following investment into sales channels and engineering".
Looking ahead, Filtronic said it is dealing with continuing component shortages, inconsistent supply and delays, but that its outlook is supported by a strong order book.
In reaction, the company's shares were up 5.8% at 11.38p.
2.55pm: New York cautious at open
The FTSE 100 index remained firm but well off session highs as US stocks opened mixed on Tuesday as investors held off making any big moves ahead of remarks from Federal Reserve chair Jerome Powell which they hope will provide hints as to the US central bank’s path of interest rate hikes.
Around 20 minutes after the Wall Street open, the Dow Jones Industrial Average was down 87 points or 0.3% at 33,803 points, the S&P 500 was off 0.2%, and the Nasdaq Composite was almost flat.
Swissquote Bank senior analyst Ipek Ozkardeskaya noted that rising geopolitical tensions were also taking a toll on sentiment.
“Tensions around the Chinese spy balloon that was discovered last week and shut down didn’t do good to the Chinese stocks trading on American exchanges on the risk of escalation,” Ozkardeskaya said. “Risk of escalation may include higher tariffs, shortly after news of tariff relief on Chinese goods, and it could lead to a potential revival of the US-China trade war.”
Ozkardeskaya added, with Powell speaking on last week’s blowout jobs report and US President Joe Biden to deliver his State of the Union speech this evening following the Chinese spy balloon incident, there was little to cheer about.
“What we know this week is that the Fed hawks are returning to the playground, mixed with escalating geopolitical tensions with China and also with Russia,” she concluded.
In London, around 2.50pm, the FTSE 100 index was ahead 18 points, or 0.2%, at 7,854, well below the session peak at 7,890.
2.35pm: Crypto bang to rights
Newly proposed advertising rules in the United Kingdom could potentially see executives of crypto firms face up to two years of prison for failing to meet certain requirements around promotion, according to UK financial watchdog, Financial Conduct Authority (FCA), the CoinTelegraph website has reported.
In a statement on Monday, the FCA revealed that if the proposed “financial promotions regime” is approved by Parliament, all crypto firms in the country and overseas would have to follow certain requirements when advertising their crypto services to UK customers.
“Cryptoasset businesses marketing to UK consumers, including firms based overseas, must get ready for this regime,” said the FCA. “Acting now will help ensure they can continue to legally promote to U.K. consumers. We encourage firms to take all necessary advice as part of their preparations."
Under the FCA’s proposed regime, crypto firms would need to either have authorization from the FCA to advertise their services or have an exemption under the Financial Promotion Order.
2.10pm: Caution ahead of US open
The FTSE index still notched up gains but came further off early highs as traders await the Wall Street open for fresh direction, with the US stock future indexes all moving lower.
Around 2.00pm, the UK blue chip index was up 28 points or 0.4% at 7,864.
Craig Erlam, senior market analyst, UK & EMEA, OANDA commented: "Investors seem a little lost this week, disheartened by the jobs report in particular but also poor tech earnings and a still hawkish Federal Reserve. The central bank may have softened its tone a little but once you take the economic data into consideration, the case for a couple more 25-basis point hikes is clearly there.
"That's come as quite a setback following what has been a much more optimistic start to the year, in which interest rate expectations have been broadly pared back. But as was always likely to be the case, and will likely remain so this quarter at least, the data is going to be inconsistent and sentiment is going to reflect that."
Erlam added: "The path to peak inflation seemed very linear and sharp but the journey back to 2% is likely to be anything but. Clearly, there is a lot of underlying strength in the labour market that is going to make the case for pausing challenging, although I suspect there'll be plenty of examples over the next couple of months that may make it seem more appealing."
1.25pm: A few of the top risers and fallers of the junior market today
Sanderson Design Group PLC (AIM:SDG) shares ripped lower as the wallpaper and textile creator reported a decline in brand product and third-party manufacturing revenue. The shares fell 11% in early trading, recovering slightly to 122.2p, a decline of 7%, and over 44% from the all-time highs seen during the pandemic.
Shares in Zinc Media PLC (AIM:ZIN), the maker of TV programmes such as Wild Tales from the Farm and Buried Secrets of World War II, jumped 7% in early trade after the production company said it had started 2023 in its strongest position for five years. The shares were changing hands for 89.55p, up 6.95p.
Alkemy Capital Investments PLC (LSE:ALK) shares climbed after the lithium developer said it had struck a deal to supply Britishvolt's new owner, Recharge Industries. Alkemy jumped to 279p following the news, 10% higher than Monday’s closing price of 252p, before dropping back to 267p – an increase of 6%.
Smartspace Software PLC (AIM:SMRT) surged 26% in early trading on the news that losses would be lower than the market expected. This sent its AIM-traded shares climbing to 53.4p on Tuesday morning from their 42p close yesterday, before sliding back to 48p, a 14.3% gain.
Live Company Group PLC (AIM:LVCG) rallied 12% on news of a joint venture with music and entertainment management company M Group focused on bringing live K-Pop concerts and the StART Art Fairs and exhibitions to Japanese audiences. Live Company shares were changing hands at 2.08p with a market value of £5mln as of 1.20pm.
1.00pm: Mixed open seen in the US
Wall Street is expected to open flat to slightly higher after two days of losses as investors await more clarity on the direction of interest rates from Federal Reserve Chair Jerome Powell.
Futures for the Dow Jones Industrial Average (DJIA) declined 0.1% in Tuesday pre-market trading, while those for the broader S&P 500 index rose less than 0.1% and contracts for the Nasdaq-100 gained 0.1%.
Powell will be interviewed by billionaire businessman David Rubenstein, co-founder of private equity firm The Carlyle Group, at The Economic Club of Washington from 11am Eastern Time.
His appearance comes after a stronger-than-expected non-farm payrolls report for January raised doubts that the Fed would soon halt interest rate hikes and even cut later this year.
Against this backdrop, the DJIA closed 0.1% lower at 33,891 on Monday, the Nasdaq Composite dropped 1% to 11,887, and the S&P 500 shed 0.6% to 4,111.
“Investors will parse Powell’s comments for his read on the red hot jobs data in the US Friday,” commented TickMill Group market analyst Patrick Munnelly.
“These come in light of last week’s post-rate announcement press conference when markets believed the Fed Chair gave the first clear acknowledgement of the start of the disinflationary process in play,” he added. “However, the employment data on Friday has pushed market pricing in favour of further rate hikes given the continued tightness in the US labour market.”
On the corporate calendar, The Carlyle Group reports quarterly earnings today, along with Chipotle Mexican Grill (NYSE:CMG), Fortinet, Gartner, Nintendo, Omnicom and Royal Caribbean, among others.
12.45pm: Government in the dark as offshore firms cloud home ownership
The UK government is still in the dark about who owns tens of thousands of British properties, after thousands of offshore firms failed to comply with new transparency laws, which campaigners said exposes the UK property market to huge money-laundering risks.
There are almost 52,000 properties in Britain, worth a combined sum of £6.7bn, that are owned by offshore companies that have failed to register their ‘beneficial owners’ with Companies House, new research from Transparency International showed.
This meant thousands of dwellings are at risk of being owned by oligarchs, money launderers, and sanctioned individuals via offshore entities in jurisdictions such as Jersey and the British Virgin Islands.
The research showed the owners of more than half (56%) of all UK properties owned by offshore firms failed to identify themselves by the 31 January deadline, following the launch of the UK’s Register of Beneficial Ownership in August 2022.
It showed around 34,500 offshore companies simply failed to register their beneficial owners, despite the threat of fines and prison sentences for those who failed to comply.
12.20pm: Credit card spending rises 9.7% in January
Consumer card spending grew 9.7% year-on-year in January, higher than in December (4.4%) and slightly above the 9.2% rise in consumer price inflation, as new year sales, blockbuster film releases and a surge in holiday bookings led to strong performances across retail, entertainment, and travel.
However, the figures released by Barclays, showed growth rates were also increased by the Omicron Plan B restrictions in January 2022, which caused a drop in non-essential spending at the time, thereby inflating this year’s figures.
Other notable figures from the Barclays report show that spending on utilities grew by 44.7%, the highest rate of growth since September 2022, a 66% uplift in the travel sector as holidaymakers booked getaways for the year ahead, and that consumer confidence in household finances (63%) reached its highest level since July 2022.
Shopping at supermarkets (7.5%) and food and drink specialist stores (3.4%) saw slightly higher growth than in December (5.5% and -0.2% respectively), primarily due to rising food prices, and consumers committing to their New Year’s resolutions by cooking more from scratch instead of ordering fast food.
One in four Brits (27%) say they’re limiting the number of takeaways they order, which is one of the reasons why the takeaway category saw its lowest growth (9.0%) since May 2022.
11.45am: Rishi Sunak splits business department
Musical chairs in Westminster as prime minister, Rishi Sunak, shuffles his cabinet with some implications for the City.
The government has split the business department into two ministries with Grant Shapps becoming Energy Security and Net Zero Secretary in a department under the same name, while Michelle Donelan becomes the Science, Innovation and Tech Secretary at a new department.
Shapps was previously business secretary and Donelan culture secretary.
NEW: As expected No 10 announced changes in depts
New Dept for Energy Security and Net Zero (Dept for Energy and Climate Change abolished in 2016)
New Dept for Science, Innovation and Technology
New Dept for Business and Trade
Culture, Media and Sport back to how it was pic.twitter.com/KBqV30Q7gZ
— Lewis Goodall (@lewis_goodall) February 7, 2023
Kemi Badenoch has become the new Business and Trade Secretary.
The PM has also made Greg Hands the new Conservative party chairman after sacking Nadhim Zahawi over his tax affairs.
Lucy Frazer is the new secretary for culture, media and sport. She was a levelling up minister before.
11.10am: HSBC cuts mortgage rates below 4%
HSBC has made its “most significant” set of rate cuts this year, with reductions “across almost every fixed rate mortgage” for new and existing residential borrowers by up to 45 basis points.
The high street bank said that this includes reducing its five-year 60% loan-to-value offer, with a £999 fee, to under 4.00% for the first time since September.
The lender is also offering more cashback options and has lowered rates on buy-to-let loans as well.
HSBC is now offering a 3.99% deal on a five year mortgage - rates are coming down! https://t.co/sYsFquZ6ux
— Grace Gausden (@gracegausden93) February 7, 2023
HSBC said this is the “third and most significant set of reductions” it has made across its home loans this year and comes as the bank recently lifted interest rates on savings accounts for the seventh time in a year.
Rates spiralled after the infamous mini-budget in September but have been falling steadily since as financial markets cut their forecasts for how high UK interest rates will peak.
10.35am: Ferrexpo falls on Ukranian probe
Shares in Ukraine-focused miner Ferrexpo PLC (LSE:FXPO) fell 2.9% on Tuesday after it was told by a court to freeze the bank accounts of its largest Ukraine subsidiary, as part of a probe relating to the potential underpayment of iron ore royalty from 2018 to 2021.
Ferrexpo denied all accusations made as part of the ongoing investigation and added it would appeal the decision.
“The group has consistently followed the established legal due process for such disputes, and the Group has fully cooperated with local authorities throughout this process to date,” it said in a statement.
“Furthermore, the group notes that the nature of the Investigation is similar to two separate investigations previously faced by other major international metals and mining companies operating within Ukraine," the company added.
Ferrexpo shares were 2.9% lower in London on Tuesday at 148.10p.
10.00am: Industrial production slumps in Germany
Not good news from Germany where industrial production dropped by 3.1% in December, according to new figures from the Federal Statistical Office (Destatis), and was 3.9% lower than a year ago.
Production at energy-intensive industries fell by 6.1% during December, month-on-month, as soaring gas and electricity prices continued to hit manufacturers.
This “terrible industrial production report” confirmed that Germany’s economy came to a “sudden and hard halt in December,” said Carsten Brzeski, economist at ING.
He warned: “The former growth engine of the German economy is stuttering and no improvement is in sight. Despite the recent return of optimism as illustrated by improving sentiment indicators, the sharp drop in new orders, the inventory build-up in recent months and the lagged impact of high energy prices all still bode ill for the short-term outlook.”
“Today’s industrial production was the last hard data for the month of December. It is a month to forget. Retail sales, exports and imports all fell sharply. Either this data will be strongly revised upwards in the coming months or the German economy entered hibernation in December," he added.
9.25am: UK retail sales slip in January
UK retail sales took a dip in the first four weeks of January, according to the BRC-KPMG Retail Sales Monitor. Total retail sales increased by 4.2% last month, compared with 11.9% in January 2022.
This is below the three-month average growth of 5.2% and above the 12-month average growth of 2.5%, according to the data covering January 1 to 28, 2023.
"With inflation running at around 10%, sales growth for January nearly halved in comparison to December to just over 4% - sending a clear signal that consumers have started the year with a tight rein on spending as they face another period of rising costs," KPMG analyst Paul Martin commented.
Sales of clothing remained strong, with men’s clothes and shoes the strongest category in January, whilst purchases of energy-efficient appliances remained a top purchase for consumers.
Helen Dickinson, chief executive of the BRC said: “As Christmas cheer subsided, retailers felt the January blues as sales growth slowed. Many retailers discounted heavily to entice consumer spend, and while there were bargains to be had in the January sales, retailers continue to be hit by lower margins and falling volumes.
“Own brand ranges remain popular across food and non-food products, and big ticket items are seeing customers trade down. The coming months will continue to be challenging for retailers and their customers.“
9.00am: Footsie extends gains
The FTSE 100 has made strong progress, extending its gains, now up 46 points at 7,883.
BP PLC (LSE:BP.) is top of the risers, up 4.1%, after its results and strategic update. Neil Wilson, chief market analyst at markets.com, said they were “truly great results and the strategy update displays a confidence with more investment in short cycle oil and gas projects to deliver what we need now, and more investment in transition growth and green stuff to deliver what we will need in the future.”
“Scaling back plans to reduce oil and gas production signals that for all the chatter, energy security right now is all about fossil fuels. Until you have the green bridge you have to keep pulling it out the ground,” he added.
But Morgan Advanced Materials PLC (LSE:MGAM) remained lower, down 4.7%.
Steve Clayton, fund manager at HL Select pointed out: “We are seeing more and more companies reporting cyber breaches. Vesuvius PLC (LSE:VSVS) has also reported an attack on their data networks, the impact of which is not yet fully known.”
“What we are learning is that recovering from attacks can be complex. Modern manufacturing methods can require hugely co-ordinated operations to be efficient.
“Restarting these plants is not just a flick of a switch and the costs of restoring optimal production patterns can be significant. Some of Morgan’s IT system has proven to be irrecoverable and new software solutions are being accelerated into place,” he added.
Elsewhere, AstraZeneca PLC (LSE:AZN) edged higher after it announced that the EU has approved its drug Forxiga for the treatment of symptomatic chronic heart failure.
The approval comes after the European Medicines Agency's Committee for Medicinal Products for Human Use recommended approval in December.
Lloyds Banking Group PLC (LSE:LLOY) also firmed as Citi ranked it top in its UK bank sector picks.
On the sector, Citi analysts said: “We expect 2023 outlook commentary to be upbeat on net interest margins and cost of risk.”
The bank's order of preference in the sector was Lloyds (Buy), Natwest (Buy), Barclays (Buy), Virgin Money UK (Buy), HSBC (Buy) and Standard Chartered (Neutral).
8.15am: Bright start by blue-chips
The FTSE 100 pushed higher in early exchanges boosted by record profits and plans for a further hefty share buy-back from oil major, BP PLC (LSE:BP.).
At 8.15am, London’s blue chip index was up 29 points, although the FTSE 250 dipped 50 points to 20,360.
BP took centre stage with shares up 3.7% after it reported record annual profits, raised its fourth quarter dividend by 10%, launched a US$2.75bn share buy-back and raised earnings targets out to 2030.
“Performing while transforming,” said the oil giant's CEO, Bernard Looney.
Joshua Warner, market analyst at City Index said: “Shareholders will welcome the US$2.75bn share buyback considering this was significantly larger than expected, as well as the 10% dividend increase.
“Those increased returns came after BP generated significantly more cash than anticipated, allowing it to spray investors with cash and reduce its net debt for an eleventh consecutive quarter.”
But Morgan Advanced Materials PLC (LSE:MGAM) slumped 7.3% as it warned it expects around £8mln to £12mln in exceptional costs from the cyber attack it suffered last month.
As a result of the disruption, Morgan said it expects adjusted operating profit for 2023 to be around 10% to 15% below previous expectations.
On the upside, Morgan said it expects its 2022 annual trading performance to be slightly ahead of market expectations.
Peel Hunt has cut its 2023 EBITDA forecast by 15% to £143mln.
“The frustration for the company is that it is operating at pretty much full capacity and cannot make this up in the balance of the year - highly engineered products cannot be outsourced” its analysts noted.
Housebuilders were a weak feature despite the latest figures from the Halifax showing house prices stabilised in January with Barratt Developments PLC, Persimmon PLC (LSE:PSN), Redrow PLC (LSE:RDW) and Bellway PLC (LSE:BWY) all just the wrong side of the line.
Comments by Bank of England policymaker Catherine Mann yesterday that interest rates are likely to be increased further continue to weigh.
Martin Beck, chief economic advisor to the EY ITEM Club suggested that “January’s flatlining in values may prove only a temporary interruption to a trend of falling prices. Although mortgage rates have dipped from post-mini-Budget peaks, they’re still at their highest in a decade”.
7.50am: House prices stabilise in January
House prices stabilised in January with the average house price remaining broadly unchanged, according to the Halifax House Price Index.
The latest figures from the lender showed that the typical UK property cost £281,684 in January, little changed on December’s £281,713.
Kim Kinnaird, director, Halifax Mortgages, noted: “This followed a series of significant monthly falls at the end of last year (-1.3% in December and -2.4% in November).
“The pace of annual growth has continued to slow, to +1.9% (from +2.1% in December), which is the lowest level recorded over the last three years” he noted, with the average house price now around 4.2% below its peak in August last year.
7.40am: Profits flow at BP despite dip in quarter four
BP PLC (LSE:BP.) has given investors plenty of food for thought today with results and a strategic update to plough through.
The oil giant delivered record annual profits, an increased dividend, a further hefty share buy-back and raised earnings targets out to 2030.
“Performing while transforming” was how the oil giant's chief executive, Bernard Looney described it all.
But it wasn’t all good news with fourth quarter underlying replacement cost profits of US$4.8bn, below City expectations of US$5bn, and down from US$8.2bn in the third quarter.
Nevertheless, annual profits reached US$27.6bn in 2022, more than double 2021’s US$12.8bn, lifted by a surge in energy prices which followed Russia's invasion of Ukraine.
The fourth quarter dividend was up 10% at 6.6 US cents when compared to last year and the oil giant launched a further US$2.75bn buy-back.
Compared to the third quarter, the result was impacted by a below-average gas marketing and trading result after the exceptional result in the third quarter, lower oil and gas realizations, a higher level of refinery turnaround and maintenance activity, and lower marketing margins and seasonally lower volumes, BP said.
The FTSE 100 listed oil giant set new targets for EBITDA of US$46bn to US$49bn in 2025 and is aiming for US$51bn to US$56bn in 2030 (assuming a US$70/barrel oil price environment), up from previous forecasts of around US$38bn in 2025 and US$39-US46bn in 2030 at $60/barrel.
The FTSE 100 listed company also pledged up to US$8bn in green energy projects and the same amount into its oil and gas business.
7.00am: FTSE expected to nudge higher
The FTSE 100 is expected to edge higher at the open with results from oil major BP PLC (LSE:BP.) the early focus in London.
Spread betting companies are calling the lead index up by around 8 points.
In the US, the Dow Jones Industrial Averager closed Monday down 36 points, 0.1%, at 33,890, the Nasdaq Composite dropped 120 points, 1%, to 11,887, and the S&P 500 shed 26 points, 0.6%, to 4,111.
In Asia, the Reserve Bank of Australia raised its benchmark interest rate by another 25bps. As Michael Hewson at CMC Markets said it is “perhaps hoping that the December surge in headline CPI from 7.3% to 8.4% was a one-off that is likely to be reversed quite quickly.”
“With its headline rate now at 3.35% it remains quite a bit below its peers which means the central bank may well have to keep hiking a lot more in the months ahead," he added.
Other Asian markets were mixed. The Nikkei 225 index closed marginally lower in Tokyo, while in China, the Shanghai Composite was up 0.3% and the Hang Seng index in Hong Kong added 0.5%.
Otherwise, the focus later will be on a speech from Federal Reserve chair, Jerome Powell, US President Joe Biden’s State of the Union address, and the latest Halifax house price index.