- FTSE 100 closes up 11 points at 7,733
- House prices fall 1.8% in 2023, says Nationwide
- Harland & Wollf jumps on credit green light
12:40pm: Upbeat end to subdued year
That is it for 2023.
The FTSE 100 has closed up 10.50 points, 0.1% at 7,733.24 while the FTSE 250 closed down 29.53 points, 0.2%, at 19,689.63.
That marks the best closing level since May and means the blue-chip index has climbed 3.8% during 2023.
Susannah Streeter, head of money and markets, Hargreaves Lansdown said: "The FTSE 100 has stumbled over the line, eking out a modest gain for the year but failing to shoot the lights out."
She described the FTSE's rise as "paltry" when compared to its international peers, "especially when you look at just how high the S&P 500 has climbed, up 25% over the year, while the DAX in Frankfurt has jumped by around 20%."
The FTSE 100's performance was better than the 0.9% eked out in 2022, but below the stellar gains witnessed in 2021 of 14.3% - the best showing by the FTSE 100 since 2016.
Those bumper gains reversed similar losses in the year Covid came, 2020, (14.3%), which came on the back of a strong 2019, up 12.1%.
Before that, three further years of big movements in markets saw the FTSE 100 drop 12.5% in 2018, rise 7.6% in 2017 and soar 14.4% in 2016.
Where we end in 2024 awaits to be seen.
On behalf of Proactive, we wish you all a very happy New Year.
11:55am: US stocks expected to open higher
US stocks are expected to make a bright start to the last trading day of a what has been a bumper year.
In pre-market trading, futures for the Dow Jones Industrial Average were up 0.1%, while those for the S&P 500 were 0.1% higher and contracts for the Nasdaq 100 futures climbed 0.1%.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, noted the biggest takeaway of this year is the birth of ChatGPT which “propelled AI right into the middle of our lives.”
She pointed out this has driven Nasdaq 100 stocks to an all-time high with Nvidia the biggest winner of the AI rally.
Besides Nvidia, she highlighted the rest of the so-called Magnificent 7, Microsoft, Apple, Amazon, Meta, Google and Tesla, which together with Nvidia, have generated almost all of the S&P500 and Nasdaq100’s returns this year.
As for 2024, she said the general expectation is “a cool down in the technology rally, and a rebalancing between the big tech stocks and the S&P493.”
Interest rates will be another key factor with the S&P500 typically rising after the first rate cut, “but the sustainability of the gains will depend on the underlying economic fundamentals.”
Back in London, and approaching the close, the FTSE 100 is 18 points.
11:10am: Travel and entertainment thrive, but card spending growth slows
The growth in consumer card spending slowed sharply in 2023 as shoppers cut back wary of the tough economic climate, according to new figures.
Data from Barclays showed card spending rose just 4.1% year-on-year in 2023 – noticeably lower than the growth seen in 2022 (10.6%) – as consumers cut back on buying new clothes, eating out and investing in home improvements amid rising inflation and household bills.
However, Barclays said consumers continued to prioritise “moments of joy and shared experiences,” boosting travel (+15.2%), entertainment (+7.5%), and pubs & bars (+5.9%).
The report also showed an increased awareness of “skimpflation” and “shrinkflation” with 76% of consumers noticing examples of shrinkflation when shopping, with chocolate (48%), crisps (41%) and packs of biscuits (38%) the most cited products impacted.
Ti offset mounting bills, Brits spent less on eating out in 2023, with restaurants seeing a 6.7% decline compared to 2022, the report showed.
But the entertainment sector saw spending jump 7.5% boosted by the release of ticket sales for major events including the Eurovision Song Contest, Taylor Swift’s ‘Eras’ tour, and Beyoncé’s ‘Renaissance’ tour.
Blockbuster hits including ‘Barbie’, ‘Oppenheimer’ and ‘Avatar: The Way of Water’ fuelled a 6.3% increase in cinema spending.
The travel sector continued to thrive with both travel agents (10.4%) and airlines (30.8%) seeing robust growth.
10:42am: Man Group open to new deals, reports Bloomberg
Man Group PLC (LSE:EMG) is open to making acquisitions and hiring new teams to build out its private credit offerings as the asset class continues to gain appeal among investors and money managers, according to a report on Bloomberg.
Bloomberg said the hedge fund plans to diversify and expand into different credit strategies in coming years to meet rising demand from clients for exposure to private assets, as well as to capitalize on the shift in corporate borrowing habits as banks tighten lending,
In an interview, Eric Burl, Man Group’s head of discretionary, said: “We’re open to acquiring businesses, adding teams or individuals.”
“If we think it’s something where we can add value and it’s relevant to clients, game on.”
Man Group signalled a major push into the credit space earlier this year with the purchase of a controlling stake in private credit manager, Varagon Capital Partners.
Shares in Man Group rose 0.1% to 232p.
10:28am: Maersk to resume shipping through Red Sea
Danish shipping company Maersk has announced its decision to resume shipping through the Red Sea, following the launch of military operations to protect the ships from Houthi attacks.
The Red Sea is one of the most important sea routes for transporting oil, natural gas, and consumer goods, bordered by the Yemen coast and the Suez Canal.
Since the beginning of the Hamas-Israel war, Houthi rebels in Yemen started attacking the route, using rockets and drones.
This has prompted many shipping companies, including Mediterranean Shipping Company, Hapag-Lloyd, and Maersk, to take an alternative route around the Cape of Good Hope.
In a bid to protect the ships, the US launched an international naval operation called Operation Prosperity Guardian.
On Wednesday, US military said that it had shot down more than 12 drone missiles launched by Houthis.
Maersk stated that it is working on plans for the first vessels to make the transit while Hapag-Lloyd said that it would reassess the Red Sea situation before making any final decisions.
Back in the markets, and the FTSE 100 remains in good spirits, up 14 points now.
9:45am: Households less financially secure heading into 2024, KPMG
Four in 10 consumers are heading into 2024 saying they feel less financially secure than when 2023 began, according to new research from KPMG UK.
Assessing confidence for 2024, KPMG’s latest Consumer Pulse survey of 3000 UK consumers shows those feeling worse about their financial security outnumber those feeling more secure by almost two to one (41% vs 22%).
The findings also showed that two-thirds of consumers say they will have to cut their non-essential spending in 2024, with eating out (78%), takeaways (70%) and clothing (57%) the top three of a wide range of cost cutting targets.
This is the same top three as when KPMG polled consumers on their 2023 spending intention 12 months ago.
But the numbers of consumers saying they will target these categories for cutbacks in 2024 has risen sharply compared to a year ago, when eating out was selected by 46%, takeaways by 42%, and clothing by 42%.
Compared to a year ago, the 2024 survey also shows clear jumps in the number of people saying that they will buy more own brand and value produce next year (46% vs 31%), and more promotional and discount produce (46% vs 30%).
Intention to shop at lower cost stores more in the year ahead has also risen (40% vs 27%), as has using retailer loyalty schemes more to unlock lower prices – with 40% of consumers saying they will do more of this in 2024, compared to 18% saying so twelve months ago.
Linda Ellett, UK Head of Consumer, Retail and Leisure for KPMG, said: “As was the case in 2023, large numbers of consumers tell us that they are going to combine stopping, reducing, and switching the things they buy to save money in 2024.”
“As more households are exposed to higher mortgage rates or rent, the number of people needing to cut non-essential costs increases.”
9:04am: FTSE holds firm in quiet trading
The FTSE 100 continues to hold in positive territory although it remains a quiet morning for market moving news.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown said stocks were suffering from "from an information vacuum, which is usual for this time of year, but makes it difficult for it to find its feet."
"The FTSE 100 has barely budged in early trading, with news of sluggish house price growth in December adding weight behind the theory of slowing activity," she noted.
Asian-focused lender Standard Chartered, up 0.6%, leads the risers, followed by Burberry Group, Pearson and Relx, while property groups are a feature on the fallers with Land Securities, Unite and Segro all lower.
8:35am: Harland & Wolff jumps on loan talks
Harland & Wolff Group Holdings PLC (AIM:HARL) shot up 26% in early exchanges after been the green light to advance talks relating to a new credit facility.
The firm, famous for its Belfast shipyard, which focuses on infrastructure projects said it has been cleared by the Government to advance negotiations in relation to the proposed £200 million guaranteed loan facility with UK Export Finance (UKEF) under its Export Development Guarantee Scheme.
Together with existing cash balances and expected cash flows in 2024 generated from existing contracts, the company believes it has sufficient funds to meet its working capital requirements until the new loan facility is completed.
The company will now firm up the bank syndicate, appoint a lead arranger and arrange the necessary documentation in relation to the credit and guarantee agreements as well as the security package that will be offered.
“It is likely that the security package will entail providing the Banks with a first charge on substantially all the assets of the company, similar to what has been provided to Riverstone Credit Partners in March 2022,” Harland said in a statement.
The company also said that no warrants are expected to be issued to the banks or UKEF.
8:15am: FTSE 100 nudges higher
The FTSE 100 has opened higher as it seeks to end 2023 on a high note.
At 8:15am, London’s blue-chip index was up 9.04 points, 0.1%, at 7,731.78 while the FTSE 250 was little changed at 19,717.34.
With company news thin on the ground house price data from Nationwide took centre stage.
The lender reported prices were unchanged in December from the previous month, leaving them 1.8% lower on an annual basis.
Andrew Wishart, senior property economist at Capital Economics pointed out this was a better performance than had been expected at the start of the year.
“Unchanged house prices in December ensured that over the course of 2023 they fell by much less than forecasters had expected,” he said.
“With mortgage rates falling, it is increasingly likely that house prices avoid falls altogether next year,” he added.
Housebuilders were mixed on the news, with Barratt Developments up 0.3% but Berkeley Group and Taylor Wimpey little changed.
7:41am: House prices unchanged in December, Nationwide
UK house prices edged lower in 2023, confounding predictions for a sharp downturn, figures from one of the UK’s largest mortgage lenders showed.
Nationwide Building Society said house prices fell 1.8% from a year ago in December to £257,443, slightly higher than the 1.3% drop economists forecast but much less than the 10% drop many had predicted a year ago.
In December, house prices were unchanged, Nationwide said.
Robert Gardner, Nationwide's chief economist, said there were some reasons for hope in 2024 although a sharp rebound in house prices was unlikely.
“Investors have become more optimistic that the Bank of England has already raised rates far enough to return inflation to target and will reduce rates in the years ahead,” he said.
“Nevertheless, a rapid rebound in activity or house prices in 2024 appears unlikely. While cost-of-living pressures are easing, with the rate of inflation now running below the rate of average wage growth, consumer confidence remains weak and surveyors continue to report subdued levels of new buyer enquiries.”
“If the economy remains sluggish and mortgage rates moderate only gradually, as we expect, house prices are likely to record another small decline or remain broadly flat (perhaps 0 to -2%) over the course of 2024,” he added.
7:10am: FTSE 100 expected to open little changed
Good morning, it looks like a subdued start to proceedings to the last trading session of 2023.
Spread betting companies are calling London’s lead index up by around 2 points after closing down 2.21 points at 7,722.74 on Thursday.
The London Stock Exchange is open for a half-day on Friday, closing at 1230 GMT.
In the US on Thursday, the Dow Jones Industrial Average edged up 0.1% and the S&P 500 closed marginally higher, while the Nasdaq Composite ended in negative territory.
It’s expected to be another quiet day for corporate news while the economic diary sees house price data from Nationwide.