- FTSE 100 closes down 2 points at 7,486
- UK borrowing lower-than-expected in December
- AB Foods Christmas trading boosted by Primark
4:40pm: FTSE 100 closes little changed
The FTSE 100 ended an up-and-down little changed as US markets fell in early trading.
At the close, London's blue-chip index was down 1.98 points at 7,485.73 while the FTSE 250 was down 78.82 points, 0.4%, at 18,996.82.
Chris Beauchamp, chief market analyst at online trading platform IG said: "The past few sessions have seen the FTSE 100 pinned just below 7500, as buyers and sellers fight hard to establish control."
"The urge to go dip-buying remains strong, but last week’s UK CPI figure continues to loom large as traders reprice expectations around the BoE’s next move."
"And without any AI or tech stocks to lift it, the index finds itself unable to match recent gains in the US.”
3:57pm: Nationwide cuts mortgage rates
Nationwide Building Society has joined the ranks of lenders cutting rates.
The lender is cutting rates on some products by up to 0.81 percentage points, taking its lowest rate down to 3.84% - its lowest level in eight months.
Henry Jordan, Director of Home at Nationwide Building Society, said: “As one of the largest lenders in the country, we remain as committed as ever to supporting borrowers.”
“These latest changes mean we are now offering sub-four percent rates for the first time in eight months.”
“These reductions will ensure that we have some of the lowest rates on the market for all types of borrowers whether it be first-time buyers, home movers or those looking to remortgage or switch deal.”
3:30pm: Barclays highlights $3bn potential of two Shell assets
Barclays thinks while Shell's “first sprint” under the new leadership appears to be going well with an increased focus on competitiveness, discipline and costs, there is also more to do to close the performance gap.
It believes two assets, Prelude LNG and the Pennsylvania cracker, could account for a c$3 billion earnings gap on its estimates.
Barclays said Shell’s cracker in Pennsylvania is designed to produce 1.6mtpa of polyethylene, both high and low density, but issues have meant it is only set to be operating at capacity in 2024 with a full earnings contribution in 2025.
The broker sees $1.5-2 billion delta in earnings from this plant alone, a "meaningful contributor" to earnings.
Barclays also highlighted the potential for Prelude Floating LNG in Australia which has a capacity of 3.6mtpa.
Production has been intermittent since its start-up in 2023 impacted by both industrial action and mechanical issues.
But Barclays estimates incremental production from the facility could be up to 1 million tonnes in 2024 with the uplift in EBITDA as $0.5-1.0 billion depending on optimisation opportunities.
Barclays has an ‘overweight’ rating on Shell, and a 3,800p price target.
3:16pm: GE's weak outlook unsettles Rolls-Royce
Top of the FTSE 100 fallers is Rolls-Royce Holdings PLC (LSE:RR.) after General Electric issued a weak outlook for the first quarter of 2024.
Shares have dipped around 2.0%
Despite growth expectations, GE’s first-quarter profit forecast for the combined operations has fallen short of Street estimates.
The company predicts EPS of 60 to 65 cents a share, below the 70-cent average of analyst estimates compiled by Bloomberg.
Elsewhere, BAT is down 1.7% after UBS downgraded to 'hold' from 'buy' while the HSBC downgrade continues to weigh on Compass.
Royal Mail owner, IDS, is heading upwards ahead of the Ofcom proposals on Wednesday and following an upgrade by HSBC.
2:46pm: Mixed start on Wall Street
Stocks made a mixed start to trading on Wall Street as investors waded through a deluge of earnings.
Shortly after the opening bell, the Dow Jones Industrial Average was down 93.58 points, 0.3%, at 37,908.23, the S&P 500 was up 6.18 points, 0.1%, at 4,856.61 and the Nasdaq Composite was up 28.04 points, 0.2%, at 15,388.33.
The Dow fell back after breaching the 38,000 mark on Monday, weighed by a 9.2% fall in 3M and a 2.8% drop in General Electric after results.
Both issued guidance for the first quarter of 2024 below Street expectations.
Bank of America noted 3M introduced first quarter EPS guidance of $2.00-$2.15 below its estimate of $2.38 and consensus of $2.30 while revenue was guided to $7.6 billion compared to consensus of $7.93 billion and BofA estimates of $8.15 billion.
But Proctor & Gamble fared better, rising 4.7%, after it raised its forecast for core earnings for the financial year while there were also gains for United Airlines, Johnson & Johnson (NYSE:JNJ) (Johnson & Johnson (NYSE:JNJ)) and Verizon.
2:12pm: BP to confirm Kate Thomson as CFO - Reuters
BP is set to confirm Kate Thomson as its permanent chief financial officer after naming Murray Auchincloss as CEO last week, completing a leadership reshuffle following Bernard Looney's abrupt resignation in September, two sources with knowledge of the matter told Reuters.
The board is expected to decide on the appointment before BP reports its full year results on February 6, one source close to the process said.
Thomson was appointed interim CFO a week after Auchincloss took the helm of the energy company on September 12, when Looney stepped down for failing to disclose past relationships with employees.
Thomson joined BP nearly 20 years ago and had previously led the finances of BP's oil and gas production and operations division.
1:06pm: Chancellor meets bank leaders in attempt to boost City
Jeremy Hunt has met the UK's biggest banks as part of efforts among the government to boost interest in the City.
The chancellor and Bim Afolami, the economic secretary to the Treasury, met with heads at Barclays PLC (LSE:BARC), HSBC Holdings PLC (LSE:HSBA), Lloyds Banking Group PLC (LSE:LLOY), NatWest Group PLC (LSE:NWG), Santander UK and the London Stock Exchange Group PLC (LSE:LSEG) on Tuesday morning.
It follows recent efforts to improve competitiveness in the financial services industry amid a dearth in stock market listings and a slew of listed companies leaving London markets.
The meeting, held in Downing Street, saw the leaders discuss the outlook for the country's economic and banking sector, the Treasury said.
Top bank bosses, including Barclays' Chief Executive CS Venkatakrishnan and Lloyds Chief Executive Charlie Nunn, gave their views on what they thought the main opportunities for the banking sector were and how to make the UK industry more competitive.
12:10pm: Abrdn to announce jobs cuts and trading update Wednesday - Sky
UK fund manager abrdn is preparing to cut hundreds of jobs in a cost-cutting drive aimed at boosting its flagging performance, according to reports.
Sky News said abrdn will announce proposals for a round of redundancies alongside a hastily scheduled trading update on Wednesday morning.
Exclusive: Abrdn, the British fund manager, is preparing to cut hundreds of jobs tomorrow as its chief executive, Stephen Bird, seeks to revive its faltering performance. I understand that roughly 10% of the company's 5,000-strong workforce could leave. https://t.co/kgngxxjVLa
— Mark Kleinman (@MarkKleinmanSky) January 23, 2024
It was unclear whether abrdn would give a precise figure for the headcount reductions, although one market source said it could affect in the region of 10% of its workforce of nearly 5,000 people.
Analysts expect the company, which was formed from the 2017 merger of Aberdeen Asset Management and Standard Life, to disclose that it has suffered billions of pounds in additional fund outflows during the second half of 2023, according to Sky.
11:55am: US stock futures flat; GE slips on weak Q1 guidance
It's a big day of earnings in the US today with stock futures flat ahead of the US open.
Netflix, Procter & Gamble, Lockheed Martin, RTX, Halliburton, 3M, Verizon, DR Horton all report earnings today giving an early indication as to the health of corporate America.
General Electric numbers are out and the Street has sent the shares down 7% in pre-market trading.
Despite growth expectations, GE’s first-quarter profit forecast for the combined operations has fallen short of Street estimates.
The company predicts EPS of 60 to 65 cents a share, below the 70-cent average of analyst estimates compiled by Bloomberg.
Fourth quarter revenue rose 15% to $19.4 billion with adjusted revenue up 13% to $18.5 billion.
Continuing EPS was $1.44 with adjusted EPS of $1.03.
Also quick out of the blocks, Johnson & Johnson (NYSE:JNJ) has reported fourth quarter EPS of $1.70, up 39.3% and adjusted EPS of $2.29 increasing by 11.7%.
Full-year reported sales grew 6.5% to $85.2 billion with operational growth of 7.4% and adjusted operational growth of 5.9%.
Operational growth excluding Covid-19 vaccines was 9.0%.
"Johnson & Johnson (NYSE:JNJ)'s full year 2023 results reflect the breadth and competitiveness of our business and our relentless focus on delivering for patients," said Chair & Chief Executive Joaquin Duator.
"We have entered 2024 from a position of strength, and I am confident in our ability to lead the next wave of health innovation."
Shares are 0.8% lower in pre-market trading.
11:23am: Ryanair strikes deal with Loveholidays
Ryanair has struck a deal with online package-holiday provider Loveholidays and will start.start listing its flights there.
The budget airline operator said the deal will allow Loveholidays’ customers to buy Ryanair flights, seats, and bags as part of a package deal, at Ryanair’s prices, without being overcharged.
Ryanair’s Dara Brady said: "We are pleased to announce this first OTA partnership with loveholidays, which will ensure that loveholidays’ customers can now book Ryanair flights, seats, and bags as part of their package with the guarantee that they will not be overcharged for flights, bags, or seats, they will receive flight updates directly from Ryanair and will also have direct access to their booking through their myRyanair account.”
Ryanair has previously taken to the courts after spats with online travel listing operators.
11:04am: Prudential benefits from double boost
Shares in Prudential PLC (LSE:PRU) have been boosted by reports that a Chinese stimulus is on the cards to support the flagging economy.
JPMorgan has also given its support for the Asia-focused insurer.
The investment bank notes Prudential is trading at a valuation that "we last saw at the start of the pandemic when one of its main markets, Hong Kong, saw a closure of a vast proportion of its business, and at a time when there was deep investor scepticism about the separation of its US life insurance business."
This largely reflects concern about the Chinese economy, it explained, as well as a number of other factors such as the growth outlook, asset and capital risk.
However, JPM thinks many of these concerns reflect "fear rather than fundamentals."
It keeps its 'overweight' rating and 1,500p price target.
10:25am: Morana rejoins boohoo at "challenging time"
Shares in boohoo.com are little changed in early exchanges after its brief update and change at the top of its finance team.
Russ Mould said while there wasn’t too much for investors to chew over there will be "some relief" the company is on track to hit the downbeat expectations unveiled in October.
However, he said this was overshadowed by the departure of chief financial officer Shaun McCabe with immediate effect.
“It’s the kind of development which reinforces the impression there’s too much noise around Boohoo, whether it’s ethical questions over its supply chain, sustainability concerns around fast fashion or a boardroom battle with fellow AIM company Revolution Beauty," Mould said.
“McCabe had only been in the job for a little over a year and to lose a finance chief so rapidly is never a great look, even if Betfair and Zoopla alumni Stephen Morana looks a solid appointment as his replacement," Mould added.
Mould pointed out Morana has previously served on Boohoo’s board as a non-executive director which should mean he has a "decent handle" on the business too.
But he rejoins the company at a "challenging time," with the shares trading "at a fraction of their pandemic highs as the whole online fast fashion model, of which it is a leading proponent, comes into question.”
9:58am: AB Foods forecasts lifted after strong trading
AB Foods is up 0.2% and its trading statement has prompted earnings forecasts to be raised by City scribes.
Barclays said it has increased 2024 Primark margins forecasts to 10.6% and raises 2025 estimate to 11.2% reflecting more certainty on the cost picture.
It thinks the Red Sea situation seems manageable but Primark volume remains the key delta as to where margins ultimately land.
Grocery and Ingredients trading has also been running ahead of expectations, it noted.
Shore Capital’s Clive Black has lifted his 2024 pretax profit and EPS forecasts by 3.5%.
He described this as “good news after such an excellent” first half.
He noted Red Sea navigation challenges are likely to delay stock inflow by around 15 days, which may kick in a little to H1 working capital.
ABF does not, however, expect a material impact from such matters, he added
“All in all, we are surprised and pleased to upgrading again and so reiterate our Buy stance, noting undemanding equity metrics for this high-quality firm,” Black said.
“We see ABF as a firm in good hands, with sound principles, benefiting in the normalised base rate environment in more way than one.”
9:23am: Hunt could have £20bn 'wiggle' room heading to Budget
Ruth Gregory, deputy chief UK economist at Capital Economic has crunched the numbers and estimates the Chancellor Jeremy Hunt could have £20 billion of headroom for tax cuts in March.
“After nine months of the 2023/24 fiscal year, borrowing is on track to undershoot the OBR’s full-year borrowing forecast of £123.9 billion by £5.0 billion,” she said.
“What’s more, with market interest rate expectations and long-dated gilt yields having fallen since November, we suspect the OBR will revise down its borrowing forecast significantly from 2025/26.”
“That may provide the Chancellor with “headroom” against his fiscal mandate of about £20 billion in the Budget,” she estimated.
She suggested this would probably allow him to unveil a freeze in fuel duty in April 2024 (costing about £6.0 billion a year) but perhaps also to announce more “crowd-pleasing measures,” such as a 1p cut to income tax (costing £6.9 billion a year), while still maintaining fiscally prudent appearances.
8:45am: Miners lift FTSE on Chinese stimulus hopes
The FTSE 100 remains in positive territory with mining and oil stocks to the fore.
Bloomberg reported that authorities in China are considering taking steps to stabilize the slumping Chinese stock market.
Bloomberg said that policymakers are seeking to mobilize about 2 trillion yuan ($278 billion), mainly from the offshore accounts of Chinese state-owned enterprises, as part of a stabilization fund to buy shares onshore through the Hong Kong exchange link
They have also earmarked at least 300 billion yuan of local funds to invest in onshore shares through China Securities Finance Corp. or Central Huijin Investment Ltd., citing familiar with the situation said.
Hong Kong’s Hang Seng index, jumped by 2.6%, on the reports.
In London, Anglo American, Rio Tinto and Glencore are prominent risers on hopes for a soft economic landing, while the renewed attacks on Houthi rebels in Yemen has sent the oil price higher, lifting BP and Shell.
Shell is also the subject of an upbeat note from Barclays which has reiterated an ‘overweight’ rating.
Prudential is higher after the gains in Asia, and positive comments from JPMorgan, which reiterated a 1,500p price target.
FirstGroup, though is down 2.2%, after HSBC downgraded to ‘hold’ from ‘buy’.
8:15am: London follows US higher; borrowing boost for Chancellor
The FTSE 100 has made a bright start to the day after US markets hit record highs, while better-than-expected borrowing figures spelt good news for the Chancellor, Jeremy Hunt.
At 8:15am, London’s blue-chip index was up 18.52 points, 0.3%, at 7,506.23 while the FTSE 250 was up 38.93 points, 0.2%, at 19,114.57.
Samuel Tombs at Pantheon Macroeconomics said public borrowing in December undershot the OBR’s forecast by £6.2 billion primarily because consumer price inflation has slowed more decisively than it anticipated, driving a £5.5 billion undershoot in debt interest payments.
He thinks the Chancellor will “almost certainly” cut personal taxes in his Budget to “improve his party’s chances in the general election.”
He noted a decision to scrap the increase in fuel duty planned for April would cost the Exchequer £3.7 billion, while a £500 increase in the income tax personal allowance would cost a further £3.3 billion.
Hunt, however, likely will “not be much bolder than this, given that large tax cuts would reduce the MPC’s scope to cut Bank Rate this year and the Conservatives cannot risk pushing up mortgage rates again,” Tombs thinks.
In company news, AB Foods rose 0.4% after reporting strong Christmas trading at Primark, alongside double digit revenue growth in its Sugar unit.
Richard Hunter, Head of Markets at interactive investor, commented “Primark remains the engine of growth for the business, with its value offerings still hitting the spot with an increasingly cost-conscious consumer.”
“Despite a slow start to the quarter given some unseasonably warm weather, Primark was back with a bang for Christmas.”
Investors were also raising a glass to Marston’s after punters flocked to its pubs to share a Christmas tipple.
Liberum described Marston’s Christmas trading as “strong” with like-for-like sales of 8.1% over the period and total sales up 8.8% ahead of the market with the CGA RSM Hospitality Business Tracker reporting LFL sales of 7.2% for pubs over a similar period.
Shares rose 3.5%.
Elsewhere, Compass fell 1.2% after HSBC downgraded to ‘hold’ from ‘buy’.
7:56am: Crest Nicholson poaches Persimmon's Clark as new CEO
Housebuilder Crest Nicholson has named Persimmon's Martyn Clark as its new chief executive, replacing Peter Truscott, who is retiring after joining the firm in 2019.
Clark is currently the chief commercial officer at rival Persimmon, and will join Crest later in 2024.
The firm, which recently issued a profit warning, said revenue in the year ended October 31 fell 28% year-on-year to £657.5 million from £913.6 million, while pretax profit slipped 30% to £23.1 million from £32.8 million.
Home completions dropped similarly by 26% to 2,020 from 2,734.
The total dividend was unchanged at 17.0 pence per share.
"Recently there has been some positive macro trends with inflation and mortgage rates falling, which bode well for the housing sector. Although it is too early to gauge customer behaviour, we have been encouraged by an increase in customer interest levels and inquiries this calendar year," said outgoing CEO Truscott.
7:52am: UK borrowing less than expected in boost for Chancellor
The UK government borrowed less than expected in December, a boost to chancellor Jeremy Hunt as he prepares to unveil the Budget in March as a general election looms.
Figures from the Office for National Statistics showed public sector borrowing fell to £7.8 billion last month, around half the sum borrowed a year earlier and the lowest figure for a December since 2019.
It was also well below City forecasts of around £14 billion.
Public sector net borrowing excluding public sector banks was £7.8 billion in December 2023.
This was £8.4 billion less than in December 2022, and the lowest December figure since 2019.
— Office for National Statistics (ONS) (@ONS) January 23, 2024
The figure, was driven down by inflation-related debt interest costs, and is substantially lower than the £14 billion estimate for the month from the Office for Budget Responsibility, the UK’s fiscal watchdog.
Central government debt interest payable was £4.0 billion in December, £14.1 billion less than in December 2022 and the lowest December figure since 2020.
Borrowing in the financial year-to-December 2023 was £119.1 billion, £11.1 billion more than in the same nine-month period the previous year and the fourth-highest financial year-to-December borrowing on record.
7:44am: Premier Foods delivers "biggest ever" Christmas
Premier Foods PLC said it was well on track to deliver previously upgraded expectations for full year after its “biggest ever Christmas.”
Chief Executive Alex Whitehouse said that “festive favourites such as Bisto, Oxo and Paxo contributed to our biggest ever Christmas,” while it sold nearly 190 million mince pies, 4 million more than last year.
The Mr Kipling owner described its third quarter performance as “very strong” with double-digit sales growth across the group, underlined by particularly strong market share gains of over 120 basis points.
The International business had another very good quarter, growing sales by 11%, delivering progress in strategic markets.
Sales in new categories more than doubled, with Ambrosia Porridge pots and Mr Kipling and Angel Delight Ice-cream both standout performers.
Quarter three sales in the thirteen weeks ended December 30 rose 14.4% versus prior year with Branded sales up 12.7%, Grocery sales up 11.9% and Sweet Treats sales up 21.3%.
7:37am: Marston's raises a glass after strong Christmas trading
Pub operator Marston's PLC has also updated on Christmas trading.
Total retail sales in the group's managed and franchised pubs for the 16-week to January 20 were up 8.8% on last year.
Both drink sales and food sales have been strong, demonstrating the resilience and appeal of our predominantly suburban pubs, the firm said..
Like-for-like sales for the 16-week period were 8.1%, reflecting strong trading over the festive period.
For the key festive days (Christmas Eve, Christmas Day, Boxing Day, New Year's Eve), like-for-like sales were up 9.6%.
Chief Executive Justin Platt said: “It has been an encouraging start to the year.”
“This, together with an improving outlook in which inflationary headwinds are broadly abating, and the actions we are taking to operate more efficiently and rebuild margins, position Marston's well for the year ahead."
7:30am: Boohoo trading in line with market expectations
A short and sweet update from boohoo Group PLC which said trading remained in line with market expectations.
The online retailer gave no further detail on its trading performance in a very brief statement and said it would report final results for the year ended 28 February 2024 in May.
Boohoo also said Shaun McCabe has stepped down from his role as CFO by mutual agreement and with immediate effect.
McCabe joined the board in October 2020 as an independent non-executive director.
Stephen Morana has been named as the new CFO starting on February 19.
7:25am: AB Foods upbeat after strong Christmas at Primark
Associated British Foods PLC (LSE:ABF) was in an upbeat mood as it updated investors trading over Christmas.
The owner of Primark and Twinings said in the 16 weeks to January 6, revenue grew 5.4% at constant currency to £6.89 billion.
Primark sales rose 7.9% to £3.38 billion while there were double-digit gains in Sugar, up 13% at £825 million.
Sales at its fast-fashion retail arm grew strongly in the run-up to Christmas with Primark's market share reaching a new record at 7.1% for the 12 weeks to 10 December, up 0.1 percentage point from last year.
The FTSE 100-listed firm said it looked forward to a year of meaningful progress in both profitability and cash generation, with the “profitability improvement being driven by a recovery in Primark margin, a marked improvement in British Sugar profitability, and by reduced losses at Vivergo.”
“At this early stage in the year we now feel more confident in the continued strong performance of both our US-focused brands in Grocery and of AB Mauri in Ingredients.”
“We also feel more confident in the delivery of the Primark adjusted operating margin in this financial year, driven by a further improvement in product gross margin.”
“This should insulate us well against potential additional costs of supply due to the disruption in the Red Sea should they arise”
7:00am: FTSE 100 seen higher after US markets hit new highs
The FTSE 100 is expected to push higher on Tuesday after US stocks hit fresh highs on Monday.
Spread betting companies are calling London’s blue-chip index up by 29 points after closing up 25.78 points, 0.4%, at 7,487.7 on Monday.
In London, the early focus will be public sector borrowing figures for December, a trading update from Primark owner, AB Foods, and results from housebuilder Crest Nicholson.
On Wall Street, the Dow Jones Industrial Average closed above 38,000 for the first time while the S&P 500 hit fresh all-time highs during the session.
"US markets picked up where they left off on Friday with new record highs for the Dow, S&P 500 and Nasdaq 100 although we did see a loss of momentum heading into the close, as US yields rebounded off their lows of the day," said Michael Hewson.at CMC Markets.
In Asia on Tuesday, the Nikkei 225 index in Tokyo closed down 0.1%.
The Bank of Japan maintained its monetary easing measures, as speculation grows of a shift away from its ultra-loose stance.