- FTSE 100 closes up 2 points at 7,534
- ECB leaves interest rates unchanged
- US economic growth above forecast in Q4
4:40pm: FTSE 100 ekes out marginal gains by the close
London's blue-chips closed the day with marginal gains, after data in the US backed hopes for an early cut in interest rates.
But in Europe, officials hinted monetary policy could be eased this summer, later than the market hoped, after leaving rates unchanged for the third meeting in succession.
The FTSE 100 index closed 2.06 points higher at 7,529.73. The FTSE 250 ended up 51.42 points, 0.3%, at 19,223.10
3:50pm: Intermediate Capital beats expectations
Plenty going in the markets this morning as traders get to grips with a raft of trading updates,
In the FTSE 100, Intermediate Capital Group (LSE:ICP) is leading the risers, up 3.5%, after reporting fee-earning assets under management (AUM) rose 10% in the quarter ending December on a reported basis to $68.4 billion from the year before.
The firm, which was recently promoted to the lead index, posted total AUM of $86.3 billion, up 13% year-on-year.
Fundraising of $3.6 billion was reported during the quarter, driven by two flagship strategies: Senior Debt Partners ($1.8 billion) and Strategic Equity ($0.8 billion).
Jefferies said it was looking for c. $2.5bn fundraising in the quarter and fee earning AUM of $65bn or more, so $3.6bn and $68.4bn are a “healthy beat,” especially with no major FX effect in the quarter.
“Perhaps the most telling point in the update was that the pipeline of deployment activity is looking more lively, which chimes with commentary from peers, and implies good news for LP returns and for further fundraising,” it said.
3:23pm: Whitbread favoured by Morgan Stanley (NYSE:MS), IHG “up with events”
Looking ahead to results in the hotels and leisure sector, Morgan Stanley (NYSE:MS) expects four main themes.
These are resilient trading, net unit growth to accelerate, more share buyback announcements and wide valuation dispersion.
It noted the themes feel very similar to the same time last year, and the sector went on to enjoy a strong performance in 2023.
On individual stocks, MS likes Whitbread but thinks IHG is “up with events.”
2:51pm: FTSE recoups losses as US markets climb
The FTSE 100 is trading little changed now as traders react to US data and comments from ECB President Christine Lagarde.
Starting in the US, stocks have opened higher after the growth figures which also showed inflationary pressures have eased.
Shortly, after the opening bell, the Dow Jones Industrial Average was up 101.45 points, 0.3%, at 37,907.84, the S&P 500 was up 18.76 points, 0.4%, at 4,887.31 and the Nasdaq Composite was up 75.67 points, 0.5% at 15,557.59.
As well as the better-than-expected growth figures, The Bureau of Economic Analysis reported that in the fourth-quarter, the personal consumption expenditures index rose 2.8% on-year, easing from a 3.1% rise in the third-quarter.
Monthly PCE data for December, including the Federal Reserve's preferred core measure, are released at 1330 GMT on Friday.
The next Fed decision is on Wednesday next week.
Ian Shepherdson at Pantheon Macroeconomics said: "The 1.99% increase in the core PCE deflator in Q4 follows a 2.04% rise in the third, so the Fed has now hit its target on this measure on a sequential basis for two straight quarters."
He thinks the Fed will have to ease unless they have very good reasons to think the economy is about to re-strengthen or inflation somehow will rebound.
"We doubt those arguments can be made with confidence, so we expect the first easing in March or May, leaning 60/40 in favor of the former."
Meanwhile, Lagarde has told reporters that the consensus around the table of the Governing Council was that it was premature to discuss rate cuts.
"One other thing, which was very much a consensus around the table was that we had to continue to be data dependent."
Markets continue to expect a rate cut in April despite her guarded comments.
2:25pm: US economic growth stronger-than-expected
There has been a big data drop in the US with economic growth figures stronger than expected, powered by consumer spending.
GDP rose at a 3.3% annualised rate, according to the government’s preliminary estimate, ahead of market forecasts of 2.0% growth.
In 2023, the economy expanded by 2.5%, its strongest performance since 2021.
The Bureau of Economic Analysis said: "The increase in real GDP reflected increases in consumer spending, exports, state and local government spending, non-residential fixed investment, federal government spending, private inventory investment, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased."
Separate numbers on Thursday showed initial unemployment benefit claims were higher than expected in the most recent week.
According to the US Department of Labor, new jobless claims rose to 214,000 in the week ended January 20 from an upwardly revised 189,000 a week earlier.
According to FXStreet cited consensus, claims had been expected to rise to just 200,000. The previous week's figure was increased from 187,000.
Meanwhile, numbers from the Census Bureau showed durable goods orders were weaker than expected last month.
Durable goods orders were flat in December, following a 5.5% surge in November.
Growth of 1.1% was expected in December, according to consensus cited by FXStreet.
2:15pm: Lloyds to axe 1,600 jobs - Reuters
Britain's biggest domestic bank Lloyds Banking Group PLC (LSE:LLOY) is cutting around 1,600 roles across its branch network, a spokesperson for the lender told Reuters Thursday, as part of an overhaul to provide more services online.
The cuts are part of a renewed push by banks to axe costs as tough economic conditions and pressure on margins from competition and peaking rates prompt them to tighten their belts, despite a year of robust profits for the industry.
As part of its revamp, Lloyds also plans to create 830 roles in an expanded 'relationship growth' team, Reuters reported.
Rival Barclays recently announced thousands of jobs losses.
1:30pm: Here are some of today's risers
Kromek Group PLC (AIM:KMK) climbed almost 7% on Thursday after announcing a £1.4 million order from the European Union for its D3M radiation detectors.
This adds to a growing list of orders for the radiation and bio-detection technology firm made over the past year as global tensions mount.
Cybersecurity group Narf Industries PLC (LSE:NARF) climbed over 12% after unveiling results for 2023 ahead of previous guidance.
Full-year revenue climbed by 130% to US$6.0 million, the high-end threat intelligence specialist said, outdoing the expected US$5.8 million.
United Oil & Gas PLC (AIM:UOG) shares rallied around 6% as it secured an extension to its Walton Morant exploration licence in Jamaica.
It sees the company retain its rights over the massive 22,400 square kilometre exploration block until January 2026.
And Helium Gas Global Ltd rose over 50% after telling investors it had successfully drilled the Itumbula West-1 well to its total depth of 961 meters and encountered elevated helium shows described as “over twenty times the background levels”.
1:22pm: ECB stands pat on interest rates
The European Central Bank’s governing council has kept interest rates unchanged, as expected.
The ECB’s rate on its main refinancing operations, which provide the bulk of liquidity to the banking system, is at 4.5%. Its deposit rate, which is paid on commercial bank deposits, is at 4%. The marginal lending facility, which offers overnight credit to banks, is at 4.75%.
We kept our interest rates unchanged at our latest meeting.
See our monetary policy decisions https://t.co/bEgIDpKhYv pic.twitter.com/zjqbHpHgS3
— European Central Bank (@ecb) January 25, 2024
The central bank explained: "Tight financing conditions are dampening demand, and this is helping to push down inflation."
The attention now switches to the press conference at which ECB President Christine Lagarde may give some hints as to the timing of any rate cuts.
1:05pm: Prospects for NatWest retail sale "looking good" - Minister
Treasury Minister Bim Afolami said the prospects for a retail sale of the UK’s stake in NatWest Group PLC (LSE:NWG) are “looking good” this year, when the government is also predicting a pickup in listing activity.
He was speaking to Bloomberg TV on Thursday come after Chancellor of the Exchequer Jeremy Hunt said in November that the government, which is NatWest’s biggest shareholder, would look to sell its stake subject to market conditions.
Afolami said he expects market conditions to be right this year and that the NatWest sale would help catalyze “animal spirits” in the wider market.
12:38pm: Retail sales fall at fastest rate in three years - CBI
Retail sales across the UK fell at the fastest pace in three years this month, according to figures from the Confederation of British Industry.
The CBI’s monthly retail sales balance, which measures sales volumes versus a year ago, fell to -50 in January from -32 in December, the weakest since December 2021 when Britain was in a Covid-19 lockdown.
Retail sales fell in the year to January at the sharpest pace since January 2021, according to the latest CBI #DTS. Sales volumes are expected to continue falling at the same rapid rate next month pic.twitter.com/G2tzUi4xYN
— CBI Economics (@CBI_Economics) January 25, 2024
February won’t be much better, the survey suggested
Martin Sartorius, the CBI’s principal economist, said: "Looking ahead, demand conditions in the sector will remain challenging as higher interest rates continue to feed through to mortgage payments and household incomes."
12:10pm: Tesla extends falls after "train wreck" conference call
Stocks are seen little changed in New York, despite a big fall in Tesla’s share price, as investors await economic growth figures.
In pre-market trading, futures for the Dow Jones Industrial Average were down 0.1%, while those for the S&P 500 were flat and contracts for the Nasdaq 100 futures declined 0.1%.
On Wednesday, the S&P hit a fresh intra-day high, while Microsoft, which reached a $3 trillion valuation for the first time, Facebook parent Meta and chipmaker Nvidia all hit record intra-day highs.
Economists expect the advance estimate for US fourth-quarter economic growth to come in at 2.3%, down from 3.3% growth in the third quarter.
Tesla dropped 7.8% in pre-market trading after disappointing results and warning of “notably lower” growth in 2024 than that achieved in 2023.
Elon Musk's electric vehicle maker said the company "is currently between two major growth waves."
Wedbush analyst Dan Ives said: “We were dead wrong expecting Musk and team to step up like adults in the room on the call and give a strategic and financial overview of the ongoing price cuts, margin structure, and flucuating demand....instead we got a high level Tesla long term view with another train wreck conference call.”
Elsewhere, the results keep rolling in with Intel and Visa reporting after the closing bell.
Air carriers Southwest Airlines, American Airlines and Alaska Air Group report earnings before the bell as does Comcast, NextEra Energy and Northrop Grumman.
11:50am: IDS extends gains on USO reform hopes, but obstacles to progress remain
Royal Mail owner, IDS is up a further 3.8% today, following the announcement on Wednesday by Ofcom of proposals to reform letter delivery obligations under the Universal Service Obligation.
JPMorgan raised its price target to 450p from 300p for IDS while analysts at Barclays saw the process of reviewing the USO as positive for Royal Mail “as it continues to modernise and implement the operational efficiency measures agreed with the CWU last year.”
The ability to pass some changes via regulation (eg. on speed of delivery) is positive, while changing the delivery days requires Parliamentary approval and may take longer, the bank said.
Achieving some structural changes to the USO provision may allow Royal Mail to recover profitability faster, it thinks.
But analysts at Liberum reiterated a ‘sell’ rating.
“We see limited prospect for change, or financial relief for Royal Mail, in the foreseeable future,” it said, noting Ofcom “has limited powers to push through changes, most of which require legislation and parliamentary approval.“
“Until the collapse of the system is imminent, the government faces only political downside from agreeing to changes,” it said.
11:13am: UK vehicle production tops 1m in 2023, best year since 2019
UK vehicle production topped one million units in 2023, its in best year since 2019, and up 17.0% on the year before.
Figures from the Society of Motor Manufacturers and Traders showed 905,117 cars and 120,357 commercial vehicles (CV) made, with record electrified model output.
UK vehicle production tops one million units, up 17.0% in best year since 2019
⚡️905,117 cars & 120,357 CVs made, with record electrified model output
????£23.7bn of private & public investment commitments announced in 2023https://t.co/09Vk4EhuST pic.twitter.com/BmT6v5pO5R
— SMMT (@SMMT) January 25, 2024
"The easing of pandemic-related challenges, from chip shortages to lockdowns, and increasing electrified model production, combined to drive annual output above one million for the first time since 2019," the SMMT said.
Strong December performances for both car manufacturing, up 20.7% year on year, and CV volumes, up 80.3%, rounded off a positive year.
10:45am: St James’s Place slips as inflows slide
St James’s Place is down 8.2% after reporting net inflows nearly halved last year, as economic upheaval and attractive returns on cash dented clients’ confidence in long-term investments.
Around £5.12 billion was invested with the company on a net basis in 2023, down from £9.78 billion in 2022, the company said.
Peel Hunt said “flows for the year of £5.1 billion were a touch behind consensus (£5.3 billion); and when put into context with the £9.8 billion generated last year, highlight how weak investor sentiment has been.“
Jefferies, which has a ‘buy’ rating on SJP, said “adviser numbers are very slightly below forecasts, but do not imply an exodus at this stage.”
“Improving market performance may help customer confidence in future periods.”
“The CEO's review as he plans for 2030 may introduce some uncertainty into shareholders' minds, but we do not envision major structural change.”
“This is a solid update at a time of improving underlying conditions.”
10:15am: Dr Martens up as investors breathe a sigh of relief
Dr Martens is up 4.5% after a trading statement - a rare occurrence recently.
AJ Bell’s Russ Mould notes it’s been a “long time” since we’ve seen Dr Martens’ shares rise on a trading update “but it has finally happened.”
While the headline figures look “miserable,” the positive market reaction is down to Dr Martens maintaining previous guidance rather than having “to rachet it down once again.”
“Investors are breathing a sigh of relief although the company still has considerable issues to resolve.”
“It’s starting to look like Dr Martens is the latest in a long line of British companies which have failed to break through in the US,” he reckons.
Dr Martens’ boots may be iconic but they also don’t come cheap, he said.
“The company should thrive in stronger economic conditions when customers are feeling flush, but we’re not currently in that environment.”
9:52am: JPMorgan warms to UK motor insurers
UK motor insurers Direct Line and Admiral are up 1.6% and 0.9% respectively after JPMorgan made positive comments on the sector.
The bank has relaunched coverage of Direct Line with an ‘overweight’ rating and upgraded Admiral to ‘neutral’ from ‘underweight.’
The broker said the UK motor recovery is “well on its way” with fears of regulatory intervention “overdone.”
On Direct Line, the bank thinks improved motor pricing should lead to normal profitability from 2025 onwards while capital returns should restart with FY23 results.
It sees little risk that the incoming CEO will take radical action on the balance sheet.
On Admiral, JPM thinks with UK motor prices seeing material increases and margins are likely to improve 2024-25, there are “few scenarios in which Admiral will underperform the sector in the coming year despite looking relatively expensive relative to recent history.”
9:22am: IG plunges after weaker-than-expected trading
IG Group PLC has plunged 9.1% after interim results which missed analyst expectations.
The trading platform said “persistently low levels of market volatility” had led to a “mixed trading backdrop” for clients.
Shore Capital said adjusted EPS of 38.9p was a 5% miss versus its 41.1p estimate.
Revenue of £473 million was lower than the £487 million it had pencilled.
It said the reduction in revenue reflects soft market conditions principally, with active clients at 296.3k, down 5% year-on-year.
9:01am: Elementis leaps on bid speculation
Elementis plc (LSE:ELM) is the top riser in the FTSE 250, soaring 9.3%, after a report that KPS Capital Partners recently explored a bid for the UK specialty chemicals maker.
Reuters said the bid, from the New York-based private equity firm was pitched at 160p per share, but that the Elementis board wanted 180p.
The report said KPS has since paused its work on such a move.
Elementis has already rebuffed other takeover bids, in 2020 from, opens new tab US-based Mineral Technologies and in 2021 from Nasdaq-listed Innospec.
8:43am: Stocks drifts lower, St Jame's Place, IG, Wizz Air slip
The FTSE 100 is trading just the wrong side of the line in early exchanges.
Susannah Streeter, head of money and markets, Hargreaves Lansdown said: “The FTSE 100 has drifted lower in early trade as uncertainty reigns about the trajectory of interest rates in Europe, with exuberance from the Wall Street party not making a mark.”
“As attacks in the Red Sea continue, geopolitical concerns are still bubbling, and there are not many fresh cues to help propel stocks higher in Europe.”
Leading the risers is Intermediate Capital Group (LSE:ICP), up 3.6%, after a better-than-expected trading update with a rise in assets under management.
But St James’s Place has gone into reverse, down 6.0%, after reporting net inflows for the full year below forecast, after a challenging year.
Admiral is up 0.5% after JPMorgan upgraded to ‘neutral’ from ‘underweight’ with Direct Line up 0.9% as the broker issued an ‘overweight’ rating.
In the FTSE 250, Royal Mail owner, IDS, continues its strong week, rising a further 3.1% after the Ofcom plans yesterday, while Dr Martens is up 1.9% after holding guidance, a relief after a string of profit warnings.
But, IG has plunged 9.1% after reporting trading revenue dropped 19% year-on-year in the first half and Wizz Air is down 5.1% after its disappointing update.
8:15am: Stocks ease ahead of US GDP and ECB rate call
The FTSE 100 made a subdued start to day with investors preferring to stay sidelined ahead of growth figures in the US and the interest rate decision by the European Central Bank.
At 8:15am, London's blue-chip index was down 15.64 points, 0.2%, at 7,512.03 while the FTSE 250 was down 56.52 points, 0.3%, at 19,115.16.
Michael hewson at CMC Markets said: “Today’s focus for European markets which are set to open slightly lower, is on the ECB and the press conference soon after with Christine Lagarde, where apart from questions on timelines about possible rate policy, Lagarde could face some questions a little closer to home amidst dissatisfaction over her leadership style from ECB staffers.”
He noted despite weak data in the eurozone “the ECB has been insistent it is not close to considering a cut in rates, having hiked as recently as last September.”
Lagarde, the President of the ECB, recently hinted that the first cut to interest rates was likely to be in the Summer although the market is more hopeful, pricing in the first move in April.
Back in London, Wizz Air fell 4.5% after its trading update.
“Results for 3Q were somewhat disappointing, due to lower-than-expected ancillary revenue,” said analysts at Peel Hunt.
Halfords dipped 3.6% after the company said increased cost savings will help it hit profit guidance despite tough trading.
Analysts at Liberum said the statement reinforces “our view that the group remains challenged.”
7:54am: Dr Martens backs outlook after "volatile" quarter
Dr Martens said its third quarter performance was in line with guidance provided in November but said trading was “volatile,” with a “softer” December.
In the three months to December 31, revenue fell 18% at constant currency to 273.8 million and 21% on a reported basis to £267.1 million. .
“This was driven by a weak USA performance, as expected,” the firm said.
Ecommerce revenue fell 9%, driven by a decline in Americas, Retail revenue was flat, while wholesale revenue plunged 49%, with significant declines seen in Americas and EMEA.
The iconic bootmaker highlighted a likely £5m hit from the appreciation of sterling.
7:47am: Haleon to pay down debt after offloading ChapStick
Elsewhere, Haleon has agreed to sell the ChapStick brand to Suave Brands Co, a portfolio company of Yellow Wood Partners.
The consumer brands business, which was spun out of GSK, will receive pre-tax cash proceeds of around $430 million, as well as a passive minority interest in Suave Brands valued at around $80 million.
The owner of Sensodyne toothpaste and Panadol will use the proceeds to pay down debt, "underpinning [its] confidence to de-level to net debt/adjusted Ebitda of below 3 times during 2024".
Haleon expects the sale to close in the second quarter.
Chief Executive Brian McNamara said the ChapStick was not a “core focus” for Haleon.
“Selling the brand allows us to simplify our business and pay down debt more quickly,” he added.
7:40am: Wizz Air returns to profit; Halfords backs outlook
Plenty of trading updates to digest today - we'll start with Wizz Air and Halfords.
Wizz Air has reported record traffic in the third quarter as it saw revenue grow and a return to profitability.
The budget airline operator said revenue rose 17% to €1.06 billion in the quarter ending December 31 from €911.7 million last year, while Ebitda totalled €18.7 million compared to an Ebitda loss of €2.8 million before.
The firm carried a record 15.1 million passengers compared to 12.4 million last year while the load factor improved to 87.6 from 87.3.
Over at Halfords, an up-and-down third quarter has seen the motor and cycle retail and repair specialist back current guidance.
“We continue to expect [pretax profit] to fall within the previously communicated range of £48 million to £53 million.”
“Whilst Q3 sales were below expectations, a strong start to Q4 trading, further cost action and resilient areas such as B2B performing well, mean that we are confident in the Q4 outlook,” it said.
Revenue rose 2.0% on a like-for-like (LFL) basis in the quarter, with stronger sales in motoring and needs-based categories partly offset by weaker spend in discretionary areas.
Halfords saw a big swing in performance during the period with sales in October and November strong, but much weaker in December.
This was most pronounced in Retail Motoring, where monthly LFL growth averaged 10.2% in October and November but fell to a 15.3% decline in December.
7:00am: FTSE seen lower ahead of ECB rate call and US GDP; Tesla disappoints
The FTSE 100 is expected to open lower as investors await the interest rate decision from the European Central Bank and growth figures from the US.
Spread betting companies are calling London's blue-chip index down by around 15 points after closing up 41.94 points at 7,527.67 on Wednesday.
Disappointing results from Tesla add to the more subdued mood with the EV maker down 6.0% in after-hours trading.
Tesla reported fourth quarter earnings below expectations and warned about "notably lower" sales growth in 2024 as it prepares to launch its next-generation vehicle.
The ECB is expected to leave interest rates unchanged with the focus squarely on comments regarding the timing of rate cuts.
The market is pricing in a first 25 basis point cut in April, but ECB President Christine Lagarde's recently suggested the bank itself is looking at the summer for the first reduction.
In the US, the Bureau of Economic Analysis will report gross domestic figures, which are forecast to show that the US economy grew by 2.0% in the three months through December, slower than the 4.9% growth recorded in the third quarter.
"US bond markets appear to be starting to have second thoughts about the prospect of 6 rate cuts from the Federal Reserve this year, although there is still some insistence that a March cut remains a realistic possibility. Today's US Q4 GDP numbers might bury the prospect of that idea once and for all if we get a reading anywhere close to 2%," said CMC Markets' UK chief market analyst, Michael Hewson.