- FTSE 100 closes up 68 points at 7,681
- BP jumps after boosting dividend and buyback
- Construction sector optimism improves
4:40pm: FTSE 100 boosted by BP and Chinese stimulus hopes
The FTSE 100 closed near its best levels for the day boosted by a 5.7% gain in index heavyweight BP.
At the close, London's blue-chip index was up 68.15 points, 0.9%, at 7,681.01.
Michael Hewson at CMC Markets said: "After four days of declines the FTSE100 has finally seen a positive session today, closing higher for the first time in 5 days, briefly rising to its highest level since 11th January before slipping back."
Hewson noted other strong performers have been the likes of Prudential and HSBC who are rising on the back of expectations that China will embark on some form of fiscal stimulus, after Chinese stocks rallied strongly in anticipation of such a move.
3:38pm: NatWest share sale planned for June
The sale of shares in NatWest to the general public could happen as early as June, UK Government Investments has confirmed.
UKGI, the company responsible for government investments, has been exploring a share sale since the chancellor announced plans last year.
The Chancellor of the Exchequer Jeremy Hunt unveiled plans in November for a potential retail sale within 12 months, with any divestment “subject to market conditions and achieving value for money”.
On Tuesday, Holger Vieten, who is in charge of selling the government's shares in NatWest, told MPs on the Treasury Select Committee that the process "potentially could happen" as early as June.
"The very earliest could be around summer time, but we don't have an exact date," the UKGI director said.
Sky News reported that M&C Saatchi has been hired to drive the advertising coverage of the share sale.
Banking sources said that Barclays had also been drafted in by government officials to work on the retail component of the share sale, which will be one of the most complex undertaken in Britain for years, Sky said.
Barclays and M&C join Goldman Sachs on the roster of so-called privatisation advisers to the government.
The government, which is NatWest’s biggest shareholder, held a stake of almost 36% as of 19 January, according to a recent filing.
2:50pm: Bright start across the pond
US stocks made steady progress when trading began on Tuesday boosted by gains in Eli Lilly and Palantir.
Shortly after the opening bell, the Dow Jones Industrial Average was up 0.3% at 38,504.01, the S&P 500 was up 0.2% at 4,952.15 and the Nasdaq Composite was up 0.2% at 15,633.97.
Eli Lilly rose 2.9% after its earnings beat expectations while Palantir soared 21% after the company’s revenue for the quarter increased 20% year over year to $608.4 million.
In a letter to shareholders, Palantir CEO Alex Karp said demand for large language models in the U.S. “continues to be unrelenting”.
Elsewhere, Boeing will face more scrutiny from the US federal aviation regulator, including “more boots on the ground” to monitor the beleaguered plane maker, the agency’s chief will tell Congress today.
According to prepared remarks released by the FAA, Whitaker will say: “Going forward, we will have more boots on the ground closely scrutinising and monitoring production and manufacturing activities.”
2:10pm: Goldman lifts UK growth forecasts on likely tax cuts
Goldman expects tax cuts in the upcoming UK budget to boost the economy in 2024 and 2025.
The investment bank said the Conservative government looks set to make tax reductions a centrepiece of its election campaign, raising the possibility of a fiscal easing at next month’s Spring Budget.
It estimated the government had £13 billion of fiscal headroom after the Autumn Statement, but the scope to reduce tax depends on how new OBR forecasts affect this figure.
Goldman thinks that headroom is likely to increase, perhaps by as much as £10 billion, given lower rates and a likely revision to the OBR’s long-run migration estimates based on newly released ONS projections.
The bank expects the government to use up most of its headroom given the proximity of the election, with a 2p cut in the basic rate of income tax (costing £14 billion per year, or 0.5% of GDP) the most likely policy choice.
This would boost output by around 0.3%, Goldman said, with half of the effect coming from higher labour supply and half from an increase in demand relative to supply.
Thus, it raised its real GDP growth forecast for 2024 to 0.6% (from 0.5% previously) and for 2025 to 1.4% (from 1.3% previously).
1.33pm: Here’s a recap of the top risers on the market today
Renishaw shares leapt 18% higher even though it reported a 27% fall in first-half profits.
The engineering group kept its interim dividend unchanged at 16.8p and said it expects an improvement in the second half.
Shares in Futura Medical PLC (AIM:FUM, OTC:FAMDF) were up 26% following its 2023 trading statement, which covered its commercial progress and breakthrough in the US market.
Filtronic PLC (LSE:FTC), the microelectronic services company, saw shares jump 17% after it said both revenues and profits for the full year would be ahead of market consensus and announced new contract wins.
Shares in SysGroup PLC (AIM:SYS, AQSE:SYS) surged 20% after the managed IT services and cloud hosting provider reported double-digit revenue growth and progress following its pivot to focus on supporting companies making forays into artificial intelligence (AI) and machine learning (ML).
Quadrise PLC (AIM:QED) has signed up Cargill, a major supplier of renewable biofuels, and MAC Solutions (MAC2), part of Group Machiels, to produce its MSAR and bioMSAR alternative ship diesel for their forthcoming trials. Shares rose 27%.
Biome Technologies PLC (AIM:BIOM) rose 13% on a solid trading update highlighting the progress being made by its bioplastics division, which offset a drop in its thermal bonding arm.
1:08pm: Coca-Cola HBC dips on Middle East nerves
Shares in Coca-Cola HBC have nudged 1.5% lower amid concerns that it could suffer from the spillover effect from the conflict in the Middle East after cautious commentary by McDonald's on Monday which pointed to some potential contagion on western brands.
But broker Jefferies expects the firm to emerge relatively unscathed.
On Monday, the US fast food restaurant chain on Monday reported weaker than expected sales in the International division - plus 0.7% compared to the consensus of 4.7% - with the Middle East conflict weighing heavily on positive same store sales in all other regions, with some Middle East-related brand impact.
Jefferies explained that McDonald's trends are often a good indicator for Coke's global volume growth amd noted Egypt accounts for 10.5% of Coca-Cola HBC group volumes and around 15% of its growth.
But it reckons that while there is likely to be some modest impact towards the end of the fourth quarter from the Middle East conflict, overall trends will likely be positive in Egypt as the company laps a weak comparative quarter.
It believes that Coke accounts for just under half of Egypt volumes and that non-Coke brands, such as Schweppes or Monster, are less likely to be impacted.
12:37am: Shares in Aston Martin drop on new CEO reports
Shares in Aston Martin Lagonda have fallen 3.1% after Bloomberg reported the firm is on the hunt for candidates to succeed Amedeo Felisa as chief executive officer and become the UK carmaker’s fourth CEO in as many years.
Bloomberg said executive chairman Lawrence Stroll has contacted current and former heads of other luxury auto manufacturers to gauge interest in the role, citing people familiar with the matter.
Stroll tapped Felisa, 77, to be CEO in May 2022, replacing former Mercedes-AMG boss Tobias Moers, who spent less than two years in the job.
His predecessor, Andy Palmer, left months after Stroll rescued Aston Martin in early 2020.
12:12pm: Modest loses expected in New York
Stock futures in New York edged lower on Tuesday as investors braced for another busy day of corporate news.
In pre-market trading, futures for the Dow Jones Industrial Average were down 0.2%, while those for the S&P 500 eased 0.1% and contracts for the Nasdaq 100 futures declined 0.1%.
Results from KKR, Spotify, GE Healthcare, and Hertz are due for before the bell while Amgen, Gilead Sciences, Chipotle, Ford and Snap are reporting after the bell.
Also reporting, Eli Lilly rose 4.4% after reporting fourth-quarter revenue and adjusted earnings that topped expectations on the strong launch of its new weight loss drug Zepboud and higher prices for its blockbuster diabetes drug Mounjaro.
11:40am: Credit card spending rises 3.1% in January, Barclays
Consumer card spending grew just 3.1% year-on-year in January as Brits stayed at home to shelter from the cold weather and save money after a busy festive period, a report showed on Tuesday.
However, pointing to improving optimism, consumers’ confidence in both their household finances and ability to spend within their means reached its highest point in over two years, the survey from Barclays showed.
Supermarkets (5.2%) saw higher growth than in December (2.8%), as consumers returned to their regular routines post-Christmas while demand for digital content and takeaways remained strong as consumers saved money by staying in.
This shift in behaviour, as well as the popularity of Dry January, meant bars, pubs and clubs saw a smaller uplift (6.5%) than in December (7.9%), while restaurants faced a steeper month-on-month decline (-11.6% vs -8.8%)
11:07am: Entain slips on Barclays downgrade
More on the Barclays downgrade on Entain which has sent shares down 2.9%.
The broker has moved the betting operator to 'equal weight' from 'overweight'.
"For the stock to work we think it needs online to return to market growth rates or better and US share to stabilise (and grow)," the broker said, adding neither "are a given."
Barclays thinks Entain faces stiff competition in more than 50% of the online division in markets such as the UK, Australia, Italy, Germany and the US.
It suggested Entain may find holding (and regaining) share a more difficult task as it exits 2024 without extra promotional spend.
It said the balance sheet remains a hindrance with little free cash flow restricting M&A.
"The stock appears cheap but risk-reward is fairly balanced here," it concluded.
10:28am: Construction sector optimism picks up
Better news from the UK construction sector - albeit from depressed levels - with UK builders the most optimistic in two years in January.
They expect lower borrowing costs to boost activity, according to a closely watched survey from S&P Global.
The S&P Global UK construction purchasing managers’ index rose to 48.8 points in January, up from 46.8 in December and the highest since August 2023.
The reading was higher than the 47.3 forecast by a Reuters-cited consensus.
Tim Moore of S&P Global Market Intelligence said construction companies were “increasingly optimistic that the worst could be behind them soon as recession risks fade and interest rate cuts appear close on the horizon.”
9:53am: China acts to boost interest in equities, stocks soar
Russ Mould at AJ Bell said the big story on the markets was the sharp rally in Chinese stocks after a state-backed initiative to stir up interest in equities.
He noted the Hang Seng advanced 4% and the SSE jumped 3.2%, "some of the biggest one-day gains we’ve seen on the Chinese market in a long time."
The Hang Seng Tech index did even better, soaring by 7%.
“A state-owned investment fund indicated it would continue to buy up shares in what looks like a concerted effort to breathe some new life back into Chinese equities after they fell out of favour," he explained.
The securities regulator also pledged to encourage more long-term funds to buy shares and to encourage companies to buy back more of their own shares, he noted.
But he added the big unknown is whether this effective stimulus initiative is just a short-term boost or enough to trigger a sustained revival in Chinese markets.
9:25am: Retail sales grow at slower annual pace in January
A bit more on the retail sales figures from the BRC and KPMG.
The report showed total retail sales in the UK between December 31 and January 27 grew by 1.2% year-on-year, slowing down from growth of 4.2% in January 2023.
Food sales growth decelerated to 6.3% over the three months to January, down from 8.0% a year prior.
Meanwhile, non-food sales fell by 1.8% annually over the three months to January.
Helen Dickinson, chief executive of the British Retail Consortium, said: "Easing inflation and weak consumer demand led retail sales growth to slow.”
“While the January sales helped to boost spending in the first two weeks, this did not sustain throughout the month.”
“Larger purchases, such as furniture, household appliances, and electricals, remained weak as the higher cost of living continued into its third year.”
“The milder temperatures meant clothing sales performed poorly, particularly winter clothing and footwear.”
“It was better news for health and beauty products, which continued to sell extremely well."
8:55am: FTSE 100 steams ahead boosted by Chinese stimulus hopes
The FTSE 100 continues to steam ahead, now up 57 points at 7,670 boosted by reports on Bloomberg that regulators in China, led by the China Securities Regulatory Commission, plan to update the top leadership on market conditions and the latest policy initiatives as soon as Tuesday.
Asia-focused insurer Prudential jumped 3.7% with HSBC up 1.9%.
BP remains the star performer, up 6.0% after its fourth quarter results.
Richard Hunter, Head of Markets at interactive investor, commented “BP joins the throng of the other global oil majors in capping off a difficult year with a resilient performance which beat expectations on most metrics.”
“Financials aside, the permanent appointment of a new CEO removes one plank of uncertainty, and certainly for the moment the company will continue its transformation from an International Oil Company to an Integrated Energy Company.”
“Its significant investment into the likes of renewables and electric vehicle charging seem set to remain for the foreseeable future, although in the meantime the vagaries of the oil price will inevitably bring their own challenges.”
Elsewhere, shares in precision measuring instruments maker Renishaw rose 11% after it pointed to an improvement in trading conditions ahead.
8:15am: Stocks lifted by gains in BP
The FTSE 100 made a bright start to the day supported by gains in BP after the oil major accelerated its share buyback plans.
At 8:15am, London's blue-chip index was up 0.9% at 7,682.19 while the FTSE 250 was up 0.4% at 19,087.33.
BP rose 1.5% after announcing a fourth quarter share buyback of $1.75 billion and pledged a further $3.5 billion buybacks in the first half of 2024.
The news came as the firm delivered quarterly profit ahead of expectations, following the performance of industry peer, Shell.
John Moore, senior investment manager at RBC Brewin Dolphin, said: “BP is still in resilient shape – surplus cashflow remains positive, net debt has fallen, and the management team’s optimism can be seen in the 10% increase in dividend distributions.”
“Questions have been raised over its future direction and BP will need to strike a tricky balance of continuing to invest in its core energy business to deliver returns in the short term, while maintaining its long-term transformation.”
Elsewhere, Virgin Money rose 1.5% after reporting in line trading which showed a rise in deposits but a slight drop in lending.
Entain fell 1.0% after Barclays downgraded to ‘equal weight’ from ‘overweight’
7:46am: Virgin Money trading in line, lending stable
Virgin Money UK PLC (LSE:VMUK) reported little change in its underlying first quarter with a drop in mortgage lending but a pick up in its Business division.
The lender said total lending totalled £72.83 billion in the financial first quarter, down 0.3%, from £73.07 billion a year ago.
Mortgage lending dropped 2.2% to £57.11 billion while lending to business rose 6.7% to £9.02 billion.
Customer deposits rose 1.7% to £67.31 billion from £66.15 last year on a net interest margin unchanged at 1.89%.
Virgin Money said overall arrears trends remain broadly consistent with 2023 with credit card arrears continuing to gradually increase in line with expectations.
The firm booked a £64 million impairment charge in the first quarter with provisions rising to £639 million.
Chief Executive David Duffy said: “We have made a positive start to the year, with strong Q1 results in line with our guidance. We've delivered growth in new accounts, deposits and target lending segments, at stable margins and with ongoing cost efficiencies.”
The firm said its Tier 1 ratio declined to 14.0% from 15.0% the year before.
7:28am: BP boosts buyback as profit tops expectations
BP PLC (LSE:BP.) accelerated the pace of its share buyback plans after following industry peer Sheel by delivering fourth quarter profit ahead of expectations.
The oil major said fourth quarter underlying replacement cost profit was $2.99 billion, down from $4.81 billion the year prior, but ahead of City forecasts of $2.76 billion.
BP announced a quarterly share buyback of $1.75 billion, pledged a further $3.5 billion buybacks in the first half of 2024, and at least $14 billion through 2025.
Ths compared to $1.5 billion buybacks in the first three quarters of 2023.
BP said the results reflected a strong gas marketing and trading result, higher oil realisations, higher gas realisations, significantly lower industry refining margins, a weak oil trading result, higher exploration write-offs, and a higher level of refining turnaround activity.
Operating cash flow in the quarter was $9.4 billion with capital expenditure of $4.7 billion.
Underlying earnings per share fell to 17.77 US cents from 26.44 cents before while the dividend was increased 10% to 7.270 cents per share.
7:00am: Stocks called higher despite drop in retail sales
The FTSE 100 is expected open higher on Tuesday after US markets closed above early lows and despite figures showing a drop in retail sales in January.
Spread betting companies are calling London's lead index up by around 18 points after closing marginally lower at 7,612.86 on Monday.
Figures from the BRC and KPMG showed retail sales grew by 1.2% year-on-year in January, slowing down from growth of 4.2% in January 2023.
In Australia, the central bank decided to leave the cash rate target unchanged at 4.35%, with the interest rate paid on Exchange Settlement balances steady at 4.25%.
"Higher interest rates are working to establish a more sustainable balance between aggregate demand and supply in the economy. Accordingly, conditions in the labour market continue to ease gradually, although they remain tighter than is consistent with sustained full employment and inflation at target," the Reserve Bank of Australia said.
In the US on Monday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.7%, the S&P 500 down 0.3% and the Nasdaq Composite down 0.2%.
Back in London, and the early focus will be updates from BP and Virgin Money UK.