- FTSE 100 closes 61 points lower.
- Body Shop collapses into administration.
- US inflation of 3.1% in January higher than expected.
4.45pm: FTSE finishes in the red
At the closing bell, the UK's main index had lost 0.8% to close at 7,512 points.
3.58pm: Taylor Wimpey, housebuilders fall on fears of delayed base rate cuts
Taylor Wimpey PLC (LSE:TW.) emerged as one of the FTSE 100’s leading fallers as the trading day began to draw to a close on Tuesday, slipping 4.5%.
Persimmon PLC (LSE:PSN) and Barratt Developments PLC (LSE:BDEV) followed closely, with losses of 4.2% and 4.4% respectively.
The declines appeared to come on emerging fears that interest rates will remain higher for longer following wage growth and unemployment data earlier on in the day.
Wages climbed by 5.8% in December, as per ONS data, outdoing inflation during the month of 4.2%.
Inflation-beating wage growth means higher interest for longer - analysts
Charles Stanley (LSE:CAY) analyst Rob Morgan noted such “resilient wages have been a driver of sticky consumer price inflation” recently.
“Wage growth above inflation is a major factor that stands in the way of earlier cuts to interest rates,” he added.
High interest has plagued the housing market over the past year, with buyers being put off by more expensive mortgages.
Markets had been factoring a base rate cut by the Bank of England as early as the spring meanwhile, according to Morgan, which would aid mortgage cost reductions.
However, sticky inflation driven by the likes of wage increases now appears to threaten this, he warned.
3.10pm: S&P 500 dips below 5,000 as US markets hit on higher-than-expected inflation reading
America’s stock markets felt the brunt of a higher-than-expected inflation reading on Tuesday.
At 3.1%, January’s inflation came in jigger than analysts' forecasts of 2.9%, effectively ruling out hopes of base rate cuts over the first half of the year.
The Nasdaq fell 1.7% to 15,659 on the news, while the S&P 500 and Dow Jones moved 1.3% and 1.1% lower to 4,956 and 38,370.
“Traders now expect around four interest rate cuts in 2024,” Evelyn Partners strategist Rob Clarry commented, “which is down from the six expected just over a month ago”.
“Similarly, they have pushed back their expectations of when the first cut will take place.”
Among equities, Coca-Cola’s report of fourth-quarter earnings in line with expectations saw the stock climb.
Burger King owner Restaurant Brands International (TSX:QSR, NYSE:QSR) faced a decline in its share price though, despite reporting better than expected revenue.
Shopify slipped after reporting fourth-quarter results too, with Airbnb earnings also expected.
2.35pm: Some Tuesday mid-afternoon movers
Scottish Mortgage Investment Trust PLC (LSE:SMT), Ocado Group PLC (LSE:OCDO) and Rightmove PLC (LSE:RMV) led the way as the FTSE 100’s movers with losses of over 4% each by Tuesday afternoon.
Having fallen 4.7%, Scottish Mortgage’s turbulence follows losses by Tesla Inc (NASDAQ:TSLA, ETR:TL0), which makes up its seventh largest holding, overnight.
GSK PLC (LSE:GSK, NYSE:GSK), BP PLC (LSE:BP.) and AstraZeneca PLC (LSE:AZN) represented the blue-chip index’s main risers meanwhile, with gains of 1.9%, 1.3% and just over 1% respectively.
Positivity surrounding GSK comes after CitiGroup analysts bumped up the pharmaceuticals firm’s rating to a ‘buy’ earlier on Tuesday, on a positive outlook for its blood disease treatments.
Waste-to-energy specialist EQTEC PLC (AIM:EQT) sat among the AIM’s big risers, climbing more than 9% after announcing a new strategic investor, Verde, was coming on board.
Verde pledged to put in £500,000 for a near 10% stake, but in what seems like a cleaning up of the balance sheet two bondholders will convert £3 million into equity while standby facility lenders YA and Riverfort look to be exiting.
Among small cap fallers was brewer Adnams plc (AQSE:ADB), which confirmed a weekend report from Sky News that it was scrambling to secure fresh funding for the business.
2.00pm: Rate cut hopes hit by US January inflation figure - analyst
Hopes that the US Federal Reserve could begin a series of base rate cuts from May have been heavily dampened on news inflation outdid expectations in January, analysts say.
“Odds have reduced further [of a May rate cut] following publication of today’s data,” Titan Asset Management chief investor John Leiper said.
“A plethora of recent economic data, including leading indicators for wages, highlight ongoing inflationary pressures,” he added, “we saw signs of that in today’s numbers”.
January’s consumer price index reading came in at 3.1%, lower than December’s consumer price index reading of 3.4%, but higher than analysts’ expectations of 2.9%.
Omnis Investments chief strategist Richard Garland explained that the path was also going to be “bumpy” meanwhile, but said moderating wage growth should start to show in future month’s figures.
“The Fed is keen not to make a mistake and wants confirmation of this before committing to a reduction in interest rates,” he commented.
“However, this eagerness may itself prove to be a mistake, if interest rates are held too high for too long.”
US stock market futures faced a blow on the news, with the Nasdaq being called down 1.6%, alongside the S&P 500 and Dow Jones by 1.2% and 0.9%.
1.41pm: US inflation higher than expected in January
US inflation came in higher than expected for January at 3.1%, hitting hopes of imminent rate cuts.
The figure is lower than December’s consumer price index reading of 3.4%, but higher than analysts’ expectations of 2.9%.
Core inflation climbed by 3.9% in January meanwhile, ahead of and anticipated of 3.7%.
The FTSE 100 fell on the news to sit 24 points lower at 7,548.
1.32pm: Body Shop falls into administration
Cosmetics retailer The Body Shop has confirmed that its UK business is now under administration.
Some 2,000 jobs have been placed into question on the news, which follows wide-ranging reports of the high street chain’s impending collapse.
Body Shop begins filing for administration
Confirmation came on Tuesday afternoon, with FRP, which has been appointed as administrator, saying it would consider all options for the business.
Body Shop’s roughly 200 outlets are set to remain open while administrators work to save the firm, which was first set up in 1976 and bought by private equity firm Aurelius six weeks ago.
12.50pm: Oil prices gain on IEA assurances
Oil prices gained on Tuesday, following assuring comments from the International Energy Agency that markets should remain “comfortable” this year.
New supplies will continue to satisfy growing demand, according to the agency, with consumption increasing at a slowing rate year-on-year.
Daily global consumption will climb by 1.2 million to 1.3 million barrels in 2024, the agency added, being easily matched by growing production in the Americas.
Brent crude climbed 0.6% to US$82.49 a barrel, while West Texas Intermediate jumped 0.8% to US$77.53.
12.18pm: Tui shareholders expected to back London delisting
TUI AG (LSE:TUI) could be on course to deal the London Stock Exchange with yet another blow after urging investors to back plans to ditch its UK listing on Tuesday.
Following the travel firm’s report of record first quarter results on Tuesday morning, shareholders will vote on the proposal later in the day.
“The termination of the listing in London would offer understandable advantages for investors and the company,” Tui told investors ahead of the vote.
This would include “simplification of structures, improvement in liquidity and indexation, and support for EU airline ownership,” the firm added.
TUI: Analysts split on travel giant; real news comes later Tuesday
Such a move away from London would mark yet another blow for the market, as Tui becomes one of a number of firms eyeing listing elsewhere on the back of post-Brexit reforms.
“This comes after a period of weak price action in the UK post-Brexit, resulting in discounted valuations for UK stocks,” interactive investor analyst Victoria Scholar explained.
Highlighting a near doubling in value of former London-constituent Arm Holdings PLC (NASDAQ:ARM) over the past five days, she added such success elsewhere served as “a painful reminder of that nasty blow to London’s public markets”.
11.52am: US stocks called lower as markets await inflation data
US stock markets are expected to fall on Tuesday’s opening bell as investors eagerly await inflation data for January.
The Nasdaq is being called 0.7% lower at 17,851 based on futures trading ahead of the data’s release, which is expected at 1.30pm.
S&P 500 and Dow Jones futures have the indexes down 0.4% and 0.1% respectively meanwhile, at 5,022 and 38,830.
“A potentially stronger inflation report could further bolster the dollar's position against currencies with lower yields,” City Index analyst Fawad Razaqzadal commented ahead of the figures.
“A softer reading would be welcomed by traders favouring foreign currencies over the US dollar.”
Analysts are expecting the consumer price index figure to sit at 2.9% for January, against a reading of 3.4% in December.
Elsewhere in the US, Coca-Cola, Airbnb and Shopify are among big companies set to report on Tuesday.
11.10am: Today’s FTSE 100 risers and fallers so far
DS Smith PLC (LSE:SMDS), GSK PLC (LSE:GSK, NYSE:GSK) and Anglo American PLC (LSE:AAL) led the FTSE 100 risers come mid-morning on Tuesday.
Shares in DS Smith sat 1.6% higher, with reports having circulated in recent days over an impending takeover offer from rival packaging firm Mondi PLC (LSE:MNDI).
Anglo American climbed by 1.3%, followed by GSK's 1.2% gain meanwhile, with the latter having been granted an upgrade by CitiGroup earlier in the day.
GSK: American investment bank goes positive on the stock for the first time in seven years. Here's why
Frasers Group PLC (LSE:FRAS) led the fallers, with losses of 2.4%, which themselves came after gains on the back of a share buyback announcement on Monday.
Scottish Mortgage Investment Trust PLC (LSE:SMT) and Rolls-Royce Holdings PLC (LSE:RR.) then followed closely with losses of around 2.4% each respectively.
Scottish Mortgage’s turbulence is said to follow losses by Tesla Inc (NASDAQ:TSLA, ETR:TL0), which makes up its seventh largest holding, overnight.
10.48am: In case you missed it… BoE governor says shallow recession no big deal
Bank of England governor Andrew Bailey played down the importance of figures due later this week which some expect will show the UK dipped into recession late last year.
UK gross domestic product (GDP) figures are due to be released on Thursday, with analysts having warned these look likely to show that the three months to December brought a second consecutive quarter of negative growth.
Though this would mean the UK had slipped into a technical recession, Bailey said he “would not put too much weight on that,” when speaking at Loughborough University on Monday night.
“If we do get two successive negative quarters [...] it will be very shallow,” he continued.
“What I would put more weight on is that the indicators we have seen since have shown some signs of upturn.”
A recession over the back end of last year would mark the first since the pandemic, or since 2009 when not accounting for Covid-19-related lockdown measures.
10.17am: Inflation-beating wage growth could mean higher interest for longer - analysts
December’s inflation-beating increase in wages offers both good and bad news for the UK, Charles Stanley (LSE:CAY) analyst Rob Morgan has said.
Though the 5.8% jump in wages indeed outdid December’s 4.2% inflation rate, offering further relief to cash-strapped households, Morgan noted the trend could delay base rate cuts.
“Today’s wage rises contribute to tomorrow’s spending power, impacting demand, and influencing inflation,” he commented, “the Bank (of England) will be keenly monitoring average earnings growth in particular”.
“Resilient wages have been a driver of sticky consumer price inflation, and they are not falling back into line as fast as the BoE would like.”
A near-10% jump in minimum wage from April could add further upward inflationary pressure, he warned, placing market expectations for a spring rate cut in doubt.
“Price rises should keep trending concertedly lower over the next few months towards the bank’s 2% target, but wage growth above inflation is a major factor that stands in the way of earlier cuts to interest rates,” Morgan added.
January's inflation figures are due on Wednesday.
9.50am: Yodel confirms takeover
Yodel has confirmed reports of a takeover by a newly formed company, which is said to have prevented the parcel delivery firm from falling into administration.
Following reports of a rescue deal by Sky News on Tuesday morning, Yodel said the acquisition by YDLGP Ltd had now taken place.
YDLGP is backed by merchant bank Solano Partners and the leadership team behind rival operator Shift.
This new business will incorporate both Yodel and Shift, creating a single larger parcel delivery service.
“Upon completion, the enlarged group will form a ‘super scale’ logistics platform serving both the parcels market [...] and larger, irregular dimensions and weights freight,” Yodel said in a press release.
Yodel spared from administration as rival takes over
Rumours had circulated in recent days over Yodel’s finances, with owners the Barclay family reportedly having rapidly searched for buyers.
Yodel generated revenue of £561.8 million last year, with over 190 million deliveries being made annually from its 50 UK sites, but has struggled to make a profit in the face of intense competition.
Here's a recap of today's other headlines:
The FTSE 100 opened lower on an albeit quiet day in the city, dominated early on by ONS data. Unemployment in December sat at 3.8%, lower than analysts’ anticipations for 4%, but as a record number reported long-term sickness.
Wage growth was stronger than expected over the month meanwhile, at 5.8% against anticipations of 5.6%, as the hospitality and retail sectors buoyed figures.
Elsewhere, Bitcoin surpassed the US$50,000 mark for the first time in two years, thanks to large inflows from new exchange-traded funds.
Among the few reporting, German travel group Tui unveiled record quarterly revenue on the back of high demand and prices in the three months to December.
9.30am: GSK lifted on upgrade, AstraZeneca regains ground
AstraZeneca and GSK led the FTSE 100’s risers on Tuesday morning, as the former regained following hefty losses and CitiGroup analysts granted the latter an upgrade.
Citi analysts bumped up GSK’s rating to a ‘buy’, reflecting positive outlook for the drug giant's treatment for the blood disease myeloma, belantamab mafodotin.
A higher share price target of 2,100p was also offered, up on 1,700p previously, and marking a prospective 30% upside on Monday’s close.
"Our upgrade is based not only on Blenrep’s underappreciated revenue potential but also the cumulative impact of the multiple incremental positives,” Citi said in a note.
Shares in the drug firm climbed 0.9% as a result, beaten only in the FTSE 100 index by AstraZeneca’s 1.6% gains, which come after it was battered by the market following disappointing results late last week.
8.40am: The morning so far
The FTSE 100 blue-chip index opened 13 points, or 0.17%, lower at 7561 when markets opened on Tuesday.
Unemployment rates were the big story of the morning.
December’s unemployment data came in lower than expected at 3.8% compared to 4% predictions.
That’s 40 basis points lower than November figures potentially feeding into a higher-for-longer rates situation.
On the company news front, TUI AG (LSE:TUI) hailed record quarterly revenues of €4.3 billion (£3.7 billion) for the three months ending 31 December.
TUI shares rallied 7% to 621p as a result.
Aston Martin Lagonda Global Holdings PLC (LSE:AML) shares rose 1.6% after executive chairman Lawrence Stroll confirmed talks with lenders to negotiate to classic carmaker’s troublesome $1.4 billion debt pile.
Speaking of movers, British fabless semiconductor chipmaker scored a 29% gain to $148.97 in the US yesterday, meaning it’s doubled in value since the start of the year.
It’s a stellar performance for the company and a vindication of the group’s decision to list in the US instead of on home territory.
Arm, which makes CPUs for basically every mobile phone on the planet, touted its expertise in artificial intelligence applications in last week’s record quarterly trading update.
Bitcoin is also in the spotlight after soaring above $50,000 for the first time in more than two years.
Newly launched bitcoin-linked exchange-traded products from the likes of BlackRock and Fidelity are evidently causing a positive price shock for the world’s largest cryptocurrency.
8.04am: TUI’s record quarter
German travel group TUI AG (LSE:TUI) is celebrating record quarterly revenues of €4.3 billion (£3.7 billion) for the three months ending 31 December.
Higher demand and higher prices sent sales surging across all segments, while underlying earnings (EBIT) surpassed €6 million for the first time in the company’s history.
“This was an improvement of €159.0m (first quarter 2023: €-153.0m), highlighting the significant progress we have made across the business and underlining the strategic development of the Group,” said TUI
Guidance for the full year is a 10% year-on-year revenue increase, with underlying EBIT increasing by at least 25% year-on-year.
It’s a bittersweet result for the City, given the group intends to delist from the London Stock Exchange in June.
7.52: Employment runs hot but vacancies keep falling - ONS
This is from ONS director of economic statistics Liz McKeown on today’s labour market figures: “It is clear that growth in employment has slowed over the past year. Over the same period the proportion of people neither working nor looking for work has risen, with historically high numbers of people saying they are long-term sick.
“Job vacancies fell again, for the nineteenth consecutive month. However, there are signs this trend may now be slowing.
“The number of days lost to strikes went up in December, with the majority coming from the health sector.
“In cash terms earnings are growing more slowly than in recent months, but in real terms they remain positive, thanks to falling inflation.”
7.48am: Arm adds another 30%
A quick recap of yesterday’s big mover on the US markets.
British fabless semiconductor chipmaker Arm Holdings PLC (NASDAQ:ARM) scored a 29% gain to $148.97, meaning it’s doubled in value since the start of the year.
It’s a stellar performance for the company and a vindication of the group’s decision to list in the US instead of on home territory.
Arm, which makes CPUs for basically every mobile phone on the planet, touted its expertise in artificial intelligence applications in last week’s record quarterly trading update.
The Cambridge-headquartered group now has a market capitalisation of more than $153 billion.
Back to the footsie, futures accounts are calling the lead index five points lower prior to Tuesday’s opening bell.
7.31am: Bitcoin rockets above $50,000
Checking in on the cryptocurrency market before stock trading commences, we’ve seen bitcoin (BTC) rocket above $50,000 for the first in over two years.
This is the result of large-scale inflows into newly launched spot-bitcoin exchange-traded funds from the likes of BlackRock and Fidelity.
The BTC/USD pair peaked at $50,400 in the early hours, but has since crept back to $50,100.
7.20am: UK wage growth increases 5.8%
UK weekly wages saw a modest year-on-year increase of 5.8% to £669, marking the slowest growth in 17 months yet edging past predictions by a narrow margin.
The rise, albeit minimal, surpassed the anticipated 5.6% hike.
Both the public and private sectors witnessed a deceleration in wage growth, dipping to 5.8% and 5.9% respectively from a previous 6.7%.
Excluding bonuses, regular pay climbed to £626, experiencing its weakest expansion in 14 months at 6.2%, still slightly ahead of the 6% forecasted.
The hospitality and retail sector led with the highest annual growth rate at 7.2%, closely followed by manufacturing and finance at 6.9% and 6.7% respectively.
When adjusted for inflation, real wage growth for total pay including bonuses cooled off to 1.4%, while regular pay saw a more significant real term increase to 1.8%.
7.06am: Unemployment rate falls in December
Good morning from Proactive.
The latest FTSE 100 futures figures show the lead index opening flat today after closing barely changed at 7,574 points on Monday.
On the company news front, TUI AG (LSE:TUI) posts its results this morning in one of its last trading updates before the German travel group departs the London Stock Exchange in June.
Results are expected to show narrowing losses in the first quarter as hopefully consumers maintain their appetite for travel and holidays as the darkest months of the cost-of-living crisis pass.
December’s unemployment data has just come out, and it is lower than expected at 3.8% compared to 4% predictions.
That’s 40 basis points lower than November figures, potentially feeding into a higher-for-longer rates situation.