- FTSE 100 up 119 points to 7,717.
- NatWest soars on new boss, best year since 2008.
- Retail sales impress in January.
4.45pm: FTSE 100 scores big win
At the close, the FTSE 100 had reached 7,712 points for a big 1.5% gain on the day.
4.00pm: FTSE 100 rally continues
The FTSE 100 continued its rally into the late stages of the trading day, climbing 119 points to reach 7,717.
This comes after ONS data revealed this morning that retail sales rebounded more-than-expected in January, prompting speculation that the UK economy is healthier than thought after Thursday’s confirmation of recession late last year.
The index was also buoyed by strong gains by the likes of lender NatWest, which reported strong profit and confirmed the appointment of Paul Thwaite as permanent chief executive.
Lloyds climbed on the back of the results, with brokers also optimistic that it would not suffer at the hands of an FCA probe into the motor finance market as much as peers.
Antofagasta was also among the FTSE 100’s big risers, alongside Weir Group, Rio Tinto and Centrica - which received new backing by Citi analysts on Friday.
Over in the US, things were not as positive, as the Nasdaq Composite, S&P 500 and Dow Jones all slipped in early trading following hotter-than-expected producer price inflation in January.
Analysts tipped the worse-than-feared uptick, which follows similar news on consumer prices earlier in the week, could mean the Fed opts to hold out for longer before beginning base rate cuts.
3.30pm: Mortgages hiked as market prices in later rate cuts
Banks have begun hiking mortgage rates en masse once again as the market prices in a longer than initially expected period of inflated base interest.
NatWest, TSB Bank and Coventry Building Society were among lenders to hike mortgage rates on Friday, after Santander and Nationwide put up prices midweek.
According to comparison site Moneyfacts, such hikes led average two-year mortgage rates to climb from 5.59% on Tuesday to 5.69% by the week’s end.
This is after wage data earlier in the week led economists to anticipate that base rate cuts from the Bank of England may take longer than originally thought.
3.17am: US Markets open lower on worse-than-feared producer price rises
The Nasdaq led US markets lower in early trading on Friday, after January’s producer price index data came in higher than expected.
Producer prices rose by 0.9% over the year to January, above market expectations for a 0.6% jump.
This follows hotter-than-expected consumer price index data earlier in the week, with the worse-than-feared figures dampening hopes that the Federal Reserve could cut base interest anytime soon.
The Nasdaq Composite slipped 0.6% to 15,817 on the news, with the S&P 500 and Dow Jones each falling by around 0.3% to 5,013 and 38,647 respectively.
City Index analysts had said prior to the producer price data being released that “an unexpected increase [would] likely strengthen the argument for the Fed to delay rate cuts, potentially leading to higher yields and a stronger dollar”.
2.37pm: Thames Water parent company’s chairman steps down
Adrian Montague has stepped down as chairman of Kemble Water Holdings, the parent company to London’s embattled supplier, Thames Water.
Having been appointed in July 2023, Montague will remain as Thames Water’s chairman but resign from an array of positions linked to the firm, including at parent Kemble.
“This is a personal decision,” the company said.
“Sir Adrian believes the time is right solely to focus on fully supporting the board and executive team of Thames Water Utilities Ltd on delivering the refocused turnaround plan in order to better meet our customers’ needs.”
His resignation comes as questions remain over the supplier’s finances, with growing interest on its £18 billion debt pile having pushed Thames Water to the brink of collapse last summer.
Lenders had been told in September that there was “no certainty” that billions in rescue funding would be received, meanwhile.
This is due to such payments relying on the firm hitting regulatory targets - a sore topic for water firms which have faced scrutiny over the past year given the amount of sewage being dumped into Britain’s waterways.
2.07pm: Nike plans thousands of layoffs
Nike is set to cut well over a thousand jobs in a restructuring effort after demand for its shoes has come under pressure.
Some 1,600 jobs will be cut, equating to around 2% of the sports retailer's global workforce, Nike revealed late on Thursday.
Overall pressure on consumers through higher mortgage and rental prices is said to have hit demand for high-priced goods, in turn dampening wholesale orders for sportswear from retail outlets.
The news of cuts comes after Nike laid out a three-year, US$2 billion savings plan in December, which included supply tightening and management reductions.
Such cuts are anticipated to cost between US$400 million and US$450 million in staff severance, with the company having employed 83,700 people as of May.
1.36pm: Here’s a recap of the risers and fallers on the market today
NatWest shares added 5.7% to reach 226.40p after the lender reported its highest profit since 2008 of £6.2 billion.
Also fuelling NatWest’s gains was its confirmation that interim chief executive Paul Thwaite would continue in the role on a permanent basis - a move analysts said would provide certainty as the lender presses ahead with plans to offer up government-held shares later this year.
Centrica’s 3.6% gains come after the British Gas owner offered up full-year results on Thursday meanwhile, which showed an impact of falling wholesale energy prices but also a massive uptick in its retail wing’s profits on the back of consumer bill increases.
Analysts said Lloyds Bank is unlikely to follow Close Brothers and forgo returning value to shareholders in anticipation of a Financial Conduct Authority probe into the motor finance market.
Lloyds shares added 2.3%
Audioboom Group PLC (AIM:BOOM) shares tuned in 10% higher on Friday morning after the podcast distributor hailed record audience reach in January.
Over 38.6 million unique listeners worldwide downloaded podcasts on Audioboom’s creator network in January, compared to a monthly average of 34.4 million last quarter.
FTSE 100-listed commercial landlord Segro PLC added 1% after reporting narrowing losses and increasing rental income for the year to December.
1.28pm: Rishi Sunak assures plan on economy “is working”
Prime minister Rishi Sunak has shared his belief that the government’s economic plan is working after the UK was confirmed on Thursday to have slipped into recession.
Discussing tax cuts announced in chancellor Jeremy Hunt’s autumn statement, Sunak said:
“Because of our plan to halve inflation, which has been successful over the past year, and because economic conditions have improved, we have already been able to start cutting taxes for people.
“Now that will benefit everyone in work, it demonstrates that our plan is working.
“And if we stick with that plan, I can give everyone the piece of mind that there is a better future for them and their families ahead, and we can all have a renewed sense of pride in the country.”
His comments come after ONS data on Thursday confirmed that the UK fell into a technical recession over the back end of last year.
Analysts argued GDP per capita figures, also released yesterday, were far more important though, given the ramifications of a 0.7% decline over the year for living standards across the UK.
1.13pm: FTSE adds 100 points to hit month-high
The FTSE 100 rallied into Friday afternoon, adding 100 points to reach a monthly high of 7,697.
Leading risers included the likes of NatWest, banking peers Lloyds and Standard Chartered, as well as British Gas owner Centrica.
NatWest shares added 5.7% to reach 226.40p after the lender reported its highest profit since 2008 of £6.2 billion.
Also fuelling NatWest’s gains was its confirmation that interim chief executive Paul Thwaite would continue in the role on a permanent basis - a move analysts said would provide certainty as the lender presses ahead with plans to offer up government-held shares later this year.
Lloyds and Standard Chartered seemed to benefit on the back of NatWest’s positive update, with shares in the duo rising 2.9% and 2.6% respectively.
Both are set to report themselves next week, with Jefferies analysts having shared an optimistic view that Lloyds would not be as worried by any potential financial hit from an FCA probe into the motor finance market than peer Close Brothers.
This was after Close Bros cut its dividend on Thursday in preparation for any prospective punishment.
Centrica’s 3.6% gains come after the British Gas owner offered up full-year results on Thursday meanwhile, which showed an impact of falling wholesale energy prices but also a massive uptick in its retail wing’s profits on the back of consumer bill increases.
Citi analysts then reiterated backing for Centrica on Friday, noting: “We see this as a robust set of numbers and continue to like Centrica.
“Balance sheet strength raises the prospect of further shareholder returns, which we expect to come at some point this year.”
12.17pm: Dow Jones called lower, S&P 500 and Nasdaq seen up
The Dow Jones is expected to slip on Friday’s opening bell, while the Nasdaq and S&P 500 look to be readying for bright starts, as the markets await producer prices data.
Scope Markets analysts noted that there was “potential for further dollar strength should producer prices start to pick up once again” with the data due later on Friday morning.
“Much like wages, producer prices provide a key gauge of underlying inflation pressures being felt by US businesses, with traders looking out for any signs of increased costs as Red Sea disruptions impact the cost of shipping globally,” Scope added.
“Any additional signs of resurgent inflation pressures could lead to a renewed push higher for the US dollar.”
Futures trading had the Dow Jones down 0.1% at 38,820, with the S&P 500 and Nasdaq being called 0.2% and 0.6% higher at 5,056 and 18,016 respectively.
Consensus is for the producer price index to come in 0.6% higher year on year, with housing starts and building permits data is also due, alongside speeches from the Federal Reserve’s Mary C. Daly and Michael S. Barr.
11.39am: Gas prices slip as Goldman warns of oversupply
Gas prices fell on Friday morning following a warning from Goldman Sachs that oversupply could plague the market next year.
Liquefied natural gas prices were tipped to fall next year, particularly between 2026 and 2028, after a sharp rise in supply on the back of the energy crisis.
Such an uptick in supply will lead to prices plummeting, in the bank’s view, as a “gradual softening” in the difference between demand and stocks takes place in Europe.
Natural gas slipped 1.4% from 61.35p per British thermal unit to 60.50p on Friday following the news.
11.19am: Energy prices expected to dip to lowest level in two years
Energy prices could be cut to their lowest level in two years come April thanks to receding wholesale costs, according to Cornwall Insight analysts.
Ofgem’s price cap, which determines household bills, will likely sit at £1,635 per annum from April, 15% lower than the current level of £1,928.
“The UK has, for now, weathered the storm of Red Sea tensions, securing a steady supply of liquified natural gas through the Atlantic,” Cornwall Insight said.
“Good availability of cargoes in Europe and Asia, in part due to mild weather, has contributed to the drop in prices.”
Cornwall Insight’s latest prediction is lower than previous estimates, with electricity set to cost 23.27p and gas 5.96p per kilowatt hour under the forecast.
Daily standing charges will sit at 58p and 30p per respective fuel in Cornwall Insight’s view, with this including provisions for energy suppliers to recoup debt - though such a move is yet to be confirmed by Ofgem.
Historically high energy bills had been a contributor to the UK’s 4% rate of inflation during January, with analysts seeing lower bills as likely feeding through to slowing price rises later this year.
11.06am: Lloyds won’t curtail returns like Close Brothers - analysts
Lloyds Bank is unlikely to follow Close Brothers and forgo returning value to shareholders in anticipation of a Financial Conduct Authority probe into the motor finance market.
Close Bros scraps dividend due to FCA motor finance probe
That’s the view of Jefferies analysts, who stuck to a forecast of a £2.5 billion Lloyds share buyback for 2023.
“In our view, other than the fact that Close Brothers and Lloyds both operate in the car finance market, the two firms cannot be compared,” analysts said.
Lloyds has experience in operational complexities related to redress schemes, Jefferies said, while the scale of any such refunds would have a very different impact of each firm.
UBS analysts also optimistic, reiterating a ‘buy’ rating, but said they saw Lloyds provisioning £1 billion annually over the coming two years in preparation for any punishments.
Shares climbed 2.3% to 42.51p.
10.39am: Retail volatility justifies GDP decline - analyst
Analysts have noted that December’s sharp decline in retail sales, followed by an impressive resurgence in January, could help make sense of the UK’s slip into recession late last year.
Sales climbed 3.4% month on month in January, as per ONS data, following a 3.3% fall in December and smashing analysts’ expectations for 1.5% growth.
According to Scope Markets analysts, the strong sales figures bolster “claims that the first quarter will bring a welcome rebound in economic growth”.
“The surge in both the value and volume of transactions served to highlight a relatively strong picture for demand,” analysts said.
Thursday had bought news that UK gross domestic product (GDP) contracted by 0.3% over the final quarter of the year, tipping the UK into technical recession after negative growth was also recorded in the preceding three quarters.
Given the decline in December, the retail sales data “provides yet another consideration for traders that continue to process yesterday's slump into a technical recession,” Scope said.
Shares in retailers JD Sports Fashion PLC (LSE:JD.) and Frasers Group PLC (LSE:FRAS) climbed 1.7% and 1.1% respectively on the back of the figures.
On the flip side, Scope added hopes that the Bank of England could start base rate cuts sooner rather than later may well be in question now on the uptick in retail data.
“This will have taken some of the pressure off the Bank of England after a week that saw lower-than-expected inflation and growth,” analysts said.
9.59am: NatWest rallies, boss appointment seen as vital for share offering
NatWest led the FTSE 100’s risers after updating the market on its full-year trading on Friday morning, but analysts noted initial hesitation following the results.
Though the lender posted its strongest pre-tax profit since 2008 of £6.2 billion, AJ Bell analyst Russ Mould viewed the figure with caution.
“Clearly [it's] a key milestone and measure of progress after years of false dawns and stuttering recovery efforts,” he said, “but it took 16 years to get there after the financial crisis”.
Coupled with watered-down medium-term returns targets, he added the market took time to “warm up” to the numbers as shares initially dropped before rebounding in early trading.
This was likely fuelled by news interim chief executive Paul Thwaite will continue in the role on a permanent basis, offering continuity that “may reassure the market,” in Mould’s view.
Predecessor Alison Rose left “not because the strategy wasn’t working, but for extraneous reasons,” he pointed out, with stability at the helm also likely boding well for the bank’s proposed share offering of government-held stock later this year.
Indeed, “the agency which manages the state holding in NatWest had made it very clear that stable leadership was an important prerequisite to getting any big placing in the stock away,” Mould said.
Shares climbed 4.1% to 223.10p, with Standard Chartered PLC (LSE:STAN) and Barclays PLC (LSE:BARC) also gaining ground.
9.25am: Segro moves higher, sees rental growth and asset values bottoming out
FTSE 100-listed commercial landlord Segro PLC marked gains on Friday morning after reporting narrowing losses and increasing rental income for the year to December.
Rental income climbed almost 13% to £587 million, helping losses slim from £2 billion to £263 million.
On an adjusted basis, pre-tax profit climbed 6% to £409 million, with per-share earnings growing 5.5% to 32.7p.
“Segro investors have endured a bumpy ride over the last couple of years,” eToro analyst Mark Crouch commented.
“This morning’s strong earnings report will give shareholders a lot to be positive about.”
Segro signalled asset valuations seemed to be bottoming out, while future rent growth looked stronger, with the firm continuing a decade-long run of dividend increases, this time by 5.7% to 27.8p.
Shares gained 1% to reach 842p.
8.50am: The morning so far
NatWest Group PLC (LSE:NWG)’s stellar performance in 2023 has lifted banking stocks across the board.
The government-backed lender posted its best yearly profit since the 2008 global financial crisis of £6.2 billion in 2023.
NatWest gave back a total of £3.6 billion to shareholders in the period and a return on tangible equity (RoTE) of 17.8%, above the group’s guided range.
Meanwhile, Paul Thwaites’ permanent appointment as chief executive has given NatWest an air of stability.
NatWest shares popped 6% higher, with Barclays and Lloyds adding over one percent each.
The FTSE 100 is in good spirits overall, adding around 54 points to 7,651 at the time of writing, thanks in part to surprisingly bullish retail sales figures for January.
Data showed retail sales in the UK increased 3.4% month on month in January, smashing the 1.5% forecast.
Household goods stores, sports shops and department store retailers were amongst those reporting robust trading due to January sales promotions. A fall in prices at the pump also meant a solid month for fuel sales.
On the company front, betting giant Flutter Entertainment PLC (LSE:FLTR) pulled ahead in opening trades, with the Paddy Power owner adding 1.45% to 17,100p.
It follows the overnight results from US sports betting rival DraftKings, which posted narrower full-year losses although the fourth quarter fell short of analysts’ expectations.
Things weren’t as rosy for Virgin Media O2, which just reported a £3.1 billion goodwill impairment in the 2023 financial year, causing reported losses to surge to £3.6 billion for the period.
8.37am: Virgin Media O2 losses exceed £3 billion
Virgin Media O2 was smacked with a £3.1 billion goodwill impairment in the 2023 financial year, causing reported losses to surge to £3.3 billion for the period.
Soaring debt costs for its £8 billion-plus were linked to overnight rate-linked interest repayments.
The company said: “We recorded a non-cash goodwill impairment of £3.1 billion primarily related to an increase in the weighted average cost of capital and the impacts of the broader macroeconomic conditions in the UK on estimated future cash flows.”
8.27am: Thwaites’ appointment provides NatWest with clarity
A quick comment from Stuart Lamont, investment manager at RBC Brewin Dolphin, on Paul Thwaites’ permanent appointment as NatWest chief: “The appointment of a new CEO provides NatWest with greater clarity over its future direction, after months of flux.
“Still, the bank is in relatively good shape – the process of simplifying its business and delivering cost efficiencies is yielding results, with a solid net interest margin and a return on tangible equity that is comfortably ahead of previous guidance.
“NatWest’s balance sheet is also strong and, while there are likely to be challenges ahead, it is well placed to manage any costs associated with bad loans.
“The government’s intention to sell down its stake will likely hang over the share price for now, but attractive shareholder distributions should provide some consolation until that matter is resolved.”
In the short term, however, NatWest shares popped over 5% higher in opening Friday exchanges.
8.20am: NatWest shares lead FTSE 100 risers
NatWest Group PLC (LSE:NWG) surged to the top of the FTSE 100 risers list this morning after the bank posted better-than-expected 2023 figures with a 20% increase in pretax profits to £6.2 billion, an 11.5p a share final dividend and a £300 million stock repurchase.
It marks the best yearly performance since the 2008 global financial crisis.
Richard Hunter, head of markets at interactive investor, commented: “The UK banks’ reporting season is off to a flying start, with NatWest displaying a pleasing mix of lending and income growth, a tight focus on costs and a reward to patient shareholders with a further increase to the dividend.
“These are a robust set of results which underpin prudence, growth and financial largesse to shareholders.”
The bank is also stabilising following the departure of former chief executive Dame Alison Rose following the Nigel Farage de-banking scandal.
Insider Paul Thwaite has been appointed permanent chief of the banking group.
NatWest shares were seen over 4.5% higher at 215.60.
8.10am: Flutter on the front foot
Betting giant Flutter Entertainment PLC (LSE:FLTR) pulled ahead in opening trades, with the Paddy Power owner adding 1.45% to 17,100p.
It follows the overnight results from US sports betting rival DraftKings, which posted narrower full-year losses although the fourth quarter fell short of analysts’ expectations.
Per share losses for 2023 came in at US$1.73, compared to US$3.16 in 2022, Draftkings reported on Thursday.
Chief executive Jason Robins said 2024 should bring Draftkings’ first adjusted profit, with the firm hiking guidance for the figure from around US$400 million to US$460 million.
In London, the FTSE 100 opened 60 points higher at 7,657.95, benefitting from bumper NatWest results and strong retail sales figures.
7.56am: Coinbase surges ahead
Across the pond, Nasdaq-listed cryptocurrency exchange Coinbase Global Inc (NASDAQ:COIN) rallied over 14% on post-market trades after exceeding revenue expectations and posting a profit in the fourth quarter.
Transaction revenue doubled from the previous quarter, thanks to an exceptional performance from the spot bitcoin market, where Coinbase sources most of its revenues.
That helped Coinbase post a profit of $1.04 per share, wiping the floor with analyst estimates of around $0.02 per share.
“We achieved our financial goal, launched new innovative products, strengthened our competitive position, and doubled down on our efforts to create momentum for a workable regulatory framework for crypto in the US,” said the group.
Shares were swapping for $189.29 at last count.
Back in London, bumper retail sales in January have lit up the blue chips, with the FTSE 100 poised to open 42 points higher at 7,641.
7.47am: NatWest books highest post-GFC profit
NatWest Group PLC (LSE:NWG)’s newly appointed permanent chief executive Paul Thwaite is taking over a well-oiled machine.
The bank just reported its highest annual pre-tax profit since the 2008 global financial crisis of £6.2 billion in 2023.
“As we look ahead, I am ambitious and confident for the future of NatWest Group,” said Thwaite. “We should not underestimate the strength of our foundations or the opportunity to build deeper relationships with our 19 million customers.
Net loans to customers excluding central items increased by £8.9 billion, or 2.6%, to £355.6 billion during 2023, reflecting a £7.6 billion increase in retail banking and £2 billion in commercial and institutional.
NatWest gave back a total of £3.6 billion to shareholders in the period and a return on tangible equity (RoTE) of 17.8%, above the group’s guided range.
The board proposed a final dividend of 11.5p and suggested another £300 million of buybacks is on the cards for 2024.
7.20: Retail sales see largest monthly rise since April 2021
This is what Heather Bovill, deputy director for surveys and economic indicators at the ONS, said of today’s retail sales beat: “After a very weak December, retail sales rebounded in January with the largest monthly rise since April 2021.
“This means that overall sales have now recovered to pre-December levels, although if we look at the broader picture, they are still below where they were pre-pandemic.
“Sales increased across nearly all retail sectors, and it was a particularly strong month for supermarkets.
Household goods stores, sports shops and department store retailers were amongst those reporting robust trading due to January sales promotions. A fall in prices at the pump also meant a solid month for fuel sales.
“Clothing shops were the only area not to see growth this month.”
The good news propelled FTSE 100 futures higher, with the lead index expected to open 46 points higher at 7,645.
7.12am: Blue chips on the front foot
Blue chips are expected to cap the week off on a positive note, with FTSE 100 futures pointing to a 37-point gain to 7,636 when markets open at 8am.
The lead index closed nearly 30 points higher yesterday, suggesting that the market is not spooked by the technical recession implied in yesterday’s gross domestic product (GDP) print for January.
In better macroeconomic news, data released this morning showed retail sales in the UK increased 3.4% month on month in January, smashing the 1.5% forecast.
Year on year, sales increased 0.7% against -1.4% expectations.
NatWest Group PLC (LSE:NWG) and Segro plc are in focus on the company news front, with final results due for both.