- FTSE 100 down around 11 points
- Barclays and IHG top leaderboard
- Bank of England says UK in "very small recession" that is showing "signs of an upturn"
15.59pm: FTSE 100 closes lower despite Barclays rally and BoE optimism
The FTSE 100 is poised to close around 11 points lower after rallying Barclays shares were unable to offset the falls of mining companies which have been weakened by a fall in copper prices.
Barclays shares are set to close around 9% after it announced a £2 billion cost-saving scheme over the next three years.
Around 17,000 jobs are set to be axed, worker bonuses are to be limited and more branches will close.
However, for investors, the bank has promised to dish out around £10 billion in capital returns.
Bank of England governor Andrew Bailey spoke with MPs on the Treasury committee, where he revealed the UK is only suffering a "very small recession" that is already showing "signs of an upturn".
Bailey added that the central bank is looking for signs of a slowdown in service prices, wage increases and the labour market before bringing through any interest rate cuts.
Inflation will fall to 2% in Spring, but Bailey warned it won't stay there for long due to the volatility of energy prices.
15.44pm: Canadian interest rate cut looms as inflation slows
Inflation in Canada fell more than expected in January, having experienced a slight uptick towards the end of 2023, the national statistics agency revealed.
Last month, inflation slowed to 2.9%, down from 3.4% in December and a significant retraction from peaks of 8.1% in June 2022.
“Overall, price growth is clearly moving in the right direction,” said Desjardins analyst Tiago Figueiredo.
He believes the Bank of Canada will begin lowering interest rates in June because of this and other indicators highlighting that the economy is slowing.
Over the last few years, the central bank hike interest rates form 0.25% to 5%.
15.30pm: The Body Shop announces store closures and job cuts
The Body Shop is closing half of its stores in the UK after the struggling retailer fell into administration last week.
Seven sites will close today including sites in Oxford Street, Canary Wharf, Bristol and Ashford.
Around 40% of workers at its London-based head office are also expected to be axed.
Under half of the remaining 198 outlets are expected to also close, putting more than 2,000 jobs at risk,
Administrators said the decision comes as it is "no longer viable" to keep its estate after "years of unprofitability".
The FTSE 100 slipped 16 points lower at around 7,710.
14.54pm: German office values plummet as country teeters on recession
German offices saw the biggest fall in value across the eurozone, according to economists, with increases in refinancing costs and the switch to online cited as key factors.
Values of office spaces in the European country dropped 40% compared with their early 2022 peak.
It is around three times greater than the fall in values suffered by German offices during the global financial crisis.
Bundesbank, the country's central bank, warned that Germany was on the edge of a recession as it continues to battle against an "ongoing period of weakness".
James McMorrow, a Capital Economics property analyst, said: “The German office market has certainly been through a torrid two years since interest rates began rising.
“Investors have soured on German offices as home-working has pushed up vacancy and dragged down rent growth.”
14:35pm: Home Depot shares slide despite 'positive' update
American DIY retailer Home Depot has opened trading around 2% lower after it saw a decline in discretionary consumer spending in 2023, leading to a drop in full-year sales and earnings.
For the full year, comparable sales fell 3.2% to US$152.7 billion, with diluted earnings per share decreasing 9.5% to US$15.11.
For the fourth quarter, comparable sales fell 3.5% year on year to US$34.8 billion.
Mark Crouch, analyst at eToro, said: “2023 was a testing year that found Home Depot still reorientating to the post-Covid landscape, what CEO Ted Decker called a ‘year of moderation’.
“Despite [the share price] reaction, there are positives in today’s update. When Home Depot previously reported, it warned of a potentially rocky road ahead, giving guidance of a 3-4% sales decline for its full-year outlook. While there may still be bumps in its path, conditions have been settling down, with inflation moderating and supply chains normalising.
"The guidance in the latest update is consequently less bearish, forecasting a comparable sales decline of 1% for fiscal 2024, while the company also announced a dividend hike of 7.7%.”
Over in the UK, any possible positives from Home Dept could help improve investor sentiment surrounding Kingfisher, the owner of Screwfix and B&Q.
Kingfisher is the second most shorted London stock, with a net short position of close to 7%.
Shares in the retailer are down around 0.5% on Tuesday.
14.17pm: Wall Street loses ground as rate cut grows less likely
Earnings season for US retailers started on a bright note with Walmart poised to open around 5% higher.
However, Wall Street's main indexes are set to open lower, largely caused by dwindling hopes that the US Fed will enact an early rate cut.
Last week's higher-than-expected inflation figures, not only reduced expectations of a rate cut but also halted a strong rally across Wall Street.
Goldman Sachs has joined UBS in raising its year-end targets for the S&P 500, with the bank expecting a 4% jump by December.
13.22pm: US markets to open lower as UBS ups S&P forecasts
US markets are expected to open lower with the Dow Jones around 140 points lower at under 38,500, while the S&P 500 is set to slip 24 points to around 5,000.
Walmart shares are looking to open around 3% higher after it announced the purchase of smart TV maker Vizio for £1.8 billion.
One key benefit of the deal is it will provide Walmart with a new place in its stores to advertise and market products to customers.
In Walmart's fourth quarter, revenues lifted around 6% to US$173 billion, while underlying profits slipped 12% to US$5.5 billion due to higher-equity investment gains.
Despite Wall Street returning from the extended holiday slightly adrift, investors will have welcomed analysts at UBS lifting their S&P 500 full-year targets.
The Swiss broker now expects the index to close out the year at 5,400, increasing from its previous forecast of 5,150.
Healthcare remains the broker's preferred sector, while it believes the financial sector could benefit from interest rate hikes and increase acquisitons.
13:00pm: UK cracks down on Russian hackers behind Royal Mail attack
Lockbit, the Russian-link hacking group behind the attack on Royal Mail last year, has been targeted by the UK's National Crime Agency.
On Monday, the crime agency, in collaboration with the FBI and other international law enforcement, said it took control of Lockbit's services, compromising their entire criminal enterprise.
The hacking group became known as "the world's most harmful cyber crime group" after it used its ransomware to demand billions of pounds, dollars and euros from its victims.
Over its four years of existence, Lockbit targeted the likes of the Royal Mail, Boeing, fire alarm production company Rex Group and trade organisation Food and Drink Federation.
National Crime Agency director general, Graeme Biggar said: “This NCA-led investigation is a ground-breaking disruption of the world’s most harmful cyber crime group. It shows that no criminal operation, wherever they are, and no matter how advanced, is beyond the reach of the Agency and our partners."
Message displayed on Lockbit's site Source: National Crime Agency
12.40pm: Antofagasta rises on 2024 expansion plans and strong cash flows
Antofagasta, the Chilean-focused mining company, clambered into the top FTSE 100 risers after its shares rose around 4%, following the release of its full-year results.
Operating cash flows jumped year-on-year from US$2.7 billion to US$3.03 billion, while underlying earnings lifted 5% annually to reach US$3.09 billion.
Looking forward to 2024, the group has several expansions planned including doubling the size of its Los Pelambres desalination plant and the construction of certain planned enclosures at the El Mauro tailings storage facility.
"Copper prices in 2023 showed reduced volatility, with prices displaying a high degree of stability in the second half of the year. Over the medium to long-term, we continue to believe in copper's fundamental role in the energy transition, helping to decarbonise the global economy," boss Ivan Arriagada said.
"The outlook for the Company and its shareholders is positive - we have a solid pipeline of copper growth projects, a strong balance sheet, a focus on costs that will underpin the delivery of those projects and long-standing relationships with local communities."
Analysts at SP Angel welcomed the results, saying that "improved cashflows should aid the expansion programme where 2024 capital expenditure is expected to reach US$2.7bn."
The FTSE 100 continues to creep higher, up around 20 points at 7,748.
12.13pm: FTSE 100 drives higher at lunch
Britain's blue-chip index has gone into lunch driving around 17 points higher after investors were left impressed by Barclays' new three-year plan.
Shares in the bank rose 5.5% after it revealed it would be undergoing a corporate overhaul, cutting £2 billion in costs and launching a £10 billion capital return.
Some 17,000 jobs are believed to be at risk.
Other risers include IHG, the Holiday Inn owner, which rose around 4% after it said expects margins to improve in 2024 through a mix of cost-cutting and revenue growth.
New boss Elie Maalouf says he aims to continue boosting the group's revenues and system size.
This is expected to lead to greater cash generation, which in turn will see increases in the amount returned to shareholders through dividends and buybacks.
Slipping the other way was a whole host of mining companies including Glencore, Anglo American and Rio Tinto.
The base metal miners were pushed lower by weaker copper prices trading lower against a steady dollar.
Other fallers included Rightmove and Scottish Mortgage.
11.51am: Santander increases rates on fixed mortgages
Santander will increase all of its residential and buy-to-let fixed-rate mortgages for new customers starting tomorrow.
Rates are expected to increase by as much as 0.34%, while selected fixed rates in its product transfer range will also rise.
Lewis Shaw, a mortgage expert, believes other lenders will follow Santander and up rates as a response to "volatile swap rates".
He implored house buyers of that remortgaging to sort out the process as quick as possible or risk being caught out by the new rates.
"This way, you'll hopefully not miss out on lower rates because once they're gone, they're gone," he added.
The FTSE 100 has trailed higher to around 7,737, up close to 9 points.
11.26am: Delayed National Express results drives FTSE 250 lower
FTSE 250 has slipped around 50 points to 19,164, with an 8% fall from National Express owner Mobico leading the index's fallers.
The coach company was forced to delay its full-year results until March as it looks to undergo a review into its German rail business before Deloitte completes the audit.
Domino's Pizza Group plc, the UK-based master franchise, is trying to help lift the index higher with its 5.5% gains.
It came after US broker Jefferies upgraded the stock from 'hold' to 'buy', having been impressed by the company's new management, easing cost inflation and improving growth prospects.
Other FTSE 250 movers include Close Brothers (+6%), Currys (+2.5%), Ferrexpo (-4%) and Kainos (-3%).
Meanwhile, outside of the FTSE 350, Superdry rallied 15% higher after it was revealed US investor and Oak Furnitureland owner Davidson Kempner is in talks with its founder to take the company private.
The FTSE 100 is up 3 points at 7,731.
11.07am: UK in 'small recession' as it shows "signs of upturn", says Bank of England's Bailey
Bank of England governor Andrew Bailey raised hopes after telling MPs that the UK is suffering a "very small reccession" that is already showing "signs of an upturn".
Speaking to the Treasury committee, Bailey said: "We’ve had this period of rapid disinflation, we’ve had restrictive monetary policy but in all the measures we use the economy appears to be at full employment.
“That is a very good story. We don’t want unemployment rising rapidly. It has happened in the past when we’ve taken these sorts of actions.
“So I would just say against a lot of talk of what we think is going to be a very small recession, we think the economy is already actually showing distinct signs of an upturn."
Bailey added that the central bank is looking for signs of improvement in services prices, wage increases and the labour market before bringing through any interest rate cuts.
The FTSE 100 is up around 3.5 points at 7,731.
10.56am: Tesco changes price displays following warning from Which?
Tesco (+1%) is changing how it displays its Clubcard deals after it was warned by Which? its current method could be illegal.
In the coming weeks, unit pricing will be rolled out across all its Clubcard price labels, allowing customers to compare different-sized items to get the best deal.
Tesco CEO Jason Tarry said: "This is something that we have been planning to do for some time, and I am really pleased that we are ready to make the change.
"Over the coming weeks, these changes will appear in all our stores, as our colleagues update millions of price labels on the shelf edge. We will also be adding these unit prices to our Clubcard Prices deals online."
The FTSE 100 continues to keep relatively flat on Tuesday morning, up 3 points at 7,731.
10.43am: Bank of England boss quizzed by MPs over interest rates
Bank of England's governor Andrew Bailey says inflation will fall to 2% in Spring, but warned it won't stay there for long due to the volatility of energy prices.
"We think the economy is already showing distinct signs of an upturn," he said, adding that the UK is now at "fully employment", which is a "very good story".
Bailey along with deputy governor Ben Broadbent and external committee members Swati Dhingra and Megan Greene are being questioned by MPs over interest rate cuts and inflation.
The Treasury committee said: "Figures released last week show the rate of inflation (CPI) remained steady at 4% in January – despite many economists forecasting an increase. This has led to heightened speculation that the Bank of England may consider cutting interest rates from the summer."
MPs are being quizzed the economists on the future of inflation, whether risks to tightening monetary policies have changed since November and what the effects of wage growth will be.
The FTSE 100 is up around 5 points at 7,732.
10.19am: FTSE 100 and 250 down as US markets prep for Walmart earnings
FTSE 100 is down around 4.8 points at over 7,724 after falls from mining companies Airtel, Rio Tinto, Anglo American and Glencore offset leading risers Barclays and IHG.
In mid-caps, the FTSE 250 is down around 36 points at around 19,180.
Falls are being driven by an 8.5% slip from National Express's owner Mobico and a 2.7% drop in Ferrexpo.
Top risers in the FTSE 250 include Close Brothers (+8.2%) and Domino's Pizza Group plc (6.69%)
Meanwhile, in North America, Canadian inflation figures will lead a quiet day for macro news, with updates not expected to impact the volatility of global markets.
However, as the US markets were closed for an extended weekend, analysts are expecting the possibility of larger movements.
Broker XTB said: "Before the session, we will learn about the quarterly results of Walmart and Home Depot. Walmart, due to its scale, can be a good indicator of the condition of the consumer in the USA."
9.53am: UK interest rate cuts to come in June not May, says Goldman
Bank of England is expected to cut interest rates in June instead of May, according to economists at Goldman Sachs.
At the end of December, the US bank advanced its estimates forward from June to May, having predicted that 25 basis point cuts would continue until it reaches 3% in May 2025.
Simon French, chief economist at Panmure Gordon, said: "Decent argument for June if the April uprating round doesn’t trigger second order effects - and we will have decent visibility by mid June. But would be odd to inflect policy at non-presser, non-MPR month. I still favour August."
It follows comments from one of the BoE's biggest former hawks Andy Haldane calling for rate cuts soon or risk the UK falling deeper into recession.
Haldane said: “It’s one thing to miss inflation on the way up, it’s another to then have crushed the economy on the way down. That double blow to credibility is one I’d be looking to avoid.”
9.35am: UK regulator extends probe into baby formula market
Britain’s Competition and Markets Authority (CMA) has opened a new phase of its investigation into the market for baby formula in the UK.
It follows research which found the price of the products had increased by 25% in the last two years.
Nestle S.A. (OTC:NSRGF, VTX:NESN) (+0.31%) and Danone (OTCQX:DANOY) (+0.23%) are the two largest suppliers of baby formula and account for 85% of the UK market, according to the CMA.
The CMA added findings would be published in September, potentially including recommendations on government action to address marketing and information available to parents...read more.
9.23am: FTSE 100 down as Barclays rallies on job cuts - Market Report
The FTSE 100 is trading around 5.5 points lower at 7,721.87, with both Barclays (+4.48%) and IHG (+2.6%) helping fend off falls from miners including Airtel Africa (-5.47%) and Rio Tinto (-2.54%)
8.53am: Barclays rallies on job cuts
More on Barclays, where analysts reckon new cost-cutting measures to deliver the targeted annual savings of £2 billion could result in 17,000 job losses.
Analysts at research house Third Bridge estimate a 20% reduction in headcount would be required to achieve the figure being touted. The high street lender currently employs around 85,000 people.
Barclays shares were up almost 7% earlier but are now just under 5% higher at 156.34p.
The FTSE meanwhile has pared losses, now almost back above water as it looks to add a sixth positive session in a row, which would take it close to the highest levels seen in the year to date.
8.37am: China housing market boost falls flat
There's more analysis coming in about the rate cut from the People's Bank of China, which is looking to provide a boost to the country's housing market and wider economy after a disappointing year.
The central bank cut a key lending rate, the five-year loan prime rate by 25 basis points, to 3.95%, more than the 15 basis points expected, and the first reduction since last summer.
"On its own it will not revive new home sales," said Julian Evans-Pritchard at Capital Economics. "But coupled with efforts to provide increased credit support to developers, today’s cut should help to reduce pressure on the property sector somewhat.
"The bigger picture though is that the PBOC remains reluctant to embrace the sizeable and broad-based rate cuts needed to drive a strong acceleration in credit growth and therefore economic activity."
Susannah Streeter, head of money and markets, Hargreaves Lansdown: "The fragility of China’s economy is weighing on minds as the country remains mired in a real estate slump with the latest attempt to stimulate demand highlighting the depths of the problems."
But she said the sharper-than-expected cut does not seem to have shored up confidence much yet, with the real estate market having been a key driver for the economy over the past decade or two, firing up the mining sector worldwide.
"It’s concentrated minds on the collision of concerns about the economy, from real estate debts to deflation to falling foreign investment. Iron ore prices are trading around three-month lows, as hopes that demand for steel could rebound have ebbed away. Asian stocks dipped back again as worries continued about the economy, setting the scene for a lacklustre start to trading for the FTSE 100, with investors also mindful that high interest rates may be sticking around for longer in the United States."
8.23am: FTSE opens in the red
The FTSE 100 has opened on the back foot, with a big jump for Barclays offset by falls for the mining heavyweights.
In opening trades, the blue-chip index slipped almost 20 points lower, or 0.25% to 7708.9.
Anglo American PLC (LSE:AAL) led the fallers, down 3.3%, as it announced potential jobs cuts at its iron ore unit and sector peer BHP lowered its dividend.
Fresnillo, Glencore and Rio Tinto were also among the major fallers, with the sector underperforming for a second day as metal prices declined following the reopening of the Chinese markets.
Barclays PLC (LSE:BARC) leapt over 5% to top the leaderboard as investors lapped up plans for bumper returns in the coming years.
This update was "something of a curate’s egg," said Richard Hunter, head of markets at Interactive Investor, "hindered by a weak final quarter but at the same time a fresh strategic update has laid the groundwork for some rather more ambitious and profitable results over the next three years".
The numbers are dragged lower by a cumulative £1 billion of "structural cost actions", he noted, which the bank has taken to streamline activities across people, infrastructure and property.
Elsewhere, investors do not seem sure about what to make about results from Intercontinental Hotels Group PLC (LSE:IHG), which hiked its dividend 10%, launched a new $800 million share buyback programme and set out plans to expand margins.
The Holiday Inn owner reported a return to stronger travel demand, with revenue per available room up 16% from 2023 and 11% higher than the 2019 peak, enabling operating profits to rise 23% to just over $1 billion.
New boss Elie Maalouf said he plans to expand fee margins in 2024, through a mix of cost-cutting and revenue growth.
7.50am: Barclays looks to boost returns
Looking deeper at the Barclays PLC (LSE:BARC) results and strategy update, the blue-eagle bank's new three-year plan includes an aim to pay out £10 billion in shareholder returns while crimping costs.
Chief executive CS Venkatakrishnan is looking to boost returns above 12%, from a return on tangible equity of 9% last year, in part by reducing costs by £2 billion by 2026, with a corporate structure shake-up including splitting operations into five new divisions.
The dividend has been kept flat with a new £1 billion buyback announced alongside results, where annual profits fell by £400 million to £6.6 billion.
“Our new three-year plan, which we will be announcing at the investor update today, is designed to further improve Barclays’ operational and financial performance, driving higher returns, and predictable, attractive shareholder distributions,” said Venkatakrishnan.
He will unveil full details of the plan this morning, which are expected to include potential job cuts.
7.16am: FTSE 100 tipped to slip
The FTSE 100 is expected to retreat in early trading on Tuesday after nudging six-week highs in recent sessions, with global financial market volumes set to be boosted today as US investors return after a long weekend.
London's blue-chip index is seen falling around eight points, according to spread-betting platforms, after adding just under 17 points to close at 7,728.5 the day before.
Elsewhere, Asian stocks mostly fought back after earlier slides after the Chinese central bank cut the major loan rate for most mortgages for the first time since last June, and more than expected.
Japan's Nikkei is the only major index in the red.
Early stock market moves in London could be dictated by the banking sector as Barclays announced a £1 billion share buyback, notified of its new operating division structure and promised to go on a major cost-cutting drive over the next three years.
Holiday Inn owner Intercontinental Hotels Group PLC (LSE:IHG) could be among the FTSE risers after it said it aims to return more than $1 billion to shareholders this year, including $800 million in share buybacks.