- FTSE 100 down 65 points
- Burberry signals encouraging turnaround efforts
- PMIs pick up across Europe
3.58pm: FTSE 100 stumbles into weekend
London’s blue chips tumbled as the weekend approached on Friday, dropping 65 points to 8,499.
Despite repeatedly notching record highs in recent days, Friday’s decline meant the FTSE 100 had shed eight points, or just under 0.1%, over the course of the week.
Marks and Spencer Group PLC continue to lead the day’s fallers, down 3.6%, while a lack of major movers saw Taylor Wimpey PLC and Compass Group PLC also among losers.
Diageo PLC headed the risers in the meantime, rising 3.7% ahead of JD Sports Fashion PLC and a score of mining companies on the back of gains for commodities.
Elsewhere, Burberry PLC held onto a 10.6% gain after news of a third quarter drop in sales came in better than feared.
The luxury fashion brand led the FTSE 250’s risers as a result, as the index traded just below the mark on Friday and down 90 points, or 0.4%, for the week at 20,506.
Small caps fared little better, with the AIM all-share off 0.8%, or six points, on Friday, to head towards the weekend 0.4% lower.
3.44pm: Flights cancelled and thousands without power as Storm Éowyn rages
Storm Éowyn has seen hundreds of flights cancelled and thousands left without power after battering Ireland and Scotland on Friday.
Some 50,000 passengers are set to have been affected after at least 334 flights were axed across Aberdeen, Belfast, Edinburgh and Glasgow over the day, according to the PA news agency.
Over 715,000 homes across Ireland were said to have been left without power in the meantime, with Scottish Power also flagging a further 20,000 affected customers.
Trains had also ground to a halt, after the storm bright red weather warnings on Friday morning.
3.34pm: Mortgage rates dip as Lloyds sees three BoE cuts in 2025
Charlie Nunn, Lloyds Banking Group PLC boss, has flagged expectations that the Bank of England will cut interest rates three times this year.
Marking a positive sign for mortgage holders, Nunn detailed the prediction to Sky News at the World Economic Forum in Davos.
Following relative stability around two to five-year mortgage deals recently, he added “stability is likely to remain for the remainder of this year” as a result.
Separate figures from Moneyfacts on Friday showed average two-year rates had edged downwards this week as banks weighed up the scope for central bank cuts ahead.
The typical two-year rate had dropped to 5.5148% as of Friday, against 5.5198% on Monday, after climbing slightly midweek.
Reductions had been stopped in their tracks earlier in the month on a bond market sell-off, which sent government borrowing costs skyrocketing... Read more
3.01am: US business activity growth slows on inflation pressures
Business activity in the US grew at a slower rate in January, weighed down by a slowdown across the service sector, data showed on Friday.
S&P’s flash composite purchasing managers index subsided from 55.4 to 52.4 between December and January, signalling slower output growth since the turn of the year.
Missing expectations, S&P noted the moderating figure coincided with a surge in inflationary pressure to a four-month high.
Price pressures increased across both the services and manufacturing sectors, as both input and selling costs climbed.
Service sector PMI hit a nine-month low of 52.8, against December’s 56.8, while the manufacturing index climbed into growth territory from 47.7 to 50.2 for a six-month high.
“Although output growth slowed slightly in January, sustained confidence suggests that this slowdown might be short-lived,” S&P economist Chris Williamson commented.
“Especially encouraging is the upturn in hiring that has been fueled by the improved business outlook, with jobs being created at a rate not seen for two-and-a-half years.
“However, rising price pressures are a concern, with companies reporting supplier-driven price hikes as well as wage growth amid poor staff availability.
“Higher input cost and selling price inflation was broad-based across goods and services and, if sustained, could add to worries that a combination of robust economic growth, a strong job market, and higher inflation could encourage a more hawkish policy approach from the Fed.”
2.39pm: Mixed start on Wall Street
Wall Street got off to a mixed start on Friday as investors awaited purchasing managers index data later in the day.
The Dow Jones headed lower, by 0.2%, at the open, while the S&P 500 and Nasdaq just ticked up above the mark.
Expectations are for Friday’s PMIs to show little change between December and January, with service sector activity seen slowing slightly as manufacturing edges higher.
2.22pm: Busy week ahead as Fed rate call, US GDP loom
The Federal Reserve’s latest rate call, alongside US gross domestic product and inflation data line up a busy week ahead on the macroeconomic front.
Having signalled expectations for just two rate cuts in 2025 upon cutting its key rate to a range of 4.25% to 4.50% last month, expectations are for the Fed to hold this time around.
Wednesday’s decision should firm up such expectations, IG analysts noted, given a lack of surprises in data signalling subsiding inflation but economic strength since.
Further clarity will come on Thursday though, with the release of advanced fourth-quarter GDP figures, which markets anticipate will show moderating growth.
Core personal consumption expenditure figures on Friday then cap off a busy week in the US, with analysts looking for the Fed’s preferred measure of inflation to have climbed by 0.2% in December.
Back across the Atlantic, the European Central Bank’s rate call on Thursday is expected to see interest cut, while Bank of England consumer credit data will also be in focus... Read more
13.45pm: Buy-to-let market still strong says specialist Paragon
Paragon Banking is one of the day’s risers as the specialist mortgage lender delivered another upbeat trading statement, sending its shares up by 1.5% to 774p.
Buy-to-let has been an area of uncertainty even with the previous government, but FTSE 250 constituent Paragon has not seen any impact.
New lending across the business for the quarter to 31 December 2024 totalled £677 million or up 11% with buy-to-let lending at £423 million, up from £336 million a year ago.
The pipeline is almost 24% higher than this time in 2024, though it is down from three months ago, which broker Peel Hunt said was down to it not chasing business.
Arrears performance also improved said the lender.
Nigel Terrington, chief executive, added: "The first quarter of our new financial year has continued to see good progress with encouraging new business flows and margins running above expectations."
Peel Hunt noted management reiterated its full-year guidance for new business volumes (£2.8-3.2bn), NIM (3% area), opex (c.£185m) and underlying return on equity (mid 15-20% range).
“As such, we leave our forecasts unchanged, albeit with the better-than-expected first-quarter net interest margin (NIM) increasing our confidence in delivery.”
FTSE 100 down 29 at 8,535.
12.59pm: CMA to cut 10% of staff after “budgeting error”
Britain’s Competition and Markets Authority has reportedly told staff of plans to axe almost 10% of its workforce on the back of a “budgeting error”.
Staff were informed of cuts due to overspending in December, according to Financial Times-cited sources.
Chief executive Sarah Cardell had reportedly laid out aims to reduce the watchdog’s headcount by around 100 people by way of a voluntary exit scheme.
She cited a “budgeting error,” but later told staff the likes of its mergers and new digital markets units would not be affected.
The CMA employed almost 1,200 people as of October and was set to receive a £139 million budget from the Treasury this year... Read more
12.34pm: Miners fail to buoy FTSE 100
Gains among miners on the back of rising commodity prices failed to keep the FTSE 100 in positive territory on Friday.
Having notched up an intraday record early on, London’s blue-chip index slipped into the afternoon, dropping 28 points to sit at 8,537.
Marks and Spencer Group PLC led the fallers with a 2.3% drop, ahead of the likes of Taylor Wimpey PLC and Compass Group PLC.
Miners dominated the risers in the meantime, owing to weakness in the dollar supporting metal prices, AJ Bell’s Russ Mould pointed out.
“Copper, aluminium, lead, zinc and tin all saw higher prices,” he said, as the dollar lost 0.5% against the pound to sit at £0.8055 on Friday.
Antofagasta PLC headed Friday’s risers as a result, up 3.7%, as the likes of Glencore PLC and Rio Tinto Ltd also picked up gains.
“Also putting a shine on metals prices was speculation that Donald Trump might not take the nuclear option regarding tariffs on China, potentially imposing a lower rate than has previously been suggested,” Mould added.
12.19pm: Wall Street in for muted start before PMI data
Wall Street looked set to kick off Friday on the back foot ahead of purchasing managers index data later in the day.
Futures had the Dow Jones, S&P 500 and Nasdaq all off by 0.1% ahead of Friday’s opening bell.
The S&P 500 had notched a new record on Thursday in the midst of headlines coming from re-elected president Donald Trump.
“There is a clear optimism that we will see US businesses go from strength to strength under Trump,” Scope Markets analyst Joshua Mahony said.
Indeed, each of the Dow Jones, Nasdaq and S&P 500 enjoyed gains since Monday’s inauguration.
Mahony added inflation concerns had “eased somewhat after Trump noted that he would rather not put tariffs on Chinese imports,” ahead of the Federal Reserve’s latest interest rate call next week.
Prior to the decision, which markets were anticipating would see rates held, PMIs and anticipations of little change on December’s readings were set to be in focus on Friday.
11.59am: Jitters around economy hammer consumer confidence
Concerns around the UK economy have prompted a drop in consumer confidence this month, GfK reported on Friday.
Citing “dark days ahead,” GfK unveiled a five-point drop in its consumer confidence barometer to -22 for January, as sentiment fell across the board.
All measurements declined against December, the report showed, including consumer sentiment around personal finances and the wider economic situation.
“New Year is traditionally a time for change, but looking at these figures, consumers don’t think things are changing for the better,” GfK consumer insights director Neil Bellamy said.
He pointed to “particularly steep” declines in views on the UK economy, with the index around the last year down at -46 and the forward-looking measurement at -34.
“These figures underline that consumers are losing confidence in the UK’s economic prospects,” Bellamy added.
Bellamy also cited a separate measurement pointing to an increase in saving among consumers.
“This sharp increase is unwelcome because it’s another sign that people see dark days ahead and are therefore thinking of putting money aside for safety.”
11.38am: Burberry up 13% as luxury confidence surges back
More on Burberry, which has jumped 13% today on an upbeat trading update.
Though sales declined by 7% to £659 million, Deutsche Bank analysts noted the third quarter had been “much better than expected”.
Comparable sales fell by 4% against an expected 14%, the bank highlighted, adding Burberry now saw second-half trading offsetting the first’s adjusted losses.
“There is a base effect from easier comparable sales last year, but this is still a much stronger performance than expected in our view,” Deutsche said.
Burberry had joined Richemont, which trounced expectations last week, in painting a more positive picture for the luxury sector, Deutsche added.
“We need more detail on the amount driven by selling through old inventory and the ‘underlying’ brand momentum but outerwear and scarves have been called out.
“We like the increased brand heat and marketing campaigns.”
Shares are up 13% to 1,211p on a rare bad day for the market.
FTSE 100 down 33 at 8,531.
10.51am: European PMIs up as well as mood in Germany improves
European PMI’s for January suggest that pessimism about the region could be overdone, said Kathleen Brooks, chief economist at XTB.
"The composite PMI for January rose back into expansionary territory for the first time since October.
"At 50.2, this does not suggest a massive rebound, but it could be the early signs of green shoots after a dark period for the Eurozone economy.
Brooks added that the regional divide in Europe, with southern Europe outperforming northern Europe, especially Germany might be turning.
"For the first time in 6 months, the pace of increase in the German composite PMI was faster than the increase in the overall Eurozone index.
"This is significant and suggests that Germany is playing catch up to the rest of Europe.
"While it is too early to tell if this will lead to a rebound in growth, it does suggest that Germany is crawling out of its malaise."
FTSE 100 down 28 at 8,537.
10.22: Composite UK PMI turns up but UK flatlining
Some good and bad news for Chancellor Rachel Reeves in today's UK PMI update from S&P.
The Services PMI index edged up 51.2 in January vs 50.9 expected and 51.1 last month, helping the composite PMI rise 50.9 against the expected 50.0 and 50.4 a month ago.
Even manufacturing edged higher to 48.2 compared to forecasts of 47.0, the previous month’s figure.
Anything above 50 indicates expansion and below contraction.
The bad news is that S&P Global reported that companies have been cutting employment at an increasing pace with falling sales and price pressures all pointing to an economy heading for stagflation.
In short, the UK is “broadly flatlining with risks remaining skewed to the downside”.
Even in services, new work at the aggregate level fell at the fastest pace since 2023, with companies citing poor underlying demand as clients limited non-essential spending, said S&P.
FTSE 100 down.24 at 8,540.
9.57am: Storm Eowyn batters Ireland and West Coast
Reports and images are starting to come in of the damage and havoc caused by Storm Eowyn, the latest in a run of extreme weather events that have battered the British Isles over the past twelve months.
The BBC is reporting extreme flooding in the West of Ireland with winds of more than 100mph moving into Scotland and the North West.
A red weather warning has been issued by the Met Office for Scotland with people told to stay at home, while flood alerts have been issued for parts of the UK, mostly in the west of the country.
By contrast, London is relatively calm so far with that being reflected in the market this morning though the index has now turned down 28 points to 8,536.
Insurance groups such as Aviva and Hiscox, which face another rush of weather-related claims, are down by 1.2% at 506p and 0.5% at 1,083p respectively.
FTSE 100 down 28 at 8,536.
9.14am: Rolls-Royce agrees £9bn nuclear sub deal with UK
Rolls-Royce Holdings PLC has secured a £9 billion deal for nuclear submarine reactors with the Ministry of Defence.
Marking the largest ever between the two, the agreement is set to be unveiled on Friday during a visit of defence secretary John Healey to Rolls’ Derby nuclear reactor factory.
Support for the Royal Navy’s current fleet and work on new Dreadnought Class submarines were set to be covered under the eight-year deal.
Initial contracts around the UK, US and Australian Aukus alliance were also to be included, after the trio agreed plans to build submarines together in 2023.
Dubbed Unity, the agreement would streamline former contracts and boost efficiency, allowing savings of £400 million, according to the government.
Some 1,000 jobs were also set to be added under the deal, with a further 4,000 safeguarded.
“This deal with Rolls-Royce, a historic British success story, will support high-skilled UK jobs, who equip the thousands of submariners that keep us all safe,” Healy said.
Rolls-Royce Submarines president Steve Carlier added: “This long-term contract enables us to invest in the right skills, equipment and facilities to play our part in protecting UK interests at home and overseas.”
8.46am: Burberry jumps as sales not as bad as expected
Burberry Group PLC shares jumped over 14% on Friday after third-quarter figures appeared to put to rest jitters around the struggling luxury brand.
Though sales declined by 7% to £659 million, Deutsche Bank analysts noted the third quarter had been “much better than expected”.
Comparable sales fell by 4% against an expected 14%, the bank highlighted, adding Burberry now saw second-half trading offsetting the first’s adjusted losses.
“There is a base effect from easier comparable sales last year, but this is still a much stronger performance than expected in our view,” Deutsche said.
Burberry had joined Richemont, which trounced expectations last week, in painting a more positive picture for the luxury sector, Deutsche added.
“We need more detail on the amount driven by selling through old inventory and the ‘underlying’ brand momentum but outerwear and scarves have been called out.
“We like the increased brand heat and marketing campaigns.”
Shares jumped 14.9% to 1,229.50p.
8.35am: Bitcoin gains after Trump signs crypto executive order
Bitcoin gained on Friday after Donald Trump signed off an executive order to kickstart his promised plans around supportive measures for the cryptocurrency space.
The president on Thursday put pen to paper on the plans, which include potentially creating a strategic Bitcoin reserve and establishing rules around crypto.
“The digital asset industry plays a crucial role in innovation and economic development in the United States, as well as our nation’s international leadership,” the order said.
Trump had pledged measures on his campaign trail, with venture capitalist David Sacks, and the president’s crypto and artificial intelligence czar, having overseen the signing in the Oval Office.
Efforts would largely be made on establishing technology and rules for crypto and its domestic development, according to the order.
A working group would also be created to weigh up a national digital asset stockpile, “potentially derived from cryptocurrencies lawfully seized by the federal government”.
Developers and miners were set to receive certain protections too, with the order detailing individuals and private sector firms using blockchain networks would be saved from “persecution”.
Bitcoin gained on the back of the order, climbing by 1.4% to US$105,419 on Friday, while smaller tokens Ether and Ripple also picked up.
8.11am: FTSE 100 hits new high as day gets off to strong start
The FTSE 100 racked up yet another intraday record as trading got underway on Friday, climbing 18 points to 8,583 early on.
London’s blue chip’s had closed Thursday at a record high, after once again testing new peaks during the day.
Antofagasta PLC led the way as miners dominated the early risers, while WPP PLC and Diageo PLC also ticked up.
Among Friday’s reporters, Severn Trent PLC gained 0.6% after welcoming Ofwat’s new price controls and signalling higher dividend payments ahead.
Burberry Group PLC surged 11.0% in the meantime, having signalled its second-half performance would offset the first’s adjusted losses, despite lower third-quarter sales.
8.02am: Severn Trent welcomes pricing rules, flags higher dividends
Severn Trent PLC has unveiled plans to hike dividend payments ahead as it welcomed Ofwat’s decision on water sector pricing for the coming years.
“Following a detailed review,” the water firm said on Friday it was “pleased to accept” Ofwat’s final determination for the period between 2025 and 2030.
Regulator Ofwat had unveiled the rules last month, allowing Severn Trent to increase consumer bills by 47% over the coming years, or to £583 annually.
A total expenditure allowance of £14.9 billion would generate real regulatory capital value growth of 45%, it added Friday, opening the door for efforts to reduce sewage spills and pollution.
Dividend payments would also increase in line with inflation under the new rules, Severn Trent confirmed, leaving next year’s at around 126.02p per share, against 2024’s 121.71p.
Severn Trent also noted it remained on track to meet guidance in the current year.
Outcome delivery incentives, paid if water firms hit performance goals, were set to sit at over £100 million in 2017 prices, it said.
7.34am: Burberry unveils lower sales as turnaround efforts go on
Burberry Group PLC has said sales fell during the third quarter as the luxury fashion brand continues to grapple with turnaround efforts.
Revenue declined by 7% to £659 million over the three months to December, Burberry reported on Friday.
Sales across the Asia Pacific region declined by 9%, as revenue also fell in Europe, the Middle East and African but ticked up in the Americas.
Currency had provided a headwind over the quarter, with revenue down 3% at constant exchange rates and a £25 million hit to profit expected over the full year.
Chief executive Joshua Schulman noted response had been positive to the likes of outerwear and festive campaigns since flagging turnaround plans in November, though.
“These activations resonated with a broad range of luxury customers leading to an improvement in brand desirability and strength in outerwear and scarves,” he said.
“The acceleration of our core categories reinforces our belief that Burberry has the most opportunity where we have the most authenticity and that our strategic plan will deliver sustainable, profitable growth over time.”
Burberry added its was now “more likely” second-half results would broadly offset the company’s first-half adjusted operating loss, despite declining sales.
“However, we recognise that it is still very early in our transformation and there remains much to do,” Schulman said.
7.14am: FTSE 100 seen climbing further
London’s blue chips looked set to build on Thursday’s record close with further gains on Friday.
Futures had the FTSE 100 adding 14 points to reach 8,571 ahead of trading, taking the index further from its closing peak and within touching distance of its intraday record of 8,572, also seen on Thursday.
Asian markets also enjoyed a largely positive showing overnight, after gains on Wall Street saw the S&P 500 fetch new record highs too.
Donald Trump had pledged to bring interest rates down and push for lower oil prices in a speech to the World Economic Forum in Davos, alongside renewing threats for sweeping tariffs.
Back in London, focus on Friday was set to be on consumer confidence figures, alongside updates from Burberry and Severn Trent.
5.00am: Friday's schedule
Focus will be on Burberry and Severn Trent on Friday, alongside consumer confidence data.
Attention will be on whether Burberry can follow luxury peer Richemont with bumper figures... Read more
Announcements due:
Trading updates: Burberry Group PLC, Paragon Banking Group PLC, Severn Trent PLC
Interims: Theworks.Co.UK PLC
US earnings: American Express, Verizon Communications
AGMs: Henderson Far East Income Ltd, Sdx Energy PLC, Team PLC
Economic announcements: Gfk Consumer Confidence (UK), Flash Composite PMI (UK), Existing Home Sales (US), University of Michigan Confidence (US), Flash Composite PMI (US)