- FTSE rises 12 points, or 0.16%
- Index benefitting from declining US tech stocks
- Prudential PLC (LSE:PRU) the day’s top performer
5:00 pm: FTSE 100 closes higher
The FTSE 100 closed higher Thursday, bucking a mixed performance among US stocks looking to gain traction.
At the close, the UK blue-chip index increased 12 points, or 0.16%, to hit 7,563.
Chris Beauchamp, chief market analyst at online trading group IG, said that enthusiasm for stocks from earlier in the week is fizzling out.
“After two days of gains a more cautious tone appears to prevail across markets, in yet another sign that 2022 lacks 2021’s swashbuckling attitude to risk-taking,” he said. “Yesterday’s CPI seemed to calm inflation concerns but with US earnings season soon upon us it looks like equities are still struggling to find much upward traction.”
Beauchamp added: “It is rare to see the Nasdaq under so much pressure compared to other indices, but the continued pricing in of tighter policy points towards an ongoing move away from high-valuation growth names and towards less-exalted sectors. Such a move should benefit the FTSE 100 overall, with its focus on raw materials firms that are less sensitive to inflation worries and on banks, where higher rates will come as a welcome change.”
The top gainer was Prudential PLC (LSE:PRU), which increased by 3% to 1,337p.
3.55pm: UK market goes into reverse
Leading shares have drifted lower again as Wall Street hits a tricky patch after a promising start.
With mixed signals on inflation and a worse than expected jobless claims number, the S&P 500 and Nasdaq Composite have both dipped into the red, down 0.14% and 0.51% respectively.
The Dow Jones Industrial Average however remains ahead, up 0.33%.
So after moving as high as 7565, the FTSE 100 is now down 9.82 points or 0.13% at 7541.9.
JD Sports Fashion PLC (LSE:JD.) is the biggest faller, down 6.55% or 13.85p at 197.65p after executive chairman Peter Cowgill raised £21.3mln by selling 10mln shares at 213.22p each.
The move came a day after its Christmas update.
Next PLC (LSE:NXT) has lost 4.47% after its shares went ex-dividend.
And Dechra Pharmaceuticals PLC (LSE:DPH) dropped 2.82% after a trading update. It said: "Group revenue growth slowed slightly from the extraordinary levels experienced in the prior year as markets return to more normal levels, albeit from a higher base."
Prudential PLC (LSE:PRU) is leading the risers, up 3.08% following a positive note from analysts at UBS.
News that the UK COVID-19 self isolation period for fully vaccinated people had been cut from seven days to five has helped lift International Consolidated Airlines Group (LSE:IAG) by 1.99%.
Meanwhile the prospect of another interest rate rise at the Bank of England's February meeting has seen HSBC PLC (LSE:HSBA) move 1.88% higher and Barclays PLC (LSE:BARC)add 1.68%.
2.55pm: US market ahead as investors weigh up inflation news
US stocks opened higher as investors digested the latest producer price inflation, which showed a slowing in prices for goods following the hot consumer data earlier this week.
In early deals in New York, the Dow Jones Industrial Average added over 179 points to stand at 36,470. The broader-based S&AP 500 gained around 12 at 4,738, while the tech-laden Nasdaq Composite Index advanced 52 at 15,241.
US PPI slowed in December to 0.2% (the smallest monthly increase for 13 months) compared to consensus of 0.4% as costs fell, indicating that inflation may have peaked and supply chains were starting to ease.
In the 12 months through December, PPI increased 9.7% after accelerating 9.8% in November.
"The December U.S. reading likely marks the peak," said Ian Shepherdson, chief economist at Pantheon Macroeconomics..
"Core PPI services inflation bumped up to a new high in December, at 7.9% year on year, thanks to an unfavorable base effect and a rebound in airline fares month on month, but this too should be the peak, given that the 3 month/3 month rate is now only 5.3% and falling. In short, PPI inflation is very elevated, but this report probably represents the high-water mark."
Delta Air Lines (NYSE:DAL) is flying after fourth quarter sales came in at a higher than expected US$9.47bn, its shares climbing 2.43%.
The rise came despite the airline saying the Omicron variant would see it making a first half loss, although it was still anticipating a profit for the whole year.
Back in the UK, the FTSE 100 is currently up 8.18 points at 7559.9.
1.43pm: Mixed signals from latest US inflation data
More signs of inflation in the US, albeit a little lower than expected
After Wednesday's consumer price index hit a 40 year high, the producer price index rose from an annualised 9.6% in November to 9.7% last month.
This was the highest calendar year increase since the data was first calculated in 2010, although it was below forecasts of a figure of 9.8%.
However core PPI was higher than expected at 8.3% rather than 8%.
The monthly rise of 0.2% was half what had been forecast.
US PPI Final Demand (M/M) Dec: 0.2% (est 0.4%; prev 0.8%)
- PPI Final Demand (Y/Y) Dec: 9.7% (est 9.8%; prev 9.6%)
- PPI Ex-Food, Energy (M/M) Dec: 0.5% (est 0.5%; prev 0.7%)
- PPI Ex-Food, Energy (Y/Y) Dec: 8.3% (est 8.0%; prev 7.7%)
— LiveSquawk (@LiveSquawk) January 13, 2022
Meanwhile US weekly jobless claims came in higher than anticipated.
The number of Americans seeking unemployment benefit for the first time rose from 207,000 (itself a surprise jump) to 230,000 last week.
Analysts had been anticipating a figure of 200,000.
Investors seem to be taking the PPI figures in their stride, with all three Wall Street indices adding to their gains.
The Dow Jones Industrial Average is set to rise 0.29%, the S&P 500 0.18% and the Nasdaq Composite 0.20%.
Back in the UK the FTSE 100 is up 8.69 points or 0.12% to 7560.41, close to its high for the day.
12.38pm: Prudential leads market higher
Leading shares have edged into positive territory as Wall Street looks to open higher.
Having fallen to 7530, the FTSE 100 is now up 3.37 points at 7555.09, but investors appear relatively cautious at the moment after this week's rises.
Insurer Prudential PLC (LSE:PRU) is leading the way, up 2.31% after a positive note from analysts at UBS.
Labelling the company a top pick, they said: "Despite short-term headwinds owing to concerns around further mobility restrictions in Asia following the Omicron variant, we believe Prudential remains competitively positioned in key Asian growth markets, with double digit growth prospects in some over the medium term.
"Additionally, Prudential has successfully demerged its US business with current minority holding of around 20%, but the stock continues to trade at a discount to its closest pan-Asian life insurance peer, AIA."
BT Group PLC (LSE:BT.A) is 1.46% better after Reuters reported the sale of its sports broadcasting service 'BT Sport' to DAZN was back on the radar. An US$800mln deal could be announced in the next month.
In the FTSE 250, Direct Line Insurance Group PLC (LSE:DLG) is up 2.78% to 303.21p after UBS (them again) raised their rating from sell to buy with a target price increased from 283p to 325p.
11.50am: US markets set to add to gains
US stocks are expected to open higher as attention shifts to US earnings season after consumer inflation data provided no additional shocks to interest-rate expectations.
Futures for the Dow Jones Industrial Average rose 0.15% in Thursday pre-market trading, while the broader S&P 500 index added 0.11% and those for the tech-heavy Nasdaq 100 gained 0.12%.
Stocks closed higher on Wednesday after the December reading for the consumer price index, a gauge of prices across a broad spectrum of goods, showed a year-on-year gain of 7%. While that is the biggest jump since 1982, it was in line with predictions.
The Dow rose by 38 points, or 0.11%, to 36,290 and the S&P 500 increased 13 points to 4,726, while the Nasdaq increased 0.23% to 15,188.
Delta Air Lines (NYSE:DAL) (Delta Air Lines (NYSE:DAL)) reports fourth quarter results today, with large banks JPMorgan Chase, Citigroup and Wells Fargo due to report on Friday.
Back in the UK, the FTSE 100 is down 6.58 points at 7545.14.
11.26am: Upbeat retailers fail to lift markets
Leading shares are drifting and are now barely in negative territory.
The FTSE 100 is down just 1.65 points at 7550.07, with Next PLC (LSE:NXT), down 3.55%, and The Sage Group PLC (LSE:SGE), off 2.73%, leading the fallers as their shares went ex-dividend.
Persimmon PLC (LSE:PSN) is down 2.10% after its latest update, while Tesco PLC (LSE:TSCO) is down 1.35% despite the supermarket reporting strong Christmas sales, as it warned of growing cost pressures.
It is a similar story at Marks and Spencer Group PLC (LSE:MKS), down 6.01% and helping push the mid-cap FTSE 250 down 0.19% to 23,004.07.
AJ Bell investment director Russ Mould said: "“The retail sector, so far at least, seems to have done well despite Omicron, although the likes of Marks & Spencer and the supermarkets are potential beneficiaries of the fact that, with Christmas parties cancelled, more of us were entertaining at home and treating ourselves to extras like sparkling wine and posh snacks.
“Despite Marks’ soggy share price, it’s still significant that its clothing and home business, long the ugly duckling of the group, is continuing to spread its wings having delivered growth for the second successive quarter.
“Perhaps there is some disappointment that the company hasn’t served up another big upgrade today – though in fairness full-year guidance had been hiked twice already.”
10.34am: Omicron hit UK workforce hard last month
The impact of the Omicron variant on businesses has been highlighted by the lastest government figures.
According to the Office for National Statistics, around 3% of the workforce were estimated to be on sick leave or not working because of coronavirus symptoms, self-isolation or quarantine in late December.
This may not seem like a big figure on the face of it, but it is the highest since comparable estimates began in June 2020.
The other service activities industry, which includes hairdressing and other beauty treatments, reported the highest absence levels at 7%.
Just over one-fifth (21%) of businesses reported increased cancellations from customers in the last month, with 64% of businesses in the other service activities industry and nearly half (44%) of businesses in the accommodation and food service activities industry reporting an increase.
3% of the workforce were estimated to be on sick leave or not working as a result of #COVID19 symptoms, self-isolation or quarantine in late December 2021.
This is the highest percentage recorded since estimates began in June 2020 https://t.co/n3o7nbcQFQ pic.twitter.com/P4wYihcP2Z
— Office for National Statistics (ONS) (@ONS) January 13, 2022
10.05am: Financial services firms see strong growth - CBI
Some positive news from the financial services sector, according to the latest CBI survey.
Business volumes grew in December at the fastest rate in more than four years, with profitability was the strongest since December 2015.
Financial services firms reported that business volumes in the quarter to December grew at the quickest pace since June 2017, according to the latest CBI/PwC Financial Services Survey. This rate of growth is expected to be matched in the quarter ahead #CBIPwC pic.twitter.com/hZUpekNzD5
— CBI Economics (@CBI_Economics) January 13, 2022
9.49am: Sterling climbs against the dollar
The pound is moving higher, benefiting from dollar weakness after US inflation was no worse than expected and investors came to terms with the Federal Reserves planned next moves.
Sterling is up 0.25% to US$1.374, also helped by expectations of further rate rises from the Bank of England in February following December's move.
A stronger pound is no help to the overseas earners populating the FTSE 100.
But while the leading index is still just about in negative territory, it has come off its worst levels and is now down just 4.26 points at 7547.46.
Victoria Scholar, head of investment at interactive investor, said: “Markets are setting themselves up for a down day after a lacklustre start to the European open. The FTSE 100 is still managing to hold above critical support at 7,500 after closing at the highest level since January 2020 while the pound is extending recent gains, closing in on key resistance at US$1.38."
Ipek Ozkardeskaya, senior analyst at Swissquote, said: "The Bank of England hawks should help the pound gain more field against the greenback in the next couple of weeks [and] an advance toward US$1.40 is no longer a faraway dream."
8.29am: Ex-divs prove a drag
A number of companies have seen their shares go ex-dividend, which is another downward drag on the market.
Among them are Next PLC (LSE:NXT), down 2.55%, The Sage Group PLC (LSE:SGE), 1.88% lower and SSE PLC (LSE:SSE). off 1.52%.
8.23am: Market starts lower as investors take profits
Leading shares have edged lower in early trading as investors decided to take some profits after recent gains.
The FTSE 100 is down 7.82 points or 0.1% at 7543.9 after reaching a new pre-pandemic high on Wednesday.
Following a tricky start to the week, markets had subsequently reacted well to signs that inflationary pressures might be easing.
There were signs of that from a weaker than expected reading from China, and the US consumer price index coming in bang in line with expectations, albeit at a near 40-year high.
Further evidence from the US one way or the other will come in the shape of today's producer prices index.
Michael Hewson, chief market analyst at CMC Markets UK, said: "PPI has tended to be a leading indicator for headline CPI for most of last year, and is already well above CPI levels. In November US PPI jumped from 8.8% to 9.6%, and is expected to rise further to 9.8%, while core PPI is expected to rise from 7.7% to 8%. If these numbers come in lower than expected we could well see some further straw clutching.
"The change in sentiment over the course of the past few days would appear to owe much to the testimony on Tuesday of Fed chair Jay Powell at his reconfirmation hearing as Fed chairman when he said that while the Fed was ready to raise rates this year, on the subject of balance sheet reduction he was more circumspect, saying it wouldn’t be done in a manner that might be destabilising."
A number of major companies have issued upbeat statements but seen their shares fall back.
Tesco PLC (LSE:TSCO) is down 1.98% despite following J Sainsbury PLC (LSE:SBRY) in reporting strong Christmas sales.
Housebuilder Persimmon PLC (LSE:PSN) has fallen 3.63% after its strong update. The sector has been weak recently as the companies are being required to pay the costs of replacing dangerous cladding after the Grenfell fire.
Meanwhile in the FTSE 250, Marks and Spencer Group PLC (LSE:MKS) is suffering the same fate of a good update but falling share price. It is down 4.27% even though it saw record food sales over the festive season.
Neil Wilson at Markets.com said: "Retailers have been strong thus far and Tesco and Marks have continued the theme, although the anticipated full-year profit upgrades were rather mild and shares dipped in early trade. Investors were primed for a bit more, but should note that every little helps."
6.50am: Markets expected to pause for breath
FTSE 100 was tipped to consolidate in early trading after gains on Wednesday sent the index to close to its highest point for almost two years.
Financial spread betters were calling the index around five points higher when trading gets underway, following the 60-point gain to 7,551 yesterday.
US markets pulled the UK up late in the day even though inflation in America reached a 40-year high.
Analysts said the market had been braced for the big rise with comments by Jerome Powell also helping to calm the mood.
The Federal Reserve chair reiterated that at 7% inflation was running “above target” and that the US economy no longer needed “or wants the very accommodative policies we have had in place."
However, fears that the surge would mean the Fed accelerating its tightening programme were not realised and US markets eventually closed higher.
UK headlines today will be dominated by the fate of Boris Johnson after his House of Commons statement yesterday, though investors will also have an eye on a raft of updates from FTSE 100 stalwarts.
Marks & Spencer and Tesco are expected to report decent trading over Christmas, while housebuilders Persimmon and Taylor Wimpey also issue updates.
Shares in the builders have slumped this year due to the government’s proposals to make developers liable for cladding repairs and their response to those plans might overshadow what should be good numbers.
6.50am: Early Markets - Asia / Australia
Asian shares were mostly lower on Thursday after overnight inflation numbers from the U.S. showed consumer prices rising 7% in December, the highest since 1982.
In earnings, Taiwan’s TSMC reported its fourth-quarter results, posting a record 16.4% rise in quarterly profit to 166.2 billion Taiwan dollars (US$6 billion) compared to last year.
China’s Shanghai Composite fell 1.01% while Hong Kong’s Hang Seng index slipped 0.10%.
The Nikkei in Japan tumbled 0.99% and South Korea’s Kospi dropped 0.36%.
Australia’s S&P/ASX200 closed 0.48% higher at 7474.40 points, with Crown Resorts leading the way (+8.8%) after Blackstone lifted its takeover bid to A$8.9 billion.