- FTSE falls 5 points, or 0.06%
- US investors moving back into growth stocks
- Pearson PLC (LSE:PSON) top performer
4:45 pm: FTSE 100 closes lower as US equities rise
The FTSE 100 closed lower Thursday despite rising US stocks across the board.
At the close, the UK blue-chip index fell about 5 points, or 0.06%, to hit 7,585.
Chris Beauchamp, chief market analyst at online trading group IG, said investors appear to be moving back into growth stocks after a bit of selling.
“The pattern of the past few weeks has seen the UK’s top index make gains while US stocks struggle, something that has become quite rare in recent years,” he said.
“But that move has been reversed today, and for a second consecutive day the bevy of banks, miners and oil stocks that make up the index’s heavyweights is falling back. The theme of money moving to value names from growth stocks has taken a bit of a knock today, but as with the bounce in the US it is not yet clear that today’s reversal is going to turn into anything more sustained.”
The top gainer was Pearson PLC (LSE:PSON), which increased by 3.5% to 693p.
3.56pm: FTSE 100 down but off worst levels
Leading shares continue to be in the doldrums despite all three main US indices gaining ground.
The FTSE 100 is down 12.81 points or 0.17% at 7576.85.
But it is off its worst levels, having trading in a range of 7549 to a new post pandemic high of 7619.
Associated British Foods PLC (LSE:ABF) is leading the fallers, down 5.02% as it warned of pricing and supply chain pressures and announced it was cutting 400 jobs at Primark.
GlaxoSmithKline PLC (LSE:GSK) has lost 268% as Unilever PLC (LSE:ULVR), off 0.79%, said it would not raise its £50bn offer for the pharmaceutical group's consumer division.
Unilever had moved higher in early trading, but has slipped back after fund manager Terry Smith issued a second negative comment about the business in a week.
Royal Dutch Shell PLC (A shares) (LSE:RDSA) is 2.51% lower after some uncertain movements in the oil price, while BP PLC (LSE:BP.) is off 1.3%.
Brent crude is now up 0.19% at US$88.61 a barrel despite an earlier slip, and some analysts believe it could reach US$100 in the short term.
Michael Hewson, chief market analyst at CMC Markets UK, said: "European markets have been mixed today, with the FTSE 100 underperforming, weighed down by weakness in the energy sector, despite today’s continued resilience in the oil price.
"We could be seeing an element of profit taking on the likes of Royal Dutch Shell and BP after a decent run of gains and a solid start to the year. Even with today’s declines BP is still up over 17% year to date, and Shell is up 12%."
Heading higher is education group Pearson PLC (LSE:PSON) after a positive response to this week's results.
Polymetal International PLC (LSE:POLY) has put on 2.75% after a positive update on the Pavlov gold deposit in Russia.
News that China has cut interest rates to boost the economy has lifted companies who have substantial business in the region including Prudential PLC (LSE:PRU), up 2.45%, and Burberry Group PLC (LSE:BRBY), 2.33% better.
Rentokil Initial PLC (LSE:RTO) has risen 1.94% after an upgrade from analysts at Citigroup.
3.03pm: US investors weigh up jobs data
US shares have opened higher, helped by better than expected results from the likes of American Airlines and United Airlines.
The Dow Jones Industrial Average added 107 points to stand at 35,136. The broader-based S&P 500 added around 20 points, or 0.46% to 4,553.
The tech heavyNasdaq Composite index was up around 154 points, or around 1%, at 14,494 in early deals in New York.
The rebound from Wednesday's falls came as investors digested the latest weekly jobless claims of 286,000 - the highest level since October.
On the other hand, the Philly Fed index rose to 23.2 from 15.4, which was above the consensus of 19.0.
On the jobs, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "Seasonal pressures pointed to a further increase in jobless claims, but only to 240K or so; this increase is much more about the hit from Omicron. It won’t last long, given that cases have now started to fall, but the near-term path of claims is now very unpredictable."
He added: "The uptick in the Philly Fed index is a pleasant surprise after the plunge in the Empire State index, reinforcing the point that they often diverge month-to-month, though they follow the same broad trends over time."
The positive start on Wall Street has done little for the FTSE 100, which is down 28.05 points or 0.37% at 7561.61, not far off the day's lows.
1.47pm: Omicron hits US jobs market
US weekly jobless claims have come in much higher than expected.
The number of Americans seeking unemployment benefit for the first time rose to 286,000 last week, compared to forecasts of a figure of 225,000.
That compares to 231,000 the previous week, itself revised upwards by a thousand.
It was the highest level for three months as the Omicron variant disrupted theUS jobs market.
U.S. weekly jobless claims surged to the highest since mid-October https://t.co/dr2zgDqwyU pic.twitter.com/2eWlNsoB2F
— Bloomberg Markets (@markets) January 20, 2022
12.34pm: Scottish Mortgage lifted by loan note news
Leading shares continue to drift in negative territory but it is hardly a slump.
The FTSE 100 is currently down just 4.13 points at 7585.53, but it may well need some guidance from Wall Street.
One bright spot is Scottish Mortgage Investment Trust PLC (LSE:SMT).
The technology investor has seen its shares fall by a quarter in the past month and a half as the sector has been hit hard by the prospect of rising interest rates.
But now they are up 2.37% after it raised US$400mln in long-term borrowings through the issue of three loan notes.
11.45am: US investors cautious amid interest rate talk
US stocks are expected to attempt another break higher after sinking back into the red in late Wednesday trade as investors continue to weigh up corporate earnings reports amid rising bond yields.
Futures for the Dow Jones Industrial Average rose 0.49% in Thursday pre-market trading, while the broader S&P 500 index added 0.59% and those for the tech-heavy Nasdaq 100 gained 0.9%.
Stocks headed south shortly before the market close on Wednesday as investors mulled over the likelihood of a March interest-rate hike.
The Dow fell 0.96% to 35,029, while the S&P 500 shed 0.97% to 4,533 and the Nasdaq dropped 1.15% to 14,340.
Meanwhile the FTSE 100 is currently 5.1 points lower at 7584.56.
11.31am: TUI climbs on holiday hopes but IAG dips
A mixed picture for the travel sector as it comes to terms with the UK's proposed lifting of most Omicron rules, but not yet the testing system for fully vaccinated travellors.
So British Airways owner International Consolidated Airlines Group (LSE:IAG) is down 0.84% but TUI AG (LSE:TUI) is up 4.10% on hopes of a rise in holidays this summer, while Trainline PLC (LSE:TRN) has moved ahead by 4.61%.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: ‘’Despite high hopes that mass vaccine roll outs would by now have propelled the airline industry upwards on a smooth ride of demand, the latest data shows that turbulence is continuing, with UK daily flights still at half of pre pandemic levels...
"As uncertainty remains about exactly when the government will ease the restrictions further, British Airways owner, International Consolidated Airlines Group (LSE:IAG) remained under pressure today...
"But tour operator TUI has surged higher amid reports that it aims to double the number of customer taking holidays in Greece next year, exceeding pre-pandemic numbers, a sign of confidence in pent up demand translating into bookings.
"The lifting of Plan B restrictions and the expectation that workers will head back to the office has also been met with a relief rally by Trainline. The company has been severely hit by the exodus of commuters from the railways, and the expectation is that online bookings will start clicking back up, although given the hybrid working from home revolution, there is still a huge journey ahead to get close to pre-pandemic levels of business. Its share price rose by just over 4% in early trade, but is 42% down over the year and less than half of what it was in February 2020.’’
11.16am: Rentokil rises but ABF falls
Rentokil Initial PLC (LSE:RTO) has risen to the top of the leading index.
Its shares are up 2.6% to 529.4p after analysts at Citigroup raised their rating on the business from neutral to buy, with a 650p price target.
Overall however the FTSE 100 remains in negative territory, albeit marginally.
It is currently down 6.14 points at 7583.52.
Primark owner Associated British Foods PLC (LSE:ABF) remains the leading faller, down 3.47% after its latest update.
10.24am: More businesses see turnover falling
A net 6% of firms reported decreasing turnover in December compared with the previous month, according to the latest economic activity report from the Officer for National Statistics.
This is the highest proportion reporting a fall in monthly turnover since April 2020.
Dr Jackie Mulligan, part of ghe government’s High Streets Task Force and founder of the local shopping platform, Shopappy, said: “This data shows the devastating impact the Omicron variant had on UK businesses in December.
"The move to Plan B holed many businesses under the waterline, just when they needed a festive lift.
"Around the country towns became ghost towns in December and 2022 has started on an equally sombre note.
"Inflation at a 30-year high is hitting small high street businesses from all angles.
"Customers have less to spend, raw materials are costing more, supply chains are being squeezed, interest rates are on the up and the cost to heat their premises is skyrocketing."
Elsewher in the ONS report, transactions at Pret A Manger stores across the UK - an indicator of office life - increased by 16 percentage points in the week to 13 January 2022 to 72% of the average level in January 2020.
Despite the weekly increase, transactions remain notably below levels in the four months before Christmas.
This is backed up by the finding that one in four working adults (26%) have reported working from home exclusively in the past seven days; this rose by 5 percentage points from 21% in the previous period.
9.47am: Market reverses after hitting new two year high
After a bright start, leading shares have drifted lower.
The FTSE 100, having hit a new post-pandemic high of 7619, is now down 15.31 points at 7574.35.
The day's dip in the oil price has seen Royal Dutch Shell PLC (A shares) (LSE:RDSA) lose 2.05% and BP PLC (LSE:BP.) drop 1.5%.
Associated British Foods PLC (LSE:ABF) is down 1.6% despite rising sales as it warned of pricing pressures and announced job cuts at Primark.
But with China cutting interest rates, miners and companies with interests in the region are providing some support.
Fresnillo PLC (LSE:FRES) is up 2.36%, while Antofagasta PLC (LSE:ANTO) has added 0.71% and BHP Group PLC (LSE:BHP) is 0.57% better.
Prudential PLC (LSE:PRU), the insurer now focused on Asia and Africa, is up 1.5% while Burberry Group PLC (LSE:BRBY), which has a large presence in China, is 0.91% better.
9.10am: Crude slips back but could it hit US$100?
Oil prices have slipped back a little but are still close to their highest levels since 2014.
Brent crude is down 0.67% at US$87.85 a barrel while West Texas Intermediate - the US benchmark - is 0.32% lower at US$86.68.
But could oil reach US$100 before too long as some have suggested?
Naeem Aslam, chief market analyst at Avatrade, said there were four reasons why crude could reach that level in the short term.
Firstly OPEC sees no need to boost supply aggressively.
Added to that, investment and lending in fossil fuels have dropped dramatically due to a shift towards renewable energy.
Meanwhile Omicron has not adversely hit oil demand as much as previously anticipated, and travel restrictions are being rolled back
Finally, the geopolitical situation is getting worse, with US president Joe Biden adopting a strong stance against Russia, and vowing to punish any attack on Ukraine.
But Aslam added: "In the long-term, fossil fuel demand is going to fall, and prices at the current level aren’t sustainable."
8.24am: Unilever helps lift market but Compass falls as it goes ex-div
On a busy day for company news, leading shares have moved higher in early trading despite continuing concerns about inflation and what central banks intend to do about it.
UK inflation hit a 30 year high on Wednesday, prompting more talk that the Bank of England would raise rates again next month after moving in December.
And the US Federal Reserve is also expected to act to temper pricing pressures in the economy.
Michael Hewson at CMC markets said: "There seems little doubt that the Fed will move on rates in March, and with a meeting due next week, there has been fevered speculation this week that the Fed might go for a 50 basis point hike when it does finally pull the trigger. This seems highly unlikely given that it is, even now, still adding to its balance sheet. Furthermore, it would be a huge shift from the tone of their communication as recently as the last meeting in December.
"The wider concern appears to be over the extent of any balance sheet reduction the Fed might look at implementing, along with the fact that after the move higher in yields seen since the beginning of the year, it might be time for a bit of a pause."
But with Asian markets rising after China did the opposite and cut rates, the FTSE 100 is up 28.02 points or 0.37% to 7617.68.
Unilever PLC (LSE:ULVR) is up 1.8% as it said it would not raise its £50bn offer for the consumer arm of GlaxoSmithKline PLC (LSE:GSK), 1.54% lower.
On the results front Associated British Foods PLC (LSE:ABF) is down 2.53% despite a bounceback in sales, helped by a strong performance from Primark in the US.
But it is cutting 400 UK Primark jobs and warned on continuing supply chain and pricing pressures.
If it's Thursday, it must be ex-dividend day, but there is only one company in that category in the leading index this time round - Compass Group PLC (LSE:CPG), which is down 1.12%.
The catering group has not been helped by Deutsche Bank analysts cutting their rating from buy to hold.
6.50am: UK market set to shrug off Wall Street woes and follow Asia's lead
FTSE 100 was forecast to make a decent start as Asian markets rallied following another cut in interest rates in China.
Spread bet firms suggested London’s blue-chip index might rise as much as 42 points in early dealing adding to the late rally yesterday on the easing of Covid restrictions that helped it close up 26 at 7,590.
The predicted rise comes despite another bad day for US markets overnight, where rising bond yields and worries over a Russian invasion of Ukraine again soured the mood.
Asian markets rose for the first time in five days as China cut its benchmark mortgage rates to help its ailing property sector and also boost consumer activity, which has been slowing recently.
The move reversed the downbeat noises spilling out from the US, where tech stocks slid again as Treasury bill yields rose to a two-year high.
Fears that the US Fed is poised to raise interest rates faster than indicated have sparked the recent sell-off, with the S&P 500 and Dow Jones now at at four-week lows.
Tech-dominated Nasdaq meanwhile has fallen into correction territory, which is defined as a 10% drop from a previous peak.
The index has shed more than 8% this year and closed down 1.2% yesterday leaving it 10.7% below its 19 November record peak of 14,340.
AB Foods leads the UK news
In the UK, Primark owner AB Foods is the largest company of interest reporting as it updates on post-Christmas trading.
In mid-December, it said was increasing prices at its famously cheap fast-fashion chain as it struggled with the closures of some European stores, supply chain disruption and higher costs.
This Omicron-related squeeze might not be entirely over yet, so the FTSE 100-listed group’s outlook and guidance will be the thing to watch.
Later, Netflix releases its latest earnings update and , in the wake of Microsoft’s move on Activision Blizzard, this will be watched even more keenly than usual especially any comments on its own long-expected moves into gaming.
6.50am: Early Markets - Asia / Australia
Asian shares were mostly higher on Thursday after China’s central bank cut the one-year loan prime rate by 10 basis points from 3.8% to 3.7%, while the five-year rate was reduced by 5 basis points from 4.65% to 4.6%.
China’s Shanghai Composite was marginally up by 0.01% while Hong Kong’s Hang Seng index surged 2.60%.
The Nikkei in Japan rose 1.12% and South Korea’s Kospi moved 0.48% higher.
Australia’s S&P/ASX200 rose 0.14% to close at 7342.4 points, as the country’s jobless rate fell to 4.2% in December – its lowest level in more than 13 years.