- FTSE 100 dips 1.70 points
- XP Power on a charge after two acquisitions
- Carnival buoyed by extension of share purchase programme
4:50pm: FTSE ends volatile January marginally positive
The FTSE 100 finished the day on a down note, easing 1.70 points, or 0.02%, to 7,464.37, even as energy and bank stocks advanced.
January saw some wild price swings, with European and US stocks had a rotten month but the Footsie set itself apart with a positive month, its second in succession.
“It looks like buyers have finally been tempted back in to the water after the drop in stock prices and valuations,” IG chief market analyst Chris Beauchamp said.
“With the Fed out of the way for now a calmer outlook prevails, even if we still have some big-name earnings to come,” Beauchamp added.
Notable movers included shares of Vodafone Group PLC (LSE:VOD), which rose 2% after the company said it would work with Intel and other silicon vendors on designing its own chip architecture to drive innovation and efficiency in nascent OpenRAN network technology.
4:10pm: Weak finish lined up
Thanks largely to supermarket and mining shares, the FTSE 100 looks set to end January on a dull note, which would at least be in keeping with the rest of the month.
London’s top shares index is down 9 points (0.1%) at 7,457.
Sainsbury’s and Tesco remain friendless while mining stocks such as Rio Tinto PLC (LSE:RIO), Anglo American PLC (LSE:AAL) and Glencore PLC (LSE:GLEN) are also weighing on the index, with losses ranging from 2.1% to 3.3%.
Among the mid-caps, XP Power Ltd (LSE:XPP) advanced 8.1% to 4,850p after paying £33mln for the splendidly named FuG and Guth. That’s two separate companies, not a thrash metal double-act.
Heavily indebted cruise lines operator Carnival PLC (LSE:CCL) was another buoyant mid-cap stock after it announced the extension of its share repurchase programme. The stock rose 3.5%.
2.48pm: Wobbly start for US markets turns into confident step forward
US markets are in higher spirits than expected after a subdued start, with the tech-heavy Nasdaq Composite off to a particularly boisterous start.
The Nasdaq Composite was up 272 points (2.0%) at 14,042, more than double (in percentage terms) the percentage gain notched up by the S&P 500, which is 36 points (0.8%) higher at 4,469. The Dow Jones average is 88 points (0.3%) to the good at 34,819.
Despite today’s rally, indices are still set for their worst month since March 2020, when Covid-19 started moving from the inside pages of newspapers in the West to the front pages.
“January has been a month to forget for many investors after hundreds of billions of dollars were wiped off equity and bond markets. Traders have shifted from the speculative corners of the market to safe haven assets as global stocks have tumbled over the past four weeks. Unprofitable growth companies, cryptos, and SPACs have felt most of the pain as the Federal Reserve prepares for its war against inflation, clearly indicating that the game has now changed following two years of extraordinary easy monetary policy,” declared Hussein Sayed, the chief market strategist at Exinity Group.
“So far, a third of the companies in the S&P 500 have reported Q4 2021 results, with 77% managing to beat EPS estimates. However, the beats are coming at a smaller margin than the 5-year average, which explains why earnings have not been very supportive of equity indices. More than 100 S&P 500 companies are due to announce results this week, including tech giants Alphabet, Meta, and Amazon. Given the new environment we're living in today, it will require robust results and positive guidance to encourage investors to buy the latest dip in the growth sector,” he added.
In London, the FTSE 100 has spent most of the day deciding which way to jump and it has now made a decision; it’s not jumping at all but it is crawling in a northerly direction, up 12 points (0.2%) at 7,478, despite the strength of sterling, which is up four-tenths of a cent against the US dollar; a strong exchange rate is usually reckoned to be bad on balance for the FTSE 100, which has a lot of big dollar earners.
12.49pm: Subdued US start in prospect
US stocks look set to start mixed on Monday, the final trading session of the first month of 2022.
The major US indices are poised to close January with heavy losses following a month of volatile trading amid worries over impending Federal Reserve interest rate hikes.
Futures for the Dow Jones Industrial Average were 0.3% lower, those for the S&P 500 edged down 0.1% but contracts for the Nasdaq-100 added 0.4%.
Stocks have tumbled in January as traders have tried to assess how fast the Fed may raise interest rates in response to heightened inflation and a tight labour market.
Through to last Friday, the S&P 500 index is down 7% for the month, on course for its worst monthly performance since March 2020. The tech-heavy Nasdaq Composite is down 12% for January and is set for its worst month since October 2008.
Hussein Sayed, chief market strategist at Exinity commented: "January has been a month to forget for many investors after hundreds of billions of dollars were wiped off equity and bond markets. Traders have shifted from the speculative corners of the market to safe-haven assets as global stocks have tumbled over the past four weeks. Unprofitable growth companies, cryptos, and SPACs have felt most of the pain as the Federal Reserve prepares for its war against inflation, clearly indicating that the game has now changed following two years of extraordinary easy monetary policy.
"The Fed last week indicated it would lift interest rates in March for the first time since 2018, with markets guessing how many more hikes would occur during the rest of the year. Raphael Bostic, President of the Fed's Atlanta branch, even hinted at the possibility of a 50-basis point rate hike in March and raising rates at each of the seven remaining policy meetings. However, his base case scenario remains three 25-basis point increases for this year, though much will depend on economic data."
He added: "So far, a third of the companies in the S&P 500 have reported Q4 2021 results, with 77% managing to beat EPS estimates. However, the beats are coming at a smaller margin than the 5-year average, which explains why earnings have not been very supportive of equity indices. More than 100 S&P 500 companies are due to announce results this week, including tech giants Alphabet, Meta, and Amazon. Given the new environment we're living in today, it will require robust results and positive guidance to encourage investors to buy the latest dip in the growth sector," Sayed added.
In London, the Footsie continues to do its impression of a lorry stuck under a bridge that was a little bit less high than the driver was expecting.
Supermarkets are getting the elbow today as traders fret about rising inflation. J Sainsbury PLC (LSE:SBRY), down 3.6%, is the worst-performing blue-chip while Tesco PLC (LSE:TSCO), off 2.2%, is the third-worst performer.
11.34am: SMT rallies
With the Bank of England’s Monetary Policy Committee meeting this Thursday, it is hard to avoid the old cliché about traders sitting on their hands.
How else does one explain the FTSE 100 being more or less unchanged at 7,465?
“Traders are betting the Bank of England will again raise interest rates this Thursday, which, if realised, would make it the first back-to-back hike since 2004 following December’s shock decision,” suggests Shafiq Shabir at Intertrader, although in truth there does not appear to be an awful lot of betting going on in the City today.
“Pressure has mounted on Threadneedle Street to act once again after December saw consumer prices unexpectedly soar by 5.4% year-on-year, with inflation at a near 30-year high. Markets have since priced in a 25bp rise, bringing rates to 0.5%.
“This time round, the arguments for and against rate rises seem far less evenly balanced, with public concerns regarding the cost of living crisis intensifying whilst the economic hit of Omicron continues to recede. More interest rate rises seem inevitable to combat rapidly spiralling inflation, so the question is whether the Bank will risk being seen to drag its feet.
“And it’s not just UK monetary policy that is tightening: officials on the other side of the pond have also endorsed imminent intervention, with Fed Chair Jay Powell last week all but confirming a hike at the US central bank’s next meeting in March. The jury is out on whether this will be quick enough action to curb inflationary pressure, but given the market’s reaction to the Fed’s plans, we can expect some choppy waters as central banks chart a new monetary policy course this year,” Shabir added.
Scottish Mortgage Investment Trust PLC (LSE:SMT), up 3.5%, is the Footsie’s top riser after the tech-heavy Nasdaq Composite rallied strongly on Friday.
Publishing group Pearson PLC (LSE:PSON) is 0.2% lower at 604.8p after acquiring Credly, a specialist in digital credentials and certifications for the workforce.
10.34am: Bright start sees no follow-through
The FTSE 100's early gains have withered on the branch, with miners, retailers and property giants all weighing as London underperforms the rest of Europe this morning.
It's now down just over six points to 7,461.
“Some of the value stocks which have done well during the recent market rotation were among the biggest fallers on Monday, including Imperial Brands and Anglo American," said says Russ Mould, investment director at AJ Bell.
“However, it is far too early to firmly state the value rally is over, particularly as we would need to see significantly more than just a day’s trading to define a trend.
“The big event on the calendar this week will be the Bank of England’s interest rate decision, where it is almost certainly going to raise rates. This is widely expected by the market and unlikely to prompt any volatility among UK stocks unless the central bank is aggressive with the amount by which it puts up rates.”
9.45am: On course
The Footsie is still on course to be about the only major index to end the month higher.
It's a "solid start" to trading after the rip-roaring close for Wall Street on Friday, notes analyst Neil Wilson at Markets.com, who notes that the London index's energy stocks and value status "has been a safer bet in Jan 2022 than tech and growth", as offered across the Pond.
Energy is helping again this morning, with oil giants Shell PLC (LSE:RDSB) and BP PLC (LSE:BP.) on the front foot as Brent crude stands just a tad below the multi-year highs set on Friday at around US$90.
The market focus is on the Ukrainian situation and UN Security Council meeting this week, says Wilson, with OPEC+ due to meet on Wednesday and stick to planned production increase.
Fallers on the FTSE are led by supermarkets and miners, but not too far away is BT Group PLC (LSE:BT.A).
This comes with news that rival Virgin Media 02 is planning to launch a fibre network-building joint venture with shareholders Liberty Global (NASDAQ:LBTYA) and Telefonica.
According to media reports Virgin Media O2 is hoping to take on BT by rolling out full fibre broadband to around 7 million homes across the UK.
8.40am: Positive start
It was not quite the kick-off that had been predicted, but the FTSE 100 at least opened in positive territory, reclaiming some of Friday’s lost ground.
On the last day of January, the UK blue-chip index is roughly flat for the month, which, when you consider the performance of the US stock market isn’t too bad at all.
Certainly, the Nasdaq is in correction territory with a tumble of 12% in the year to date, while the first month of 2022 has also been a bruising one for the Dow Jones, off 5% in that time.
"The situation remains delicately poised and the current levels of volatility are likely to be echoed by a continuation of the currently skittish sentiment,” said Richard Hunter, head of markets at Interactive Investor.
In the opening exchanges, activist interest from Cevian Capital helped push shares in Vodafone Group PLC (LSE:VOD) 3% higher.
READ: Vodafone board under pressure from activist investor Cevian Capital
Scottish Mortgage Investment Trust PLC (LSE:SMT), one of the UK’s biggest investors in Silicon Valley, mirrored Friday’s after-hours bounce in tech stocks by opening 2% higher.
Among the mid-caps, the marketing group Next Fifteen Communications Group PLC (AIM:NFC) was trading 11% higher after a better than expected update on trading.
6.50am: FTSE 100 set to start week on the front foot
The FTSE 100 looks set to continue its roller coaster ride – this time with a swing higher after Friday’s 83-point decline.
US stock future provided some reasons to be cheerful for traders in Asia, where the markets opened the new week in positive territory.
Don’t expect the volatility to dissipate over the coming days with the UK gearing up for a hike to interest rates.
Overnight that barrel of crude breached US$91 – a high last seen in 2014 – amid concerns over Russia’s belligerence towards Ukraine.
Looking ahead to the new trading week, updates are expected from Shell, BT and Vodafone along with results from Ryanair, Virgin Money and Glencore.
Around the markets
- Pound US$1.3422 (+0.16%)
- Bitcoin US$36,997.30 (-2.39%)
- Gold US$1,788.50 (+0.11%)
- Brent crude US$91.14 (+1.11%)
6.50am: Early Markets - Asia / Australia
Asia-Pacific shares were mostly higher on Monday as Mainland China and South Korea’s markets remained closed for the Lunar New Year eve.
Japan’s Nikkei and Hong Kong’s Hang Seng indices both gained more than 1%.
Australia’s S&P/ASX200 closed 0.24% lower at 6971.60 points to post a 6.3% loss for January, the biggest monthly drop since COVID-19 first hit about two years ago.
India's Finance Minister Nirmala Sitharaman will present the country's annual budget on Tuesday as India tries to boost growth back to pre-pandemic levels while tackling a third wave of COVID-19 infections.