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London open: FTSE edges lower as investors eye Powell speech
London stocks edged lower in early trade on Tuesday as investors eyed a speech by Federal Reserve chair Jerome Powell.
At 0850 GMT, the FTSE 100 was down 0.3% at 7,703.26
Victoria Scholar, head of investment at Interactive Investor, said: “After the FTSE 100 closed above a three-year high, European markets have opened lower following hawkish comments from two Fed policymakers.
“Focus now shifts to Fed Chair Jerome Powell’s address later today for clues into the outlook for US monetary policy. US futures are pointing to a softer open after markets stateside closed mixed with tech stocks outperforming as the Nasdaq logged its second day of gains despite weakness for the Dow Jones.
“Oil prices are giving back some gains after a rally on Monday driven by hopes of stronger demand following the loosening of China’s covid restrictions and a Goldilocks US jobs report on Friday.”
Powell is due to speak later in the day at a central bank conference in Stockholm.
On home shores, meanwhile, data showed that retail sales jumped in December as shoppers splashed out on Christmas food and gifts.
Many in the sector had been concerned that the cost-of-living crisis, widespread rail strikes and the cold snap would weigh on sales during December, one of the most important months of the year for retailers. But according to the latest BRC-KPMG Retail Sales Monitor, total sales increased by 6.9% last month, compared to 2.1% growth in December 2021.
On a like-for-like basis, they improved 6.5% against a 0.6% rise a year previously. The increase was driven largely by food sales, which jumped 7.7% in the three months to December. Non-food sales rose 1.1% over the same period on the same basis.
The strong end to the year helped UK total retail sales increase 3.1% year-on-year in 2022, with food sales ahead 3% and non-food sales up 3.2%.
Helen Dickinson, chief executive of the British Retail Consortium, said: “After an exceptionally challenging year, which saw inflation climb and consumer confidence plummet, the uptick in spending over Christmas gave many retailers cause for cheer.
“Nonetheless, despite the strong sales, growth remained below inflation, making December the ninth consecutive month of falling volumes.
“Retail faces further headwinds in 2023: cost pressures show little immediate signs of waning, and consumer spending will be further constrained by increasing living costs.”
In equity markets, recruiters PageGroup and Hays slumped after a profit warning from Robert Walters.
Miniature wargames manufacturer Games Workshop was in the red after it posted a decline in half-year profit.
On the upside, online electrical retailer AO World rallied after it lifted its profit guidance for the year to March 2023 as it said profitability was running ahead of its previous expectations, having taken actions to cut costs and improve margins.
Greeting card retailer Card Factory also upgraded its profit guidance for the year as it hailed better-than-expected trading as customers returned to shopping in bricks and mortar stores.
Plus500 pushed higher as it highlighted an “excellent” operational and financial performance throughout 2022.
In broker note action, Centrica was a high riser after it was reinstated at ‘outperform’ by Exane, while Admiral was boosted by an upgrade to ‘buy’ at Deutsche Bank.
Softcat was knocked lower by a downgrade to ‘sell’ from ‘neutral’ at UBS.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
|||||||
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Admiral Group Plc | +1.90% | +42.00 | 2,250.00 |
| 2 |  |
Hargreaves Lansdown Plc | +1.37% | +12.00 | 886.60 |
| 3 |  |
Sainsbury (j) Plc | +0.93% | +2.30 | 249.40 |
| 4 |  |
Astrazeneca Plc | +0.84% | +98.00 | 11,834.00 |
| 5 |  |
Centrica Plc | +0.80% | +0.72 | 91.18 |
| 6 |  |
Associated British Foods Plc | +0.57% | +10.00 | 1,760.00 |
| 7 |  |
Tesco Plc | +0.53% | +1.30 | 244.50 |
| 8 |  |
Pearson Plc | +0.49% | +4.40 | 911.00 |
| 9 |  |
Bae Systems Plc | +0.41% | +3.40 | 838.60 |
| 10 |  |
Relx Plc | +0.39% | +9.00 | 2,341.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Itv Plc | -4.00% | -3.26 | 78.22 |
| 2 |  |
Bt Group Plc | -2.11% | -2.70 | 125.35 |
| 3 |  |
Tui Ag | -2.06% | -3.10 | 147.70 |
| 4 |  |
International Consolidated Airlines Group S.a. | -1.79% | -2.60 | 142.90 |
| 5 |  |
Ocado Group Plc | -1.70% | -12.60 | 730.60 |
| 6 |  |
Scottish Mortgage Investment Trust Plc | -1.65% | -12.40 | 739.20 |
| 7 |  |
Anglo American Plc | -1.61% | -57.50 | 3,524.00 |
| 8 |  |
Ferguson Plc | -1.42% | -165.00 | 11,430.00 |
| 9 |  |
Ashtead Group Plc | -1.37% | -70.00 | 5,040.00 |
| 10 |  |
Prudential Plc | -1.28% | -16.00 | 1,231.00 |
US close: Stocks mixed as investors await bank earnings
Wall Street stocks delivered a mixed performance on Monday as major indices struggled to extend gains recorded in their first strong session of 2023.
At the close, the Dow Jones Industrial Average was down 0.34% at 33,517.65 and the S&P 500 slipped 0.08% to 3,892.09, while the Nasdaq Composite saw out the session 0.63% firmer at 10,635.65.
The Dow closed 112.96 points lower on Monday following a strong performance in the previous session after non-farm payrolls came in slightly higher than expected.
Monday marked the beginning of another week full of key macroeconomic data, with last month’s consumer price index out on Thursday, while earnings will also be in focus, as the likes of Bank of America, Bank of New York Mellon, BlackRock, Wells Fargo, JPMorgan Chase, Citigroup, and Delta Air Lines all report their latest quarterly figures on Friday.
As far as the bank earnings go, investors will zero in on the level of bad loan provisions and mortgages, given that although rising interest rates will be good for earnings, higher-than-expected interest rates will likely threaten credit quality, loan growth, and net interest margins.
Capitol Hill was also drawing an amount of investor attention after Republican Kevin McCarthy finally became US House Speaker after battling through 15 rounds and four days of chaotic voting. However, many view McCarthy’s job to come as being even more difficult than his path to seize the gavel in the first place.
On Monday’s macro slate, consumer credit increased to $27.96bn in November, according to the Federal Reserve, up from $27.08bn a month earlier.
In the corporate space, Uber shares traded higher after analysts at Piper Sandler upgraded the stock to ‘overweight’, while WD-40 posted first-quarter earnings and revenues that fell short of expectations.
Tuesday newspaper round-up: UK inflation, landlords, City AM
Businesses will receive reduced support for their energy bills from the end of March as the Treasury attempts to cut the cost of compensating for soaring gas and electricity prices, the UK government has confirmed. James Cartlidge, the exchequer secretary to the Treasury, said on Monday that the government would provide £5.5bn of “transitional support” for businesses over 12 months from 1 April 2023. – Guardian
The Bank of England’s chief economist has warned high rates of UK inflation could persist for longer than expected, despite a fall in wholesale energy prices in recent weeks and the economy on the brink of recession. Huw Pill said the slowdown in the British economy and sharp fall in European gas prices could help to take the sting out of the highest rates of inflation in more than four decades. Threadneedle Street forecasts headline inflation – which was running at 10.7% in November – will ease from the middle of this year. – Guardian
Nicola Sturgeon and Andy Burnham are plotting to force ministers to spend at least £3bn on making HS2 services run to Scotland. Ministers last summer culled a section of HS2 designed to allow Scotland to benefit from the controversial high-speed rail line, amid concerns that costs were spiralling out of control. – Telegraph
City AM, the free London business newspaper, has shut down its Friday print edition as it blamed a shift to home working among bankers in the Square Mile. The publication said it will become digital-only on Fridays to respond to the shift in working habits and lower demand from advertisers. – Telegraph
The value of commercial properties in Britain fell by £130 billion last year as landlords were hit by rapidly rising interest rates and the prospect of a recession. Commercial property capital values dropped by 3 per cent last month alone, according to the latest monthly index from CBRE, the real estate and investment company. The monthly fall in December means that commercial properties lost 13.3 per cent of their value in 2022, wiping about £130 billion from the value of Britain’s £1 trillion estate of commercial warehouses, shopping centres and offices. – The Times
