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London open: FTSE rises amid deluge of retail updates, ahead of US inflation
London stocks rose in early trade on Thursday as investors eyed the latest US inflation data and waded through a deluge of retail updates.
At 0845, the FTSE 100 was up 0.5% at 7,766.50.
Oanda market analyst Craig Erlam said the US inflation print has been the main topic of conversation all week.
“The jobs report last Friday changed the dynamic in the markets and ensured that not only was this CPI report going to be important but in all likelihood pivotal ahead of next month’s Fed meeting,” he said.
“We’ve gone from inflation declining but the labour market being stubbornly tight to both appearing to sing from the same hymn sheet. Cracks are appearing in the economy following a very aggressive tightening cycle that’s leading to cooling demand, prices, and wage demands. Unemployment remains low as employers have been reluctant to lay people off but there’s every chance that will follow.
“The Fed doesn’t want to be responsible for a needlessly sharp downturn and the lag effect of monetary policy means that is a risk when the central bank is raising rates as aggressively as they have been. Another good inflation report today, particularly on the core side, will give policymakers more than enough reason to slow the pace of tightening further and even lower the terminal rate projections in March, if it continues.”
The US consumer price index for December is due at 1330 GMT.
In UK equity markets, meanwhile, it was a bumper day for retail updates.
Tesco was in the red even as the supermarket chain reiterated full-year profit guidance and posted strong Christmas sales.
The grocer, the UK’s largest by market share, said like-for-like sales excluding fuel in the UK and Ireland jumped by 7.8% in the six weeks to 7 January and by 7.2% in the UK. Across the 19 weeks to 7 January – which includes the third quarter – group sales rose 6.4%.
Marks & Spencer also lost ground despite posting a jump in sales over the Christmas period.
Halfords shares tumbled after the motoring and cycling products retailer cut its full-year profit guidance amid weakness in the consumer tyre market and labour market issues. The company said it now expects underlying pre-tax profit for FY23 of between £50m and £60m, down from previous guidance of £65m to £75m.
On the upside, online fashion retailer Asos surged despite reporting a slide in sales over the crucial festive trading period. It said the UK had been hit by weak consumer sentiment, first in September and then again in December, which was further affected by disruption in the delivery market after Royal Mail workers carried out a series of strikes.
Away from retailers, British Gas owner Centrica rallied after it lifted earnings guidance again as volumes remained strong amid surging energy prices for consumers. The company now expects full-year adjusted earnings per share of above 30p compared with a previous estimate of between 15.1p and 26p provided on 10 November.
Premier Inn owner Whitbread also racked up solid gains as it posted a rise in third-quarter sales, highlighting a strong performance in the UK and further progress in Germany.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Centrica Plc | +5.64% | +5.18 | 96.98 |
| 2 |  |
Tui Ag | +4.64% | +7.20 | 162.30 |
| 3 |  |
Whitbread Plc | +4.45% | +127.00 | 2,982.00 |
| 4 |  |
Persimmon Plc | +4.05% | +52.50 | 1,349.00 |
| 5 |  |
Vodafone Group Plc | +3.60% | +3.16 | 90.98 |
| 6 |  |
Easyjet Plc | +3.54% | +13.90 | 406.50 |
| 7 |  |
Barratt Developments Plc | +2.91% | +12.30 | 435.20 |
| 8 |  |
Dcc Plc | +2.38% | +104.00 | 4,472.00 |
| 9 |  |
International Consolidated Airlines Group S.a. | +2.38% | +3.50 | 150.56 |
| 10 |  |
Ocado Group Plc | +2.38% | +17.40 | 749.40 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Sse Plc | -2.13% | -36.00 | 1,656.50 |
| 2 |  |
Marks And Spencer Group Plc | -1.95% | -2.80 | 140.60 |
| 3 |  |
Direct Line Insurance Group Plc | -1.63% | -2.90 | 174.90 |
| 4 |  |
Johnson Matthey Plc | -1.18% | -26.00 | 2,179.00 |
| 5 |  |
Sage Group Plc | -1.12% | -8.80 | 774.20 |
| 6 |  |
Pearson Plc | -0.82% | -7.60 | 918.20 |
| 7 |  |
Smith & Nephew Plc | -0.60% | -7.00 | 1,154.00 |
| 8 |  |
Ashtead Group Plc | -0.51% | -26.00 | 5,076.00 |
| 9 |  |
Hiscox Ltd | -0.50% | -5.50 | 1,105.50 |
| 10 |  |
Experian Plc | -0.48% | -14.00 | 2,876.00 |
US close: Stocks extend rally ahead of CPI reading
Wall Street stocks ended the session in the green on Wednesday as major indices managed to build on what has generally been a strong start to 2023.
At the close, the Dow Jones Industrial Average was up 0.80% at 33,973.01, while the S&P 500 advanced 1.28% to 3,969.61 and the Nasdaq Composite saw out the session 1.76% firmer at 10,931.67.
The Dow closed 268.91 points higher on Wednesday, extending gains recorded in the previous session after comments from Federal Reserve chairman Jerome Powell.
News from Finnish think tank the Centre for Research on Energy and Clean Air that revealed Russian revenues from fossil fuel exports tumbled in December drew an amount of investor attention on Wednesday, with the first month of the European Union’s ban on seaborne imports of crude from the nation and the G-7’s price cap costing Moscow roughly $171.8m per day and significantly hampering Vladimir Putin’s ability to fund his war in neighbouring Ukraine.
However, Oleg Ustenko, economic advisor to Ukrainian President Volodymyr Zelenskyy, stated that while it was “very good news” that Western measures had hurt Russia, they were “definitely not enough” and called for a price cap against the Kremlin of $20 to $30 a barrel – markedly lower than the current $60-per-barrel price cap.
Investors also looked ahead to Thursday’s key consumer price index, with economists expecting to see SPI dipping to 0.1% in December and 6.5% overall year-on-year.
On the macro front, mortgage applications rose 1.2% to start off 2023, according to the Mortgage Bankers Association of America, following a 10.3% nosedive to wrap up 2022. Applications to refinance a home loan soared 5.1%, while those to purchase edged 0.5% lower.
No major corporate earnings were released on Wednesday but shares in Disney rose in extended trading after the media behemoth revealed that Nike executive chairman Mark Parker will join its board as chairman.
Thursday newspaper round-up: Prepayment meters, Elon Musk, FTX
Ministers are being urged to stop the forced installation of prepayment meters after revelations that 3.2 million people – the equivalent of one person every 10 seconds – were left with cold and dark homes last year as they ran out of credit. As energy prices surged this winter, suppliers have stepped up the use of court warrants to force their way into homes to install prepayment meters, with some magistrates approving hundreds of applications at a time. For homes with smart meters, the change can be made remotely without even needing a warrant. – Guardian
Elon Musk has broken the world record for the largest loss of personal fortune in history, according to a Guinness World Records report. The tech billionaire has lost approximately $182bn (£150bn) since November 2021, although other sources suggest that it could actually be closer to $200bn, the report said. – Guardian
More than 750,000 households are at risk of defaulting on their mortgages over the next two years as soaring borrowing costs make payments unaffordable, Britain’s financial regulator has warned. The Financial Conduct Authority (FCA) said that over 200,000 households had already fallen behind on payments by the end of June 2022 – with bills overdue on around one in 40 home loans. – Telegraph
Striking train drivers are to reject a £5,000 pay rise as leaked proposals reveal government plans to impose greater reliance on automation across the railways. In a move that raises the spectre of more strike action, the executive committee of drivers union Aslef will next week vote against an 8pc pay rise, The Telegraph has learnt. – Telegraph
The bankrupt cryptocurrency exchange FTX has recovered assets worth more than $5 billion, according to its attorneys, after its collapse left investors, customers and lenders facing steep losses. Andy Dietderich, who represents FTX, told a bankruptcy court in Delaware yesterday that it had located “cash, liquid cryptocurrency and liquid investment securities”, and also planned to sell non-strategic investments with a book value of $4.6 billion. – The Times
