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London open: FTSE edges lower as St James’s Place, Reckitt slump
London stocks were a little weaker in early trade on Wednesday, with St James’s Place and Reckitt Benckiser under the cosh after disappointing results.
At 0850 GMT, the FTSE 100 was down 0.2% at 7,664.5.
Investors were looking ahead to the latest US growth figures and key inflation data, due later in the day and on Thursday, respectively.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: “Today, the US will reveal its latest GDP numbers. The US economy is expected to have grown 3.3% in Q4. That’s lower than the 5% printed in the Q3, but it’s still a very strong growth for an economy that underwent the most aggressive tightening cycle of its modern history. And if Atlanta’s GDP prediction is an indication, the slowdown will slow in the first quarter of this year.
“Robust growth is good, if it’s not accompanied by stronger inflation. Is it possible? Yes, it is possible, if supply grows faster than demand, but I think that’s not necessarily the case for the US right now. Demand remains strong despite the latest weakness in consumer spending and durable goods orders. And core PCE – which will be released tomorrow – is expected to print the biggest jump in a year on a monthly basis. Therefore, good news (on GPD data) has the potential to be bad news for market sentiment, provided that strong growth and higher inflation would push the Federal Reserve (Fed) rate cut expectations further down the road.
“Pricing today suggests that the market expects a 75bp cut from the Fed this year – matching what the Fed members plotted on their latest dot plot in December. The probability of a June rate cut slipped just below 60% yesterday. A U-turn in inflation won’t only delay the first rate cut but likely slow the pace of the future cuts as well. That’s not good news for risk appetite.”
In equity markets, St James’s Place tanked as the wealth manager said it swung to a full-year loss as it slashed its dividend and set aside £426m for potential client refunds.
Reckitt Benckiser was also under pressure as the consumer goods giant’s fourth-quarter sales missed expectations.
Housebuilder Taylor Wimpey lost ground as it said 2023 profits almost halved as higher mortgage rates hit demand, but added that current trading was showing “some encouraging signs of improvement with reduced mortgage rates positively impacting affordability”.
Luxury carmaker Aston Martin edged lower as it said that annual losses more than halved last year, driven by higher prices for its high-end vehicles.
Insurer Direct Line was hit by a downgrade to ‘neutral’ at Citi.
Outside the FTSE 350, Halfords tumbled as it slashed its profit guidance for this year, saying it had seen “a further material weakening” in three of its four core markets, resulting in a significant drop in like-for-like revenue growth in the retail business.
On the upside, Vodafone rallied after confirming media speculation that it plans to sell its Italian operations to Swiss telecoms group Swisscom for an enterprise value of €8bn.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Vodafone Group Plc | +3.33% | +2.28 | 70.68 |
| 2 |  |
Rolls-royce Holdings Plc | +1.39% | +5.00 | 363.60 |
| 3 |  |
Marks And Spencer Group Plc | +1.17% | +2.80 | 242.60 |
| 4 |  |
Centrica Plc | +1.08% | +1.35 | 126.80 |
| 5 |  |
Barclays Plc | +0.87% | +1.46 | 168.32 |
| 6 |  |
Kingfisher Plc | +0.87% | +2.00 | 232.50 |
| 7 |  |
Sage Group Plc | +0.75% | +9.00 | 1,216.50 |
| 8 |  |
Gsk Plc | +0.61% | +10.20 | 1,681.20 |
| 9 |  |
Mondi Plc | +0.61% | +8.50 | 1,411.50 |
| 10 |  |
3i Group Plc | +0.58% | +14.00 | 2,430.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
St. James’s Place Plc | -31.87% | -197.90 | 423.10 |
| 2 |  |
Smith & Nephew Plc | -4.44% | -49.50 | 1,064.50 |
| 3 |  |
Taylor Wimpey Plc | -3.63% | -5.10 | 135.45 |
| 4 |  |
Direct Line Insurance Group Plc | -2.79% | -4.55 | 158.80 |
| 5 |  |
Prudential Plc | -2.35% | -19.00 | 789.00 |
| 6 |  |
Anglo American Plc | -1.95% | -34.40 | 1,728.00 |
| 7 |  |
Hargreaves Lansdown Plc | -1.94% | -14.60 | 739.00 |
| 8 |  |
Fresnillo Plc | -1.92% | -9.00 | 458.90 |
| 9 |  |
Persimmon Plc | -1.82% | -25.00 | 1,345.50 |
| 10 |  |
Easyjet Plc | -1.65% | -9.20 | 550.00 |
US close: Stocks mixed as investors turn cautious ahead of data
US stocks finished mixed on Tuesday with markets rangebound as risk sentiment receded ahead of key economic data later in the week.
The Dow fell 0.25%, while the S&P 500 inched 0.17% higher and the Nasdaq gained 0.37%, though gains were limited by data showing the biggest monthly drop in US durable-goods orders in nearly four years.
Stocks have been pulling back over the past few sessions after racing to new highs last week on the back of blockbuster earnings from chip giant and AI poster child Nvidia, which spurred buying across the tech sector.
“Those urging caution point out that the latest leg of the rally has been triggered by FOMO-buying driven by the incalculable future benefits of generative AI,” said David Morrison, senior market analyst at Trade Nation. “They say that the rally is being driven by a relatively small number of large corporations which makes the market particularly vulnerable to a shift in sentiment.”
All eyes on data
On the macro front, US durable goods orders shrank rapidly at the start of 2024, mainly due to a more than halving in orders for defence aircraft and parts. According to the Department of Commerce, in seasonally adjusted terms durable goods orders dropped by 6.1% in January to $276.65bn, well below the 4.5% decline expected by the market.
In other news, the Conference Board’s US consumer confidence index fell to 106.7 in February from a revised print of 110.9 for January, missing the 115 level expected by analysts; while the S&P CoreLogic Case-Shiller US national home price index accelerated to a year-on-year pace of 5.5% in December, after rising by 5.0% during the month before.
Looking ahead, a barrage of closely watched US datapoints will be on tap in the coming days, including GDP, manufacturing PMIs and the all-important personal consumption expenditures inflation gauge on Thursday. Market participants will be closely watching these releases for any hints as to the state of the US economy and for clues as to the potential future path of monetary policy.
Norwegian Cruise Line jumps
Cruise operator Norwegian Cruise Line Holdings surged 20% after guiding to a surprise profit in its first quarter on the back of strong bookings for 2024. The company said it expects to earn 12 cents a share, compared to the 20 cents loss expected by the market. Sector peer Carnival also rose strongly.
Workday shares were down 4% despite the workplace software provider beating profit forecasts and meeting revenue estimates with its fourth quarter.
Macy’s finished higher after the retail giant unveiled a new strategic plan along with a mixed set of holiday-quarter figures. The plan, dubbed ‘A Bold New Chapter’, aimed at repositioning it to enhance customer experience and foster growth, and will see the company close about 150 locations over the next three years.
US home improvement retailer Lowe’s was also in favour despite giving a cautious outlook for 2024 as it reported fourth-quarter profits ahead of analysts’ expectations. The company said it expects to generate $84bn to $85bn in total sales, slightly lower than current consensus estimates.
Wednesday newspaper round-up: HMRC, Chinese EVs, Klarna
Customer service levels at HM Revenue and Customs have sunk to an “all-time low”, parliament’s spending watchdog has said. Users regularly encounter long call-waiting times as the tax department apparently struggles to cope with demand, a report by the cross-party public accounts committee (PAC) has found. As demands on HMRC grow, the authority has not been given the resources needed to staff its phone lines, the report said. – Guardian
Deep cuts to government funding have led a council in south London to ask its residents to invest their own money, for a financial return, to build cycle hangars, new LED street lighting and green upgrades at schools and leisure centres. In the midst of a financial crisis hitting town halls across England, councillors in Southwark have resorted to a crowdfunding scheme to raise £6m over the next six years to help fund climate-friendly projects. – Guardian
Britain is poised to launch an investigation into cheap Chinese electric vehicles coming onto the market amid fears a flood of cars subsidised by Beijing will destroy local manufacturing. On Tuesday it emerged that officials at the Department for Business and Trade have discussed an intervention amid concerns that China has given its car makers an unfair advantage through vast subsidies. – Telegraph
High street banks shut more than 140,000 accounts held by small businesses last year, according to figures obtained by MPs that will fuel concerns about debanking. Eight banks disclosed account closure data to the Commons Treasury committee after requests for information from the MPs, who are scrutinising the financing for small and medium-sized enterprises. – The Times
The buy now, pay later group Klarna is using an AI-powered chatbot to handle two thirds of its customer service inquiries, doing the equivalent work of 700 full-time agents. The Swedish fintech, which has 150 million customers worldwide, collaborated with OpenAI to build the AI assistant for customer service chats on its app. – The Times
