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London open: Stocks rise on US inflation cheer; house prices, retail data in focus
London stocks rose in early trade on Friday following solid gains on Wall Street, as investors continued to cheer an easing in US inflation.
At 0845 GMT, the FTSE 100 was up 0.6% at 7,676.70.
Richard Hunter, head of markets at Interactive Investor, said: “The personal consumption expenditures price index is the Federal Reserve’s preferred inflation measure and revealed the slowest annual increase for almost three years in January. The core monthly increase of 0.4% led to an annual rate of 2.8%, down from a previous 2.9% and excluding food and energy prices. Meanwhile, the headline numbers were both in line with estimates, rising by 0.3% and 2.4% respectively.
“The figures were met with some relief, especially given recent CPI and PPI readings which came in hotter than expected, thus igniting fears of a reacceleration of inflation. The news provides the potential for an interest rate cut in June to still be on the table, even if at the broadest level there are few signs of a weakening US economy, let alone one which is veering towards recession. The situation therefore remains finely balanced, and the Fed’s previous mantra of ‘higher for longer’ looks increasingly prescient given the current showings from economic data.”
On home shores, data released earlier by Nationwide showed that annual house prices returned to growth in February for the first time in more than a year following a dip in borrowing costs.
House prices rose by 1.2% on the year following a 0.2% decline in January.
On the month, prices were up 0.7%, the same as in January, with the average price of a home standing at £260,420, versus £257,656.
Nationwide said house prices are now around 3% below the all-time highs recorded in the summer of 2022, after taking account of seasonal effects.
Nationwide chief economist Robert Gardner said: “The decline in borrowing costs around the turn of the year appears to have prompted an uptick in the housing market. Indeed, industry data sources point to a noticeable increase in mortgage applications at the start of the year, while surveyors also reported a rise in new buyer enquiries.
“Nevertheless, near-term prospects remain highly uncertain, in part due to ongoing uncertainty about the future path of interest rates. After falling sharply in late December, swap rates, which underpin fixed rate mortgage pricing, have drifted back up.
“Borrowing costs remain well below the highs recorded last summer but, if the recent upward trend is sustained, it threatens to restrain the pace of any housing market recovery.
“While the squeeze on household budgets is easing, with wage growth now outstripping inflation by a healthy margin, it will take time to make up for the ground lost over the past few years, especially given consumer confidence remains fragile.”
Separate figures showed that retail footfall plunged last month as the unusually wet weather kept shoppers at home.
According the latest BRC-Sensormatic IQ Footfall Monitor, footfall slumped 6.2% in February, compared to a 2.8% decline a month earlier.
Within that, high streets recorded the biggest decline, with footfall down 9.3% from a more modest 2.3% fall in January.
But shopping centres and retail parks were also affected, with footfall off 7% and 5.8% respectively.
According to the Met Office, nearly a third more rain than usual fell in February, with some parts of the country experiencing record-breaking levels.
Helen Dickinson, chief executive of the British Retail Consortium, said: “Footfall experienced its biggest fall since the pandemic. One of the wettest Februarys on record, exacerbated by train strikes at the start of the month, meant shoppers visited fewer stores, with high streets one of the most significant declines.
“London, where footfall had been outperforming other major cities in the UK, saw one of the most significant declines.”
In equity markets, education publisher Pearson rallied as it said it expected 2024 earnings to be in line with expectations after reporting a rise in annual profits driven by strong demand for its English language courses and extending its share buyback by £200m.
ITV surged to the top of the FTSE 250 after the broadcaster said it had sold its entire 50% stake in streaming service BritBox International to its joint venture partner BBC Studios for £255m in cash.
On the downside, Rightmove slumped as the property portal warned that customer numbers were likely to decline this year amid uncertainty about interest rates and mortgage borrowing costs.
Specialist engineer IMI lost ground even as it reported a 12% jump in 2023 profits and forecast higher earnings this year, driven by a strong order book.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Itv Plc | +14.34% | +8.02 | 63.96 |
| 2 |  |
Pearson Plc | +4.83% | +46.40 | 1,007.00 |
| 3 |  |
Segro Plc | +2.84% | +24.00 | 869.40 |
| 4 |  |
Vodafone Group Plc | +2.79% | +1.93 | 71.05 |
| 5 |  |
Anglo American Plc | +2.22% | +37.80 | 1,738.80 |
| 6 |  |
Barclays Plc | +2.18% | +3.58 | 168.04 |
| 7 |  |
Lloyds Banking Group Plc | +1.93% | +0.90 | 47.47 |
| 8 |  |
Carnival Plc | +1.74% | +19.50 | 1,139.00 |
| 9 |  |
Bp Plc | +1.67% | +7.70 | 468.40 |
| 10 |  |
Ferguson Plc | +1.67% | +275.00 | 16,760.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rightmove Plc | -4.27% | -24.20 | 542.40 |
| 2 |  |
Ocado Group Plc | -2.29% | -11.70 | 499.70 |
| 3 |  |
St. James’s Place Plc | -1.71% | -8.60 | 494.40 |
| 4 |  |
Relx Plc | -1.10% | -38.00 | 3,423.00 |
| 5 |  |
Hikma Pharmaceuticals Plc | -0.97% | -19.00 | 1,948.00 |
| 6 |  |
Melrose Industries Plc | -0.79% | -5.00 | 630.00 |
| 7 |  |
Experian Plc | -0.56% | -19.00 | 3,366.00 |
| 8 |  |
Gsk Plc | -0.52% | -8.60 | 1,656.00 |
| 9 |  |
Rentokil Initial Plc | -0.50% | -2.20 | 436.10 |
| 10 |  |
Marks And Spencer Group Plc | -0.42% | -1.00 | 235.80 |
US close: Stocks higher following PCE reading
US stocks turned in modest gains on Thursday after a closely watched gauge of inflation showed that price pressures had continued to ease last month, reigniting hopes of a rate cut in the first half of the year.
At the close, the Dow Jones Industrial Average was up 0.12% at 38,996.39, while the S&P 500 advanced 0.52% to 5,096.27 and the Nasdaq Composite saw out the session 0.90% firmer at 16,091.92.
The Dow closed 47.37 points higher on Thursday, reversing losses recorded in the previous session.
According to the Department of Commerce, the so-called price deflator for personal consumption expenditures rose by 2.4% year-on-year in January, in line with forecasts and following a 2.6% annual increase in December. Meanwhile, the core rate eased to 2.8% from 2.9%, matching economists’ expectations.
Meanwhile, data showed that personal income growth surged to 1.0% month-on-month in January, after the 0.3% increase seen in December, though that didn’t translate into a jump in spending growth, which slowed to just 0.2% from 0.7%. The weak consumer spending outcome was thought to be a pullback from strong holiday shopping sales in December and weather-related weakness in auto sales.
In other news, jobless claims rose to 215,000 in the week to 23 February, according to the Labor Department, up from a revised 202,000 the week before and ahead of the 210,000 expected by economists.
In the corporate space, CRM software provider Salesforce fell despite beating forecasts with its quarterly earnings and launching a share buyback, as it disappointed the market with weak revenue targets for the coming financial year.
Also falling was cloud-computing firm Snowflake which dropped after underwhelming with its growth outlook and announcing the surprise and immediate departure of its chief executive.
Friday newspaper round-up: Boeing, mortgages, ISAs
Boeing said on Thursday it had reached a $51m settlement with the US state department for numerous export violations including Chinese employees in China improperly downloading documents related to US Pentagon programs. The state department said from 2013 through 2017 three Chinese employees at Boeing facilities in China downloaded technical data involving programs including the F-18, F-15 and F-22 fighter jets, the E-3 airborne warning and control system, the AH-64 Apache attack helicopter and the AGM84E cruise missile. – Guardian
Food industry trade bodies are discussing whether to take legal action against the government over post-Brexit plans that will require all meat and dairy products sold in the UK to be labelled as “not for EU”. Food producers say the labelling could add £250m a year to their costs, further fuelling inflation, and they are discussing a legal challenge as a viable option if a solution with the government is not found. – Guardian
Jeremy Hunt has scrapped plans for a scheme that would enable first-time buyers to get on the housing ladder with a 1pc deposit, just days after it emerged the Treasury was considering the move. Treasury insiders said the Chancellor had abandoned the taxpayer-backed scheme ahead of the Budget next week following a backlash from lenders that warned that the plans risked a surge in defaults among borrowers. – Telegraph
Fund managers with collective assets under management of nearly £100 billion have added their voices to calls for Jeremy Hunt to introduce a “British Isa” in next week’s budget to encourage investment in British companies. In a letter to The Times today, the signatories, who include fund managers such as Liontrust, brokers led by Peel Hunt and Canaccord Genuity, and senior City figures such as Baroness Altmann, have called on the chancellor to create a new UK Isa. – The Times
British drinkers bought ten million fewer bottles of wine in the run-up to Christmas after the government’s duty increases, leaving a black hole in Treasury finances, the industry has warned. In a letter to the chancellor, wine bosses say that last August’s double-digit increase in the tax on most wines and spirits has stifled sales, fuelled inflation and reduced revenue to the Treasury. – The Times
