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London open: FTSE flat as investors eye US PPI
London equity markets were little changed in early trade on Thursday as a raft of stocks went ex-dividend, with all eyes on the release of the latest US inflation reading.
At 0840 GMT, the FTSE 100 was flat at 7,770.10.
Richard Hunter, head of markets at Interactive Investor, said: “Given the mixed global lead, UK markets opened in unspectacular fashion, with investors searching for catalysts. One of the current themes for debate is the gulf between the US and the UK, not only in terms of market performance, but also the expected difference in timings to the first interest rate cut.
“Despite much weaker growth than the US, the UK seems likely to keep rates in a holding pattern until August, in an attempt finally to put the inflation genie back in the bottle.”
He added: “Further clues on inflation will come later in the day with the release of the producer price index, a measure of wholesale inflation which is expected to have risen by 0.3% in February at the headline level and by 0.2% excluding the more volatile energy and food prices.
“The data could muddy the water if the reading comes in hotter than expected, given that the recent CPI print showed some signs of inflation remaining sticky in the final push towards the Federal Reserve’s target of 2%. In addition, readings on retail sales and the labour market will provide additional clues ahead of the Fed meeting next week, with no change to the interest rate expected, with the consensus currently anticipating the first cut in June.”
The US producer price index for February is due at 1230 GMT.
On home shores, a survey out earlier showed the housing market continued to stabilise in February despite prices remaining under pressure.
According to the latest UK Residential Market Survey from the Royal Institution of Chartered Surveyors, the net balance for house prices was -10 last month. A net balance is the proportion of respondents reporting a rise in prices minus those reporting a fall.
However, that was the least negative since October 2022, and a notable improvement on last year’s low of -67. Respondents were more optimistic looking forward as well, with a net balance of 36 expecting house prices to return to growth over the next year.
New buyer enquiries remained positive for the second month, unchanged at 6, while new instructions rose to 21, the strongest since October 2020.
Agreed sales, meanwhile, eased to -3 from 4 a month previously. However, RICS noted: “Although a little softer, both readings are indicative of a stronger trend in sales volumes than was evident through much of the past 12 months.”
Sales activity was also expected to gain further momentum over the coming year, with a balance of 42.
Simon Rubinsohn, chief economist at RICS, said: “The February survey provides some grounds for encouragement around the sales market, with not just buyer interest staying positive but also the uplift in new instructions to agents.
“Whether the increase in stock coming back to the market will be sustained is likely to be a critical factor in explaining how things play out over the balance of the year, especially with new build likely to remain constrained.”
In equity markets, online ticketing platform Trainline chugged higher as it reported a strong jump in sales as fewer strikes in the UK and competition for passengers in Italy and Spain boosted revenues. Total group sales for the year to February 29 rose 22% to £5.3bn, with international ticketing up 14% to £1bn and the UK surging 23% to £3.5bn.
Vistry advanced as the housebuilder posted a rise in annual profits, unveiled another £100m share buyback and forecast higher completions in 2024 driven by strong demand.
Helios Towers was in the black as its full-year results were broadly in line with expectations and the company struck an upbeat note on its outlook.
Deliveroo gained as it posted a narrowing of its full-year losses as revenue jumped and the company hailed a “resilient year of growth”.
On the downside, NatWest, Anglo American, Segro, Haleon, Lancashire, Entain, Dunelm and Abrdn all fell as they traded without entitlement to the dividend.
OSB Group tumbled as it reported a slump in full-year profit, with earnings per share and net interest income missing estimates.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Burberry Group Plc | +2.14% | +27.00 | 1,286.50 |
| 2 |  |
Diageo Plc | +1.51% | +44.00 | 2,955.00 |
| 3 |  |
Barratt Developments Plc | +1.48% | +7.00 | 480.70 |
| 4 |  |
Informa Plc | +0.97% | +7.80 | 813.40 |
| 5 |  |
Direct Line Insurance Group Plc | +0.93% | +2.00 | 218.00 |
| 6 |  |
Centrica Plc | +0.90% | +1.15 | 129.25 |
| 7 |  |
Melrose Industries Plc | +0.85% | +5.20 | 614.40 |
| 8 |  |
British Land Company Plc | +0.81% | +3.00 | 371.40 |
| 9 |  |
Bp Plc | +0.79% | +3.85 | 488.85 |
| 10 |  |
Bt Group Plc | +0.78% | +0.85 | 109.90 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Anglo American Plc | -4.47% | -86.60 | 1,850.40 |
| 2 |  |
Easyjet Plc | -2.38% | -12.80 | 524.60 |
| 3 |  |
Segro Plc | -2.38% | -21.00 | 862.40 |
| 4 |  |
Whitbread Plc | -1.15% | -38.00 | 3,258.00 |
| 5 |  |
Carnival Plc | -1.01% | -12.00 | 1,178.50 |
| 6 |  |
Intertek Group Plc | -1.00% | -50.00 | 4,966.00 |
| 7 |  |
International Consolidated Airlines Group S.a. | -0.94% | -1.45 | 152.50 |
| 8 |  |
Intercontinental Hotels Group Plc | -0.88% | -72.00 | 8,146.00 |
| 9 |  |
3i Group Plc | -0.78% | -20.00 | 2,536.00 |
| 10 |  |
Ocado Group Plc | -0.72% | -3.40 | 468.30 |
US close: S&P falls back on mixed day for equities
Wall Street finished in a mixed state on Wednesday, as the S&P 500 retreated from its previous record close.
The Dow Jones Industrial Average edged up 0.1% to reach 39,043.32 points.
However, the S&P 500 declined 0.19% to settle at 5,165.31 points, while the Nasdaq Composite saw a dip of 0.54% to stand at 16,177.77 points.
In currency markets, the dollar was last down 0.01% on sterling to trade at 78.13p, while it slipped 0.02% against the euro to 91.32 euro cents.
The greenback also recorded a slight decrease on the yen, retreating 0.06% to change hands at JPY 147.67.
“The rebound in Chinese markets is catching the attention this side of the globe, as mining stocks in London lead the way higher,” said IG chief market analyst Chris Beauchamp earlier.
“After huge outflows from Chinese markets over the last year, it looks like investor confidence in the outlook is returning, along with hopes of renewed raw material demand.”
Beauchamp added that sector rotation was continuing across the pond, as the Dow Jones managed to make gains even as the Nasdaq came under some pressure.
“The rally in stocks has moved into a choppier phase, a change from the relentless gains of the fourth quarter of 2023, and the sideways price action could intensify as we begin the run towards next week’s Fed decision.”
Mortgage applications rising slightly slower
In economic news, mortgage applications in the US saw a notable uptick in the week ended 8 March, according to data from the Mortgage Bankers Association.
The overall increase of 7.1% marked a slight slowdown from the prior week’s surge of 9.7%.
Notably, applications for home purchases advanced by 4.7%, while those for refinancing home loans experienced a significant jump of 12.2%.
Concurrently, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances dropped by 18 basis points to 6.84%, hitting its lowest level in five weeks.
“Mortgage rates dropped below 7% last week for most loan types because of incoming economic data showing a weaker service sector and a less robust job market, with an increase in the unemployment rate and downward revisions to job growth in prior months,” said MBA chief economist Mike Fratantoni.
Across the Atlantic, the UK’s economy showed signs of recovery as it returned to growth in January.
Data from the Office for National Statistics revealed a 0.2% increase in gross domestic product (GDP) for the month, aligning with market expectations.
That growth came after a slight 0.1% drop in December.
Meanwhile, the eurozone saw a significant decline in industrial production in January, surpassing analysts’ expectations.
Eurostat reported a sharp 3.2% drop in industrial production within the euro area and a 2.1% decline across the wider EU bloc.
That was a stark contrast to the prior month, which saw revised growth figures of 1.6% in both areas.
Dollar Tree, Tesla in focus on the downside
In equities, Dollar Tree tumbled 14.21% on the back of a fourth-quarter profit miss.
The discount retailer also gave a downbeat outlook and announced plans to close a large number of Family Dollar stores.
Sector peer Dollar General was also in the red, closing down 1.89%.
Elsewhere, Tesla declined 4.54% after a downgrade from Wells Fargo, which shifted its rating on the electric car maker from hold to sell.
Wells Fargo also slashed Tesla’s price target to $125 per share from $200.
Thursday newspaper round-up: Nestle, Halifax, Glencore
Direct trains could next year connect Wrexham to London, with a new service capitalising on the town’s Hollywood-meets-football mini-boom. The train manufacturer Alstom is bidding to set up the Wrexham, Shropshire and Midlands Railway with a promise of cheaper, more comfortable trains straight to London. – Guardian
Green MP Caroline Lucas has accused the government of stoking a culture war on climate issues by calling for more investment in new gas-fired power plants before a general election. Lucas used an urgent question in the House of Commons to challenge the energy minister, Graham Stuart, on the plans set out on Wednesday, which could see a string of new plants built in the coming years despite the government’s commitment to phase out fossil fuels. – Guardian
Britain’s biggest investor is demanding that Nestlé sells fewer chocolate bars amid worries over the public health impact of the Swiss food giant’s products. Legal & General Investment Management (LGIM), which looks after around £1.2 trillion of saver’s money, is seeking to toughen up health targets set by the Swiss food giant as part of an ethical compliance drive. – Telegraph
Halifax is imposing a new 70-year age limit on thousands of homebuyers as banks seek to rein in risky mortgage lending. The lender is reducing the maximum age at which it will allow many borrowers to say they intend to retire from 75 to 70 – meaning that in many cases it will not lend to someone older than this limit. – Telegraph
An activist investor has called on Glencore to abandon the demerger of its coal business and to switch its primary listing to Sydney from London, which it said was “no longer the home of mining”. Tribeca Investment Partners, an Australian hedge fund, wrote to the board of the Swiss commodities powerhouse this week putting forward a list of proposals designed to help to revive the share price, which it said had trailed behind rivals since Glencore’s stock market flotation in 2011. – The Times
A key architect of EY’s failed plan to split itself in two has been moved from his executive role as the Big Four firm’s incoming boss rejigs the senior leadership team before she starts in the summer. Janet Truncale, who was voted in as EY’s new global chief executive and chairwoman in November, sent an email to partners this week naming the four senior partners who would help her to run the accounting and consulting group. – The Times
