FTSE 100 live Jan 24: Pound slips on recession fears, borrowing rises to December record, Primark selling up
FTSE closes down 27 points: Evening Wrap
At the end of the day’s trading session in London, the FTSE 100 fell 27 points to close at 7,757.36. Energy and healthcare stocks were the worst performers, down 0.9% and 2.3%, respectively, from their averages.
It was also a sad day for sterling, with the pound falling almost one percent to $1.23 against the dollar.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdowne, said: ‘The pound slipped against the dollar as concerns about the fragility of the UK economy re-emerged, most recently in recession, but still better times. Let’s hope.
“Sterling gave back small early gains, falling 0.5% to $1.23 against the dollar, and disappointing readings from the S&P Global CIPS Purchasing Managers’ Index contributed to the stumble for the FTSE 100.”
gold has closed at sterling high
Gold is closing at a record high, rising to £1,576 an ounce, just short of its peak of £1,580 in March 2022, down just 6% from its peak in August 2020.
Laith Khalaf, head of investment analysis at AJ Bell, said: “A weaker dollar, China’s reopening and a slowing global economy have helped the precious metal move higher in recent months.
“It is likely that gold has also received some help from short-term traders, as a ‘golden cross’ has appeared on technical charts. This occurs when a shorter-term moving average of prices, typically 50 days, crosses a longer rises above its moving average, typically the 200 day (see chart below). Gold has experienced one of these graphical epiphanies, and a golden cross is often used by technical traders as a buy signal.
Wall Street stocks fall as earnings season begins
Wall Street’s S&P 500 fell in early trading as investors took in a series of big-name company reports at the start of quarterly earnings season.
Overall, the broader New York index fell 0.5% to 19 points at 4001.13. Shares of General Electric declined 2.6% after it predicted a tough year, particularly for its electricity business. Shares in 3M were down nearly 5% after missing forecasts for the fourth quarter, hit by a strengthening dollar in the period.
FTSE 100 midday movers: Fresnillo shines on upbeat expectations for the precious metals market
Mexican silver miner Fresnillo caught the eye of investors and soared to top the FTSE 100 today amid rising hopes in the precious metals market after a detailed report predicted its size would grow by more than a third by 2028 .
The forecast, from research firm Proficient Market Insights, came on Fresnillo after it was recently downgraded by the broker, which sees it to have room to rally today.
Associated British Foods was one of the biggest decliners, with inflation eating into its profit margin and investors exiting the stock after it recently moved higher in today’s trading update.
Pound slips as recession fears spur New Year rally on Bank of England interest rate call
Sterling slipped further today as forward-looking data pointed to a recession and a reminder of the difficulties facing the UK economy, which the Bank of England forecasts will be in recession until 2023.
The pound fell 0.5% to $1.2317, having retreated for a second session in a row. This followed an increase in public sector borrowing, as the figures included the cost of government intervention in the energy market.
as well. Purchasing managers’ index data for the services sector pointed to a decline for the largest segment of the economy, coming in at 48, well below the 50-mark that separates expansion from contraction. It also missed the forecast of 49.7, and was down from a previous reading of 49.9. The performance was also notably worse than the equivalent numbers for European countries.
Sterling’s fall interrupted a broader rally for the currency during January, following encouraging numbers on the economy and a series of bright spots for high street trading over Christmas, even though overall retail sales failed to impress. There has also been some support, with the BoE expected to raise interest rates by another 0.50% next week, although weak data could unsettle policy makers.
falls but BP and Astra shares are below the FTSE 100
Shares of Rolls-Royce rose 2% today as investors welcomed more signs of improving conditions in the engine giant’s aerospace markets. A gain of 2.2p to 110.4p lifted Rolls to the top of the FTSE 100 index and left the stock at its highest level since last February.
Rolls valuations have taken their time to rebuild since the pandemic, although airline customers reported stronger demand than expected, raising hopes that the all-important engine flight hours could eventually make up lost ground.
The positive mood was further boosted by today’s update from FTSE 250-listed Senior as the parts supplier to Airbus and Boeing forecast 2022 profits at the top end of City expectations.
Senior, whose components are used in everything from air duct systems to precision sheet metal fabrication, said aerospace activity was in line with expectations and demand was particularly strong in the heavy duty truck and power and energy markets.
Shares advanced 11%, or 15.6p, to 152p, taking the senior to its highest level since the start of last year. Analysts at Jefferies have a price target of 190p, believing the Hertfordshire-based company has significant recovery potential.
Enthusiasm in aerospace also helped British Airways owner IAG rise 2.7p to 165.1p as it continued its recovery from the 100p seen at the end of October.
Its progress failed to prevent the FTSE 100 index from plunging 33.10 points to 7751.57 as heavyweight stocks came under pressure. Fallers included AstraZeneca, which fell 230p to 10,808p, and BP after a 5.7p drop to 475.1p.
The FTSE 250 index clung to positive territory by adding 28.29 points to 19,829.98, with private equity firm Bridgepoint rising 7% or 15.6p to 243.6p.
One of the session’s best performers was AIM-listed corporate energy supplier Yu, after it said it was on an “accelerating trajectory of growth” following a fifth upgrade of its forecast for 2022 results. Shares jumped from 62p to 700p, up from a little over 200p in October.
City Pub Group knocks 3.5% from strike
Signs of the damage rail strikes are doing to the hospitality sector emerged today after London-based chain City Pub Group said it recorded a £750k hit from industrial action.
The firm, whose sites include the Three Crowns on Old Street, Temple Brew House on The Strand and The Cock & Bottle in Notting Hill, said the attacks wiped out around 3.5% of its revenue in the fourth quarter.
Clive Watson, boss of City Pub Group, said: “We would have had a record week if it weren’t for the strike – which will also affect staff bonuses and tips.”
Watson urged union bosses and government ministers to come to an agreement to end the industrial action, and said: “Given what we have faced over the last three years we have to work together.”
Despite the knock-on effect from the strike, the firm said sales had risen 7.8% over pre-pandemic levels in the run up to Christmas, after getting a boost from the unusually timed winter World Cup. Shares climbed 1.7% to 76p.
Budget shock as public borrowing rises
The chances of a budget being delivered on March 15 have been further dimmed by today’s worse-than-expected public finance data.
The total of £27.4 billion for December was the third consecutive month that borrowing exceeded the same month a year earlier.
Total spending came to £91.2 billion, a £16.4 billion increase on the previous December. However, total tax receipts of £74.6 billion were higher than the previous year’s £70.6 billion.
There is also some incentive for Chancellor Jeremy Hunt through the recent fall in wholesale gas prices, which Capital Economics believes will shave at least £10 billion off the government’s energy price subsidies estimated in 2023/24. May be less.
The consultancy believes borrowing will be less than projected until March 2024 and the chancellor may still be in a position to cut taxes or increase spending ahead of the next general election.
FTSE 100 disappoints, AB Foods shares fall after update
The FTSE 100 index fell 33.90 points to 7750.77, with GSK and AstraZeneca down 1% during a worse-than-expected performance for the London market.
Associated British Foods fell 18p to 1851.5p as investors used today’s update as an opportunity to lock in profits following a recent strong run for the shares. They also sold Diageo and Unilever as the consumer-focused pair retreated 34p to 3671.5p and 32p to 4073.5p respectively.
Rolls-Royce was the leading riser, up 1.8p to 110p in the wake of a strong update from aerospace components supplier Sr. Its shares in the FTSE 250 index jumped 10%, or 13.2p, to 149.6p as the UK-focused benchmark advanced 28.67 points to 19,830.36.
M&C Saatchi chairman to step down after ‘record’ year
Advertising and branding agency M&C Saatchi said today that its chairman, Gareth Davies, is stepping down after what it called a “record year”.
The London-based company said profit before tax for 2022 would reach at least £31 million, the biggest in its history and up 14% year on year, in line with guidance. Revenue was expected to reach £249 million to £271 million.
Davis will stay on until a successor is found, the search for which is already underway. he said: ,It has been a privilege for me to lead M&C Saatchi through three years of turnaround.
Employing around 3,000 staff in more than 30 cities, the company founded by brothers Maurice and Charles Saatchi is best known for its commercials and a series of creative campaigns for the Conservative Party in the 1980s, establishing itself as the center of the global advertising industry. changed the reputation of London.