London close: Stocks finish weaker amid uninspiring data

London's stock markets ended the day in negative territory on Thursday, despite a rebound on Wall Street in early trading, as investors digested lacklustre government borrowing and retail sales data.

The FTSE 100 closed down 0.27%, settling at 7,694.73 points, while the FTSE 250 was 0.3% lower at 19,570.97 points.

In currency markets, sterling was last up 0.2% on the dollar, trading at $1.2664, while it weakened 0.13% against the euro to change hands at €1.1535.

"The strongest US GDP expansion since the fourth quarter of 2021, initial jobless claims unexpectedly holding at two-month lows and rapidly falling US Treasury yields gave US stock indices another boost," said IG senior market analyst Axel Rudolph.

"While they are back trading close to their recent record highs, European equity indices see a session in the red.

"Worse than expected UK retail sales put a dampener on the FTSE 100's advance after three straight days of gains."

Government borrowing tops forecasts, retail downturn deepens

In economic news, the UK government's borrowing exceeded expectations last month, according to fresh figures from the Office for National Statistics.

Public sector net borrowing, excluding public sector banks, reached £14.3bn, slightly below November 2022's figure of £15.2bn but surpassing consensus forecasts of £13bn.

It marked the fourth-highest November borrowing since records began in 1993.

Additionally, debt interest payments in November reached £7.7bn, surpassing all November records since 1997.

For the eight months leading up to November, public sector net borrowing excluding banks stood at £116.4bn, showing an increase of £24.4bn compared to the same period in the prior year and marking the second-highest financial year-to-November borrowing on record.

Ashley Webb, UK economist at Capital Economics, doubts that the higher-than-expected borrowing figures will prevent the Chancellor from embarking on a pre-election fiscal splash in the Spring Budget.

Webb said the recent drop in market interest rate expectations supported the view that interest rates would be lower in 2025 than the Office for Budget Responsibility predicted in November.

"As a result, we expect this to give the Chancellor more wiggle room to unveil a further pre-election splash at the Sprint Budget.

"But this would almost certainly be followed by hefty tax rises in 2025 after the election."

In the retail sector, the Confederation of British Industry reported a deepening downturn in December.

The retail sales balance fell to -32, down from -11 in the year to November, marking the eighth consecutive monthly decline.

Furthermore, expectations for sales in the upcoming month declined, with the balance dropping to -41 in December from -6 the previous month.

"The retail sector ended 2023 on a glum note, with the ongoing downturn in sales volumes deepening during the crucial holiday trading period," said CBI principal economist Martin Sartorius.

"Looking ahead, retailers are bracing themselves for a New Year's chill, as sales are set to fall at an even quicker pace next month.

"Strained household finances and higher interest rates continue to take a toll on consumer spending, suggesting that retailers will have to navigate a tough demand environment in the months to come."

Across the Atlantic, the US Commerce Department's release of third-quarter GDP figures indicated a downward revision from 5.2% to 4.9%, disappointing economists who had expected no change in the growth estimate.

On the labour front in the US, initial jobless claims increased by 2,000 to 205,000 in the week ended 16 December.

Despite the slight uptick, the figure remained near the previous week's two-month low and significantly below the consensus expectation of 215,000.

Hipgnosis in focus, Harbour Energy rockets on acquisition deal

On London's equity markets, Hipgnosis Songs Fund closed down 0.78% after it reported wider interim losses.

The troubled music rights owner also announced the suspension of dividends until at least the end of the financial year, citing the need to comply with loan covenants amidst a dispute with its investment adviser over asset valuations.

Cybersecurity firm Darktrace dropped 6.99%, with speculation arising that this decline could be related to Mike Lynch selling stock, potentially to fund his US fraud trial.

Insurer Admiral Group faced a 1.58% decrease after receiving a downgrade to 'hold' from 'buy' at Berenberg.

On the upside, Vodafone Group added 2.19% after reports that Swisscom was considering a potential offer for Vodafone's Italian business in the coming year.

BT Group also advanced, with a 0.28% gain, fuelled by reports that Saudi Telecom could be exploring an approach to Patrick Drahi, the company's largest shareholder, to discuss increasing its stake in the telecommunications company.

Harbour Energy surged 21.11% after announcing an agreement to acquire the upstream assets of German oil and gas producer Wintershall Dea for $11.2bn.

The acquisition would encompass Wintershall's upstream assets in various countries, excluding Russian assets, and include European carbon capture and storage (CCS) licences.

Cruise giant Carnival was ahead 3.94% after reporting record-breaking revenues of $21.6bn, marking an all-time high.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,694.73 -0.27%
FTSE 250 (MCX) 19,570.97 -0.30%
techMARK (TASX) 4,285.80 0.01%

FTSE 100 - Risers

Vodafone Group (VOD) 69.00p 2.25%
Melrose Industries (MRO) 566.60p 0.78%
Anglo American (AAL) 1,924.00p 0.63%
BAE Systems (BA.) 1,093.50p 0.60%
Pearson (PSON) 956.40p 0.59%
Smith & Nephew (SN.) 1,071.00p 0.52%
Sage Group (SGE) 1,180.00p 0.51%
Smurfit Kappa Group (CDI) (SKG) 3,198.00p 0.50%
Rio Tinto (RIO) 5,812.00p 0.50%
HSBC Holdings (HSBA) 622.50p 0.50%

FTSE 100 - Fallers

Burberry Group (BRBY) 1,430.50p -4.19%
Ocado Group (OCDO) 757.20p -4.03%
United Utilities Group (UU.) 1,068.00p -2.95%
British American Tobacco (BATS) 2,284.50p -2.20%
Airtel Africa (AAF) 127.70p -1.62%
Severn Trent (SVT) 2,629.00p -1.61%
Endeavour Mining (EDV) 1,785.00p -1.60%
Admiral Group (ADM) 2,670.00p -1.51%
SEGRO (SGRO) 894.60p -1.45%
Entain (ENT) 1,005.00p -1.33%

FTSE 250 - Risers

Harbour Energy (HBR) 295.50p 21.11%
Carnival (CCL) 1,377.00p 3.46%
Tullow Oil (TLW) 37.64p 2.56%
Future (FUTR) 761.50p 2.29%
Helios Towers (HTWS) 82.50p 2.16%
Baltic Classifieds Group (BCG) 240.00p 2.13%
RIT Capital Partners (RCP) 1,834.00p 1.89%
easyJet (EZJ) 517.20p 1.77%
Drax Group (DRX) 483.80p 1.77%
SDCL Energy Efficiency Income Trust (SEIT) 64.00p 1.72%

FTSE 250 - Fallers

Darktrace (DARK) 348.60p -7.31%
Tritax Eurobox (GBP) (EBOX) 59.70p -4.33%
Syncona Limited NPV (SYNC) 116.20p -3.97%
HGCapital Trust (HGT) 433.00p -3.46%
Britvic (BVIC) 844.00p -3.16%
Tyman (TYMN) 308.00p -2.99%
Just Group (JUST) 83.30p -2.91%
Trustpilot Group (TRST) 143.90p -2.84%
Direct Line Insurance Group (DLG) 184.60p -2.61%
Mitie Group (MTO) 99.10p -2.46%