London open: Stocks tick up but recruiters slump after Hays profit warning

London stocks edged up in early trade on Tuesday following solid gains on Wall Street, but recruiters were under the cosh after a profit warning from Hays.

At 0835 GMT, the FTSE 100 was up 0.2% at 7,709.23.

Richard Hunter, head of markets at Interactive Investor, said: "The next leg of the interest rate debate will follow later in the week, with the release of the [US] consumer price index reading on Thursday and the producer price index on Friday.

"Investors will be keen to see whether there is further progress towards the Fed’s 2% stated aim, or indeed whether the last mile towards hitting the target will be the hardest, as some fear.

"At the same time, the full-year reporting season will begin in earnest on Friday, as some of the major banks unveil their latest trends, where focus will turn towards the likes of any increase in consumer impairments, shareholder returns, the progress of deal-making activity and the outlook for the coming quarters."

On home shores, industry data showed that retailers ended 2023 on the back foot despite a modest uptick in demand in the week leading up to Christmas.

According to the latest BRC-KPMG Retail Sales Monitor, UK total sales increased by just 1.7% in the five weeks to 30 December, compared to a 6.9% rise a year previously.

The increase was below the three-month average of 2.3%, and the 12-month average of 3.6%.

December is the most important month of the year for many retailers, as consumers splash out on homewares, presents and festive food.

Helen Dickinson, chief executive of the British Retail Consortium, said there had been a "slight" uptick in the week leading up to Christmas.

But she added: "The festive period failed to make amends for a challenging year of sluggish retail sales growth, as weak consumer confidence continue to hold back spending.

"The post-Christmas sales were unsuccessful in enticing spend in areas such as furniture and homewares, with households remaining cautious about making larger purchases.

"2024 looks to be another challenging year for retailers and their customers, and spending will continue to be constrained by high living costs."

In equity markets, GSK gained as it announced the acquisition of Aiolos, a clinical-stage biopharmaceutical company focused on treatment of respiratory and inflammatory conditions, for up to $1.4bn.

B&M European Value Retail was in the red even as it reiterated full-year guidance, declared a special dividend and posted a 5% jump in third-quarter sales. The discount retailer said it still expects group adjusted EBITDA of between £620m and £630m for FY24, up from £573m a year earlier.

Recruiter Hays tumbled as it warned on profits after a hiring slowdown in December. In an update for the three months to the end of December, the company said group net fees were down 10%, having fallen 15% in December.

As a result, and despite ongoing actions to reduce costs, the recruiter now expects first-half pre-exceptional operating profit of around £60m, which is below consensus expectations of around £73m.

Fellow recruiters PageGroup and SThree also lost ground.

Jupiter Fund Management suffered heavy losses as it warned that net outflows for 2023 would be higher than expected.

Warhammer maker Games Workshop fell even as it posted a sharp jump in half-year profits driven by the launch of new products and said the company was "in great shape".

Market Movers

FTSE 100 (UKX) 7,709.23 0.20%
FTSE 250 (MCX) 19,356.14 -0.19%
techMARK (TASX) 4,311.42 0.30%

FTSE 100 - Risers

Scottish Mortgage Inv Trust (SMT) 772.60p 1.34%
Airtel Africa (AAF) 129.80p 1.33%
Smith & Nephew (SN.) 1,084.00p 1.26%
AstraZeneca (AZN) 10,886.00p 1.06%
Rolls-Royce Holdings (RR.) 308.20p 0.98%
GSK (GSK) 1,563.40p 0.93%
Prudential (PRU) 849.20p 0.90%
BP (BP.) 465.45p 0.87%
Melrose Industries (MRO) 586.20p 0.83%
Rentokil Initial (RTO) 417.90p 0.77%

FTSE 100 - Fallers

B&M European Value Retail S.A. (DI) (BME) 551.40p -1.85%
Endeavour Mining (EDV) 1,521.00p -1.23%
Rio Tinto (RIO) 5,630.00p -0.97%
Intermediate Capital Group (ICP) 1,594.00p -0.90%
Kingfisher (KGF) 229.30p -0.78%
Unite Group (UTG) 1,038.00p -0.76%
Glencore (GLEN) 454.05p -0.67%
Sainsbury (J) (SBRY) 308.50p -0.61%
Frasers Group (FRAS) 849.00p -0.59%
Standard Chartered (STAN) 646.20p -0.58%

FTSE 250 - Risers

Diversified Energy Company (DEC) 1,168.50p 2.50%
Me Group International (MEGP) 129.80p 2.20%
Ashmore Group (ASHM) 216.60p 1.98%
Plus500 Ltd (DI) (PLUS) 1,823.00p 1.67%
Octopus Renewables Infrastructure Trust (ORIT) 90.00p 1.58%
PureTech Health (PRTC) 212.50p 1.43%
Hipgnosis Songs Fund Limited NPV (SONG) 73.00p 1.39%
Monks Inv Trust (MNKS) 1,024.00p 1.39%
Allianz Technology Trust (ATT) 294.50p 1.38%
Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 271.50p 1.31%

FTSE 250 - Fallers

Hays (HAS) 94.20p -12.53%
Jupiter Fund Management (JUP) 78.30p -11.53%
Pagegroup (PAGE) 444.80p -5.28%
AO World (AO.) 90.00p -4.20%
SThree (STEM) 398.00p -3.63%
Coats Group (COA) 70.40p -2.76%
NCC Group (NCC) 123.00p -2.69%
Sirius Real Estate Ltd. (SRE) 86.70p -2.47%
Crest Nicholson Holdings (CRST) 221.80p -2.46%
Balanced Commercial Property Trust Limited (BCPT) 70.00p -2.37%