London close: Stocks finish higher on raft of global data

Market participants were also digesting a veritable smorgasbord of key earnings reports from US companies across the pond.

By the close, the FTSE 100 was up 0.44% to finish at 7,666.31 points, while the FTSE 250 posted a slight increase of 0.2%, ending the day at 19,349.50.

On the currency front, sterling was last down 0.24% on the dollar to trade at $1.2679, while it slipped 0.32% against the euro to change hands at €1.1695.

“European stock indices ended the day on a positive note as the IMF raised its 2024 growth forecast but despite it lowering Germany's from 0.9% to 0.5% this year, and eurozone sentiment weakening slightly,” said IG senior market analyst Axel Rudolph.

“Preliminary fourth quarter GDP showed that France, Germany and the euro area avoided technical recessions by narrow margins.

“In the US, home prices hit a fresh one-year high with JOLTS job openings unexpectedly rising as well.”

Rudolph added that Monday's rally on Wall Street was taking a breather as investors fervently awaited earnings from Alphabet and Microsoft after the closing bell, the Fed's interest rate decision and outlook on Wednesday, and Apple, Amazon and Meta earnings on Thursday, as well as US non-farm payrolls on Friday.

“Oil and gold prices are little changed as well while the greenback is stuck in a tight sideways trading range.”

Shop price inflation slows, IMF raises global projections

In economic news, shop price inflation in the UK saw a noticeable slowdown at the start of the year.

According to data from the British Retail Consortium (BRC) and NielsenIQ, annual shop price inflation dropped significantly to 2.9% in the period from 1 January to 7 January, marking its lowest level since May 2022.

Within the data, non-food inflation saw a substantial decrease, plummeting to 1.3% in January from 3.1% in December - a sharp drop below the three-month average rate of 2.4%.

Food inflation also decelerated, declining to 6.1% in January from 6.7% in December, continuing a trend of nine consecutive months of deceleration and reaching its lowest level since June 2022.

“Some New Year cheer as January shop price inflation slid to its lowest level since May 2022,” said British Retail Consortium chief executive officer Helen Dickinson.

“Non-food goods drove the fall, as many retailers offered heavily discounted goods in their January sales to entice consumer spend amidst weak demand.

“Good news for the morning brew as the price of tea and milk fell, while evening tipples remained more expensive on the back of increased alcohol duties.”

Elsewhere, a trio of leading UK consumer lending indicators for December fell short of analysts' expectations.

Net consumer credit borrowing declined to £1.2bn, down from £2.1bn in November, with credit card borrowing dropping to £0.3bn from £1.0bn.

Other forms of credit, such as car finance and personal loans, also decreased to £0.9bn from £1.1bn.

Mortgage debt saw net repayments of £0.8bn in December, compared to a net zero result in November, while gross mortgage lending increased to £17.1bn from £16.4bn.

Net mortgage approvals for house purchases rose to 50,500, slightly below the market forecast of 53,000 and below the 2015 to 2019 average of 66,400.

Additionally, the measure of total liquid assets, including household deposits with banks, building societies, and flows into National Savings and Investment accounts, increased by £6.0bn, surpassing the £4.2bn average monthly rate over the last six months.

“Households managed their finances cautiously towards the end of 2023, but they likely will be willing to borrow more this year, now that mortgage rates have fallen and the outlook for growth in real disposable income has improved,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

On the global stage, the International Monetary Fund (IMF) raised its projections for economic growth in 2024 and 2025.

The IMF's January update to its World Economic Outlook report now forecast world GDP growth at 3.1% in 2024, up 0.2 percentage points from its previous forecast in October.

For 2025, growth was pencilled in at 3.2%, thanks to “greater-than-expected resilience in the United States and several large emerging market and developing economies, as well as fiscal support in China”.

However, in the eurozone, economic sentiment remained subdued in January, with the sentiment indicator in the euro area decreasing slightly from 96.3 in December to 96.2.

Small improvements in sentiment in manufacturing and services were offset by declines in other sectors, and consumer confidence also fell.

In Germany, official data revealed that the economy contracted by 0.3% in the final quarter of 2023, following flat GDP in the second and third quarters, raising concerns about the possibility of recession in Europe's largest economy.

Meanwhile, France managed to avoid entering a technical recession, but its economy stagnated with a 0.0% growth rate in the last three months of 2023, following a flat third quarter.

On the other side of the Atlantic, the US jobs market continued to show strength at the end of 2023, with an increase in job openings and hiring.

However, there was a slight decrease in voluntary separations, or quits.

Finally on data, consumer confidence in the US saw its third consecutive monthly increase in January, reaching its highest level in more than two years, according to the Conference Board.

The consumer confidence index rose to 114.8, aligning with consensus forecasts.

Ashtead and 3i Group rise, Saga slides despite outlook

On London’s equity markets, 3i Group gained 2.63% after Barclays reaffirmed its 'overweight' rating and raised the price target, while Ashtead Group rose 1.53% with JPMorgan reiterating its 'overweight' stance on the shares.

Kainos Group jumped 4.01% after Berenberg re-initiated coverage with a 'buy' recommendation.

WPP saw a 1.92% increase after the advertising group backed its full-year guidance and outlined its 2024 targets.

Auction Technology Group recorded significant gains of 19.82% after announcing that it expected its annual results to align with expectations following an 11% increase in revenue for the first three months of the year.

HSBC Holdings, despite being fined £57.4m by the Bank of England for serious failings in protecting customer deposits, managed to gain 0.68%.

Diageo turned green by the end of the day, rising 0.91% even after it reported a decline in first-half profits, particularly in the Latin American and Caribbean regions.

Pets at Home Group also ended positively, managing gains of 0.14% despite cutting its full-year profit outlook due to weaker-than-expected retail performance in the third quarter.

Carnival advanced 3.03% despite announcing that its annual earnings would be impacted by the re-routing of ships in the Red Sea, as it cited strong bookings that would offset the impact.

On the downside, Saga reversed earlier gains to close 2.62% lower, even after it anticipated more than doubling its full-year underlying pre-tax profit compared to the prior year.

Travel caterer SSP Group gave up earlier gains to decline 0.27%, even after maintaining its full-year guidance following a strong rise in first-quarter sales driven by recovering rail and air passenger numbers after the Covid pandemic.

Deliveroo faced a 3.12% decline after Delivery Hero sold its entire 4.5% stake in the company.

Natural gas group Diversified Energy Company slipped 1.43% after announcing its expectation to deliver record profits above consensus forecasts for 2023, despite a "challenging" commodity price environment, as production reached an all-time high.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,666.31 0.44%
FTSE 250 (MCX) 19,349.50 0.20%
techMARK (TASX) 4,377.01 0.07%

FTSE 100 - Risers

3i Group (III) 2,497.00p 2.63%
Auto Trader Group (AUTO) 738.00p 2.41%
Pershing Square Holdings Ltd NPV (PSH) 3,804.00p 2.20%
NATWEST GROUP (NWG) 227.20p 2.07%
WPP (WPP) 795.60p 1.92%
CRH (CDI) (CRH) 5,640.00p 1.92%
Barclays (BARC) 150.26p 1.84%
Lloyds Banking Group (LLOY) 43.06p 1.83%
Experian (EXPN) 3,311.00p 1.72%
Informa (INF) 779.20p 1.70%

FTSE 100 - Fallers

Airtel Africa (AAF) 114.30p -5.15%
Mondi (MNDI) 1,424.40p -3.22%
Entain (ENT) 957.40p -2.37%
Smith (DS) (SMDS) 284.70p -1.93%
Ocado Group (OCDO) 554.80p -1.91%
Fresnillo (FRES) 539.20p -1.71%
Croda International (CRDA) 4,586.00p -1.52%
Smurfit Kappa Group (CDI) (SKG) 3,008.00p -1.51%
BT Group (BT.A) 112.75p -1.49%
Burberry Group (BRBY) 1,324.00p -1.41%

FTSE 250 - Risers

Auction Technology Group (ATG) 545.00p 19.39%
Kainos Group (KNOS) 1,140.00p 4.49%
Baltic Classifieds Group (BCG) 242.50p 3.85%
Spectris (SXS) 3,690.00p 3.48%
Carnival (CCL) 1,193.00p 3.03%
W.A.G Payment Solutions (WPS) 90.60p 2.95%
Trainline (TRN) 336.20p 2.94%
Morgan Advanced Materials (MGAM) 282.50p 2.91%
TP Icap Group (TCAP) 191.10p 2.80%
Computacenter (CCC) 2,918.00p 2.53%

FTSE 250 - Fallers

NCC Group (NCC) 118.20p -3.90%
Mobico Group (MCG) 86.55p -3.78%
Wood Group (John) (WG.) 166.40p -2.92%
Helios Towers (HTWS) 79.25p -2.76%
Ithaca Energy (ITH) 139.40p -2.38%
Fidelity China Special Situations (FCSS) 190.60p -2.26%
Victrex plc (VCT) 1,362.00p -2.23%
Assura (AGR) 44.38p -2.16%
Direct Line Insurance Group (DLG) 166.95p -2.11%
Jlen Environmental Assets Group Limited NPV (JLEN) 97.20p -1.92%