London close: Stocks finish lower after slew of weaker data

The FTSE 100 index dipped marginally by 0.05% to close at 8,245.28 points, while the FTSE 250 fell more sharply, by 1.27% to settle at 20,350.37.

In currency markets, sterling was last down 0.16% on the dollar to trade at $1.2500, while it edged up 0.03% against the euro, changing hands at €1.2054.

“US stocks didn't follow their European peers higher amid an expected third straight month rise in euro area inflation reading, despite it being the highest since July, but instead ended their two-day rally as traders expect the Fed to keep interest rates on hold this month,” said IG senior technical analyst Axel Rudolph.

“US job openings at a six-month high and a higher-than-expected rise in US services prices let inflationary worries creep up again.”

Rudolph noted that the US 30-year Treasury yield rallied to a more-than-one-year high at 4.91%, and the 10-year yield to 4.68% - a level not seen since May.

“European yields rallied as well with the UK 30-year Treasury gilt hitting its highest level since 1998.”

UK construction sector growth moderates, house prices fall in December

In economic news, a survey from S&P Global indicated that UK construction sector growth moderated in December, with the purchasing managers' index (PMI) falling to 53.3 from 55.2 in November, slightly below forecasts.

While commercial and civil engineering activity expanded at slower rates, residential construction remained in contraction, with its PMI slipping to 47.6.

Respondents attributed the slowdown to subdued demand, higher borrowing costs, and weak consumer confidence.

Looking ahead, 48% of firms expressed optimism for growth in 2025, though housing sector challenges remain a concern.

Tim Moore, economics director at S&P Global Market Intelligence, said there had been a “loss of momentum” across the sector.

“The slowdown in overall construction output growth reflected more subdued demand conditions in recent months, as illustrated by a further moderation in new order growth during December,” he said.

“Survey respondents commented on headwinds from elevated borrowing costs and the impact of fragile consumer confidence.”

UK house prices meanwhile fell 0.2% in December, marking the first decline since March, according to lender Halifax.

Annual growth slowed to 3.3% from 4.7% in November, leaving the average property price at £297,166.

“The housing market was broadly steady at the start of 2024, with house price growth taking off from the summer onwards,” said Amanda Bryden, head of mortgages at Halifax.

“In the latter half of the year, house prices grew in response to the falls in mortgage rates, alongside income growth, both leading to financial pressures somewhat easing for buyers.

“Impending changes to Stamp Duty thresholds have also given prospective first-time buyers even greater motivation to get on the housing ladder and bring any home-buying plans forward.”

The British retail sector meanwhile struggled in 2024, with annual sales growth slowing to just 0.7%, according to the BRC-KPMG retail sales monitor.

December saw a 3.2% sales boost from Black Friday spillover, but the ‘Golden Quarter’ ended with a modest 0.4% rise.

“Following a challenging year marked by weak consumer confidence and difficult economic conditions, the crucial ‘Golden Quarter’ failed to give 2024 the send-off retailers were hoping for,” said Helen Dickinson, chief executive at the British Retail Consortium.

“Non-food was particularly hard-hit, with sales contracting from the previous year.”

Grocery spending hit a record high during Christmas, with households averaging £460, supported by strong demand for premium products.

However, food price inflation climbed to 3.7%, the highest since March, as retailers grappled with rising costs.

“It was a solid Christmas for the supermarkets, with sales surpassing £13bn during the four weeks of December for the first time ever, showing people were clearly in the mood to celebrate and spend,” noted Fraser McKevitt, head of retail and consumer insight at Kantar.

“In contrast to reports of disappointing footfall across the rest of the high street, it was a very different story in the world of grocery.”

On the continent, eurozone inflation rose for a third consecutive month, reaching 2.4% in December, up from 2.2% in November.

Energy prices drove the increase, while core inflation remained steady at 2.7%.

Meanwhile, eurozone construction remained in contraction, with the PMI edging up slightly to 42.9, marking the 32nd consecutive month of decline.

France saw its sharpest contraction in construction since April, while Italy bucked the trend, entering growth territory.

Across the Atlantic, the US services sector showed resilience in December, with the ISM PMI rising to 54.1 from 52.1 in November, exceeding expectations.

New orders and prices rose, though employment slowed slightly.

Despite uncertainty surrounding potential trade tariffs, sectors like construction and transportation reported steady activity.

Fashion retailers in the green, broker notes prove a drag on stocks

On London’s equity markets, JD Sports Fashion gained 3.63% after Bank of America Merrill Lynch reinstated coverage with a ‘buy’ rating, citing optimism about the retailer's prospects.

Clothing retailer Next climbed 3.75% after lifting its full-year profit guidance to £1.01bn, following better-than-expected December sales.

Full-price sales rose 5.7% in the period, exceeding forecasts of 3.5%.

Despite the upbeat forecast for the current fiscal year, Next cautioned about slower UK growth in 2025 due to tax increases and their economic impact.

3i Group added 0.91% after Citi placed the stock on an "upside catalyst watch" and maintained its ‘buy’ rating.

Housebuilder Taylor Wimpey fell 4.46% after Barclays downgraded the stock to ‘equalweight’.

Rival Persimmon shed 4%, with the sector broadly weaker after the data from Halifax showing UK house prices fell in December.

Raspberry Pi Holdings dropped 7.01% following a downgrade to ‘reduce’ by HSBC.

Pennon Group slid 3.37% as Deutsche Bank downgraded the water utility to ‘sell’, citing risks of an equity raise, a potential dividend cut, and lower returns compared to peers.

Paper and packaging firm Mondi was down 1.51% after BNP Paribas Exane cut its rating to ‘neutral.’

Industrial thread maker Coats Group lost 3.65% after announcing CFO Jackie Callaway will step down in May, raising concerns about leadership continuity.

AJ Bell tumbled 6.64% after Citi downgraded the investment platform to ‘sell,’ pointing to risks from cash balances and competitive pricing pressures.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,245.28 -0.05%
FTSE 250 (MCX) 20,350.37 -1.27%
techMARK (TASX) 4,622.08 -0.23%

FTSE 100 - Risers

Next (NXT) 9,912.00p 3.75%
JD Sports Fashion (JD.) 101.50p 3.63%
International Consolidated Airlines Group SA (CDI) (IAG) 304.50p 2.66%
BP (BP.) 422.00p 1.92%
Halma (HLMA) 2,745.00p 1.55%
Shell (SHEL) 2,617.00p 1.53%
Rolls-Royce Holdings (RR.) 576.60p 1.16%
Pearson (PSON) 1,302.50p 1.13%
Auto Trader Group (AUTO) 796.20p 1.12%
Unilever (ULVR) 4,497.00p 1.10%

FTSE 100 - Fallers

Taylor Wimpey (TW.) 114.60p -4.46%
WPP (WPP) 758.00p -4.10%
Persimmon (PSN) 1,120.50p -4.00%
NATWEST GROUP (NWG) 395.20p -3.54%
Barclays (BARC) 265.70p -2.60%
Smurfit Westrock (DI) (SWR) 4,156.00p -2.49%
Pershing Square Holdings Ltd NPV (PSH) 4,026.00p -2.24%
Schroders (SDR) 319.80p -2.14%
Experian (EXPN) 3,426.00p -1.86%
Sainsbury (J) (SBRY) 272.40p -1.73%

FTSE 250 - Risers

Burberry Group (BRBY) 971.40p 1.87%
Chemring Group (CHG) 333.00p 1.83%
Spectris (SXS) 2,562.00p 1.67%
Aston Martin Lagonda Global Holdings (AML) 107.00p 1.61%
4Imprint Group (FOUR) 4,805.00p 1.59%
Indivior (INDV) 983.50p 1.50%
Oxford Nanopore Technologies (ONT) 135.10p 1.35%
Ithaca Energy (ITH) 126.00p 1.29%
Greggs (GRG) 2,832.00p 1.14%
Plus500 Ltd (DI) (PLUS) 2,638.00p 1.00%

FTSE 250 - Fallers

Ferrexpo (FXPO) 99.30p -7.90%
AJ Bell (AJB) 422.00p -6.64%
Raspberry PI Holdings (RPI) 571.00p -6.09%
Baltic Classifieds Group (BCG) 314.50p -5.70%
SThree (STEM) 278.00p -5.12%
Domino's Pizza Group (DOM) 295.00p -4.72%
Wood Group (John) (WG.) 64.80p -4.71%
Marshalls (MSLH) 269.50p -4.43%
Vistry Group (VTY) 547.00p -4.37%
Genuit Group (GEN) 364.50p -4.33%