London close: Stocks mixed as US PCE inflation holds steady

The FTSE 100 index slipped 0.26% to close at 8,084.61 points, while the FTSE 250 gained 0.25%, finishing at 20,450.69 points.

In currency markets, sterling was last up 0.66% on the dollar to trade at $1.2585, while it posted a marginal 0.05% gain against the euro, changing hands at €1.2070.

“This week's post Fed sell-off in global stock indices continues as US PCE price inflation is rising and German producer prices head higher for the first time in 17 months,” said IG senior technical analyst Axel Rudolph.

“A looming US government shutdown after a Trump-backed bill came to nothing might spoil government officials' festive cheer with the traditional stock market Santa rally not rearing its head either.”

Rudolph added that while crude oil prices continued to drop amid ample supply and China demand concerns, natural gas prices were surging to their highest level in over a year amid stronger global LNG demand bets.

“Gold and silver prices are mixed amid low volume end of year trading.”

UK retail sales fall short while government borrowing undershoots

In economic news, UK retail sales fell short of expectations, while government borrowing figures came in stronger than anticipated.

Retail sales edged up by 0.2% in November, improving from October’s 0.7% decline but missing forecasts of a 0.5% increase.

Growth in supermarkets and non-food stores partially offset a slump in clothing sales, according to the Office for National Statistics.

“Retail sales increased slightly in November following last month’s fall,” said Hannah Finselbach, senior statistician at the ONS.

“For the first time in three months there was a boost for food store sales, particularly supermarkets. It was also a good month for household goods retailers, most notably furniture shops.

“Clothing store sales dipped sharply once again, as retailers reported tough trading conditions.”

Meanwhile, public sector borrowing was £11.2bn for the month, below the £13bn consensus estimate and marking the lowest November figure in three years.

“Borrowing this month was over £3bn less than this time last year and the lowest November borrowing for three years,” noted Jessica Barnaby, deputy director for public sector finance at the ONS.

“Central government tax receipts grew compared with last year, while increased spending on public services and on benefits were offset by lower debt interest payable.”

In the manufacturing sector, UK car production plunged 30.1% year-on-year in November to its worst level since 1980.

Factories produced just 64,216 cars, with output for both domestic and export markets sharply lower, according to the Society of Motor Manufacturers and Traders.

Production of electric and hybrid vehicles accounted for nearly 30% of total output.

The decline came amid concerns over the government’s electric vehicle mandate, which requires automakers to meet progressively higher zero-emission vehicle sales targets through 2035.

“These figures offer little Christmas cheer for the sector,” said SMMT chief executive Mike Hawes.

“While a decline was to be expected given the extensive changes underway at many plants, manufacturing is under pressure at home and abroad, with billions of pounds committed to new technologies, new models and new production tooling.

“Government can help by supporting consumers in the transition, fast-tracking its industrial strategy for advanced manufacturing and, most urgently, reviewing the market regulation which is putting enormous strain on the sector.”

Retailers in the UK were also facing subdued conditions in December, with the Confederation of British Industry’s monthly retail sales balance rising slightly to -15 from -18 in November.

Sales volumes remained poor for the time of year, with little improvement expected in January as cost pressures weigh on consumer sentiment.

“Retailers have endured a gloomy festive period,” said CBI economist Martin Sartorius.

“Looking ahead, retailers expect sales to fall again in January, while wholesalers and motor traders are braced for sharper sales declines.”

Elsewhere in Europe, German wholesale prices posted their first annual increase in 17 months, rising 0.1% in November compared to a 1.1% decline in October.

Destatis attributed the uptick to higher prices for capital goods such as machinery and motor vehicles, which saw a 1.9% annual increase.

Across the Atlantic, US data pointed to steady consumer activity and easing inflation pressures.

Personal incomes rose 0.3% in November, while spending increased 0.4%, both slightly below forecasts.

Core inflation, as measured by the personal consumption expenditures (PCE) price index, held steady at 2.8% year-on-year.

Meanwhile, consumer confidence improved, with the University of Michigan’s sentiment index rising to 74.0 in December from 71.8 the prior month.

In Asia, China left its benchmark lending rates unchanged, maintaining the one-year loan prime rate at 3.1% and the five-year rate at 3.6%, in line with expectations.

Water companies in the red, travel plays rise on falling crude prices

On London’s equity markets, water companies dropped after Thursday's gains, as investors digested Ofwat's final determination for the 2025-2030 period, which included a 36% rise in average bills across England and Wales.

Severn Trent fell 2.25%, United Utilities slid 1.74%, and Pennon Group dropped 1.11%.

GSK also traded lower, shedding 0.95%, despite positive phase three trial results for its ovarian cancer treatment, which met its primary endpoint of progression-free survival.

On the upside, Frasers Group surged 2.81% after Boohoo shareholders decisively rejected the appointment of Mike Ashley and restructuring expert Mike Lennon to Boohoo's board.

Frasers had pushed for the appointments, citing Boohoo's “dismal” interim results and governance concerns.

IP Group gained 2.92% following news that two of its life science portfolio companies, Intelligent Ultrasound Group and Abliva, had received cash offers, with anticipated proceeds totaling £13.8m.

Travel stocks benefited from falling oil prices, with Wizz Air Holdings climbing 2.56% and Carnival up 3.62%.

Elsewhere, International Distribution Services edged up 0.16% after the UK government approved the £3.6bn sale of Royal Mail’s parent company to Czech billionaire Daniel Kretinsky’s EP Group.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,084.61 -0.26%
FTSE 250 (MCX) 20,450.69 0.25%
techMARK (TASX) 4,579.52 -0.24%

FTSE 100 - Risers

Frasers Group (FRAS) 626.50p 2.79%
B&M European Value Retail S.A. (DI) (BME) 362.70p 2.17%
Rentokil Initial (RTO) 399.60p 2.04%
Vistry Group (VTY) 664.00p 2.01%
SEGRO (SGRO) 695.60p 1.99%
Antofagasta (ANTO) 1,613.50p 1.73%
LondonMetric Property (LMP) 178.40p 1.59%
International Consolidated Airlines Group SA (CDI) (IAG) 305.80p 1.26%
Unite Group (UTG) 802.50p 1.20%
Land Securities Group (LAND) 566.00p 1.16%

FTSE 100 - Fallers

Severn Trent (SVT) 2,506.00p -2.64%
Hiscox Limited (DI) (HSX) 1,082.00p -2.17%
United Utilities Group (UU.) 1,045.50p -1.74%
JD Sports Fashion (JD.) 95.70p -1.44%
Intermediate Capital Group (ICG) 2,050.00p -1.25%
Sage Group (SGE) 1,290.00p -1.19%
London Stock Exchange Group (LSEG) 11,335.00p -1.14%
NATWEST GROUP (NWG) 395.50p -1.13%
Standard Chartered (STAN) 973.40p -1.04%
WPP (WPP) 833.20p -0.97%

FTSE 250 - Risers

Raspberry PI Holdings (RPI) 588.00p 15.75%
Bakkavor Group (BAKK) 142.50p 5.40%
Carnival (CCL) 1,887.00p 3.62%
HarbourVest Global Private Equity Limited A Shs (HVPE) 2,585.00p 3.61%
AO World (AO.) 107.00p 3.28%
Jupiter Fund Management (JUP) 85.80p 3.25%
Foresight Solar Fund Limited (FSFL) 74.60p 2.98%
Ocado Group (OCDO) 305.00p 2.97%
IP Group (IPO) 52.80p 2.92%
GCP Infrastructure Investments Ltd (GCP) 69.90p 2.79%

FTSE 250 - Fallers

PureTech Health (PRTC) 154.60p -3.25%
Close Brothers Group (CBG) 223.00p -3.21%
European Opportunities Trust (EOT) 770.00p -3.14%
Games Workshop Group (GAW) 12,990.00p -2.99%
PZ Cussons (PZC) 80.00p -2.56%
Mony Group (MONY) 189.90p -2.21%
Mobico Group (MCG) 77.60p -2.14%
Victrex plc (VCT) 1,056.00p -2.04%
St James's Place (STJ) 863.00p -1.88%
Just Group (JUST) 161.80p -1.70%