16th Jan 2025 07:54
(Alliance News) - The FTSE 100 was called to open higher on Thursday, while latest figures from surveyors show that UK house sales and prices increased in December.
Also, data from the Office for National Statistics showed that the UK economy grew in November, but by less than expected.
Gross domestic product edged up 0.1% in November, below the FXStreet-cited market consensus of 0.2% growth.
Separately, the UK trade deficit in goods and services widened by GBP3.8 billion in the three months to the end of November.
"While the risk of recession remains modest for now, the UK is not yet out of the woods, and in the three months to November the economy flatlined," commented Quilter analyst Lindsay James. "This weak growth can in part be attributed to the fallout of the government's budget, which saw consumers hit pause on spending.
"As we move further into this year we could see an even bigger impact. Businesses will soon feel the effects of increased national insurance contributions, the costs of which are likely to be passed on to employees. Wage growth is expected to take a hit, and spending could be dampened further as a result."
James continued: "Generally speaking, markets have been sceptical about the prospect of further rate cuts in the UK in the early part of this year, and less than two quarter-point cuts are being priced in for the full year...However, should the economy fail to pick up at least some momentum and the UK falls into a recession, it may be forced to change tack."
In corporate news, Safestore reported a profit surge.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 34.8 points, 0.4%, at 8,335.93
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Hang Seng: up 1.1% at 19,498.56
Nikkei 225: up 0.3% at 38,572.60
S&P/ASX 200: up 1.4% at 8,327.00
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DJIA: closed up 703.27 points, 1.7%, at 43,221.55
S&P 500: closed up 1.8% to 5,949.91
Nasdaq Composite: closed up 2.5% at 19,511.23
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EUR: slightly higher at USD1.0299 (USD1.0293)
GBP: lower at USD1.2224 (USD1.2243)
USD: lower at JPY156.10 (JPY156.51)
GOLD: higher at USD2,697.62 per ounce (USD2,683.65)
OIL (Brent): higher at USD82.25 a barrel (USD81.46)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
11:00 CET eurozone trade balance
11:00 GMT Ireland CPI
08:30 EST US export and import prices
08:30 EST US initial jobless claims
08:30 EST US Philadelphia Fed manufacturing index
08:30 EST US retail sales
10:30 EST US EIA natural gas stocks
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The UK economy grew in November, but by less than expected, data from the Office for National Statistics showed on Thursday. Gross domestic product edged up 0.1% in November, driven by growth in services, after a fall of 0.1% in October. This undershot the FXStreet-cited market consensus of 0.2% growth. "Human health and social work activities was the largest positive contributor to the rise in services output in this three-month period, increasing by 1.3% in the three months to November 2024, compared with the three months to August 2024," the ONS said. In the three months to the end of November, real GDP is estimated to have stayed unchanged compared with the three months to the end of August.
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Separately, the ONS said the UK trade deficit in goods and services widened by GBP3.8 billion to GBP10.8 billion in the three months to the end of November. Additionally, it said monthly construction output in the UK is estimated to have grown by 0.4% in volume terms in November, following a fall of 0.3% in October. Meanwhile, monthly production output in the UK is estimated to have fallen by 0.4% in November, slowed from a decline of 0.6% in October. Finally, the ONS reported that services output in the UK is expected to have grown by 0.1% in November, following a decrease of 0.1% in October.
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Bank of England rate-setter Alan Taylor said UK interest rates may need to be cut five or six times this year to prevent a hard landing for the UK economy. "My view is that we've made it to the last half mile on inflation, but with the economy weakening, it's time to get interest rates back toward normal to sustain a soft landing," Taylor said in his first speech as a Monetary Policy Committee member. Speaking at Leeds University Business School, Taylor said the risks around inflation have shifted in the last 12 months and, although the path may be bumpy, he expects the underlying trend of inflation to remain on track towards the 2% target from now on. But he noted other data and forward-looking activity indicators present an "increasingly gloomy outlook for 2025". "The labour market is near balance, but is still loosening at pace, GDP growth appears to have ground to a halt in the second half of 2024, and with confidence indicators and business expectations veering to the pessimistic, in my view the risks are now more skewed to the downside." Taylor made the case for being "outlook-dependent", rather than "data-dependent", noting the latter is "mostly backward looking, and sometimes murky." With the risk of demand "stalling," Taylor said there could be a need for "a more accelerated pace of rate cuts, perhaps 125 or 150 basis points in the coming year."
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The Federal Statistical Office in Germany confirmed German on-year consumer price index inflation accelerated to 2.6% in December, in line with provisional results, from 2.2% in November. For all of 2024, Germany's consumer price inflation stood at 2.2%, down from 5.9% in 2023 and 6.9% in 2022.
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Housing market activity in the UK picked up as 2024 ended and expectations for the year ahead are "solidly positive," surveyors have reported. A net balance of 5% of property professionals reported new buyer inquiries rising rather than falling in December, the Royal Institution of Chartered Surveyors, Rics, said. Sales volumes have risen, with a net balance of 7% of respondents indicating sale growth, compared with a balance of 1% in November. There was also a bounce in new instructions to sell in December, with a net balance of 14% of professionals seeing rises rather than falls. This is the sixth month in a row where the study has indicated an increase in houses being listed for sale. Rics said that, in general, house prices rose across the UK, with professionals in Northern Ireland and Scotland reporting the strongest price growth. Rics chief economist, Simon Rubinsohn, said the research points "to a further improvement in sentiment in the housing market".
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US President Joe Biden urged Americans to stand guard against a "dangerous" oligarchy forming under Donald Trump as he delivered a dark farewell address before stepping down next week. In a primetime speech from the Oval Office at the end of his single term in office, he warned of an ultra-wealthy "tech industrial complex" that he said could gain unchecked power over the American people. "Today, an oligarchy is taking shape in America of extreme wealth, power and influence that literally threatens our entire democracy, our basic rights and freedoms," the 82-year-old Democrat said. Biden warned there was a "dangerous concentration of power in the hands of a very few ultra-wealthy people" with "dangerous consequences if their abuse of power is left unchecked." He then lashed out at social media firms, with Musk having turned X into a right-wing megaphone and Meta Platforms Chief Executive Officer Mark Zuckerberg ending fact-checking operations in the US as he courts Trump. "Americans are being buried under an avalanche of misinformation and disinformation," said Biden. "The free press is crumbling. Editors are disappearing. Social media is giving up on fact checking. The truth is smothered by lies told for power and for profit."
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The People's Pension has revealed plans to step into private market investment in the months ahead. The body is one of the biggest independent master trusts in the UK, serving more than 6.8 million pension savers and managing GBP31 billion in assets. It is set to start investing a significant proportion into private markets later this year, with a target to grow this allocation to GBP4 billion by 2030. A substantial part of the new allocation of assets could be deployed in the UK, if assets are available that meet the return requirements, the People's Pension said. This latest announcement follows the scheme's statement last year that it has now reached the scale to deploy meaningfully into private markets. Chancellor Rachel Reeves said: "Growing the economy is the number one mission of the government. "This public commitment from one of the UK's largest independent pension master trusts to invest here, at home in Britain, will help drive economic growth and support our milestone of improving living standards across the UK."
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BROKER RATING CHANGES
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Citigroup cuts Associated British Foods to 'sell' - price target 1,770 pence
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UBS cuts JD Sports Fashion to 'neutral' (buy) - price target 103 (155) pence
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Barclays raises BHP price target to 2,600 (2,430) pence - 'equal weight'
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COMPANIES - FTSE 100
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Antofagasta expects copper production for 2025 to range between 660,000 and 700,000 tonnes, the mining titan said. For 2024 it said copper production rose 0.5% on-year to 664,000 tonnes from 660,600 tonnes in 2023. Copper sales however fell 3.3% to 645,500 tonnes. Fourth-quarter copper production rose 12% to 200,300 tonnes from 179,000 in the third quarter. Full-year gold production fell 11% to 186,900 ounces. For the current year, Antofagasta expects consolidated capital expenditure of USD3.9 billion, in line with prior guidance. However it said the capex guide excludes costs related to the Zaldivir project, and that it must resolve a permit dispute by May or close the project.
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COMPANIES - FTSE 250
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Safestore reported pretax profit of GBP398.6 million for the year ended October 31, up 92% on-year from GBP207.8 million. Revenue however decreased 0.3% to GBP223.4 million. Operating profit rose 85% to GBP425.8 million, due to "a larger gain from investment properties revaluation reflecting the healthy asset transactional market in the year". Safestore is also "confident to recommend" a 30.4 pence per share full-year dividend, up 1.0% from 30.1p, and said that in the medium term it expects the dividend to grow at least in line with adjusted diluted EPRA earnings per share.
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The UK Competition & Markets Authority is considering whether the planned GBP1.16 billion takeover of Crawley, England-based Spirent Communications, a provider of testing and assurance services, by Keysight Technologies, could weaken UK competition. The regulator has set a March 13 deadline for its phase 1 decision. Its invitation for comments from any interested party on the transaction closes on January 30. Keysight is a Santa Rosa, California-based manufacturer of electronics test and measurement equipment and software
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OTHER COMPANIES
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In its third-quarter results, Wise reported that cross-border volume jumped 24% to GBP37.8 billion from GBP30.6 billion the previous year. Underlying income rose 13% to GBP349.5 million from GBP307.9 million. Account balances rose 26% on-year to GBP16.2 billion, and Wise reported a 39% surge in "card & other revenue". It said it continues to expect between 15% and 20% underlying income growth at constant exchange rates in the current financial year ending in late March, with reported growth at the lower end of this range.
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By Emma Curzon, Alliance News reporter
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