13th Feb 2025 17:03
(Alliance News) - Blue chips closed lower on Thursday, on a mixed day for stocks in London, underperforming European peers which prospered on hopes a peace deal could be struck in Ukraine.
The FTSE 100 index closed down 42.72 points, 0.5%, at 8,764.72. The FTSE 250 ended up 35.64 points, 0.2%, at 20,916.14, and the AIM All-Share closed down 0.19 of a point at 723.20.
The Cboe UK 100 ended down 0.5% at 877.79, the Cboe UK 250 closed up 0.3% at 18,280.99, while the Cboe Small Companies climbed 0.2% at 16,119.59.
In European equities on Thursday, the CAC 40 in Paris jumped 1.5%, while the DAX 40 in Frankfurt closed 2.1% higher, on hopes a peace deal could be struck between Ukraine and Russia.
US President Donald Trump and Russian President Vladimir Putin spoke by phone on Wednesday and agreed to begin negotiations to end the war in Ukraine "immediately".
Trump, writing on his Truth Social platform, described the call with Putin as "lengthy and highly productive," adding that they had also agreed to visit each other's countries.
"While much remains uncertain, markets are already moving to price in the possibility of peace," deVere analyst Nigel Green commented.
"Equities, particularly in sectors hit hardest by supply chain disruptions and energy volatility, are already responding positively."
Green continued: "A shift away from war-driven volatility opens the door for capital to flow back into European equities, industrials, and consumer sectors that have struggled under the weight of uncertainty."
However, the Financial Times noted European fears they will have to bear the cost of postwar security and reconstruction in Ukraine.
In a statement on Wednesday evening, six European countries, including Germany, France and the UK, said: "We want to discuss the way forward with our American allies ... Ukraine and Europe must be involved in any negotiations."
Germany’s defence minister Boris Pistorius on Thursday expressed regret that Washington had made concessions to Moscow before the start of peace talks, including ruling out Nato membership for Ukraine.
Defence stocks climbed in Europe, on the likelihood of higher defence budgets and spend, should Europe bear the brunt of the costs. BAE Systems rose 3.1% in London and Rheinmetall firmed 4.0% in Frankfurt.
Hopes of peace in Europe took attention away from tariffs, at least for now, and put the dollar under pressure. The pound was quoted at USD1.2535 at the London equities close Thursday, higher compared to USD1.2415 at the close on Wednesday.
The euro stood at USD1.0439 at the European equities close Thursday, higher against USD1.0364 at the same time on Wednesday.
Against the yen, the dollar was trading lower at JPY152.97 compared to JPY154.77 late Wednesday.
But Stephen Innes at SPI Asset Management struck a note of caution on recent dollar weakness, noting "Trump’s tariff hammer is still swinging".
"The forex market is walking a tightrope, caught between hopes for a geopolitical breakthrough and the very real risk of a full-blown trade war," he added.
Stocks in New York were higher at the London equities close, with the DJIA up 0.3%, the S&P 500 0.5% higher and the Nasdaq Composite 0.8% to the good.
In London, earnings sparked hefty falls for BAT, Unilever and Barclays.
BAT fell 9.3% after giving soft guidance alongside as expected annual results.
The London-based maker of cigarette and vaping products swung to pretax profit of GBP3.54 billion in 2024, from a loss of GBP17.10 billion in 2023.
Analysts at RBC Capital Markets said: "2024 organic growth, both in terms of revenue and operating profit, came in line with guidance and expectations. Meanwhile, the company's FY25 growth guidance came in below consensus, which we believe reflects a challenging backdrop in Bangladesh and Australia."
In 2025, BAT expects "significant" regulatory and fiscal headwinds in Bangladesh and Australia to hurt combustibles performance.
Marmite and Ben & Jerry's owner Unilever fell 6.2% as it issued a cautious outlook statement alongside its annual earnings.
It outlined listing plans for its Ice Cream business, as it warned of a "slower start" to the new financial year after better-than-expected sales in 2024.
The London-based firm also outlined plans to list its Ice Cream business in Amsterdam, London and New York, the same three exchanges on which Unilever are currently traded.
The news came as Unilever said pretax profit in 2024 amounted to EUR8.87 billion, fading 5.0% from EUR9.34 billion in 2023. Revenue, however, rose 1.9% to EUR60.75 billion from EUR59.60 billion, beating the company-compiled consensus of EUR60.58 billion. Underlying sales growth was 4.2% in 2024, shy of consensus of a 4.3% improvement.
Looking ahead, Unilever said it expects "underlying sales growth for full year 2025 to be within our multi-year range of 3% to 5%".
But it warned of a "slower start to 2025 with subdued market growth in the near term," although it expects the market and to improve during the year.
Barclays was also on the back foot, declining 4.6%, with the lack of a guidance upgrade a disappointment in otherwise solid results.
Full-year results from the lender were described as "stable" and "dependable" but with little new to "get excited about", by analysts.
Andrew Coombs at Citi summed up the mood: "Overall a solid set of results, but little new to get excited about either. This, plus the strong run up in the share price over the past year, may temper any initial reaction, but the stock still appears inexpensive in our view."
Barclays reported pretax profit in 2024 totalled GBP8.11 billion, rising 24% from GBP6.56 billion in 2023. Total income rose 5.6% to GBP26.79 billion from GBP25.38 billion. Pretax profit beat company-compiled consensus of GBP8.07 billion, while total income was ahead of a GBP26.53 billion forecast.
Banking analysts at Peel Hunt felt while the fourth quarter was positive for Barclays the "earnings upgrade cycle might now pause".
Although the broker retains a 'buy' rating, it thinks the shares, up 15% year-to-date, could "consolidate around these levels for a while".
The UK economy climbed 0.1% quarter-on-quarter in the three months to December, the Office for National Statistics said. Gross domestic product had been flat in the third-quarter from the second. The fourth-quarter reading defied expectations of a 0.1% fall, according to FXStreet-cited consensus.
GDP perked up "mainly because of growth in the services sector", the ONS said.
In December alone, GDP improved 0.4% on-month, beating forecasts of a 0.1% rise. In November, GDP rose 0.1% from October.
Bank of America said the main driver of growth in the fourth quarter was government spending.
"Weak consumer and business confidence, higher employment costs, higher taxes and uncertainty likely weighed on private sector demand. Consumer real income gains seem to be absorbed by savings," BofA noted.
"We expect growth to improve to 1.4% in 2025. The heavy lifting of growth in 2025 is likely to come from looser fiscal policy and further increases in government spending. We also expect sentiment and consumption to recover to reflect strong real income growth, monetary easing and potential normalization of savings rate. In the near term, a strong December print provides a strong carryover for Q1 GDP. But downside risks are high, including higher employment costs leading to larger than expected loosening of the labour market, potential tariffs, trade uncertainty or potential fiscal consolidation in the Spring."
Brent oil was quoted lower at USD75.10 a barrel at the London equities close Thursday from USD75.81 late Wednesday.
Gold was quoted higher at USD2,917.47 an ounce at the London equities close Thursday against USD2,897.30 at the close on Wednesday.
Friday's UK corporate calendar sees full-year results from high street lender NatWest.
The economic calendar for Friday has eurozone GDP and unemployment figures, plus US retail sales and industrial production data.
By Jeremy Cutler, Alliance News reporter
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