14th Jan 2025 16:56
(Alliance News) - London's FTSE 100 underperformed on Tuesday but the FTSE 250 index recovered a bit of lost ground, as Chancellor Rachel Reeves looked to calm a wild UK bond market.
The FTSE 100 index ended down 22.65 points, 0.3%, at 8,201.54. The FTSE 250 added 47.90 points, 0.2%, at 19,766.27, but the AIM All-Share lost 1.58 points, 0.2%, at 707.81.
The Cboe UK 100 was down 0.3% at 822.38, the Cboe UK 250 was up 0.2% at 17,151.71, and the Cboe Small Companies rose 0.7% at 15,271.59.
In European equities on Tuesday, the CAC 40 in Paris added 0.2%, while the DAX 40 in Frankfurt rose 0.7%.
In New York, the Dow Jones Industrial Average was down 0.2% at the time of the London equities close. The S&P 500 shed 0.3% and the Nasdaq Composite lost 0.4%.
The FTSE 250 had one of its best days of the year so far. But Tuesday's 0.2% gain being its best showing so far in 2025 highlights how tricky the start to the year has been for the mid-cap benchmark.
With its domestic focus, the FTSE 250 index has struggled amid investor concern for the UK economy. UK fiscal and growth worries have been characterised by dramatic moves in government bonds.
Rachel Reeves insisted the turbulence in the financial markets underlined the need to go "further and faster" in search of economic growth.
The UK chancellor faced questions in the Commons after the cost of government borrowing increased and the value of the pound fell in recent days, putting her plans for the nation's finances at risk.
Reeves told MPs: "We have seen global economic uncertainty play out in the last week. But leadership is not about ducking these challenges, it is about rising to them.
"The economic headwinds that we face are a reminder that we should – indeed, we must – go further and faster in our plan to kickstart economic growth."
Reeves restated her commitment to her fiscal rules, which include meeting day-to-day spending through tax revenues.
The chancellor was addressing the Commons following her return to the UK from a trip to China which was criticised by opposition MPs.
She said agreements reached in Beijing and Shanghai, where she held discussions on trade and investment, would be worth GBP600 million to the UK over the next five years.
But Shadow Chancellor Mel Stride said a "black hole has opened up in the public finances while (Reeves) was absent from her station".
"Rachel Reeves addressed parliament on Tuesday. She sounded self-assured and confident, not like someone whose job is one the line, and the bond market is stable in the aftermath of her speech. However, she did not deliver a knockout blow, and the bond vigilantes have not been put to bed. Aside from defending her position as Chancellor and promising to boost economic growth, she has not produced any concrete measures on how she will stabilize the UK’s finances. In fairness, no one expected her to list spending cuts, but financial markets may not give Reeves a long reprieve," XTB analyst Kathleen Brooks commented.
"UK bond yields may be stable on the back of her speech, but they are not in recovery mode."
The pound was quoted higher at USD1.2202 at late on Tuesday afternoon in London, compared to USD1.2161 at the equities close on Monday. The euro stood at USD1.0295, higher against USD1.0209. Against the yen, the dollar rose to JPY157.95 compared to JPY157.66.
Keeping a lid on the dollar, US producer price growth was softer-than-expected.
US annual producer price inflation picked up to 3.3% in December, from 3.0% in November, the Bureau of Labor Statistics said.
The reading undershot the FXStreet cited consensus of 3.4%.
On-month, prices were 0.2% higher, cooling from a 0.4% rise in November from October. Price growth of 0.3% for December had been expected, according to FXStreet.
Also landing below consensus, producer prices rose 3.5% annually last month when excluding food and energy, but 3.8% growth was expected. Price growth accelerated from 3.4% in November. Monthly, producer prices tread water in December when stripping out food and energy, falling short of expectations of a 0.3% rise. In November, they rose 0.2% from October.
Oxford Economics analyst Matthew Martin commented: "With a resilient labour market and robust economic growth, risks are for fewer than the three 25bps rate cuts in our forecast. However, its too soon abandon our baseline, as continued progress on inflation could still pave the way for a March rate cut rather than another pause. Without the consumer price index we cannot yet produce our tracking estimate for the personal consumption expenditure deflator, but the source data from the PPI was relatively benign. Passenger air services and travel agencies will apply some upward pressure, but gains in the financial and healthcare services components were modest and should be an offset."
The next Fed decision is on January 29.
In London, housebuilders shone. Persimmon added 5.5%, while Crest Nicholson rose 2.9%.
York, England-based Persimmon said completions in 2024 increased 7.5% on-year to 10,664, from 9,922 in 2023, and its forward sales position increased 8.5% to GBP1.15 billion from GBP1.06 billion.
Chief Executive Officer Dean Finch said: "Persimmon has worked hard and is well positioned for the future, supported by the land and planning investment we have made in recent years, our vertical integration capabilities and our excellent teams. This investment, coupled with the government's ambitious planning reforms which demand more of the high-quality, affordable homes which are Persimmon's core strength, supports our growth ambitions in the medium-term."
The company added that it expects underlying pretax profit "to be around the upper end of market expectations", which range from GBP349 million to GBP390 million.
Crest Nicholson said it needs to delay its annual results by two weeks in order to complete work on the provision for fire remediation work on its UK properties.
The Surrey, England-based housebuilder said results for the financial year that ended October 31 will be released on Tuesday, February 4 instead of on Tuesday next week.
Crest on Monday said it expects its total fire remediation provision for financial 2024 will be GBP245 million to GBP255 million. It had taken a GBP145 million provision at the half-year stage, when 45% of the buildings had been assessed. The cost is expected to be funded from company cash flow.
Crest continues to expect adjusted pretax profit for financial 2024 at the lower end of its guidance range of GBP22 million to GBP29 million, subject to any audit adjustments. This will be down from GBP41.4 million in financial 2023 and GBP137.8 million in financial 2022.
BP declined 2.5%. The London-based oil major said it expects to report lower fourth production figures as it delayed its capital market event set for next month. It expects upstream production in its fourth-quarter to be lower than the prior quarter, with weaker figures in gas & low carbon energy and oil production & operations.
BP furthermore updated guidance for its full year, noting that the underlying effective tax rate is now expected to be in the region of 42% instead of the previously guided 40%. It also revised its full-year expectation for its other business & corporate segment, with its underlying annual charge now anticipated to be in the region of USD600 million, up from the previous range of between USD300 million and USD400 million.
Gym Group added 4.7%. It said that positive trading momentum has continued through the second half of the year, driving strong like-for-like revenue growth.
The Croydon-based gym chain said revenue increased by 11% to GBP226.3 million for the year ended December from GBP204.0 million a year prior, with like-for-like revenue growing 7% year-on-year.
As a result, Gym Group expects full-year adjusted earnings before interest, tax, depreciation and amortisation to be slightly above the top end of the current market forecast range of GBP43.5 million to GBP45.5 million.
On London's AIM market, Trellus Health jumped some eight-fold, with shares topping 4.50 pence after closing at 0.60p on Monday. It announced a collaboration with Johnson & Johnson to integrate its Trellus Elevate platform into a patient support programme in the US.
Eligible patients prescribed a Johnson & Johnson therapy will gain access to Trellus Elevate, a digital platform combining data analytics with personalised resilience programmes to help manage chronic conditions.
Brent oil was quoted lower at USD79.84 a barrel late in London on Tuesday from USD81.25 late Monday. Gold was higher at USD2,673.07 an ounce against USD2,666.56.
Wednesday's economic events calendar has a UK inflation reading at 0700 GMT. There is a US consumer price index print at 1330 GMT.
The local corporate calendar has trading statements from electronics seller Currys, credit checking Experian and housebuilder Vistry.
Stateside, eyes are on major US banks which kick off the earnings season. Citigroup, Goldman Sachs, JPMorgan Chase and Wells Fargo all report annual results, as will asset manager BlackRock.
By Eric Cunha, Alliance News news editor
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