7th Feb 2025 16:50
(Alliance News) - Stock prices in London closed mostly lower on Friday, amid a climate of "grim" UK consumer confidence.
"The UK outlook is getting worse by the day," commented AJ Bell's Dan Coatsworth. "Business and consumer sentiment is already weakening amid concerns that the new government doesn't have an effective plan to accelerate economic growth.
"The outlook is further clouded by companies facing higher employment-related costs from April as these are likely to be passed onto the customer via price hikes. That could lead to higher inflation and reduced consumer spending – a disaster for many companies on the UK stock market."
He continued: "The statistics make for grim reading. GfK's monthly Consumer Confidence index decreased in January, with steep falls in consumer views on the UK economy, both looking back a year and 12 months ahead."
Short sellers are consequently "sharpening their knives" for UK consumer-facing stocks, Coatsworth said, aiming to profit from declining stock prices.
The FTSE 100 index closed down 26.75 points, 0.3%, at 8,700.53. The FTSE 250 ended down 159.97 points, 0.9%, at 20,813.16, and the AIM All-Share closed down 1.31 points, 0.2%, at 719.53.
The Cboe UK 100 ended down 0.5% at 871.44, the Cboe UK 250 closed down 0.9% at 18,158.00, and the Cboe Small Companies ended up 0.9% at 15,824.16.
Legal & General ended 2.1% higher.
The London-based insurer is selling its US insurance entity for USD2.3 billion to Japanese firm Meiji Yasuda Life Insurance which may also buy a stake in L&G.
Legal & General said more than half of the deal proceeds will be returned to shareholders.
Barratt Redrow was the biggest loser, down 4.0% after UBS cut its price target to 575 pence from 630p although it maintained a 'buy' recommendation.
Ferrexpo led the FTSE 250, up 9.4%. Aston Martin led the laggers, down 3.9%.
European Opportunities Trust gained 1.4%.
The investor's net asset value per share fell 8.6% to 921.66 pence each as at November 30 and its total return with dividends reinvested was minus 8.4% over the six months. This underperformed against the benchmark, the MSCI Europe total return index in sterling, which had a return of minus 3.3%.
The trust also noted that the "nomination of Robert F Kennedy Jr to be the next US health secretary has alarmed investors".
However looking ahead, the chief investment officer of its manager Devon Equity said that "earnings forecasts for [our] portfolio companies are markedly higher than those projected for the wider market...Our healthcare, technology and payments companies should all make good progress."
Among smaller caps, Phoenix Spree Deutschland closed 9.7% higher.
The Berlin real estate-focused investor reported the first increase in its portfolio valuation since the second half of 2022. Its portfolio value rose 3.2% in the second half of 2024.
Iomart lost 21%.
The Glasgow, Scotland-based cloud computing service provider expects to report adjusted earnings before interest, tax, depreciation and amortisation around 10% below current market expectations, citing a GBP37.0 million to GBP38.0 million forecast range. It also expects lower adjusted pretax profit.
The reduced earnings guidance was the result of an "accelerated shift in revenue mix towards higher growth, lower margin services", Iomart said.
Outside the stock market, fast fashion retailer Shein is expected to "go for a much lower [than previously planned] valuation" of USD50 billion in its potential London listing.
"Shein's planned London listing was already mired in controversy and now it's hit by fresh tariff turmoil, becoming ensnared in clampdowns on e-commerce giants," said Hargreaves Lansdown's Susannah Streeter, with the EU potentially following the US in closing loopholes which allow Shein to pay lower shipping costs and keep consumer prices lower.
"This looks set to be a big bump in the road for Shein's controversial planned listing on the London Stock Exchange," Streeter said. "If Shein can't compete so easily on price in major markets like the US and the EU, it'll be a much harder sell, particularly given it also faces claims of environmental recklessness and poor working conditions in its supply chains.
"This is likely knock potential investor sentiment and make it that bit harder to achieve a hoped-for blockbuster valuation."
In European equities on Friday, the CAC 40 in Paris ended down 0.5%, while the DAX 40 in Frankfurt ended down 0.5%.
The pound was quoted at USD1.2400 at the London equities close on Friday, compared to USD1.2444 at the close on Thursday.
The euro stood at USD1.0333 at the European equities close Friday, down against USD1.0375 at the same time on Thursday.
Against the yen, the dollar was trading lower at JPY151.24 compared to JPY151.82 late on Thursday.
Stocks in New York were lower at the London equities close, with the DJIA down 0.6%, the S&P 500 index down 0.7%, and the Nasdaq Composite down 1.1%.
Nonfarm payroll employment increased by less than anticipated in the US in January, data published by the Bureau of Labor Statistics.
Total nonfarm payroll employment increased by 143,000 in January, down from growth of 307,000 in December, which was upwardly revised from a previously reported increase of 256,000. January's increase was lower than the ING consensus for a slowdown in growth to 175,000, and below the FXStreet-cited consensus of 170,000.
It indicates the labour market in the US was softer than expected in January, which could help justify a faster pace of rate cuts from the Federal Reserve.
The country's unemployment rate edged down to 4.0% in January from 4.1% in December. This was better than the FXStreet-cited consensus, which had expected the rate to have remained at 4.1%.
Meanwhile, OpenAI said it is taking reports of a data breach "seriously" but said it has not yet seen any evidence of its systems being compromised.
Reports on Friday said a hacker claimed to have obtained the log-in information for 20 million OpenAI accounts, including passwords and email addresses. Their forum post provided an alleged sample of the data and offered to sell the full batch.
The credibility of the claims has not been verified, but in a statement OpenAI said it was looking into the reports.
Brent oil was quoted at USD a barrel at the London equities close Friday from USD74.71 late Thursday.
Gold was quoted at USD an ounce at the London equities close Friday against USD2,851.18 at the close on Thursday.
In Monday's UK corporate calendar, Porvair releases full-year results.
The economic calendar for Monday has vehicle sales data from China and US consumer inflation expectations.
Before that, China's consumer and producer price inflation will come out on Sunday.
By Emma Curzon, Alliance News reporter
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