3rd Jan 2025 12:06
(Alliance News) - The FTSE 100 was down slightly around midday on Friday, consolidating Thursday's strong gains, as gains in oil majors offset weak housebuilding and mining stocks.
The FTSE 100 index traded down 4.69 points, 0.1%, at 8,255.40. The FTSE 250 was down 48.37 points, 0.2%, at 20,591.86, and the AIM All-Share was up just 0.19 of a point at 723.54.
The Cboe UK 100 was down 0.1% at 827.28, the Cboe UK 250 was 0.1% lower at 18,008.53, and the Cboe Small Companies also up 0.2% at 15,995.56.
In Europe on Friday, the CAC 40 in Paris was down 0.8%, and the DAX 40 in Frankfurt was 0.4% lower.
But in the US, markets are expected to open higher after a downbeat start to the year on Wall Street on Thursday. The Dow Jones Industrial Average is called up by 0.1%, the S&P 500 up by 0.2% and Nasdaq Composite up by 0.4%.
Back in London and housebuilders topped the blue-chip fallers list after a surprise drop in mortgage approvals in November.
According to Bank of England data, net mortgage approvals for house purchases fell to 65,700 in November from 68,100 in October. However, approvals remained above their previous 12-month average of 60,400.
FXStreet consensus had expected mortgage approvals to edge up to 68,500.
Approvals for remortgaging decreased to 31,200 in November from 31,500 in October, but remained above their previous 12-month average of 30,000.
Barratt Redrow and Taylor Wimpey fell 2.0% with Persimmon 1.8% lower.
Nonetheless Elliott Jordan-Doak at Pantheon Macroeconomics thinks mortgage approvals should "settle" around the 67,000 mark however in the coming months, and that "strong demand for housing will keep the number of approvals elevated into 2025".
Mining stocks also eased amid ongoing uncertainty in China.
AJ Bell's Russ Mould explained: "Miners' fortunes are closely tied to the commodity-hungry Chinese economy where faltering stimulus efforts, uneven economic data, and the threat of tariffs continue to raise questions about metals demand. Domestic Chinese shares came under further pressure amid mixed trading in Asia more broadly."
The Shanghai Composite Index closed down 1.6%.
Anglo American fell 1.0%, while Rio Tinto slipped 0.7%.
On the plus side, oil majors and index heavyweights BP and Shell rose 1.4% and 1.2% respectively although the oil price eased slightly after a strong start to the year.
A barrel of Brent oil fell to USD75.71 midday Friday from USD76.43 at Thursday's London close. European gas prices, which have rallied 14% in the last two weeks, remained firm however, trading just below EUR50 per mega watt hour.
Gold stabilised, trading at USD2,656.71 an ounce around Friday lunchtime, down from USD2.657.49 at the on Thursday.
Retailers were mixed after a report showed footfall fell in December.
According to BRC-Sensormatic data, total UK footfall was down 2.2% in the five weeks to December 28 compared to 2023.
This was an improvement on November's 4.5% decline, although this reflected the timing of Black Friday. This year's December figure includes Black Friday, rather than November’s figure, while the reverse was true in 2023.
Overall, UK footfall in 2024 was down 2.2% compared to 2023.
Helen Dickinson, chief executive of the British Retail Consortium, said: "A drab December which saw fewer shoppers in all locations, capped a disappointing year for UK retail footfall. This means 2024 is the second year in a row where footfall has been in decline. High streets and shopping centres were hit particularly hard throughout the year as people veered towards retail parks to take advantage of free parking and the variety of larger stores."
M&S rose 0.7% but Next was down 1.8%.
AJ Bell's Mould said the weak footfall illustrates "how life remains tough for the sector".
"There is a heightened risk of profit warnings from the retail sector over the coming weeks as management teams take a more realistic view of the year ahead. That’s a key reason behind a negative broker comment on Next which has sent its shares down."
"Deutsche Bank is worried that Next will give weaker forward guidance than is currently expected by the market."
"Next is the bellwether for the UK retail sector and anything it does to upset investors could have a negative read-across to other retail shares on the London market," he added.
Elsewhere, British Land firmed 0.2% after positive comments from Morgan Stanley.
The broker thinks the European property sector should "re-rate if we were to see more recognition of bottom-up fundamentals".
"There are risks around macro, but the risk reward looks compelling," Morgan Stanley added.
It sees the "best opportunities" in the UK where "asset valuations have been marked down, demand is solid with limited availability, while balance sheets are strong."
"Near term we see most re-rating potential in British Land, Derwent London, Great Portland Estates and Land Securities, with a preference for British Land and Landsec as their high dividend yields means investors are 'paid to wait'."
Sterling and the euro rallied after Thursday's heavy falls although ING sees further US dollar strength ahead.
The pound was quoted at USD1.2412 at Friday lunchtime, up from USD1.2378 at the time of the London equities close on Thursday. The euro was higher at USD1.0303 from USD1.0251.
Against the yen, the dollar ebbed to JPY157.23 from JPY157.63.
"The first trading day of the year brought fresh pressure on European currencies. There is now a considerable risk premium being built into EUR/USD, and we suspect that both protectionism and the recent rise in gas prices are playing a role. A short-term dollar correction would be warranted by technical factors, but the overarching narrative should remain USD-positive," analysts at ING remarked.
Shares in Tullow Oil jumped 12% after the International Chamber of Commerce ruled that branch profits remittance tax is not applicable to the firm in Ghana as it is outside the tax regime provided for in its petroleum agreements.
As a result of the decision, Tullow Ghana is not liable to pay the USD320 million BPRT assessment issued by the Ghana Revenue Authority.
Panmure Liberum's Ashley Kelly said the removal of a further liability "will take some pressure off the stretched balance sheet."
Tullow has two further tax cases that it filed with the International Chamber of Commerce in 2023.
Kelly explained the two further dispute tax claims being assessed by the ICC are for a total of USD387 million.
They relate to corporation tax for the same areas – the Government is claiming CT was payable on business Interruption proceeds from the Jubilee field and on disallowed loan interest.
"These claims are still in process and the outcome is likely later this year. While the outcome remains uncertain, Tullow will be feeling more optimistic following the first win."
Still to come, the ISM manufacturing PMI report at 1500 GMT.
By Jeremy Cutler, Alliance News reporter
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