13th Feb 2025 12:08
(Alliance News) - London's FTSE 100 underwhelmed on Thursday, massively underperforming European peers who jumped on Ukraine peace hopes.
Weakness in banking stocks following earnings from Barclays, as well as share price falls for Unilever, British American Tobacco, weighed on the index.
The FTSE 100 index traded down 58.01 points, 0.7%, at 8,749.43. The FTSE 250 was down 16.97 points, 0.1%, at 20,863.53, and the AIM All-Share fell 0.71 of a point, 0.1%, at 722.68.
The Cboe UK 100 fell 0.6% at 876.73, the Cboe UK 250 lost 0.1% to 18,212.07 and the Cboe Small Companies was up 0.4% at 16,147.02.
In focus in London, Barclays fell 6.0%. Improved earnings and a share buyback failed to spur the stock on. Going into the report, Barclays shares were up more than double from a year earlier, however.
"In 2024, UK banks mostly did well as rates came down enough to mean there wasn't a flood of bad debts driving impairments but stayed high enough that margins were supported. The industry will be hoping for a similar pattern in 2025. However, while there was nothing too alarming in Barclays' full-year results as it kicked off the UK banks' earnings season, a lack of upgrades after a period of strong performance saw the shares knocked off their perch," AJ Bell analyst Russ Mould commented.
"The GBP1 billion buyback was widely expected and earnings and dividends per share came in below expectations. Investors were also disappointed that 2026 guidance wasn't upgraded. In the context of the stock having more than doubled in value over the last 12 months, it's not a surprise to see a degree of profit taking."
NatWest shares have similarly been on a tear, also more than doubling during that 12-month stretch. The stock was down 1.9% midday Thursday, however. Elsewhere in the banking sector, HSBC fell 0.9%, while StanChart lost 1.1%. Lloyds Banking Group fell 0.5%.
NatWest reports earnings on Friday, HSBC on Wednesday, Lloyds next week Thursday and StanChart next week Friday.
Unilever fell 6.9%. 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 owner of brands such as Marmite and Ben & Jerry's 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%."
"We anticipate a slower start to 2025 with subdued market growth in the near term. We expect the market and our growth to improve during the year as price increases, reflecting higher commodity costs in 2025. We expect a more balanced split between volume and price."
BAT shed 7.2%. The tobacco firm booked a GBP6.20 billion charge related to ongoing litigation in Canada, weighing on the shares.
In European equities, the CAC 40 in Paris jumped 1.2%, while Frankfurt's DAX 40 surged up 1.8%.
Hope of a peace deal in Ukraine support equities in mainland Europe. Defence stocks, which struggled out of the gate on Thursday, eventually pushed higher. Leonardo rose 1.2% in Milan and Rheinmetall added 1.7% in Frankfurt, perhaps under the expectation that government defence spending will be lofty, even if a peace deal is struck.
In London, defence contractor BAE Systems added 2.8%, also recovering from a slow start. Iron pellet producer Ferrexpo, which operates in Ukraine, rose 7.3% in London, the best FTSE 250 performer.
JPMorgan Emerging Europe, Middle East & Africa Securities jumped 19% in London. The firm, which invests in the Middle East, Africa and "emerging Europe", including Russia, is down more than 60% since the invasion of Ukraine roughly three years ago.
Against the dollar, the pound rose to USD1.2474 midday Thursday, from USD1.2415 at the time of the London equities close on Wednesday. The euro rose to USD1.0402 from USD1.0364. Against the yen, the greenback faded to JPY153.84 from JPY154.77.
Analysts at ING commented: "European currencies received a lift late yesterday following an update from Donald Trump that he'd had productive discussions with Vladimir Putin about a ceasefire in Ukraine. The rally may have a little further to run, yet the stiff headwinds of potential US tariffs on Europe and sticky US inflation/high US rates will limit the EUR/USD upside."
A barrel of Brent fell to USD74.38 early Thursday afternoon from USD75.81 late Wednesday. Gold rose to USD2,918.53 an ounce from USD2,897.30.
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.
"In a surprise twist, the UK economy beat expectations to end the year on a positive momentum," Deutsche Bank analyst Sanjay Raja commented.
"Despite the stronger Q4-24 and December output data, today's stronger GDP report masks some underlying weakness in the economy. Household spending moderated in Q4-24. Business investment retreated significantly to end the year. And net trade dragged on output – its third worst performance in the post-war period."
Still to come on Thursday is a US producer price reading at 1330 GMT.
By Eric Cunha, Alliance News news editor
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