8th Jan 2026 09:04
(Alliance News) - Stock prices in London opened lower on Thursday as updates from Associated British Foods, Tesco and Shell disappointed investors.
The FTSE 100 index opened down 26.38 points, 0.3%, at 10,021.83. The FTSE 250 was down 75.43 points, 0.3%, at 22,805.38, and the AIM All-Share was down 0.58 points, 0.1%, at 781.00.
The Cboe UK 100 was down 0.3% at 1,004.87, the Cboe UK 250 was down 0.2% at 19,902.40, and the Cboe Small Companies was down 0.5% at 17,855.19.
In European equities on Thursday, the CAC 40 in Paris was 0.2% lower, while the DAX 40 in Frankfurt was up 0.4%.
Sterling was at USD1.3436 on Thursday morning, down from USD1.3472 at the London equities close on Wednesday. The euro was lower at USD1.1669 from USD1.1685. Against the yen, the dollar was lower at JPY156.69 versus JPY156.74.
UK house prices unexpectedly fell in December, while annual growth slowed, numbers from Halifax showed.
House prices dipped by 0.6% in December, with the average price falling to GBP297,755 from GBP299,544 in November, the lowest price since June. A rise of 0.2% was expected for December, according to market consensus cited by FXStreet.
Annual house price growth slowed to 0.3% in December from 0.6% in November.
"While this may feel like a subdued close to the housing market in 2025, overall activity levels were resilient over the last year and broadly in line with the pre-pandemic average," Halifax analyst Amanda Bryden said.
"Various forces are poised to somewhat buoy the market heading into 2026. While December's monthly fall in prices was likely related to uncertainty in the latter part of the year, this should now be starting to unwind. Further, mortgage rates are already reducing following the latest base rate cut and there are an increasing number of lending options available for those borrowing at a higher loan-to-value."
Meanwhile, geopolitical concerns remained in focus.
US Energy Secretary Chris Wright said Washington will control sales of Venezuelan oil "indefinitely," a day after President Donald Trump announced Venezuela's interim leaders had agreed to US-managed marketing of 30-50 million barrels of crude.
"We're going to market the crude coming out of Venezuela, first this backed up stored oil, and then indefinitely, going forward, we will sell the production that comes out of Venezuela into the marketplace," Wright said at a Goldman Sachs energy event in Miami.
In the US on Wednesday, Wall Street ended mixed, with the Dow Jones Industrial Average down 0.9%, while the S&P 500 lost 0.3% and the Nasdaq Composite ended up 0.2%.
The yield on the 10-year US Treasury was unchanged from Wednesday's close at 4.15%. The yield on the 30-year widened to 4.84% from 4.82%.
In Asia on Thursday, the Nikkei 225 in Tokyo was down 1.6%. In China, the Shanghai Composite was 0.1% lower, while the Hang Seng Index in Hong Kong lost 1.2%. The S&P/ASX 200 in Sydney rose 0.3%.
In London, Associated British Foods was down 11%, the biggest faller on the FTSE 100 index.
The food processing and clothing retailing business issued a profit warning amid a challenging start to the financial year at Primark and mixed trading in its food business.
"We now expect group adjusted operating profit and adjusted earnings per share to be below last year," the London-based company said in an unscheduled trading update.
In November, AB Foods, which owns retailer Primark and a range of food manufacturing businesses, said it expected to deliver growth in adjusted operating profit and adjusted EPS in the current financial year.
In the financial year ending September 13, AB Foods, which owns food brands such as Twinings tea, Kingsmill bakery, Jordans cereals and Mazola cooking oils, as well as Primark, reported adjusted EPS of 174.9p and adjusted operating profit of GBP1.73 billion.
By division, Retail sales grew 1% at constant currency for the 16 weeks to January 3 year-on-year, as did Grocery sales. Ingredients sales fell 2%, Sugar sales dropped 5% and Agriculture sales declined 4%.
The firm said Primark's UK performance was "encouraging" with sales growth of around 3% in the 16 weeks to January 3, and like-for-like sales growth of 1.7% in a "difficult clothing market".
But in continental Europe, like-for-like sales declined 5.7% in the period.
"Overall, Primark's sales growth in the period was below our previous expectations and we now expect Primark's sales growth in the first half of 2026 to be in the low single digits. In a difficult trading environment, we significantly increased markdowns to manage inventory levels effectively, which impacted profitability," the company said.
In November, AB Foods said it was considering separating its Primark retail business and its Food operations as part of a review into the group's structure.
Tesco shares dropped 5.4% as it said it expects to deliver profit at the upper end of previous guidance, though quarterly sales fell short of expectations weighed by a surprise drop in sales at Booker.
"Competition is as intense as ever," said Tesco Chief Executive Ken Murphy.
The food retailer said like-for-like sales excluding VAT and fuel rose 2.4% in the six weeks to January 3 compared to a year ago.
Like-for-like sales on the same basis were up 3.2% in the UK and 3.8% in the Republic of Ireland.
Sales were down 2.1% at Booker and 0.8% higher in Central Europe.
For the third quarter, which is the 13 weeks to November 22, Tesco said like-for-like sales excluding VAT and fuel for the group were up 3.1%, with 3.9% growth in the UK.
As a result of what the firm called "a strong Christmas performance", Tesco now expects to deliver financial 2026 group adjusted operating profit at the upper end of its GBP2.9 billion to GBP3.1 billion guidance range issued in October.
It continues to expect free cash flow within its medium-term guidance range of GBP1.4 billion to GBP1.8 billion.
Marks and Spencer shares climbed 3.0% as it reported higher Food sales in the third quarter, but Fashion, Home & Beauty sales fell.
For the group, excluding the Ocado Retail joint venture, sales rose 3.3% to GBP4.15 billion in the 13 weeks to December 27. Ocado Retail was consolidated by M&S in April, so there is no prior year comparative. Including Ocado Retail, group sales jumped 24% to GBP4.99 billion.
Food sales rose 6.6% to GBP2.72 billion, and increased 5.6% on a like-for-like basis. Fashion, Home & Beauty sales fall 2.5% to GBP1.27 billion, and dropped 2.9% on a like-for-like basis.
The retailer said Fashion, Home & Beauty performance reflects reduced high street footfall and the long tail impact on stock data and management issues following the cyberattack earlier in the year.
"As we enter 2026, we plan to accelerate the reshaping strategy against the context of an uncertain consumer environment," M&S said.
Shell shares were down 2.3% as it said it expects to report stable or increasing production figures for the fourth quarter of 2025.
The London-based oil and gas exploration company projects fourth-quarter integrated gas production between 930,000 and 970,000 barrels of oil equivalent per day, against 934,000 boepd in the third quarter.
Marketing sales volumes are seen as "seasonally lower" at 2.7 million to 2.75 million barrels per day, down quarter-on-quarter from 2.82 million.
Shell added that it expects marketing adjusted earnings to be down compared to the fourth quarter of 2024, "reflecting a (non-cash) deferred tax adjustment in a joint venture". It also forecasts "a significant loss" in adjusted earnings for its Chemicals sub-segment for the same reason.
On the FTSE 250 index, Greggs sank 6.7% as it said it expects to meet its full year guidance and reported higher sales for the 2025 financial year.
The pastry provider said total sales were up 6.8% to GBP2.15 billion in the twelve months to December 27 from GBP2.01 billion a year ago. Company-managed shop like-for-like sales rise 2.4%.
Total sales in the fourth quarter rose 7.4%, while company-managed shop like-for-like sales were up 2.9%.
Greggs said market conditions "remain challenging". It expects consumer confidence to remain a market headwind in the year ahead, which will "put some temporary pressure on margins" along with the costs of new supply chain capacity.
"Taking all of this into account, in the year ahead we expect to deliver profits at a similar underlying level to 2025, with any year-on-year improvement contingent on a recovery in the consumer backdrop," it added.
On the AIM market, Cerillion shares jumped 11% as the firm said it has won its its "largest ever" contract, worth GBP42.5 million, with Oman Telecommunications.
The London-based billing, charging and customer relationship management software company said the contract win helps to underpin existing market forecasts for financial 2026 and beyond.
It will supply and install its BSS/OSS suite and provide ongoing support and maintenance over the five-year subscription term.
Gold was down at USD4,427.10 an ounce early on Thursday from USD4,458.54 late Wednesday. Brent oil was trading slightly lower at USD60.07 a barrel from USD60.37.
Still to come on Thursday's economic calendar are eurozone unemployment and PPI figures, and US weekly jobless claims data.
By Michael Hennessey, Alliance News reporter
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