Yahoo Finance FTSE 100 Live: UK recession fears, US 'vibecession' ending, shares set to end week down
Retailers endured a tough end to 2023 after official figures today revealed a shock plunge in sales volumes for December.
The biggest monthly decline since January 2021 increases the chances the UK economy experienced a mild recession at the end of the year.
In today’s session, Deliveroo and DFS Furniture have updated on trading while the FTSE 100 index is higher after a tech-led rebound on Wall Street.
FTSE 100 Live Friday
'Diverging fortunes' as retail sales slide
Waitrose logistics firm in £765m takeover
Deliveroo earnings ahead of hopes
Sudden turnaround in US consumer sentiment
Friday 19 January 2024 15:19 , Daniel O'Boyle
US consumer sentiment suddenly jumped today, according to the closely watched University of Michigan sentiment index, defying economists' expectations.
The index hit 78.8, up from 69.7 last month and is the second straight big increase.
Commentators had noted that sentiment had been unusually low in the second half of 2023 considering the economic data, in what some economists called a "vibecession". The index spent most of 2023 at lows only seen in 2008 and the 1970s, even as inflation fell, GDP grew rapidly and unemployment remained at historic lows.
Is a 'soft landing' still likely?
Friday 19 January 2024 13:34 , Daniel O'Boyle
Paul Dales, chief UK economist at Capital Economics, says that a 'soft landing - where inflation returns to the 2% target without a significant contraction in GDP - is still more likely than not, even despite bad news this week.
He said: "This week’s stronger-than-expected news on inflation and weaker-than expected news on activity doesn’t mean that a soft landing for the economy is no longer the most likely outcome. Instead, there’s just a bit of turbulence as the runway comes into sight."
Luxury retailers make long term commitments to the Royal Exchange in the Square Mile
Friday 19 January 2024 13:29 , Daniel O'Boyle
A trio of luxury brands have signed new long-term leasing deals at the Royal Exchange, in a boost for the Square Mile’s high-end retail sector.
Property investor The Ardent Companies UK is the landlord of the retail element of the 458-year-old former trading centre which stands opposite the Bank of England.
It said British watchmaker Bremont and handbag maker Aspinal of London have both renewed the leases on their stores — 380 sq ft and 280 sq ft respectively — for 10 years until 2033.
You can’t justify a salary of that size, says £4.5m boss of British Gas owner
Friday 19 January 2024 12:19 , Daniel O'Boyle
The boss of British Gas’s parent company has said there is “no point” trying to justify his £4.5 million pay package, as he recognised that many of his customers were struggling to pay their bills.
Chris O’Shea, who runs Centrica, told BBC Breakfast that “you can’t justify a salary of that size”.
“It’s a huge amount of money, I am incredibly fortunate. I don’t set my own pay, that’s set by our remuneration committee.
“That’s the first bonus I’ve taken in my time at Centrica, for a number of years, I’ve given up bonuses because of hardships that customers were facing,” he said.
Tata Steel confirms plans to close blast furnaces at South Wales plant
Friday 19 January 2024 11:56 , Daniel O'Boyle
Tata Steel has confirmed plans to close blast furnaces at its plant in Port Talbot, South Wales, with the loss of more than 3,000 jobs.
About 2,800 jobs will go over the next 18 months, with a further 300 to be lost.
Tata said in a statement: “Tata Steel today announced it will commence statutory consultation as part of its plan to transform and restructure its UK business.
“This plan is intended to reverse more than a decade of losses and transition from the legacy blast furnaces to a more sustainable, green steel business.
“The transformation would secure most of Tata Steel UK’s existing product capability and maintain the country’s self-sufficiency in steelmaking, while also reducing Tata Steel UK’s CO2 emissions by five million tonnes per year and overall UK country emissions by about 1.5%.”
'Chances of a recession have risen again'
Friday 19 January 2024 10:43 , Daniel O'Boyle
Investec analyst Sandra Horsfield says that December's "very weak retail numbers heighten UK recession chances".
She said: "The ONS reports that, with today’s data, retail sales look to have subtracted 0.04%pts from Q4 GDP. Is this an isolated sign of sector-specific difficulties or indicative of faltering consumer demand more generally? It is particularly hard to tell in the absence of reliable labour market data.
"From what we can tell, the fall in vacancies has remained gradual so far rather than precipitous, although we have some niggling concern about the poorer hiring trends reported by several UK recruitment firms recently. Chances of a winter recession, which we have had in our forecasts for some time, but which had become less certain as a result of some stronger macro data recently, have just risen again."
Asda to open four more London convenience stores
Friday 19 January 2024 10:41 , Daniel O'Boyle
Asda is set to open four more ‘Express’ shops in London this month, as it continues its rollout of convenience stores.
The supermarket had long stayed out of the convenience market dominated by Tesco and Sainsbury’s, but began to change that with the opening of the first Asda Express stores in late 2022.
Today, it says it will open 21 more across the UK before the end of January. It plans to open 470 by the end of March, having bought that many shops from the Co-Op. The London stores are in Hornchurch, Crouch End, Dagenham and Horsham.
Persimmon leads FTSE 100 recovery, 4imprint surges in FTSE 250
Friday 19 January 2024 10:12 , Graeme Evans
Shares in US-focused promotional products firm 4imprint have jumped 13% in the FTSE 250 index, lifted by an upgrade to profit guidance.
London-based 4imprint generates most of its revenues in North America, where it boosts the marketing campaigns of its customers through merchandise such as branded pens, mugs and embroidered apparel.
The shares today rebounded 605p to their highest level since September at 5240p, lifted by the company’s guidance for 2023 profits of at least $140 million (£110.4 million).
That’s a jump of around 35% on 2022’s level and slightly above the top end of City forecasts. Broker Peel Hunt responded by increasing its price target to 6650p as it backed 4imprint to continue its progress in 2024.
The strong performance by 4imprint came as the wider London market also benefited from US tailwinds after Thursday’s tech-led bounce for Wall Street.
The improved risk appetite helped the FTSE 100 index to lift 0.7% or 49.48 points, although 7,508.57 is more than 100 points short of the week’s starting level.
Stocks on the recovery trail after Wednesday’s big sell-off included housebuilder Persimmon, up 30p to 1455p following an upgrade by Morgan Stanley.
The FTSE 250 index rose 83.22 points to 19,301.26, with Watches of Switzerland up 2% or 7p to 378.4p after yesterday’s profit warning triggered a 37% slide in value.
FTSE 100 rallies after strong US handover, retailers hold firm
Friday 19 January 2024 08:34 , Graeme Evans
Traders regained their appetite for risk today as the FTSE 100 index jumped by a surprise 0.8%, up 60.50 points to 7519.59 after Wall Street's strong session.
The recovery included a gain for housebuilder Persimmon of 27.5p to 1452.5p, while mining giant Anglo American improved 23p to 1818.6p
BP also did well, up 5.25p to 449.5p after Brent Crude futures moved back towards $80 a barrel.
The retail sector was largely untroubled by today’s poor official sales figures, particularly as most leading players have delivered their festive updates.
Next shares rose 12p to 8398p and JD Sports Fashion added 0.7p to 108.95p, but Marks & Spencer fell 1.5p to 252.5p.
The UK-focused FTSE 250 index improved 61.69 points to 19,009.73, led by corporate merchandise firm 4imprint after it said profits will be slightly higher than the top end of City forecasts. Shares jumped 6% or 300p to 4935p.
DFS warns on revenue, but shares rise
Friday 19 January 2024 08:12 , Daniel O'Boyle
Furniture seller DFS issued a revenue warning today, as "record hot weather in September and early October" hit sales.
However, it left its profit guidance unchanged, as it expects to be able to cut enough costs to offset the weaker revenue.
Sales were down 5.6% in the six months to Christmas Eve.
But investors were undeterred, as the stock rose by 2.4p, or 2.2% to 113.2p.
CEO Tim Stacey said: "The group has performed well in tough trading conditions. Despite the weaker than expected market, good operational performance and progress on gross margins and lowering our cost base have enabled us to deliver a profit for the first half that is slightly ahead of the prior year and we remain on track to deliver our full year profit target."
French shipping firm Ceva to buy Waitrose logistics firm Wincanton in deal worth £765 million
Friday 19 January 2024 07:38 , Michael Hunter
Wincanton, the logistics firm best known for hauling Waitrose groceries, is being bought by French shipping firn Ceva.
The bid is being recommended by Wincanton's board, and values the Chippenham-based firm at £764.9 million including debt.
The cash component of the bid is worth £567 million. Shareholders will receive 450p per share in cash, a 52% premium.
Wincanton began in 1925 as milk distributor and now employs around 20,300 people from 170 sites. it has 8,500 vehicles.
It also distributes Neal Yard Remedies products and has the logistics contact to support the supply chain for nuclear power plant being built at Hinckley Point.
Deliveroo rides into 2024 with earnings ahead of expectations
Friday 19 January 2024 07:37 , Simon Hunt
Deliveroo today said its 2023 earnings guidance was set to come in above the top end of expectations as it cheered resilient demand despite squeezed consumer spending.
The London-based business said gross transaction value, a measure of the total size of orders, rose 8% to £4.2 billion in the UK and 3% worldwide. Order numbers rose 1% in the UK and contracted 3% worldwide.
The numbers look better than an update from rival Just Eat earlier this week, which said orders fell 6% in the UK last year and as much as 16% in Southern Europe as consumers on squeezed incomes pared back their takeaway orders.
Retail figures 'would subtract 0.15 percentage points from real GDP growth'
Friday 19 January 2024 07:36 , Daniel O'Boyle
What do today's retail figures mean for the hopes that the UK avoided a 2023 recession?
Alex Kerr, assistant economist at Capital Economics, says: "Today’s release would subtract around 0.15 percentage points from real GDP growth in December, which increases the chances the economy may have ended 2023 in the mildest of mild recessions. Looking ahead, some of the drag from higher interest rates on existing mortgage holders may result in a further modest decline in real consumer spending in Q1. But we think interest rate cuts from June and the further boost to real household incomes from falling inflation will support a recovery in real consumer spending in the second half of this year."
'Diverging fortunes' on the high street
Friday 19 January 2024 07:33 , Daniel O'Boyle
The weak retail sales figures appear at odds with the results reported by some London-listed companies in recent weeks.
Erin Brookes, European retail and consumer lead at Alvarez & Marsal, says that may mean some firms were still winners over Christmas while others saw an extreme decline in sales.
She said: "This appears at odds with recent retailer results, with the likes of Marks & Spencer and Next reporting booming sales over the festive period – the latter even revising its profit guidance higher. This suggests that performance was polarised, with strong brands and propositions emerging as Christmas winners while others fall behind. It’s likely that these diverging fortunes will only be exacerbated through the year, as consumers remain discerning about where they spend."
Superdry to report results next week
Friday 19 January 2024 07:20 , Simon English
Struggling fashion chain Superdry will publish its half-year results next Friday, Jan 26, it alerted the market today. The group, led by Julian Dunkerton, recently appointed PwC to review its finances and look at possible options to raise cash.
It earlier admitted that trading before Christmas was "significantly below management expectations". The battered shares are likely to come under further pressure today.
Dunkerton, the co-founder who returned as CEO after a boardroom coup, still believes the company can be turned around
Wall Street and Nikkei 225 benefit from tech rebound, FTSE 100 seen higher
Friday 19 January 2024 07:17 , Graeme Evans
A tech-led rally boosted Wall Street last night as the Nasdaq Composite closed 1.3% higher and the S&P 500 index up by 0.9%.
Strong quarterly results from the semiconductor sector and a broker upgrade for Apple shares were factors in the performance. The iPhone maker rallied 3% while other Magnificent Seven stocks Nvidia and Meta Platforms lifted 2%.
The US performance was in contrast to the lacklustre showing in London, where shares steadied after Wednesday’s global slump but the FTSE 100 index lagged European benchmarks with a rise of 12.80 points to 7459.09.
The handover from Wall Street and a stronger oil price means CMC Markets expects the top flight to open 15 points higher at 7474, although any gains today are unlikely to prevent another weekly decline.
On Asia markets, the Nikkei 225 rose 1.4% on the back of the tech rebound and after Japan’s inflation rate dropped to a 17-month low. The Hang Seng index and Shanghai Composite both traded in the red.
Long-term retail sales picture 'subdued'
Friday 19 January 2024 07:07 , Daniel O'Boyle
The decline in retail sales is the biggest since January 2021.
Heather Bovill, Deputy Director for Surveys and Economic Indicators at the ONS, said customers buying presents early played a part, but there were also signs of long-term decline.
She said: “Following a strong November, retail sales plummeted in December with all types of outlets being hit. This was the largest overall monthly fall since January 2021, when the reintroduction of pandemic restrictions knocked sales heavily.
“Food stores performed very poorly, with their steepest fall since May 2021 as early Christmas shopping led to slow December sales.
“Department stores, clothing shops and household goods retailers reported sluggish sales too as consumers spent less on Christmas gifts, but had also purchased earlier during Black Friday promotions, to help spread the cost.
“The longer-term picture remains subdued, with quarterly sales dipping, while annual sales volumes fell for the second consecutive year, to their lowest level in five years.”
“The longer-term picture remains subdued, with quarterly sales dipping, while annual sales volumes fell for the second consecutive year, to their lowest level in five years.”
Retail sales fall by 3.2% as high street has disappointing christmas
Friday 19 January 2024 07:04 , Daniel O'Boyle
Retail sales fell by 3.2% in December, in a very disappointing Christmas for the high street.
That means sales volumes fell by 0.9% in the last three quarters of the year, and have now fallen for consecutive quarters.
The figures are seasonally adjusted, meaning the actual figures were likely higher than in November, but the rise was much less than in past years.
Non-food store sales volumes fell fastest, by 3.9%.
Recap: Yesterday's top stories
Friday 19 January 2024 06:43 , Simon Hunt
In the old days, prior to the 2007 crash, the banking sector was widely derided as boring, as stuck in the mud.
Critics used to call it 3-6-3 banking.
The bankers paid 3% on deposits, charged 6% on loans, and hit the golf course at 3pm every afternoon.
Encouraged by shareholders and governments to be a bit more adventurous, trouble ensued. Boring banking suddenly looked not so bad after all.
When the supermarkets decided to get into financial services it was widely assumed they would eat the High Street giants for lunch.
With their superior customer service and cut throat competition, Barclays et al would be crushed by the marketing savvy of the food kings.
Stop of at Tesco for a pound of apples – walk out with a mortgage and a life insurance policy.
The grocers quickly discovered that it wasn’t as easy as all that. That customers are more likely to get divorced than flip bank accounts and that what people really wanted from their grocers was, well, groceries.
Yesterday Sainsbury's said it is looking to offload its banking arm; arch rival Tesco is rumoured to be doing the same.
Maybe doing banking well – which just means not screwing it up – is harder than it looks.
Here's a summary of our other top stories from Yesterday:
Ahead of its US listing, Flutter, home to Betfair and PaddyPower, barely mentions the UK in its latest update, but it takes a huge hit from "adverse" US sports results
AJ Bell ignores market woes – assets up 53% to £5.2bn in last year, customer numbers 8% to 484,000
The Works not working: losses double to £14 million at the arts and crafts retailer as it warns "pressure on profitability from lower sales and margins has increased" and vows to cut back on investments
WeWork tells members it is closing Holborn office as it seeks to cut costs post bankruptcy
London fintech lender Zilch moves into big new offices in Victoria as it gears up for major expansion ahead of possible IPO later this year
The Kitchen beats the living room this Christmas for Currys, as good sales of appliances offset weaker trends for TV, it ups it profit forecasts to up to £115 million, even as like-for-like sales fall 4% overall
Hipgnosis Songs Fund says it will give £20 million to anyone who makes an offer for its songs - it's intended to cover due diligence costs and balance out the "conflict of interest" that results from an option held by Merck Mercuriadis
Watches of Switzerland profit warning in latest sign of luxury slowdown - saw a "volatile trading performance in the run-up to and beyond Christmas."
