- FTSE 100 falls 2 points to 8,248
- Retailers inflation warning following unspectacular festive period
- Next upgrades profit guidance after further solid sales
4.05pm: US stocks tumble
The FTSE 100 is flat and European stocks are up, while Wall Street has seen a U-turn, with the tech-heavy Nasdaq now leading a sharp retreat.
Nvidia (NASDAQ:NVDA) Inc fleetingly took the crown from Apple (NASDAQ:AAPL) as the chipmaker's shares (and many others) have since dropped sharply.
After just over an hour of trading, shares in the chipmaker have tumbled 5.4%.
This profit-taking was been triggered by a rise in bond yields following the release of macroeconomic data, with fellow tech giants Meta Platforms 3% and Tesla slipping 4%.
The Nasdaq Composite is down 1.3% now, with the S&P 500 falling 0.6% and the Dow Jones down less than 0.1%.
Sparking the turnaround in share directions, there was the release of the ISM services report, which may have played a role in driving yields higher, traders said, with inflation a concern as the services prices index for December climbed to its highest since February 2023.
There was also a strong JOLTS report that revealed US job openings, which surprised by rising to a six-month high in November, boosted by a jump in business services.
In London, the FTSE 100 is just below where it started, while the FTSE 250 has dropped 240 points or 1.2% to 20,371.
Next was top of the blue-chip leaderboard, with fellow retailers JD Sports and Burberry (LON:BRBY) not far behind.
Housebuilders Taylor Wimpey (LON:TW) and Persimmon (LON:PSN) led the fallers, along with ad group WPP (LON:WPP) and banks NatWest and Barclays (LON:BARC).
Over on the Continent, the DAX is up 0.3% and the CAC 40 up 0.5% to a four-week high.
2.39pm: Wall Street starts tentatively on front foot
US stocks have opened higher, with the tech-heavy Nasdaq in the rear this time.
Of the main benchmarks, the Dow Jones is in the lead, up almost 0.5% in early trades, with its top four names (Apple, Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT)) all in the green.
The S&P 500 has added 0.3% and the Nasdaq Composite is just above flat so far.
Back in Europe, the FTSE 100 is almost back to parity, while the German and French benchmarks are up 0.8% and 0.9%.
2pm: US trade deficit widens further
US stock futures are now pointing higher than they were initially.
The morning's main macro data showed the US trade deficit widened again to $78.2 billion in November, from $73.6 billion the month before, as imports rebounded 3.4% and exports 2.7%.
Shipments in both directions recovered after the three-day East Coast port strike the month before.
"The deficit could widen even more in the coming months, as importers rush to bring in goods before the incoming Trump administration imposes tariffs," says Paul Ashworth at Capital Economics.
Imports and export prices both dropped, so real goods exports increased 3.4%, with real goods imports up 4.1%.
Nominal services exports increased by almost 1%, with services imports broadly stagnant, offsetting some of the deterioration in the goods trade deficit.
"As things stand now, fourth-quarter growth for real exports of goods and services is tracking at around +0.5% annualised, with growth in real imports close to -1.0%," says Ashworth.
The upshot is that net external trade could end up adding about 0.2% points to overall US GDP growth, he adds, but that is likely to be more than offset by a 0.6% point drag from slower inventory growth.
Overall US GDP should be as high as 2.7% thanks to solid consumption levels.
1.26pm: New consumer tech for next Christmas?
Alongside the investor attention-grabbing speech from Nvidia boss Jensen Huang there have been plenty of other interesting technological developments at the CES expo, writes my colleague Josh Lamb.
He highlights a wearable solar panel, some smart glasses and a robo-vacuum cleaner that will also pick up your bulky waste (and maybe tidy away a dropped sock or two?).
12.22pm: FTSE continues to drag
As we head to lunchtime, London stocks remain in the red and the main anomaly in European markets, while US futures are mixed.
The FTSE 100 is down 0.3% and the FTSE 250 down 0.6%.
Ukrainian iron ore group Ferrexpo (LON:FXPO), down almost 8% is the main failler acoss the FTSE 350, followed by Raspberry Pi (LON:RPI), also down 7%. Both stocks had done well in the past couple of months.
AJ Bell (LON:AJBA) PLC (LSE:AJB) is down 5% after Citi downgraded the stock to 'sell'.
Other fallers include housebuilders, after the Halifax report earlier showed a weak finish to last year for house prices.
Three of the five largest FTSE stocks are down more than 1%, AstraZeneca (LON:AZN), HSBC and Rio Tinto (LON:RIO), with Compass, Barclays, Natwest similarly afflicted further down the list.
Two retailers are top of the leaderboard, with JD Sports up 5%, Next PLC (LSE:LON:NXT) up 3.9% after its trading update, but other names have seen their gains tail off.
In Europe, the DAX is up 0.3% in Frankfurt, while in Paris the CAC 40 is up 0.8% and the pan-continental Euro Stoxx 600 has gained 0.2%.
Across the pond, futures are not committing strongly to anything yet, with the Nasdaq 100 just below flat, and the S&P 500 and Dow Jones both just above flat.
11.31am: Primark sales remain poor, M&S good
Primark saw "particularly weak" sales, boding badly for parent company Associated British Foods PLC (LSE:LON:ABF), say analysts at Citi.
This follows the most recent Kantar UK clothing survey, which suggested that four-week sales in the run-up to mid-December fell around 3.6% compared to the year before, though this was a sequential improvement on the previous weeks decline of 5.1%.
It is also consistent with BRC commentary that consumers had been delaying purchases of winter clothing this year, leading to weaker sales in October and November.
Sales remained weak for Primark's UK businss, with data suggesting a 7% decline in the first 12 weeks of the first quarter of its financial year, Citi said.
More positively, Marks and Spencer Group PLC (LSE:LON:MKS) bucked the trend with positive sales growth in the period.
11.06am: Next reactions
Next shares are up 4.1%, but not all analysts reactions were positive.
"Even Next it seems is not immune to the UK macro conditions," say Shore Capital analysts David Hughes and Clive Black, flagging the 2.1% decline for UK in-store retail sales for the blue-chip retailer in the past nine weeks.
This brought year-to-date figures to -1.1%.
"However, the strength of the business remains its multi-channel, multi-brand and international position and here we saw the stronger growth," says Black with UK online up 6.1% (+5.2% YTD) and overseas online up 31.4% (+23.9% YTD).
With this stronger-than-expected December performance, Next raised its guidance for the year to April 2025, now expecting total group sales growth of 7.8% (vs +7.4% previously) and PBT growth of +10% to £1,010 million (vs +9.5% to £1,005 million previously).
Alongside this profit the business is expected to generate £670 million of surplus cash, with circa £580 million to be returned to shareholders (£258 million ordinary dividends, £326 million share buybacks) while still reducing net debt.
"Overall, this looks a positive set of numbers from Next, and while the UK macro environment remains consistently uncertain, the company remains a stand-out in terms of excellent retail operations."
Analysts at Deutsche Bank (ETR:DBKGn) are less glowing in their praise.
They said they expected the market reaction to be "mixed", viewing the 3.5% sales guidance as "reasonably conservative at this stage, given the +6% 4Q exit rate, and gives scope for further upgrades as the year progresses".
Next's 2025 PBT beat was smaller than the City expected, they said, and 2026 guidance was "slightly below expectations".
"The next realistic time for the guidance to be changed is May with the 1Q trading update, so we expect limited movement in the share price until this point."
10.40am: Close Bros appoints new CEO
Close Brothers (F:CBRO) Group PLC (LSE:CBG), one of the lenders at the centre of the motor finance enquiry, has appointed a new chief executive.
Adrian Sainsbury , the current chief exec, has stepped down after a period of medical leave, with finance director Mike Morgan now stepping up to the CEO role permanently.
Morgan takes the reins at a critical time for the mid-sized bank, which is awaiting a Supreme Court ruling on the amount of compensation it has to pay for failing to tell customers the level of commissions on car purchase loans.
For the sector overall, estimates from credit rating agency Moody’s put the bill at £30 billion, with broker KBW yesterday suggesting Close Bros might have to pay out £460 million.
The bank has already halted its dividend and agreed the sale of its asset finance arm to bolster its balance sheet by £400 million ahead of the final judgement.
10.27am: Thoughts on construction PMI
After the earlier headline CIPS construction PMI eased to a six-month low in December, economist Matthew Pointon at Capital Economics notes that the housing balance is now at a one-year low.
"That decline will reflect concerns around higher interest rates, which will act to both raise the cost of construction and dampen house prices."
Indeed, Halifax earlier reported a 0.2% m/m fall in house prices in December, the first monthly fall since March last year.
"Higher interest rate expectations have had less of an impact on commercial activity," says Pointon.
"And looking ahead, gilt yields are set to trend down this year. That should support a gradual recovery in development starts."
Elliott Jordan-Doak at Pantheon Macroeconomics says the PMI shows business sentiment in the sector "well ahead of the pessimism evident in the services and manufacturing surveys released recently".
He estimates the PMI is still consistent with construction sector output rising at a healthy clip of 0.8% on a three-month-on-three-month basis.
"The sector should continue to outperform as government spending supports building, and planning reforms help unblock the pipeline of projects."
10.14am: UK long-term debt costs rise, amid low demand
Some significant bond news this morning, as the UK bond auction of 30-year government debt received the lowest demand since December 2023.
The debt was issued at 5.198% well up on the previous auction's yield of 4.747%.
Earlier, the cost of UK long-term borrowing climbed to the highest level since 1998 ahead of the debt sale.
The yield on 30-year gilts climbed three basis points to 5.21%, and has remained just off that level in recent minutes at 5.206%.
Yields on shorter-term debt also is up this morning, including two-year, five-year and 10-year gilts.
10.07am: Euro CPI rises
Gains for German and French shares have been cut after an early 'flash' inflation estimate for the euro zone showed an annual rise of 2.4% for the consumer price index, up from 2.2% as economists forecast.
Month-on-month, CPI was up 0.4%, also as expected, after a fall of 0.3% in November.
Core CPI, which excludes more volatile prices like food and fuel, remained at 2.7% on an annual basis, as predicted.
The eurozone unemployment rate also remained at 6.3% in November, as foecast.
9.55am: London lagging Europe
London's shares are lagging most of Europe this morning.
The FTSE 100 and 250 are down 0.3% and 0.6%, compared to a 0.2% gain for Germany's DAX and 0.4% improvement for France's CAC 40.
Spain's IBEX is flat, while Italy's FTSE MIB is down 0.3%.
The Euro Stoxx 600 is just above flat, as gains for German forklift truck-maker Kion, Swedish carmaker Volvo and JD Sports, are just offsetting losses for French cater Sodexho, rolling stock maker Alstom (EPA:ALSO), shipping giant Moller-Maersk and UK water company Pennon (LON:PNN).
Market analyst Kathleen Brooks at XTB highlights the 3% gain for Next this morning.
"The market was not deterred by Next’s concerns around higher costs from the Budget, which bodes well for the UK’s largest retailers," she says.
Oh look, Next $NXT beat forecasts again. How surprising. pic.twitter.com/R9Fvkg4Fm1— Chris Beauchamp (@ChrisB_IG) January 7, 2025
Shares in retailers JD Sports, Burberry, Watches of Switzerland, Moonpig, AO World are also among the top risers on the FTSE 350 after bellwether Next was the first of the big sector names in the UK to announce their Christmas trading figures, with BRC and Kantar numbers also out this morning.
"It has gone some way to easing fears about a weak consumer in the all-important ‘golden quarter’," says Brooks.
Next reported less footfall in its shops, with retail sales falling by 2.1%. In contrast, online sales in the UK surged by 6.1%.
"This suggests that retailers with the biggest online presence will outperform this winter, and bodes well for Next’s competitors including M&S."
M&S reports its Christmas trading update on Thursday.
Elsewhere, Brooks says markets are "taking a breather on Tuesday, and European stock indices are also mostly lower as we wait for European inflation", which is out in a few minutes and expected to have climbed 2.4% year-on-year in December up from 2.2% a month earlier.
9.44am: Construction sector still expanding, housing the exception
The UK construction PMI dropped last month but remained in positive territory.
It fell to a six-month low of 53.3 in December, from 55.2 in November, although as it is still well above the 50 expansion/contraction level this indicates construction activity is still expanding.
All three of the industry subsectors were positive, with only the housing balance, at 47.6, is consistent with a contraction in construction activity as it fell to a one-year low.
9.28am: GSK (LON:GSK) cancer drug boost
GSK PLC (LSE:GSK, NYSE:GSK) shares are little moved after it received a major regulatory boost for an experimental drug that targets a rare and aggressive bone cancer called osteosarcoma.
The US Food and Drug Administration (FDA) has granted 'breakthrough therapy designation' to the treatment, which is being tested for patients whose cancer has returned after at least two prior treatments.
The drug is also being explored for other cancers, including lung cancer and sarcoma, as part of GSK’s ongoing global trials.
9.12am: Card spending was flat over Christmas
Consumer card spending growth remained flat in December, figures from Barclaycard show, which is significantly lower than the latest UK inflation rate.
Cutbacks in card spending on essential categories were offset by growth in discretionary spending, supported by entertainment (up 6.0%) and cinemas (up 52.1% with Wicked, Gladiator and Paddington luring people out), with holiday bookings for 2025 seeing travel spending up 4.7%.
Restaurants, pubs, bars and clubs saw modest increases, the data shows, as Brits limited socialising amid the “quad-demic” and cut back on eating out to save money.
Furniture stores saw the highest level of growth since March 2022.
Barclays survey also finds that 35% of Brits plan to participate in ‘dry January’ this year, anticipating saving £57.70 each on average due to cutbacks, while one in four will try 'veganuary' and just over one in four say they’re trying to eat fewer processed foods.
8.53am: FTSE cuts losses
The initial losses for the FTSE have been mostly erased.
Top of the leaderboard is JD Sports Fashion PLC (LSE:LON:JD.), up 4.6% amid the flurry of industry data. It was up yesterday too, after being one of the biggest fallers in the index last year.
Next PLC (LSE:NXT) is up 3% after its positive trading update earlier.
Miners, including Antofagasta PLC (LSE:LON:ANTO), Fresnillo PLC (LSE:LON:FRES) and Glencore PLC (LSE:LON:GLEN) are among the risers, along with bookmaker Entain PLC (LSE:LON:ENT) and drinks maker Diageo PLC (LSE:LON:DGE).
8.33am: Supermarkets data mixed
UK supermarkets saw sales growth tail off at the end of last year, fresh figures from Kantar show.
Take-home sales at the grocers rose by 2.1% over the four weeks to 29 December compared with last year, which was down from the 2.5% growth reported a month earlier.
Grocery price inflation ticked up to 3.7% in the period, its highest level since March 2024.
Market leader Tesco PLC (OTC:TSCDY) (LSE:TSCO) generated a 5.0% increase in sales over the 12 weeks to 29 December, down from 5.2% in the previous report. Its shares are down 1.4% this morning.
Closest rival J Sainsbury PLC (LSE:LON:SBRY) also achieved its highest share since December 2019 at 16.0% as sales grew 3.5%, which was faster than the wider market but down from 4.7% a month earlier. SBRY shares are down 1.2%
Fraser McKevitt, Kantar's head of retail and consumer insight, called it a "solid Christmas" for the supermarkets.
Kantar found that more people chose to do some of their Christmas grocery shopping online this year, with 5.6 million households opting to do this on at least one occasion as online spending for the month reached a record £1.6 billion.
This saw Ocado Group PLC (LSE:LON:OCDO) boost its sales by 9.6% over the 12 weeks, taking its overall share to 1.8%. Its shares are up 0.45%.
8.14am: London shares fall
UK shares have slipped on the ice this morning, with the FTSE 100 index dropping 57 points or 0.7% to 8,192.4 in initial trading.
The mid-caps of the FTSE 250 are down 0.4% to 20,526.8 too.
Housebuilders, retailers and banks are among the blue-chip fallers, with Tesco PLC (LSE:LON:TSCO) and Taylor Wimpey both down 2%, followed by HSBC Holdings PLC (LSE:LON:HSBA), NatWest Group PLC (LSE:LON:NWG), Barclays PLC (NYSE:BCS) (LSE:BARC) and J Sainsbury PLC (LSE:SBRY).
7.59am: UK retail sector grows modestly
The UK retail sector enjoyed a 3.2% increase in sales in December, figures from the British Retail Consortium show this morning, bouncing back from a 3.3% fall in November.
Like-for-like sales rose 3.1% year-on-year, which was stronger than the consensus forecast from economists, who expected a 0.2% decline.
For the three months to December, the festive period known in the trade as the Golden Quarter, sales grew just 0.4% year on year.
For 2024 overall, UK retail sales increased 0.7% on the previous year, with food growth of 3.3% offsetting a decline of 1.5% in non-food.
In December alone, food sales increased 1.7%, while non-food sales bounced back with 4.4% growth after a decline of 2.1% in December 2023 and above the three-month average decline of 1.1% and a 12-month average decline of 1.5%.
7.49am: Next outlook assumes slowing UK growth
Digging deeper into the Next trading statement, the FTSE 100-listed retailer said its guidance takes account of a cautious outlook for both the UK and overseas.
"We believe that UK growth is likely to slow, as employer tax increases, and their potential impact on prices and employment, begin to filter through into the economy."
UK costs are expected to include a £67 million increase in the cost of wages, driven by a combination of general wage inflation, the recent increase in the minimum wage and changes to National Insurance, though the policy changes do not come into effect until April and are expected to have a full-year effect of £73 million.
It expects to offset around £13 million of wage costs through raising prices, which will require an increase of around 1% in selling prices, and operational savings of around £23 million from efficiencies in warehouses, distribution networks and stores.
Overseas, growth is expected to moderate from the 24% achieved so far this year to 14% in the year ahead.
In the current financial year to 5 April, overseas sales benefited from an +85% step change in marketing expenditure, funded by some price increases.
"We do not believe we can profitably increase our overseas marketing expenditure by the same percentage next year, and expect the growth to be closer to +20%."
7.40am: Next raises outlook again
Next PLC (LSE:NXT) has, in classic style, upped its guidance again, after seeing unexpectedly strong overseas sales over the festive period.
The clothing retailer is now more confident in generating a £1 billion profit for the first time this year, as it lifted its profit before tax growth guidance to 10%, up from 9.5%.
Full-price sales in the nine weeks to 28 December rose 5.74% if the effect of the end-of-season sale is excluded.
This is stronger than previous guidance for the Christmas period of 3.5% growth.
7.22am: UK house prices unexpectedly fall
UK house prices unexpectedly fell last month, according to research from lender Halifax.
The index fell 0.2% month-on-month in December, when economists expected it to rise 0.8%, following the previous 1.3% gain.
Compared to the a year earlier, house prices were up 3.3%, following the 4.8% gain in November.
7.15am: FTSE 100 on course to reverse
The FTSE 100 is on course to tumble back down on Tuesday while the pound continues to strengthen, ahead of further updates from the retail sector.
Futures markets are predicting a 44-point fall for the London benchmark, after an up-and-down day where it eventually added almost 26 points to finish at just under 8,250.
Overnight, Wall Street had a mixed session, with the Nasdaq adding 1.2% and the S&P 500 0.55% but the Dow Jones and Russell 2000 falling slightly.
Gains were driven by chip stocks, with Nvidia rising to a new all-time high with a market cap of $3.66 trillion.
Asian markets are mostly higher this morning, outside of the Hang Seng, which is down 1.7%.
5am: What to look out for on Tuesday
Next's report and retail sector figures on Tuesday will kick off a string of updates covering the key Christmas period.
Can Next PLC (LSE:NXT) meet ambitions for its first £1 billion-plus profit... Read more
In data releases, there's a couple of UK retail releases, house prices and construction PMIs, while later the US ISM services index will follow. as well as the JOLTS report and the trade balance for November.
For the euro area, we’ll also get a flash CPI inflation release and the unemployment rate for November.
Announcements due:
Trading updates: Next
US earnings: RPM International Inc
AGMs: Inspired PLC (LON:INSEI)
Economic announcements: Kantar Grocery Market Share (UK), BRC Retail Sales (UK), Halifax House Prices (UK), PMI Construction (UK), Balance of Trade (UK), ISM Services (US),