- FTSE 100 up 122 points, tops 8,500 for first time
- Retail sales down in December
- Glencore (LON:GLEN), Rio merger said to have fallen through
4.01pm: FTSE 100 heads for record close after bumper week
A record intraday high looked set to be complemented by an all-time closing peak for the FTSE 100 on Friday, as London’s blue chips approached late trading up 122 points at 8,514.
Having trounced last May’s intraday peak of 8,474, the FTSE 100’s former closing high of 8,445 appeared well beaten as the week’s trading drew closer to a close.
Friday’s gain meant the index had added 262 points, or 3.2% over the week, with the domestically-focused FTSE 250 up 4.5% at 20,611 in the meantime.
Both were boosted by growing hopes for a Bank of England rate cut next month on figures this week pointing to sluggish economic growth but also subsiding inflation.
On the FTSE 100, Smiths Group (LON:SMIN) PLC led Friday’s risers with a 5.5% gain, ahead of the likes of Entain (LON:ENT) PLC and Spirax (LON:SPX) Group PLC.
Miners, alongside Asia-focused Prudential (LON:PRU) PLC, were also up after China overnight reported its economy had hit a 5% growth target last year.
Just four companies, Fresnillo PLC (LON:FRES), JD Sports Fashion PLC (LON:JD) Auto Trader Group PLC and Vodafone Group PLC (LON:VOD), fell into the red on Friday.
3.37pm: Octopus strips British Gas of UK's largest energy supplier title
Octopus Energy has stripped British Gas of its title as the UK’s largest energy supplier.
According to industry consultant Cornwall Insight, October now has a market share of 23.7% against 23.1% for Centrica PLC (LSE:LON:CNA)-owned British Gas.
Octopus has only been in existence for a decade and has taken advantage of the chaos caused by the energy price spike following the Ukraine war though saw it buy the bankrupt Bulb... Read more
3.32pm: FTSE 100 powers on in record-breaking territory
The FTSE 100 remained within record-breaking territory into Friday afternoon, peaking at 8,532 before receding slightly to 8,524.
This meant London’s blue-chip index was up by 1.6%, or 132 points, for the day, and by 3.3% over the course of the week.
“We think the return upside in UK markets remains massively underappreciated,” Panmure Liberum analysts noted.
“With the Bank of England cutting rates and consumer spending power increasing thanks to strong real wage growth, we expect earnings to grow in the double digits in 2025.”
Gains were also seen across Europe, where Germany’s DAX also notched a new record, climbing as high as 1.2% to 20,907, alongside in the US.
The Nasdaq was up 1.2% in early trading, while the Dow Jones and S&P 500 surged 0.8% and 0.9% respectively.
3.20am: UK to still grow third-fastest among G7 this year
Britain’s economy is expected to grow third-fastest among the G7 major economies this year, despite sluggish growth over the back-end of 2024.
According to the International Monetary Fund, UK economic growth should sit at 1.6%, against a previous estimate for 1.5%, over the course of 2025.
This would place the UK ahead of rival European economies, but behind the US and Canada, where respective growth of 2.7% and 2.0% was forecast.
“Our projections incorporate recent market developments and the impact of heightened trade policy uncertainty, assumed to be temporary,” IMF economic counsellor Pierre-Olivier Gourinchas said.
“But [they] refrain from making assumptions about potential policy changes that are currently under public debate.”
Estimates for UK economic growth in 2024 were trimmed though, to 0.9% from 1.1% previously.
Following a period of stagnation, surging public spending was set to buoy growth, with central bank cutting also expected to help.
2.52pm: Wall Street rallies at open
Wall Street was in a positive mood as stocks rebounded sharply at the start of trading on Friday.
The Nasdaq jumped 1.3% following the opening bell, while the S&P 500 and Dow Jones added 0.8% and 0.7% respectively.
Gains followed declines across the board on Thursday, as stocks receded from a rally on revived rate cut hopes thanks to soft core inflation data for December on Wednesday.
A quieter Friday saw housing starts come into focus, with new building projects trouncing expectations having grown by 15.8% units in December.
Among companies, Intel Corp (NASDAQ:INTC) was among the big risers early on, jumping 8.1% on speculation the company had emerged as a potential acquisition target.
Nvidia Corp (NASDAQ:NVDA) also regained after dipping on Thursday following worries around chip delays and order cuts earlier in the week, leading the likes of Amazon.com Inc (NASDAQ:AMZN) and Apple Inc (NASDAQ:AAPL) higher.
2.17pm: Bond yields near pre-sharp sell-off levels
Bond yields have receded back towards levels seen last week before a sell-off intensified and threatened to hammer chancellor Rachel Reeves’ spending plans.
Come the afternoon, yields on 10-year gilts were down six basis points for the day at 4.62%.
Rates on 30-year gilts fell by seven basis points to 5.17% in the meantime, having challenged highs last seen in 1998 after Tuesday last week saw a sell-off build pace.
Higher borrowing costs for the government had threatened to remove Reeves’ fiscal headroom and prompt cuts and tax hikes.
Declines come after soft economic data and news of moderating inflation this week have opened the door for a rate cut in February.
Among equities, the FTSE 100 continued to push higher in record-breaking territory, gaining 125 points to reach a new all-time peak of 8,517.
1.34pm: Trump, unemployment, borrowing and confidence in focus next week
Unemployment, government borrowing and confidence data will all be in focus next week, adding to the picture around the state of the UK economy.
Following figures pointing to slowing economic growth in November this week, eyes will be on both for clarity around already sky-high bets for a February rate cut.
According to Trading Economics, expectations are for unemployment to have remained flat at 4.3% in November, as average earnings growth picked up from 4.9% to 5.2%.
After November’s £11.25 billion deficit, net government borrowing is predicted to have hit £11.3 billion in December.
Early readings for this year are then anticipated to see consumer confidence and business optimism falling further as concern grows around the likes of wider economic woes and feedthrough of Budget-related cost pressures.
In the US, Donald Trump’s inauguration on Monday and any subsequent policy announcements will be key.
Eyes will be on any rapid executive orders, after Trump has signalled plans for the likes of sweeping tariffs and energy sector deregulation... Read more
12.59pm: FTSE 250 rally to outsrip FTSE 100’s this week
Despite the FTSE 100’s record on Friday, London’s domestically-focused FTSE 250 index is set to be this week’s major winner on the back of rising rate cut hopes.
Come Friday, the FTSE 250 was up 4.2% for the week at 20,569, outstripping the FTSE 100’s 3.0% gain to 8,495.
“The UK is in focus today,” XTB analyst Kathleen Brooks noted, pointing to underwhelming data on Friday which showed a surprise drop in retail sales through December.
“However, bad news on sales has not stopped the FTSE 250 from having a stunning week. [...] as rate cut hopes spur a major recovery rally in UK mid cap stocks,” she said.
“The market is now predicting a 91% chance of a rate cut from the Bank of England next month. There was only a 73% chance at the start of the week.
“The interest rate futures market is also on the way to pricing in nearly three rate cuts from the BoE this year. Earlier this week there had been less than two cuts priced in.”
Despite its rally, the FTSE 250 remained well off its peak above the 24,000 mark in 2021.
The FTSE 100 surpassed the 8,500 mark for the first time ever in the meantime to continue setting new records on Friday, this time at 8,506.
12.40pm: US stocks seen bouncing back
Wall Street appeared on course to bounce back on Friday following a volatile week that saw stocks rally on soft inflation data before easing back.
Futures had the Nasdaq, Dow Jones and S&P each adding around 0.4% ahead of Friday’s opening bell.
The trio fell on Thursday following a rally in the wake Wednesday’s soft core inflation data for December, which saw hopes for a Federal Reserve rate cut this year reappear.
Nasdaq had led the drop, falling by 0.9%, with Swissquote Bank analyst Ipek Ozkardeskaya pointing to dovish commentary from the Feds Christopher Waller, but ongoing jitters around inflation.
“The energy and goods inflation is under control, but the core services inflation remains pretty sticky,” Ozkardeskaya said.
“Donald Trump’s tariff threats and plans to jolt the energy space with further sanctions against oil-producing countries like Iran, Russia and Venezuela, threaten to maintain the upside pressure in oil prices this year.”
12.30pm: AJ Bell (LON:AJBA)'s Daniel Coatsworth on why the FTSE 100 has rallied
Watch AJ Bell investment analyst Daniel Coatsworth discuss the FTSE 100's new high and key reasons for the surge, including a weaker pound, ongoing merger activity in the mining sector, and Chinese GDP figures supporting commodity demand.
12.17pm: Mortgage rates back on the rise
Mortgage rates headed higher this week as HSBC Holdings (LON:HSBA) PLC was among those to hike as lenders grappled with rising swap rates.
Though sluggish economic data and news of subsiding inflation in December in recent days has paved the way for a February rate cut, banks already faced growing borrowing costs in line with a surge in government debt yields before this week’s figures.
Average two-year fixed mortgage rates climbed from 5.4739% to 5.5198% between Monday and Friday in response, according to Moneyfacts.
Reports had emerged on Wednesday that lenders were holding off re-hiking rates in order to keep bolstering buying activity.
However, the sentiment appeared to soon crumble, with HSBC on Thursday announcing hikes for five and two-year fixed mortgages for Friday.
Virgin Money (LON:VMUK) and TSB Bank were also among those to unveil rate increases this week.
“That will probably prompt others to follow, which will be disappointing for anybody seeking to purchase or remortgage a home in the months ahead,” Knight Frank Finance managing partner Simon Gammon commented.
“That said, fairly positive inflation data from both the UK in and the US this week has calmed bond markets, which suggests we’ll see a swift repricing, rather than weeks of sustained increases in mortgage rates.”
11.27am: FTSE 100 completes its ton before easing back, Next (LON:NXT) boss caution
Having briefly added more than 100 points, Footsie has eased a tad but is still comfortably above its previous all-time high with a 97-point gain to 8,489.
As a reminder that things are not as rosy as the market might be suggesting, Next boss Simon Wolfson warned about the impact that the NI hike and living wage rise will have on the retail sector.
Calling on the government to stagger the tax change, rather than introduce it fully in April, the clothing retailer's CEO said without that change jobs or hours would have to be cut.
The Conservative peer said employers with large numbers of lower-paid or part-time workers would be hit hardest with Next's wage bill set to rise by £70 million.
Wolfson urged the government to lower the NI threshold over time, rather than the few months' notice employers got in October's Budget.
An increase in tax on a £60,000-a-year job was around 2%, but the increase for a part-time living wage worker was around 6.5%, he told the BBC.
"So the axe has fallen particularly hard on those entry-level, National Living Wage jobs, and that's where the pain is going to be felt the most." (read more).
FTSE 100 up 97 at 8,489
10.50am: FTSE 100 hits new heights as retail worries underline the case for rate cuts
Footsie is leaving its previous all-time high in the dust with the market now up 92 points at 8,485 and closing in on 8,500.
“It’s refreshing to see positive news around the UK stock market given its unloved reputation,” said Dan Coatsworth, investment analyst at AJ Bell.
“Three-quarters of companies in the FTSE 100 generate their earnings overseas, and the relative value of those foreign earnings is boosted when the pound weakens.
“Traders are pricing in an 81.5% probability that the Bank of England will cut interest rates by a quarter percentage point next month.
“Weak UK retail sales in December are a worry as they indicate further pressure on the economy following weak GDP data yesterday.
"Retailers will be keeping their fingers crossed [a rate cut] happens as it could help to take some of the pressure off household finances and encourage more spending.”
FTSE 100 up 92 at 8,485.
10.05am: European markets join in the fun
It’s not just the UK stock market that’s hitting new highs, Europe is also seeing investors fill their boots.
The Dax in Germany is up 1% at 20,839 while the CAC in Paris is 1.1% better at 7,718, with both at or within touching distance of their best-ever levels.
Interest rate optimism seems to be driving the UK buying with expectations for the pound to keep falling over the next six months to as low as US$1.15 from US$1.22 today boosting exports and earnings translation.
Benchmark 10-year gilt yields fell again today to 4.64% after the drop in retail sales in December while the yield on 30-year gilts was 5.2%, against 5.46% just a few days ago.
Alex Kerr of Capital Economics said the retail sales figures were “further evidence that the economy had very little momentum at the end of last year”.
City expectations are for one rate cut by the Bank of England in February, one in August and possibly a third at the end of the year.
FTSE 100 up 79 at 8,471.
9.32am: FTSE 100 looks to push on from new high
Footsie has consolidated a little after hitting a new intraday high, but the mood remains buoyant with only a handful of stocks in the red at present.
Since the New Year, the blue-chip index is up by 3% nearly all of which has come this week and most following the benign inflation data here and in the US on Wednesday.
Dollar earners have been boosted by a weaker pound, higher oil prices helped BP (LON:BP) and Shell (LON:SHEL) while China today hitting its 2024 growth target has lifted the miners.
FTSE 100 up 87 at 8.479.
9.08am: FTSE 100 sets new record high
The FTSE 100 has topped its intraday record high after surging once again on Friday morning.
An 83-point gain on Friday morning took the index to a peak of 8,475 and just past its previous all-time intraday record of 8,474, set last May.
9.06am: Rio Tinto (LON:RIO), Glencore boosted by merger talk
Rio Tinto Ltd and Glencore PLC both racked up gains on Friday after rumours emerged that the pair had engaged in merger talks late last year.
Bloomberg reported on Thursday that the duo had discussed plans for a tie-up, which would mark the industry’s largest-ever deal, creating a company worth £150 billion.
Reuters later reported that talks had taken place but were brief and no longer active.
Glencore shares picked up almost 3.0% on Friday, as Rio Tinto rose 1.5%.
8.52am: FTSE 100 just off record high
The FTSE 100 has edged ever closer to its intraday record high after surging once again on Friday morning.
An 80-point gain on Friday morning took the index to 8,472 and just off its previous all-time intraday peak of 8,474.
8.49am: Pound hit after surprise retail sales drop
Sterling took a hit after figures on Friday showed an unexpected drop in retail sales over the course of December.
The pound dropped 0.34% against the dollar to sit at US$1.2196, reversing on a slight recovery seen in recent days.
ONS figures earlier on showed sales across Britain’s shops declined by 0.3% in December, underwhelming against expectations for growth.
“A lacklustre Golden Quarter is particularly concerning after a tough year as retailers would have been hoping for a Christmas boost,” RSM UK retail head Jacqui Baker said.
“Many retailers had little choice but to launch their Boxing Day discounting early to maximise sales and clear as much stock as possible ahead of the seasonal slowdown in January.
“However, without the ‘golden’ boost to sales many retailers will find it difficult to navigate the imminent headwinds post-Budget and we could see prominent brands struggle to compete in 2025.”
8.27am: FTSE 100 approaches record high
Another strong start on Friday has taken the FTSE 100 to within touching distance of a new record high.
At 8,459, the index was up 67 points on Friday morning, nearing its record intraday peak of 8,474 and above an all-time closing high of 8,445.
8.24am: Chinese economy hits 5% growth target in 2024
China’s embattled economy hit targeted growth of 5% last year thanks to a rebound in the final quarter.
According to the country’s the National Bureau of Statistics, gross domestic product “recovered remarkably” over the final three months of the year.
Growth came in at 5.4% for the year as a result, moderating against 2023’s 5.2% but surpassing expectations for 4.9%.
“With a package of incremental policies [...] confidence was effectively bolstered and the economy recovered remarkably,” the NBS (LON:NBS) said.
Beijing had unveiled a string of economic stimulus measures towards the back end of last year, including monetary easing, stock market support and local government debt refinancing.
8.15am: FTSE 100 rallies at open
London’s blue chips rallied further as trading got underway on Friday, with the FTSE 100 picking up 73 points to reach 8,465.
Just a handful of its constituents dropped early on, with Rightmove PLC (LON:RMV), Marks and Spencer (LON:MKS) Group PLC and Fresnillo PLC among the few in the red after the market opened.
Entain PLC led the risers in the meantime, bouncing 4.1%, ahead of the likes of Smith Group PLC and Persimmon (LON:PSN) PLC.
Stocks have been boosted this week after news of subsiding inflation in December and sluggish economic growth the previous month boosted bets for a February interest rate cut.
8.03am: Glencore, Rio Tinto tie-up discussed but talks fell through - report
Glencore PLC and Rio Tinto Ltd reportedly did engage in talks for a potential mining industry mega-merger but nothing came of discussions, according to Reuters.
Bloomberg reported on Thursday that the two were in the early stages of discussing a tie-up, which would reflect the mining industry’s largest-ever deal... Read more
However, a Reuters-cited source said these talks were brief and no longer active.
Ben Cleary, of Glencore investor Tribeca Investment Partners, noted Rio would have had to pay a significant premium on the former’s share price, which closed Thursday at 379p.
“Anything under £5 wouldn't make sense for Glencore given [...] material capital returns this year,” he told Reuters.
He added there was a “definite culture clash” splitting the two, with Glencore more aggressive than Rio Tinto.
7.44am: DFS Furniture flags tough times ahead after Budget
DFS Furniture PLC (LON:DFSD) grew profit in the first half but has flagged caution over pressure ahead following the likes of October’s Budget.
Interim pre-tax profit was expected to be around £16 million to £17 million, DFS said on Friday, marking an increase of as much as £8 million year on year.
Order intake had climbed by 10.1%, though delivered sales were anticipated to be up 1.4% due to ongoing Red Sea shipping delays.
Full-year profit was still on course to meet consensus of £22.7 million, however this was now set to be first-half weighted following the Budget.
DFS flagged caution on demand due to the UK’s sluggish economic performance since and pointed to cost pressures around hiked employer national insurance and wages... Read more
7.18am: Stocks seen higher as retail sales unexpectedly fall
London’s blue chips were seen racking up further gains on Friday to build on a solid uptick seen over the week so far.
Futures had the FTSE 100 up 45 points at 8,460 ahead of Friday’s open, as figures showed an unexpected dip in retail sales over the course of December.
According to the Office for National Statistics, retail sales declined by 0.3% over the key Christmas month, following a downwardly revised 0.1% improvement in November.
Expectations had been for volumes to grow by 0.4% in December, with lower supermarket sales having offset the likes of improved automotive fuel, clothing and footwear sales.
ONS senior statistician Hannah Finselbach noted food retailers had faced a “very poor month” as sales sank to their lowest level since 2013.
December’s drop meant retail sales declined by 0.8% between the third and fourth quarters but were up 1.9% against the final three months of 2023.
Overnight, Asian markets faced a mixed showing on the back of declines on Wall Street as US stocks receded following a rally on soft core inflation data midweek.
5.00am: Friday's schedule
DFS Furniture will be among those to update on Friday, while retail sales figures for December will be in focus.
Announcements due:
Trading updates: DFS Furniture PLC, Ninety One PLC, Petershill Partners PLC
US earnings: Schlumberger NV (NYSE:SLB)
AGMs: Catalyst Media Group, The Character Group, Smithson Investment Trust PLC
Economic announcements: Retail Sales (UK), Housing Starts (US), Industrial Production (US), Manufacturing Production (US)