- FTSE 100 falls 45 points to 8,763
- UK GDP grew more than expected in December
- Barclays (LON:BARC), BAT and Unilever (LON:ULVR) report results
- Shares in London hit by higher US bond yields
4.06pm: FTSE stands out by falling as European stocks surge
Apart from a not-insignificant fall the for FTSE 100 it was an almost universally upbeat day for European and US investors as Thursday’s closing bell approached.
The Footsie was dragged down by a fall in oil prices and the reaction to results from a handful of its largest constituents, sending the index down almost 50 points or 0.6%.
Unilever, the fourth largest stock in the index, fell 5.7%; BAT, the seventh largest, fell 8.6%; Barclays, 15th in line, fell almost 5%.
Elsewhere in the top 10, Shell (LON:SHEL) fell over 2% and BP (LON:BP) almost 1%.
Meanwhile, the FTSE 250 index rose 57 points or 0.3% to 20,937.2.
This was small beer compared to Germany’s DAX, which is up 1.7%, an France’s CAC 40, up 1.4%.
"Tariffs and inflation remain the only two themes that investors care about," said market analyst Chris Beauchamp at IG.
"Over the past 24 hours, the latter of those narratives seems to have lost its power. Despite stronger CPI and PPI readings, stocks have avoided a selloff, with US markets demonstrating remarkable resilience."
He said Trump’s announcement of more tariffs "failed to have much of an impact" since they are delayed until the beginning of April, while the hopes about Ukraine peace talks, which Trump mooted late yesterday, were a bigger boost for European stocks.
"The prospect of a Ukraine deal seems to have bolstered the attraction of the region to investors, though the initial pop may well be a fade, given that even the start of negotiations may be some way off," Beauchamp says.
3pm: US stocks open higher, Trump tariff talk
Wall Street stocks opened higher, following some encouraging deep dives into wholesale prices, though German and French benchmarks are where the real action is still.
The Nasdaq Composite is leading the way, up 0.4%, with the S&P 500 rising 0.2% and the Dow Jones 0.1%, while the small- and mid-cap Russell 2000 up 0.4%.
Top risers on the S&P 500 are MGM Resorts International, Caesars Entertainment and Intel Corp (NASDAQ:INTC).
AppLovin Corp (NASDAQ:APP) is topping the Nasdaq 100 leaderboard, up 33% after beating Wall Street’s fourth-quarter earnings estimates and raising guidance for the year.
The US dollar is trading a touch weaker this morning.
US President Trump, after yesterday surprising markets with an announcement about a call with Vladimir Putin seeking an end to the war in Ukraine, this morning has shared that further detail on reciprocal tariffs would come today.
This has kept trading flows "relatively muted", say analysts at Monex USA, until such news becomes public, as well as continuing to boost haven currencies with the exception of the USD.
"Though Trump’s post on social media platform Truth Social gave very little detail, White House press secretary Karoline Leavitt did previously say that this announcement would come before Trump’s meeting with Indian Prime Minister Modi this afternoon.
"Even without specifics so far, reciprocal tariffs would be a marked escalation in an already-fraught trade war with many economic partners.
"Depending on the scope of these actions, as well as how much room for negotiation there may be, the Dollar could see some resurgent strength this afternoon – but nothing is certain except for volatile trading."
Fawad Razaqzada, market analyst at City Index, said news of Trump’s discussions with Putin, in which both leaders agreed to initiate talks aimed at ending the Ukraine war, has been reflected in European asset pricing.
"A potential resolution could significantly ease war-related costs, particularly in the energy sector, while reducing uncertainty and improving business confidence — an outcome that would be especially beneficial for Europe’s largest economies, and by extension the euro."
So far today, the euro is up 0.4% at $1.0425, having been around $1.02 at the start of the month and dipping below that last month.
2.25pm: US factory gate inflation suggests CPI and PCE inflation will fall
While the US PPI reading was higher than expected, it is still consistent with a fall in other consumer-facing inflation, so good news for the Federal Reserve’s aims of cutting inflation, says Samuel Tombs, chief US economist at Pantheon Macroeconomics.
"We think that PPI components collectively made a small negative contribution to the month-to-month change in the core PCE deflator in January," he says, and that that core PCE inflation fell to 2.6%, from 2.8% in December.
"The Fed still can declare, therefore, that progress in returning inflation to its 2% objective is still being made."
"Meanwhile, components of the PPI that reliably lead the CPI data paint a reassuring picture," he adds, with PPI inflation for durable goods falling and PPI inflation for services prices also consistent with a further fall ahead in CPI inflation for core services.
This is why hopes have crept up about US interest rate cuts, though only marginally.
1.50pm: US stocks now higher
US factory gate prices for January have also come in hotter than expected, which has lifted stock futures.
Interest-rate futures have gained, reflecting rising bets on a Fed rate cut in July or September - which I don’t understand as yesterday persistent inflation was meant to suggest there would be less likelihood of cuts. Lets see what the experts say shortly.
The producer price index was up 0.4% month on month in January, higher than the 0.3% consensus estimate.
PPI final demand was up 3.5% year on year, again higher than the 3.3% expected.
Core PPI was up 0.3% on the month and 3.6% on the year, versus 0.3% and 3.3% expected, respectively.
1.20pm: US stock futures becalmed
Looking across the pond, US stock futures are sitting on their hands, but as we saw with the FTSE earlier this often means nowt.
Now the focus moves to today’s PPI update, is a measure of factory gate or wholesale inflation.
Kenny Polcari at Slatestone says the move in bonds suggests that the Fed "may be boxed into a corner – unable to really cut rates this year at all and in fact – the rumor yesterday was that we could see a rate HIKE rather than a CUT this year".
He notes that the Fed’s rate-cutting last year now seems rather premature, and notes that the January PPI report is also expected to tick up a bit.
11.43am: German and French stocks surging
European stocks are surging ever higher, with the DAX and CAC up 1.75% and 1.5% respectively, the former smashing new all-time highs.
Meanwhile, the FTSE has seen losses pared slightly, down 0.5% now.
The Euro Stoxx 50 is up 1.45% and the Stoxx 600 is up 0.1%.
The DAX (dark blue) has stormed higher over past few months, outstripping the FTSE (light blue), CAC (yellow) and S&P (orange)
Top risers this morning are payments outfit Adyen (AS:ADYEN), up 13.5%, Delivery Hero 9.5%, Coca-Cola (NYSE:KO) HBC 8.4% and Volkswagen (ETR:VOWG_p) at 7.2%.
Most of the big fallers are from London, though Neste, the Finnish oil refiner, is down 10.1%.
Then comes Tate & Lyle, down 9%, BAT, Unilever and Barclays all down between 6% and 8%.
Eurozone industrial production was also out mid-morning, showing a fall of 1.1% month-to-month in December, after rising by 0.4% in November.
"The December decline exceeded expectations, yet aligns seamlessly with the recessionary trend that the industry has experienced for nearly two years," says Bert Colijn at ING.
Even though the manufacturing PMI improved slightly in January, the output index reading of 47.1 still corresponds with contraction, he says.
"For the moment, it is difficult to see what could drive a swift turnaround for manufacturing production. We are looking for further reductions of inventories, lower interest rates and stronger domestic consumption towards the second half of the year, but don’t expect too much support for stronger production in the coming months."
However, the prospect of an end to the war in Ukraine and potential restart of Russian oil and gas pipelines is lifting markets in Europe.
10.35am: Investment trust discount trends
Interesting article about what investment trusts have been up to try and narrow discounts, which have traded at double-digit discounts on average for a record 29 months, averaging 15% currently.
"Wide discounts, underperformance and, in some cases, board inaction have provoked the ire of activist investor Saba Capital Management, which earlier this week launched a new campaign to persuade four trusts to convert to open-ended funds," says this article on Trustnet.
The journalist speaks to one investment fund research chief who thinks boards should be doing more.
10.19am: Market analysis - FTSE down but European stocks flying
While the FTSE is in the red, European stocks are romping higher on Ukraine peace hopes.
Germany’s DAX is up 1.3% and France’s CAC 1.1%, while the London index is down 0.8%.
Ukraine peace talks are the key for Europe, while higher US bond yields, dragging up UK gilts, is hitting the Footise, along with falling oil prices, which is also linked to Ukraine.
"The news that President Trump would meet Russian President Putin in Saudi Arabia to agree an end to the war in Ukraine calmed markets late on Wednesday after the CPI shock," said market analyst Kathleen Brooks at XTB.
"There is some concern that the US rather than Ukraine is leading the negotiations, and the US defense secretary said that Ukraine won’t get back all of the territory that Russia has captured, and he also reiterated that the US does not agree to NATO membership for Ukraine."
She notes that the initial spike higher in the dollar yesterday also faded, and the dollar index closed higher by a notch.
GBP/USD has recovered further this morning, up 0.4% at almost $1.25, and EUR/USD is also higher and above $1.04.
"Unsurprisingly, the bond market has felt the biggest impacted from the CPI report," she says, with the US Treasury market underperforming the other major sovereign bond markets, as the CPI report makes it likely that the Fed’s rate cutting cycle will remain on pause.
"However, if the increase in CPI was seasonal, then we could see some of the move higher in US bond yields erased on Thursday.
"The Fed chair Jerome Powell also reiterated on Wednesday that the Fed will not react to a single month’s worth of data, during his semiannual testimony to Congress. This may also calm fears about the CPI report."
Brooks notes that on Ukraine is "very early days" in the negotiations and it is "unclear how peace could unfold and how it may impact financial markets".
An end to the war is good news for energy supply chains, particularly to Europe, which would be "positive for economic growth, especially for Germany, but also for the rest of the EU and the UK", while hitting oil and gas prices "and could ease inflation concerns across Europe and allow the ECB and the BoE to cut rates at a faster pace down the line".
"A peace deal negotiated by the US could also have ramifications for Europe", Brooks adds, as the US is not expected to protect Ukraine with troops or military aid after Russia’s withdrawal, meaning Europe will need to take on this responsibility, pushing EU’s defence budgets to more than 3.5% of GDP perhaps.
9.16am: Stocks down as bond yields rise
After an hour and a quarter of trading, the FTSE 100 is down 77 points or 0.9% at 8,730, while the FTSE 250 is down 0.3% at 20,825.
The biggest faller across the FTSE 350 is Tate & Lyle PLC (LSE:TATE), down 9.9% after what was essentially a profit warning.
The ingredients maker warned that profits for the year would be at the lower end of its previous guidance, amid pricing pressure and the absence of an anticipated surge in demand.
Elsewhere on the mid-caps, Renishaw (LON:RSW), the supplier of measuring and manufacturing systems, is down 7.9% on the back of its interim results.
Insurer Lancashire, which estimated losses of up to $165 million from California wildfires.
Lancashire Holdings (LON:LRE) Limited (the "Company" or "Lancashire") today announces that it estimates its aggregate net ultimate losses relating to the wildfires in California, which occurred in January 2025, in the range of $145 million to $165 million. This estimate falls within the Company’s modelled loss ranges for this type of catastrophe event.
Among the blue-chips, nicotine delivery specialist BAT is down 8.3% after beat expectations for the past quarter but its guidance for 2025 was for another slow year.
Unilever is down 6.7% after its results, and Barclays 5.2% after its update that seemed pretty good.
"Markets are clearly getting a little nervous," said analyst Neil Wilson at TipRanks, noting rises in US Treasury yields.
"US two-year breakevens rose above 3%, highest in two years, while the 10-year hit 2.5%.
"Fed chair Jay Powell was right to stress this week that the US central bank should not be in a hurry to cut again, even if that’s what President Trump wants it to do."
Wilson says the US CPI data yesterday "crashed the party and got us all wondering who the hell invited it back".
"Lumpy disinflation was always going to be order of things post-Covid, the question now is whether tariffs and trade barriers of other kinds being erected push up prices further. There has already been evidence of companies raising prices ahead of tariffs being put in place."
8.52am: Oil weighs, fizzy drinks a small offset
Shell, down 2.2%, and BP, down 1%, are also weighing on the Footsie, as oil prices take another leg lower, with Brent slipping to $74.6 a barrel.
Looking at the other end of the index, Coca Cola HBC AG (LSE:LON:CCH) is top of the leaderboard, up 5.7% on the back of its final results, even though its outlook seemed a bit below City expectations.
The drinks bottler guided to organic operating profit growth of between 7% and 11% for this year, while the City consensus was for growth of 10.7%.
Elsewhere, Entain (LON:ENT) continues to bounce back, up another 2.6%, with miners and housebuilders among the other risers.
8.32am: Why BAT is being battered
Looking at why those BAT shares are now down over 8%, analyst Rae Maile at Panmure Liberum says the contrast between BAT and rival Japan Tobacco (OTC:JAPAF) "is somewhat stark this morning, both in terms of content as well as in presentation, and not to BAT’s benefit".
Operating profit was "essentially flat" and there are "lots of moving parts" in the guidance for the current year related to the timing of a final settlement in Canada after 25 years.
It looks like 2025 is set to be "another year without much to show in profit terms", says Maile, as it battles to getting to 4-6% operating profit growth by 2026.
Derren Nathan, head of equity research at Hargreaves Lansdown (LON:HRGV) also notes that revenue from the smokeless brands grew 8.9% "but that’s lagging the high-octane rates seen in recent years".
He says regulatory and fiscal headwinds "soured the outlook for this year with revenue growth guidance of 1% coming in way below the mid-term target of 3-5%".
8.13am: FTSE stumbles at open, expectations be damned
The FTSE 100 has dropped fairly sharply at the open, down 37 points or 0.4% to 8,770.2.
British American Tobacco (LON:BATS) PLC, Unilever PLC, and Barclays PLC (NYSE:BCS), three companies that reported this morning, are leading the fallers, down 6.9%, 5.4% and 4.7%.
So much for beating expectations.
7.52am: Buyback for Unilever too
Unilever PLC has also announced a new share buyback, its one being up to €1.5 billion, to begin today.
The final results "reflect a year of significant activity as we focused on transforming Unilever into a consistently higher performing business", says CEO Hein Schumacher.
His plan has been to do "fewer things, better and with greater impact", which includes selling off the Ice Cream business, which he says remains "on track", with the announcement today of a chair designate and details of the listing structure.
For the past year, underlying sales grew 4.2% with volumes up 2.9%, with particularly strong performances from brands such as Dove, Comfort, Vaseline and Liquid IV.
With divestments of some other ’local brands’, including Unox and Conimex, as well as "decisive actions" in Indonesia and China, Schumacgher said he expect to see the benefits of these actions "from the second half of 2025".
"Market growth, which slowed throughout 2024, is expected to remain soft in the first half of 2025," he added, but the resahping of the group "leave us better positioned to deliver on our ambitions in the years ahead".
Let’s see.
7.36am: Barclays unveils new share buybacks
Barclays PLC (LSE:BARC) has stepped up its target for returns in 2025 and plans to distribute at least £10 billion of capital to shareholders by the end of next year, including a £1 billion buyback announced today.
This followed a better-than-expected performance in the fourth quarter, where the statutory return on tangible equity (RoTE) was 7.5% as profit before tax came in at £1.7 billion compared to £0.1 billion a year earlier.
Profit before tax for the year increased by 24% to £8.1 billion.
The CET1 capital ratio ended the year at 13.6%, which chief executive CS Venkatakrishnan said underpins the target for shareholders distributions overt the next two years, “with a progressive increase in 2025 vs 2024”.
7.17am: UK GDP stronger than expected
UK economic growth at the end of last year was stronger than expected, helped by stronger performances from services and industrial production.
Gross domestic product in December was up 1.5% compared to a year earlier, the Office for National Statistics calculated, up from 1.1% growth in November, and stronger growth than the 1.0% that economists expected.
On a month-on-month basis, GDP rose 0.4%, better than the 0.1% forecast.
GDP growth for the fourth quarter rose 1.4%, again beating expectations of 1.1% and up from 1.0% in the third quarter.
UK industrial production in December rose 0.5% month-on-month, rebounding from a 0.4% dip in November and higher than the 0.2% estimated by economists.
The index of services was up 0.2%, improving from 0.0% and better than the 0.1% expected.
Business investment in Q4 was much weaker though, down 3.2% after a 1.9% rise the previous quarter, with a decline of only 0.4% expected.
Private consumption was flat, government spending rose 0.8% in the quarter, and exports fell 2.5% while imports rose 2.1%.
7.14am: FTSE seen flat
The FTSE 100 has been tipped for another quiet open on Thursday, but things are not likely to stay that way, with various companies reporting and GDP and other data just out.
Futures markets were anticipating a gain of one point for the London benchmark, which closed at 8,807.4 yesterday, having added 30 points.
Overnight, US stocks were mixed, mostly lower, with the S&P 500 dropping 0.3% and the Dow Jones 0.5%, while the Nasdaq was flat.
Asia stocks are largely higher this morning, led by the Hang Seng and Nikkei, up 1.4% and 1.3%.
5m: Barclays, Unilever and BAT in the spotlight
Any news on a rumoured £1 billion buyback will be in focus when Barclays reports... Read more
Warnings have emerged from analysts around growth at Unilever... Read more
BAT was flagged by UBS as a ’top pick’ given strong prospects around its nicotine pouches... Read more
Announcements due:
Interims: Renishaw PLC, South32 (OTC:SOUHY) Ltd
Finals: British American Tobacco PLC, Brunner Investment Trust PLC, Coca-Cola Hbc AG, Unilever PLC, RELX PLC (LON:REL), Barclays PLC
US earnings: Deere & Co, Airbnb, Applied Materials (NASDAQ:AMAT), Coinbase Global (NASDAQ:COIN), Palo Alto (NASDAQ:PANW) Networks, Twilio
AGMs: easyJet (LON:EZJ) PLC, GCP Infrastructure Investments Ltd, Polar Capital Global Healthcare Trust PLC, Cerillion PLC
Economic announcements: RICS House Prices (UK), GDP (UK), PPI (US)
Ex-dividends to reduce FTSE 100 by: 7.27