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London open: Stocks fall as investors mull GDP data
London stocks fell in early trade on Thursday as investors mulled the latest UK GDP data, which showed the economy unexpectedly grew in the fourth quarter of last year, but only just.
At 0845 GMT, the FTSE 100 was down 0.5% at 8,760.61, underperforming European peers, with the benchmark Stoxx 600 index up 0.4% amid Ukraine peace hopes.
Figures released earlier by the Office for National Statistics showed that gross domestic product rose 0.1% in the three months to December, beating expectations for a 0.1% contraction.
ONS director of economic statistics Liz McKeown said: “The economy picked up in December after several weak months, meaning, overall, the economy grew a little in the fourth quarter of last year.
“Across the quarter, growth in services and construction were partially offset by a fall in production. GDP per head, in contrast, fell back slightly in the quarter.
“In December wholesale, film distribution and pubs and bars all had a strong month, as did manufacturing of machinery and the often-erratic pharmaceutical industry. However, these were partially offset by weak months for computer programming, publishing and car sales.”
Paul Dales, chief UK economist at Capital Economics, said the 0.1% quarter-on-quarter rise in GDP in Q4 “leaves the economy all-but stagnating” as businesses adjust to higher taxes and more uncertainty from overseas.
“We aren’t expecting the economy grow much at all in the coming quarters,” he said. “After stagnating in Q3, the economy was saved from the same fate in Q4 (or worse) by a 0.4% m/m rise in GDP in December (consensus +0.1%, CE -0.1%).
“That’s pretty much the only growth there’s been for a while as it explains all of the 0.4% rise in GDP since Labour came to power in July and the 0.3% gain since last April.”
In equity markets, British American Tobacco slumped as it posted a 5.2% drop in full-year revenue, driven by the sale of its businesses in Russia and Belarus last year and translational FX headwinds, but said it swung to a profit.
Imperial Brands also fell.
Unilever lost ground as the consumer goods company said it expects a slow start to the current financial year with “subdued” market growth in the near term and announced a €1.5bn share buyback after a 12.6% rise in annual profit to €11.2bn.
Barclays was weaker even as it reported a 24% jump in full-year pre-tax profit to £8.11bn and announced the launch of a £1bn share buyback.
Richard Hunter, head of markets at Interactive Investor, said: “A stable, dependable and progressive set of numbers such as these would normally fire the share price ahead, but given Barclays’ recent run the height of expectation has turned into a temporary headwind.”
Renishaw tumbled after interim results, while Tate & Lyle also retreated on the back of a trading statement.
Lancashire Holdings was in the red as the insurer said it expects to incur net ultimate losses of between $145m and $165m related to the California wildfires.
On the upside, Coca-Cola rallied after saying it expects organic operating profit to rise by 7% to 11% this year amid a “challenging” macroeconomic environment.
The bottling company, 20% owned by the drinks brand of the same name, also said organic revenue was forecast to grow 6% – 8% in the year, compared with average market expectations of 7.3% in a company-compiled poll.
Average analyst forecasts tipped 10.7% average growth in 2025 organic earnings before interest and taxes (EBIT).
Ferrexpo surged amid hopes of a potential peace deal between Ukraine and Russia after Donald Trump and Vladimir Putin agreed to start negotiations “immediately” with a view to ending the war.
Wizz Air was also sharply. The airline’s chief executive told Reuters on Tuesday that it was aiming to restart flights to Ukraine shortly after the announcement of any ceasefire with Russia, reinstating about 30 inbound routes within six weeks.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Coca-cola Hbc Ag | +5.86% | +174.00 | 3,144.00 |
| 2 |  |
Smurfit Westrock Plc | +3.92% | +157.00 | 4,164.00 |
| 3 |  |
South32 Limited | +3.46% | +6.00 | 179.30 |
| 4 |  |
Fresnillo | +2.84% | +22.50 | 814.00 |
| 5 |  |
Flutter Entertainment Plc | +2.47% | +540.00 | 22,360.00 |
| 6 |  |
Rentokil Initial Plc | +1.30% | +5.30 | 412.30 |
| 7 |  |
Astrazeneca Plc | +1.19% | +140.00 | 11,942.00 |
| 8 |  |
Glencore Plc | +1.16% | +3.95 | 344.95 |
| 9 |  |
Relx Plc | +1.14% | +47.00 | 4,172.00 |
| 10 |  |
Pershing Square Holdings Ltd | +1.13% | +50.00 | 4,480.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
British American Tobacco Plc | -8.49% | -288.00 | 3,106.00 |
| 2 |  |
Unilever Plc | -6.23% | -296.00 | 4,455.00 |
| 3 |  |
Barclays | -5.25% | -16.15 | 291.60 |
| 4 |  |
Imperial Brands Plc | -3.19% | -92.00 | 2,792.00 |
| 5 |  |
Centrica Plc | -2.99% | -4.10 | 132.95 |
| 6 |  |
Shell Plc | -2.35% | -63.50 | 2,638.00 |
| 7 |  |
Vodafone Group Plc | -2.14% | -1.48 | 67.64 |
| 8 |  |
Natwest | -1.76% | -7.90 | 442.10 |
| 9 |  |
Standard Chartered Plc | -1.42% | -16.00 | 1,110.00 |
| 10 |  |
Aib Group Plc | -1.38% | -7.00 | 499.00 |
US close: Stocks fall as inflation fears hit sentiment
US stocks finished mostly lower on Wednesday after an unexpected acceleration in core inflation spooked markets, causing bond yields to rise strongly.
“Hotter-than-expected inflation has given investors something new to fret about, with the data presenting the Federal Reserve with less of a reason to cut interest rates any time soon,” says Dan Coatsworth, investment analyst at AJ Bell.
The Dow and S&P 500 fell 0.5% and 0.3%, respectively, while the Nasdaq was little changed by the close.
According to data from the Bureau of Labor Statistics, the annual rate of US consumer price inflation rose to 3% in January, surprising economists who had expected no change from 2.9% the previous month, highlighting persistent inflationary pressures across the economy.
Core inflation, which excludes food and energy prices, unexpectedly increased to 3.3% from 3.2% in December, whereas analysts had pencilled in a decline to 3.1%.
“The inflation figures mean that cost-of-living pressures are returning, even before Donald Trump has had time to enforce policies that could drive inflation even higher,” AJ Bell’s Coatsworth said.
The yield on a 10-year US Treasury note was up 9.7 basis points at 4.629% – its highest in three weeks. The dollar initially jumped following the inflation data, but had pared gains by the close with the greenback index finishing flat at 107.98.
Elsewhere on the macro front, mortgage applications increased 2.3% in the week ended 7 February, according to the Mortgage Bankers Association of America, with applications to purchase a home falling 2% week-on-week and applications to refinance a mortgage soaring 10%.
Market movers
Shares in Kraft Heinz fell sharply after the food conglomerate said profit would be below forecasts and missed quarterly sales estimates on the back of weak demand price rises. The company said it expects fiscal 2025 adjusted earnings per share to be $2.63 – $2.74, compared with analysts’ average estimates of $3.04.
Pharmacy chain CVS rallied thanks to fourth-quarter results that came in ahead of expectations on the Street, with revenues hitting $97.71bn and earnings per share of $1.19, beating the $97.1bn and 93 cents forecasts, respectively.
In other news, ride-share group Lyft, car rental outfit Avis Budget and property marketplace Zillow all tumbled after disappointing investors with quarterly updates; while fintech Upstart Holdings and food delivery firm DoorDash were rising strongly after their latest figures.
Thursday newspaper round-up: Solar panels, OBR, Chevron
California’s home-insurance safety net does not have enough money to pay all of the claims from damage caused by the Los Angeles wildfires and has asked private insurers to contribute $1bn toward those claims. All private insurers operating in California are required to contribute to the Fair plan, a plan of last resort established so all Californians would have access to fire insurance. More than 450,000 California homeowners got their insurance through the Fair plan in 2024 – more than double the number in 2020. As of 4 February, the plan had received more than 4,700 claims from the Palisades and Eaton fires, almost half of which were for “total losses”. – Guardian
Poorer households could cut their energy bills by a quarter if solar panels were installed on their rooftops, a report has found. However, the upfront costs mean that those who stand to benefit most from decreased energy bills are prevented from getting panels installed, according to the Resolution Foundation thinktank. – Guardian
Rachel Reeves has been warned not to hammer businesses with higher taxes after the Office for Budget Responsibility (OBR) told the Chancellor she was now at risk of breaking her fiscal rules. Rupert Soames, chairman of the Confederation of British Industry (CBI), warned the Chancellor that another raid on the private sector to fix the public finances would create more problems by damaging business investment. – Telegraph
The majority of rich people who backed Labour at the election now regret it, according to a new poll. Two thirds of high net worth individuals (HNWI) who voted for Sir Keir Starmer’s party last July now wish they hadn’t, a survey from wealth manager Saltus has found. Policies that have shattered faith in Labour include changes to inheritance tax, the addition of VAT – at 20pc – to private school fees and an increase in employers’ National Insurance contributions, which has pushed up staffing costs for business owners. – Telegraph
Chevron Corporation, the US oil giant, will make up to 8,000 employees redundant by the end of 2026 to cut costs. The oil producer said it will cut between 15 per cent and 20 per cent of jobs from its global workforce. At the end of 2023, Chevron employed 40,212 people across its operations so 20 per cent would be about 8,000. Those figures do not include about 5,400 employees of Chevron service stations. – The Times
