FTSE on course for another record close
The FTSE 100 has made it back into positive territory, up 13 points, putting it on course for another closing high.
Here are the latest scores across Europe:
- FTSE 100: +0.2% at 7,745
- Germany’s DAX:-0.9% at 13,258
- France’s CAC: -0.4% at 5,500
- Italy’s FTSE MIB: +0.4% at 23,085
- Spain’s IBEX: +0.1% at 10,433
- Europe’s STOXX 600: -0.5% at 398
Wall Street is forecast to open lower:
US Opening Calls:#DOW 25282 -0.43%#SPX 2740 -0.44%#NASDAQ 6639 -0.60%#IGOpeningCall
— IGSquawk (@IGSquawk) January 10, 2018
On that note, it’s time to close for the day. Thanks for all your comments, and we’ll be back tomorrow.
Over to Greece now, where thousands of protestors have taken to the streets on the first day of a parliamentary debate about austerity measures.
Helena Smith reports from Athens:
Public sector unionists and communist-affiliated workers took to the streets in fury over yet more reforms included in a multi-bill of ‘prior actions’ submitted to parliament.
Among the most contentious is the demand that Greece pare back the right of unionists to press ahead with industrial action - in a country where strikes are regarded as a hallowed right won with sweat and blood.
Demonstrators also converged on courts in angry scenes protesting against electronic auctions of properties belonging to indebted bank depositors. Athens has to enforce the measures to conclude a compliance review that will unlock more rescue funds (an estimated €5.5bn) given the debt-stricken nation’s exclusion from capital markets.
The leftist-led government is keen to legislate the measures in time for the next EU leaders’ summit meeting on 22 January.
Warren Buffet: bitcoin will come to a bad ending
Billionaire investor Warren Buffet is the latest big name to predict a burst bubble for bitcoin.
The chairman of Berkshire Hathaway told CNBC:
In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending.
When it happens or how or anything else I don’t know.
Buffet said he would not take a short position on bitcoin futures.
I get into enough trouble with things I think I know something about. Why in the world should I take a long or short position in something I don’t know anything about.
City watchdog flags concerns over spread betting firms
The Financial Conduct Authority has warned spread betting firms could be putting UK consumers at serious risk of harm.
Shares in the sector fell sharply after the warning this morning about the contracts for difference market. CFDs are a type of high-risk, complex derivative that allow investors to gamble on the price of an asset without owning it.
Read our full story here:
Superdry is the biggest faller in the FTSE 250, with shares down 8%, after the clothing retailer announced a fall in profits despite a positive Christmas performance:
Superdry's strong Christmas marred by profit drop https://t.co/6kqwYPMQyf pic.twitter.com/u8BmdjNVUL
— City A.M. (@CityAM) January 10, 2018
RAC: oil price rise signals misery for motorists
The RAC says the recent rise in oil prices to just below $70 could be bad news for UK motorists without a significant strengthening of the pound.
The breakdown recovery firm warns the rise could potentially put further pressure on Britain’s cash-strapped consumers if they have to pay more at the pump.
Simon Williams, fuel spokesman at the RAC, comments:
Oil hitting $70 a barrel is potentially very bad for motorists who are already having to get used to paying 7p a litre more for petrol and 9p more for diesel than they did last July.
If oil stays at this level, pump price hikes will be almost inevitable. With households across the country still feeling the cost of Christmas this is not the start to 2018 anyone would have wanted. It could also negatively affect business and further fuel inflation.
Oil hits highest level in more than three years
The price of a barrel of Brent crude oil is just a touch below $70 at $69.33, the highest level since 5 December 2014.
UK economic growth picked up to 0.6% in Q4, NIESR says
Britain’s economy grew by 0.6% in the final quarter of 2017, according to an estimate by the National Institute of Economic and Social Research*.
That would be the fastest rate of growth since the final three months of 2016, and would put annual growth in 2017 at 1.8%, slightly below growth of 1.9% in 2016.
The economy grew by 0.4% in the third quarter of 2017.
Amit Kara, head of UK macroeconomic forecasting at the thinktank, says:
We estimate that economic growth recovered to 0.6% in the final quarter of this year from 0.4% in the third quarter. Economic growth has picked up in the second half of 2017 after a period of subdued growth in the first six months.
The recovery has been driven by both the manufacturing and the service sectors, supported by the weaker pound and a buoyant global economy, while construction output continues to lag.
We’ll have to wait until 26 January for the first official estimate from the ONS.
*In this morning’s agenda I incorrectly stated the NIESR estimate would be published at 1pm. Sorry about that. AM
@angelamonaghan Hi there, just to let you know we now release the GDP estimates at 12, not 1 https://t.co/6ZsizVHpny
— NIESR (@NIESRorg) January 10, 2018
Updated
The UK’s small exporting firms are optimistic about the future, according to the trade body that represents them, despite Britain’s wider trade deficit in November.
The Federation of Small Businesses (FSB) said the broader trend was more positive, with the trade in goods and services deficit narrowing by £2.1bn to £6.2bn in the three months to November.
Mike Cherry, national chairman at the FSB:
It’s a positive step to see the UK’s total trade deficit narrowing in the three months to November 2017.
Our own research shows exporting small firms remain optimistic about trade prospects, with an increase in those reporting either stable or increasing international sales in the last quarter of 2017. Our exporters continue to benefit from a depreciated pound and strong economic growth overseas.
“The success of the UK economy rests on helping more small businesses to export, and with nine in ten small firms that do business internationally trading with EU nations, securing the right Brexit deal will be crucial.
The ONS stats show an increase in exports to non-EU countries have contributed to the narrowing of the deficit, showing the importance of new agreements with key markets beyond Europe.
Here is our full story on the UK data published this morning:
Business secretary in Paris for talks with Peugeot on future of UK Vauxhall plant
Britain’s business secretary Greg Clark is in Paris for talks with Carlos Tavares, the chief executive of PSA, owner of Peugeot and Vauxhall.
Concerns over the future of the Vauxhall plant at Ellesmere Port mounted after another 250 job cuts were announced this week, bringing the total number of redundancies announced over the past three months to 650.
The cuts mean that more than a third of the workforce will have been lost since PSA took control last year.
Do #British consumers care where their cars are made? @unitetheunion thinks so. But when so much production could move abroad without #Brexit deal and electric cars subsidised by gov't, consumers could wave goodbye to more than just Astras @dgbailey https://t.co/JdrxGOjv6i
— Phillip Inman (@phillipinman) January 10, 2018
The pound is slightly up against the dollar, rising 0.1% to $1.3551. Earlier it dipped below $1.35 for the first time in a week, despite some fairly upbeat UK data.
Against the euro, the pound is down 0.5% at €1.1291.
The dollar meanwhile is down 0.6% against a basket of other major currencies, its biggest drop in a month.
FTSE dips into the red
The FTSE 100 has slipped into the red, failing to hang on to earlier gains as markets across Europe fall:
Britain’s manufacturers are benefiting from the “upswing” in the global economy according to Christian Jaccarini at the Centre for Economics and Business Research.
As the manufacturing sector is relatively outward-looking, producing around 45% of exports despite accounting for just 10% of UK employment, manufacturers have been significantly helped by a buoyant global economy and the weakened pound in recent quarters.
The eurozone, which accounts for almost half of UK exports, is performing strongly and economic forecasters are unambiguously optimistic about its prospects moving forward.
Though significant geopolitical threats remain, the world economic outlook is also positive. World air freight rose as much in 2017 as it has in the previous five years taken together.
Alan Clarke, economist at Scotiabank, says the ONS data published this morning suggests the UK economy ended 2017 on a decent note.
The first official estimate of growth in the fourth quarter of 2017 will be published on 26 January, but think tank NIESR will give its own estimate at 1pm today. The economy grew by 0.4% in the third quarter.
Clarke says:
UK GDP growth for the 4th quarter of 2017 is looking good again after some encouraging industrial and construction output data for November. These are the last concrete official monthly data that feed directly into the GDP arithmetic and give us the best clues to the likely growth rate when the data are released on 26 January.
The manufacturers’ trade body, EEF, the manufacturers’ organisation, said firms were feeling positive about prospects for the year ahead.
A quick check in the rear view mirror confirms that UK manufacturers were, in the main, in good shape as 2017 came to a close with the majority of sub-sectors enjoying growth.
Exports continue to pick up with the pace of growth in goods headed overseas outpacing the rate at which we’re sucking in imports, enabling us to start chipping away at our sizeable trade deficit.
Manufacturers’ expectations for the year ahead point to output and export growth being maintained through this year on the back of continuing support from a burgeoning global economy.
This, together with an on-going commitment from government to deliver on its industrial strategy will be crucial in helping to propel the sector forward.
UK industry enjoys longest growth run in 23 years
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, points out that industrial production has grown now for eight consecutive months, making it the longest run of growth since May 1994.
A breakdown of the figures for industrial production - which grew 0.4% in November - showed growth in two of the four sub sectors over the month.
- Energy supply rose by 3.2% as temperatures dropped in November
- Manufacturing output was up 0.4%. There was broad-based strength in the sector, which helped to offset a sharp 7.1% fall in car production as demand slides
- Mining and quarrying fell by 1.4%
- Water supply, sewerage, and waste management dipped 0.8%
UK data: trade and construction weaker than expected in November, but manufacturing beats expectations
The Office for National Statistics has published some key data on UK trade, industrial production and construction output.
Here are the headline figures:
- Britain’s trade in goods deficit with the rest of the world was the biggest in five months in November, rising to £12.2bn from £11.7bn in October
- Industrial production was stronger than expected, increasing by 0.4% in November following a 0.2% rise in October. Manufacturing output increased by 0.4%, beating expectations and the previous month
- Construction output was weaker than forecast, rising by 0.4% in November following a 1.1% drop a month earlier.
Ole Black, senior statistician at the ONS, comments:
There was strong and widespread growth across manufacturing with notable increases from renewable energy projects, boats, planes and cars for export. However, despite a small uptick in November, construction again contracted in the last three months, with private house building providing the only positive news in the sector.
The trade deficit narrowed in the last three months, mainly due to increased exports of services, shipments of works of art and cars. Over the last year exports of goods, particularly cars, machinery and crude oil, have continued to increase, and at a faster rate than imports.
Updated
Lidl has record December in UK
Lidl had record UK sales in December, up 16%, as more customers visited the German discounter.
Shoppers bought about 600 tonnes of Brussels sprouts, 17m mince pies and more than 800,000 litres of champagne and prosecco.
Lidl cited research from Kantar Worldpanel that concluded it was the fastest-growing supermarket over the festive period.
Christian Härtnagel, the chief executive of Lidl UK, said:
Lidl UK has had a fantastic 2017 and this was capped by our strongest Christmas trading period to date. Customers came into our stores to buy more of their Christmas items, knowing they could find high-quality products at market-leading prices.
We look forward to bringing the Lidl offering to more communities across the UK, as we continue our rapid expansion plan this year.
Updated
Moss Bros issues profit warning after disappointing Christmas
Moss Bros has fallen into the category of Christmas loser after issuing a surprise profit warning this morning.
The menswear retailer and suit hire business said fewer than expected customers visited its shops in December.
Moss Bros now expects full-year, pre-tax profit in the range of £6.5m-£6.8m, slightly below current market expectations.
Its chief executive, Brian Brick, gives his assessment:
Having made considerable progress in building a strong, profitable, cash-generative menswear business, which has outperformed the market in recent years and despite continued progress throughout much of 2017, we faced a very tough December trading environment, which led to a significant reduction in store footfall and a hardening of the corresponding competitive environment in which we operate.
In common with many UK retailers, the year ahead looks like being an extremely challenging one, not least because of the uncertain consumer environment, wider political backdrop and significant cost headwinds we face from a weaker pound, business rates and increasing employee-related costs.
Sainsbury shares up 1.8% after it nudges up guidance, Moss Bros shares down 8.9% after it nudges guidance lower.
— Garry White (@GarryWhite) January 10, 2018
Updated
FTSE hits record high
Having hit a closing high on Tuesday, the FTSE 100 has continued to make gains this morning, up about 10 points.
Financial stocks and Sainsbury’s are among the biggest risers, as the leading index outperforms most of its European peers.
The latest scores across Europe this morning:
- FTSE 100: +0.1% at 7,740
- Germany’s DAX: -0.3% at 13,348
- France’s CAC: -0.2% at 5,515
- Italy’s FTSE MIB: +0.3% at 23,071
- Spain’s IBEX: +0.03% at 10,430
- Europe’s STOXX 600: -0.3% at 399
Updated
Sainsbury's: Christmas sales rise but it warns of challenging market
Sainsbury’s is the latest big retailer to give an update of its trading performance over the crucial Christmas period.
It’s a mixed bag. Total sales were up 1.2% in the three months to 6 January and 1.1% on a like-for-like basis. That was in line with expectations. Grocery sales rose 2.3%.
But general merchandise sales fell 1.3%, reflecting the growing reluctance among consumers to spend as much on non-essential, discretionary items.
Sainsbury’s said profit would be moderately ahead of the expected £559m because it had found more ways to save money by merging its supermarkets with Argos.
This is what its chief executive, Mike Coupe, had to say:
We’re pleased with our performance across the group this quarter. We had a strong Christmas week, with record sales, more than 340,000 online grocery orders and stellar growth in Argos fast-track delivery and collection. Online accounted for 20% of the group’s sales during the quarter.
Friday 22 [December] was our biggest sales day for stores and we also delivered an online grocery order to customers every second. Customers bought more Taste the Difference food than last year as people treated themselves and our popular 25p veg lines helped our customers live well for less.
Read our full story here:
Sainsbury's says profits will be ahead of expectations despite tough market as it is expecting better synergies (+£25m) from Argos merger..
— Sarah Butler (@whatbutlersaw) January 10, 2018
Updated
The agenda: UK data to give latest snapshot of wider economy
Good morning and welcome to our rolling coverage of the world economy, financial markets, eurozone and business.
It’s a big day for UK data, as official figures will shed light on how various parts of the economy are performing.
The ONS figures on trade, manufacturing and construction will cover the month of November, giving a clearer picture of the state of the wider economy in the final quarter of 2017.
Britain has started to slip down the G7 league table of growth, and today’s figures will provide a backdrop to David Davis and Philip Hammond’s trip to Germany, as the Brexit secretary and chancellor make a direct plea to German businesses to help them secure a good deal.
Michael Hewson, chief market analyst at CMC Markets, says it’s an important day for UK data.
Manufacturing has been a standout performer for the UK in Q4, if various independent surveys are to be believed, so it would be a surprise if today’s ONS announcements don’t confirm that picture.
The agenda:
- 9.30am: UK trade figures are expected to show the goods deficit was roughly unchanged in November at £10.7bn.
- 9.30am: UK construction data for November is forecast to show a 0.8% rise in output, following a 1.7% drop in October.
- 9.30am: Industrial production and manufacturing figures are expected to show faster growth for the sectors in November.
- 1pm: The National Institute of Economic and Social Research will publish its estimate of UK growth in the fourth quarter of 2017.
Also in the spotlight today are Sainsbury’s and fashion brand Superdry. Both companies have updated the market on their Christmas trading performance.
Updated
