Share prices across the FTSE 100 index are higher. Photo: Reuters (REUTERS/Reuters)
The FTSE and European markets rose on Friday as official figures showed the UK economy returned to growth in November.
The FTSE 100 (^FTSE) rose 0.6% to 7,620 points at the open, while the CAC 40 (^FCHI) rose 0.3% to 7,411 points in Paris. In Germany, the DAX (^GDAXI) rose 0.7% to 16,658. Europe's Stoxx 600 (^STOXX) rose 0.6%.
Across the pond, S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=F) were all in the red as trading began in Europe.
Read more: The British economy rebounds in November, but fears of recession remain
On Wall Street on Thursday, U.S. stocks rebounded from earlier losses to end the session largely unchanged after a new reading of December inflation came in slightly higher than economists expected, raising new questions about the Federal Reserve's interest rate path.
The Dow Jones (^DJI) closed just above the flatline at 37,711 points. The S&P 500 (^GSPC) lost almost 0.1% to close at 4,780 points. The tech-heavy NASDAQ (^IXIC) closed flat at 14,970.
According to the U.S. Bureau of Labor Statistics, U.S. inflation rose more than expected last month, rising 3.4% in the year through December.
That was up from an annual rate of 3.1% in November, when cheaper gas prices curbed the rise in the cost of living in America.
In Asia, Hong Kong's Hang Seng (^HSI) fell 0.6% to 16,211 points, while the Shanghai Composite (000001.SS) lost 0.2% to 2,881 points.
Stocks in Tokyo closed higher, extending gains from the previous day's session when the benchmark Nikkei index closed above 35,000 points for the first time since 1990. The Nikkei 225 (^N225) rose 1.5% to 35,577 points.
Read more: My first boss: Harry Hyman, founder of FTSE 250 company Primary Health Properties
The pound (GBPUSD=X) was flat against the dollar, trading at $1.2758. The pound sterling (GBPEUR=X) was stronger against the euro, trading at €1.1633.
Meanwhile, Brent crude oil (BZ=F) rose over 2% to trade at around $79/barrel after Iran seized a tanker off the coast of Oman, raising fears that fuel prices could rise.
The story goes on
Tensions in the Middle East escalated as the US and Britain carried out strikes on Houthi military targets in Yemen in retaliation for attacks by the Iran-backed group on ships in the Red Sea since late last year.
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The British economy rebounds in November, but fears of recession remain
According to the Office for National Statistics (ONS), the British economy returned to growth in November. Gross domestic product (GDP) grew by 0.3% for the month, but the country is still on the brink of recession.
It follows October's 0.3% decline and is slightly steeper than the 0.2% forecast by economists.
However, looking at the three months to November, the UK economy actually contracted by 0.2%, fueling recession fears. Production in the services sector increased by 0.4% for the month.
Read the whole story here
- Fri Jan 12, 2024 at 2:55am GMT-6
Larger images show “sluggish growth,” says NIESR
The National Institute of Economic and Social Research (NIESR) warned of “sluggish growth” in the UK economy. Paula Bejarano Carbo, Associate Economist at NIESR, said:
“While this may seem positive, GDP is estimated to have fallen by 0.2% in the three months to November compared to the previous three-month period, reflecting declines in manufacturing and construction output and default , to sustain growth in the services sector.
“These three-monthly data, which are less volatile than the monthly numbers, suggest that the overall picture remains one of sluggish growth. This is in line with the ONS's recent quarterly revisions to national accounts GDP estimates, which revised growth figures for 2023 and 2023Q3 downwards from 0.2% and no growth to no growth and -0.1% respectively. “
- Fri Jan 12, 2024 at 2:45am GMT-6
Snapshot of the markets
Here is Richard Hunter, Market Head at Interactive Investor,'s take on today's trading session:
“The Premier index also opened with a bounce, gaining 0.8%, but also failed to offset the damage of recent trading sessions, leaving the FTSE 100 (^FTSE) down 1.2% in January.”
The index was held back by an early trading update from Burberry (BRBY.L), which lowered the group's forecast. Shares fell about 9% in early trading. There was some comfort among housebuilders after recent releases suggested demand may be picking up again, with Barratt Developments (BDEV.L) and Taylor Wimpey (TW.L) gaining.
There was also a rise in certain select mining companies, suggesting some traders may be taking advantage of the opportunity to buy on a decline, with an eye on a possible increase in global demand later in the year.”
- Fri Jan 12, 2024 at 2:33am GMT-6
A technical recession is still possible, warns KPMG
KMPG UK chief economist Yael Selfin warned that a technical recession was “still potentially possible”. She said:
“New year, but old problems for the British economy.”
“The economic outlook currently remains bleak and a technical recession may still be possible in the second half of 2023, particularly given the expected impact of industrial action in December.”
“Even if the economy manages to avoid recession, it is likely to remain in the stagnation zone.
“Manufacturing has recovered somewhat after suffering the impact of high interest rates and slowing global economic activity, while construction is struggling due to a slowdown in housing construction.”
“The hope is that the outlook for the future will brighten as mortgage rates continue to fall and affordability dynamics improve.”
“In the second half of the year the fortunes of the UK economy could change and inflation is expected to normalize further.
“This could raise the prospect of earlier rate cuts, with the Bank of England likely to shy away from the risk of excessive tightening given the weak economic backdrop.”
- Fri Jan 12, 2024 at 2:29am GMT-6
Burberry cuts its profit targets as luxury demand continues to weaken
Burberry lowers profit targets (Reuters/Reuters)
Burberry (BRBY.L) said the decline in demand for its luxury goods worsened in December as wealthy shoppers tightened their belts.
The London-based fashion house subsequently cut its profit forecast for the year.
It said trading was hit by a continued “slowdown in luxury demand” following a rise in the cost of living and rising interest rates worldwide.
Jonathan Akeroyd, the company's chief executive, said it had experienced a “further slowdown in our key December trading period” which would weigh on its profitability.
Burberry had already seen its shares plunge after its last update in November, when the company warned that sales growth was falling short of targets due to pressure in the luxury market.
On Friday, Burberry said retail sales fell 7% to £706m in the three months to December 30.
It said like-for-like store sales fell 4% in the key trading period.
- Fri Jan 12, 2024 at 2:26am GMT-6
Shell leads the ranking of the most expensive gas station brands
Shell (SHEL.L) New figures show petrol stations are typically the most expensive in the UK.
The British oil and gas company's branded petrol stations in Britain charged an average of 142.6 pence per liter for petrol and 151.2 pence per liter for diesel on Thursday, according to an analysis by automotive research organization RAC Foundation.
That's more than any other major retailer.
Supermarket brand fuel remains the cheapest, although savings compared to other companies have fallen in recent years.
Morrisons was found to have the lowest fuel price. Petrol stations charge an average of 136.9p per liter for petrol and 145.5p per liter for diesel.
The figures suggest that filling up a 55-litre family petrol car is typically £3.14 cheaper at Morrisons compared to Shell.
Caution: Higher than expected US inflation numbers could delay the Fed's interest rate cuts
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