London stocks opened in the red on Tuesday morning, but FTSE 100-listed retailer Next achieved a gain as it upped its guidance following a healthy Christmas trading period.
The FTSE 100 index opened down 23.47 points, 0.3%, at 8,226.19. The FTSE 250 was down 79.56 points, 0.4%, at 20,533.09, and the AIM All-Share was down 1.37 points, 0.2%, at 727.22.
The Cboe UK 100 was down 0.3% at 824.16, the Cboe UK 250 was 0.4% lower at 17,956.68, and the Cboe Small Companies was marginally lower at 15,962.71.
The CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was 0.2% lower.
The pound was quoted at $1.2551 early Tuesday, rising from $1.2528 late Monday afternoon. The euro was up at $1.0420 from $1.0397. Against the yen, the dollar rose to JP¥157.50 from JP¥157.22.
A barrel of Brent faded to $75.91 early Tuesday, from $76.65 at the time of the London equities close on Monday. Gold rose to $2,642.04 an ounce from $2,638.63.
In New York on Monday, the Dow Jones Industrial Average lost 0.1%. But the S&P 500 climbed 0.6% and the Nasdaq Composite shot up 1.2%.
‘For now though, the AI enablers continue to shoulder the rally. The S&P500 kicked off the week with a 0.55% gain, while its tech-heavy peer Nasdaq 100 gained more than 1%. Mood elsewhere was murkier however. The Dow Jones for example was slightly lower on Monday, as the 10-year yield spiked past 4.60% and the 30-year yield hit 4.86% - for the first time since November 2023 on expectation that the Federal Reserve (Fed) could make a long pause before its next rate cut due to worries of reviving inflation with Donald Trump‘s pro-growth and tariff policies,’ Swissquote analyst Ipek Ozkardeskaya commented.
‘The US will be releasing its latest jobs figures starting from today, and the numbers will matter fpr the Fed expectations. The US economic growth last year remained robust, the jobs market started cooling but the cool down was not as sharp as the Fed predicted; the US economy ended by adding close to 180K new nonfarm jobs on average every month during last year. As such, the potentially excessive Fed cuts of last year now fuel the expectation that the Fed will pause for a few months. Activity on Fed funds futures suggests that the next Fed cut will not arrive before May. A sufficiently soft figures this week could scale back a part of that hawkishness, pull the US dollar lower and allow the others to gain field.’
The latest US job openings and labour turnover survey reading is released at 1500 GMT. There is also an ISM services purchasing managers’ index reading at 1500 GMT. In Europe, focus is on a eurozone inflation reading at 1000 GMT.
Analysts at ING commented: ‘Consensus expects the eurozone headline number to rise to 2.4% YoY from 2.2% and core to stay at 2.7%. Any upside surprise – particularly to the core reading – could further rein in the expected scale of this year’s ECB easing. Currently the market prices in 107bp of rate cuts.’
It was a slow start for the FTSE 100 in London, but some retail names were on the up. JD Sports added 4.6% after Bank of America reinitiated coverage of the stock at ’buy’.
Next added 3.0% as it raised its annual profit guidance after better-than-expected Christmas trading, including strong overseas online growth.
The Leicester-based clothing and homewares retailer said full price sales in the nine weeks to December 28 rose 6.0% on-year. Adjusting for the effect of the end-of-season sale, which ‘flattered’ its outturn, full price sales were up 5.7%. It had guided for growth of 3.5%.
‘The over-achievement adds £27 million to full price sales,’ Next said.
It now expects pretax profit for the year to January 25 of £1.01 billion, a rise of 10% on-year. It had previously expected a profit rise of 9.5%. It now predicts total group sales of £6.30 billion, its outlook raised from £6.27 billion.
Next said it plans to raise prices to offset roughly £13 million of wage cost hikes.
‘This will require an increase of around 1% in selling prices on like-for-like garments over and above any factory gate price increases. Fortunately, we are seeing 0% inflation in factory gate prices. So although we are increasing our bought-in gross margins, we still expect our prices to rise by less than the Bank of England’s target for inflation of 2%,’ it said.
Pennon fell 3.1% after Deutsche Bank cut the stock to ’sell’ from ’hold’.
Serica Energy lost 2.9% after it said production in the second half of 2024 was ‘disappointing’ on woes at the Triton asset. The North Sea-focused oil and gas firm said production averaged 34,600 barrels of oil equivalent per day in 2024. In the fourth-quarter alone, it totalled 25,100, down from 26,000 in the third, 42,400 in the second and the 45,100 achieved in the first three months of 2024.
‘Production in the second half of 2024 was clearly disappointing and well below the potential of our asset base. We and our partners are working to improve planning and procedures to optimise maintenance and maximise production resilience going forward. At Triton the key issue has been operating vulnerabilities associated with reliance on a single gas export compressor, and we have stayed in touch closely with the FPSO operator as they worked through root cause analysis in relation to the repeated issues seen in H2 2024,’ Chief Executive Officer Chris Cox said.
‘We understand what has caused these issues and, together with our partners, are implementing improvements to support better and more reliable future performance. As the Triton operations continue their ramp-up, we look forward to seeing both enhanced production as the new wells drilled during 2024 contribute fully, and more resilient operations, as we resume operations with two compressors in Q1.’
The Hang Seng Index in Hong Kong lost 1.2%. The Shanghai Composite added 0.7%, while in Tokyo, the Nikkei 225 closed 2.0% higher. In Sydney, the S&P/ASX 200 added 0.3%.
The US Defense Department has added Chinese tech firm Tencent Holdings and battery manufacturer Contemporary Amperex Technology Co to a list of companies it says are affiliated with Beijing’s military.
The two firms were included on a list of Chinese military companies operating in the US that is due to be published Tuesday on the US Federal Register, with copies available for download the day before.
Tencent is one of the top players in China’s expansive technology sector, operating the WeChat ‘super-app’ with other offerings across gaming, content streaming and cloud services.
CATL is also a major firm, producing more than a third of the electric vehicle batteries sold in the world.
Tencent shares fell 7.3% in Hong Kong.
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