London investors appeared indecisive on Tuesday, as markets reacted to falling UK government borrowing and the sterling closed down against the dollar.
The FTSE 100 index closed down 1.98 points, marginally down, at 7,485.73. The FTSE 250 ended down 83.02 points, 0.4%, at 18,992.62, and the AIM All-Share closed up 0.5%, or 3.67 points, at 739.01.
The Cboe UK 100 ended down 0.1% at 748.77, the Cboe UK 250 closed down 0.5% at 16,427.10, and the Cboe Small Companies ended up 0.1% at 14,866.41.
In European equities on Tuesday, the CAC 40 in Paris and the DAX 40 in Frankfurt both ended down 0.3%.
‘The FTSE 100 has found itself on the back foot in early trade despite a welcome decline in UK public sector net borrowing for December,’ Scope Markets analyst Joshua Mahony commented.
UK government borrowing dropped sharply in December, figures from the Office for National Statistics showed. Public sector net borrowing, excluding public sector banks, amounted to £7.8 billion - some £8.4 billion less than the prior year. It was the lowest level for December since 2019.
Borrowing in the financial year to December was £119.1 billion, which was the fourth-highest for the period on record. It was 10% higher than the equivalent nine-month period of the prior fiscal year.
Public sector net debt excluding public sector banks was £2.686 trillion, which is provisionally estimated to be around 97.7% of the UK’s annual gross domestic product.
Sterling was quoted at $1.2660 on Tuesday at at the London equities close, lower than $1.2717 on Monday. The euro traded at $1.0835, lower than $1.8990.
Stocks in New York were lower at the London equities close, with the DJIA down 0.5%, the S&P 500 index down 0.1%, and the Nasdaq Composite down 0.1%.
Corporate earnings dominated in New York, with Johnson & Johnson falling 1.6% after reporting quarterly and annual sales growth, although profit fell in 2023.
3M plunged 12%, after it reported weaker fourth-quarter revenue and set out tepid growth guidance for 2024. Verizon meanwhile rose 5.5% despite swinging to a fourth quarter loss, hurting its bottom line for the full-year, although it declared an increased quarterly dividend and expects to fare well in 2024.
Netflix earnings are still to come this evening.
In the FTSE 100 in London, Associated British Foods rose 0.8%.
The company said revenue rose 2.8% to £6.89 billion in its first quarter ended January 6, or by 5.4% in constant currency. For Primark, sales rose 7.9% in constant currency, with the period getting off to a slow start amid unseasonal warm weather, but seeing strong Christmas trading. Like-for-like Primark sales rose 2.1% due to higher average selling prices.
Elsewhere, Vistry eased 0.1%, after it said its housebuilding and urban regeneration arm Countryside Partnerships has been selected as preferred developer to build new homes in London.
It said Countryside Partnerships will deliver 739 new homes in the northern London borough of Barnet as part of a £276 million redevelopment scheme. Of these, 427 will be classified as affordable homes, while 144 will be build-to-rent and 168 will be for private sale.
Countryside was selected by the Greater London Authority and the Mayor’s Office for Policing & Crime. The project is on the site of the former Hendon Metropolitan Police training centre and driving school in Colindale.
Among London’s small-caps, Marston’s lost 1.5%.
The pub operator reported strong trading over Christmas, ahead of its annual general meeting later on Tuesday morning. In the 16 weeks to January 20, total retail sales in the firm’s managed and franchised pubs rose 8.8% year-on-year, with strong sales of both food and drink.
Brave Bison gained 22%, after the digital advertising and technology service provider said its results for the last year beat market expectations, as it remained focused on becoming a ‘market-leading’ digital advertising company.
Net revenue jumped 23% to £20.8 million in 2023 from £16.9 million in 2022, while turnover grew 12% to £35.5 million from £31.7 million.
Adjusted earnings before interest, tax, depreciation and amortisation surged 43% to £4.3 million from £3.0 million. Adjusted pretax profit was 38% higher at £3.6 million in 2023 from £2.6 million in 2022.
Brent oil was trading at $79.92 a barrel, rising from $79.73 on Thursday afternoon, with focus on continued escalations in the Middle East.
The US and UK launched new strikes on Yemen’s Houthis on Monday, saying their second round of joint military action against the Iran-backed rebels was in response to continued attacks on Red Sea shipping.
In Asia on Tuesday, the Nikkei 225 index in Tokyo closed down 0.1%.
The Bank of Japan maintained its signature monetary easing measures on Tuesday, as speculation grows of a shift away from its ultra-loose stance.
After a two-day policy meeting, board members decided to keep interest rates in negative territory – a global anomaly that has driven down the yen against the dollar, while also leaving unchanged the band in which rates for 10-year government bonds fluctuate.
Against the yen, the dollar was quoted at JP¥148.54, up versus JP¥147.94.
In China, the Shanghai Composite was up 0.6%, while the Hang Seng index in Hong Kong jumped 2.7%.
Gold was quoted at $2,023.60 an ounce on Tuesday, lower than $2,024.07 on Monday.
In Wednesday’s UK corporate calendar, JD Wetherspoon releases its half-year results.
The economic calendar, a slew of composite purchasing managers’ index figures are posted.
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