London close: Stocks mixed on UK consumer confidence, US jobless claims

(Sharecast News) - London stocks ended Thursday's session with a mixed performance, as investors digested a drop in consumer confidence in the UK, alongside a spike in jobless claims across the pond. The FTSE 100 index edged up 0.23% to close at 8,565.20 points, while the FTSE 250 slipped 0.29% to finish at 20,520.39 points.

In currency markets, sterling was last up 0.25% on the dollar to trade at $1.2347, as it rose 0.17% against the euro, changing hands at €1.1850.

"UK stocks initially rotated within a tight range amidst subdued trading conditions as investors looked for direction following the market's recent all-time highs," said TickMill market strategy partner Patrick Munnelly.

"Initial reports signaling a notable downturn in sentiment within the manufacturing sector; confidence among manufacturers dropped to its lowest point in more than two years, which exerted some downward pressure on the market.

"Recent data indicated that British inflation unexpectedly decreased last month, with core price growth measures monitored by the Bank of England declining more significantly, reinforcing expectations for a rate cut next month."

Munnelly noted that as buyers entered the market, investor sentiment shifted, pushing the benchmark into positive territory for the session and maintaining levels just shy of the record highs.

"The cautious atmosphere prevailing in the market is further compounded by concerns surrounding the tariff threats issued by US president Donald Trump, adding an additional layer of uncertainty to the trading landscape.

"This delicate balance of market dynamics underscores the intricate interplay of economic indicators, geopolitical events, and investor sentiment shaping the UK stock market's trajectory."

UK consumer sentiment weakens further, LA wildfires drive spike in US jobless claims

In economic news, consumer sentiment in the UK weakened further, with expectations for the coming months deteriorating across various sectors, according to the latest data from the British Retail Consortium.

The personal finance situation index declined to -4 in January from -3 in December, while views on the broader economy worsened to -34 from -27.

Consumers also signaled reduced spending intentions following the holiday season, with personal retail spending dropping to -9 from -3 and overall spending slipping to 4 from 11.

However, expectations for savings improved slightly, rising to -3 from -5.

"As the government warns of tough times ahead, it is little surprise that the public have caught the January blues," said Helen Dickinson, chief executive of the BRC.

"Concerns [are] most pronounced among older generations - gen Z, 18-to-27 year olds, remain the only group to expect the economy to improve, while two thirds of 60-to-78 year olds expect things to get worse.

"Expectations of retail spending and wider spending both fell significantly, though much of this is likely to be at the end of the Christmas period, as people tightened their belts for the new year."

In monetary policy, Norway's central bank opted to keep interest rates steady at a 17-year high of 4.5% but indicated that a rate cut could come as soon as March.

The decision came as inflation and unemployment remained in line with projections, while overall inflation was lower than expected, providing room for potential easing in the months ahead.

Across the Atlantic, US jobless claims climbed to their highest level in six weeks, driven in part by a surge in claims from California, where wildfires had severely impacted employment.

Initial claims rose to 223,000 for the week ending January 17, exceeding the consensus forecast of 220,000.

In California, claims jumped by nearly 6,744 to reach 60,988 as wildfires in the north-west Los Angeles area displaced thousands of residents and workers.

Continuing jobless claims also saw a sharp increase, rising by 46,000 to 1.899 million, the highest level since November 2021 and surpassing expectations of 1.860 million.

Analysts warned that the ongoing wildfires could continue to drive higher claims in the coming weeks.

"We could also see some increase in claims related to the extreme cold in much of the country, including unusually harsh winter weather in much of the South this week," said Nancy Vanden Houten, lead US economist at Oxford Economics.

Housebuilders in the green, AB Foods falls on Primark outlook

On London's equity markets, housebuilders were among the top gainers in the market, with Persimmon rising 3.22%, Barratt Redrow up 2.69%, and Taylor Wimpey advancing 2.17%.

Spectris shares surged 9.45% after the precision instruments supplier announced that it expected to exceed market expectations for its 2024 results.

The company projected adjusted operating profit to come in above analysts' forecasts, which currently ranged from £183.3m to £201m, although that would still represent a decline from the £262.5m reported in 2023.

On the downside, Associated British Foods saw its shares fall 2.83% after lowering its sales growth outlook for its Primark division in 2025.

The company cited weaker UK revenue in the 16 weeks to 4 January, attributing the slowdown to unseasonably warm autumn weather and more cautious consumer spending.

AB Foods said it now expected low-single digit sales growth for Primark, down from its previous mid-single digit forecast.

CMC Markets plunged 17.36% following a brief update in which the trading platform said it remained on track to achieve its full-year net operating income guidance.

"The share price has been strong over the past couple of weeks, so to the extent the market was expecting a more positive trading update today - perhaps more news on how the Revolut partnership has progressed - we could imagine weakness today," said Shore Capital analyst Vivek Raja.

Car dealership Inchcape dropped 13.7% after JPMorgan downgraded the stock to 'neutral' from 'overweight,' reflecting concerns over the company's growth outlook and market conditions.

JD Sports Fashion also faced pressure, slipping 2.41% after Citi downgraded the stock to 'neutral' from 'buy,' citing a more cautious view on the retailer's growth prospects in the current economic environment.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,565.20 0.23% FTSE 250 (MCX) 20,520.39 -0.29% techMARK (TASX) 4,727.07 0.73%

FTSE 100 - Risers

Persimmon (PSN) 1,258.50p 3.92% Taylor Wimpey (TW.) 118.60p 3.18% NATWEST GROUP (NWG) 429.60p 2.85% Intermediate Capital Group (ICG) 2,316.00p 2.57% Barratt Redrow (BTRW) 441.80p 2.53% Centrica (CNA) 137.70p 2.08% Weir Group (WEIR) 2,394.00p 1.87% Standard Chartered (STAN) 1,083.50p 1.74% SEGRO (SGRO) 714.80p 1.74% Barclays (BARC) 298.65p 1.67%

FTSE 100 - Fallers

Entain (ENT) 676.60p -4.27% Associated British Foods (ABF) 1,879.50p -2.97% Marks & Spencer Group (MKS) 332.80p -1.92% Smith & Nephew (SN.) 1,009.00p -1.80% Sainsbury (J) (SBRY) 253.20p -1.63% JD Sports Fashion (JD.) 81.70p -1.54% WPP (WPP) 727.40p -1.44% Scottish Mortgage Inv Trust (SMT) 1,061.00p -1.30% Croda International (CRDA) 3,256.00p -1.24% Informa (INF) 826.80p -1.24%

FTSE 250 - Risers

Spectris (SXS) 2,984.00p 10.52% Morgan Advanced Materials (MGAM) 266.00p 3.70% Burberry Group (BRBY) 1,070.50p 3.43% Bridgepoint Group (Reg S) (BPT) 371.40p 2.82% Bellway (BWY) 2,536.00p 2.76% Wood Group (John) (WG.) 69.55p 2.43% Ferrexpo (FXPO) 105.60p 2.33% Spirent Communications (SPT) 182.00p 2.19% Oxford Instruments (OXIG) 2,165.00p 2.12% Safestore Holdings (SAFE) 602.50p 2.12%

FTSE 250 - Fallers

CMC Markets (CMCX) 220.50p -16.79% Inchcape (INCH) 652.00p -13.30% W.A.G Payment Solutions (WPS) 71.20p -9.64% IG Group Holdings (IGG) 1,006.00p -6.24% Victrex plc (VCT) 999.00p -6.11% Ithaca Energy (ITH) 127.20p -5.78% Oxford Nanopore Technologies (ONT) 142.20p -5.45% Hochschild Mining (HOC) 183.60p -5.07% Harbour Energy (HBR) 275.40p -4.80% Ocado Group (OCDO) 313.10p -4.72%