London close: Stocks mixed as US jobless claims fall again

(Sharecast News) - London's stock markets ended Wednesday on a mixed note, as investors digested another fall in jobless claims across the Atlantic, after some disappointing corporate news earlier in the session. The FTSE 100 index edged up 0.07% to close at 8,251.03 points, while the FTSE 250 slid 1.96% to 19,952.24 points. The performance reflected investor reactions to mixed corporate results and macroeconomic updates.

In currency markets, sterling was last down 1.05% on the dollar to trade at $1.2346, as it declined 0.72% against the euro, changing hands at €1.1979.

"The mood music around the UK continues to deteriorate as 30-year gilt yields rise to their highest level over a quarter of a century," said IG chief market analyst Chris Beauchamp.

"Investors have come back from the festive break in a sour mood concerning the UK, and have now decided that the UK's cheap status is not an attraction, but instead a reflection of the poor situation facing the British economy.

"The cautious attitude is evident across markets, but it seems to be the UK that is bearing the brunt."

Beauchamp noted that Tuesday's signs of rising inflation in the US had combined with an 11-month low in jobless claims to push back expectations of any rate cuts in 2025.

"While the claims figure shows that the US economy's much-vaunted economic strength is still in place, rising prices mean the Fed's job is going to get much tougher.

"This is, of course, before any new tariffs are imposed.

"Having effectively achieved his soft landing in 2024, Powell is going to find keeping the economy in that sweet spot will be much harder."

Jobless claims fall again in the US, UK consumer spending reaches festive high

In economic news, initial jobless claims in the US dropped to a seasonally-adjusted 201,000 in the week ended 4 January, marking a decrease of 10,000 and outperforming expectations for 218,000.

The four-week moving average also fell, declining by 10,250 to 213,000.

However, continuing claims, which measure secondary unemployment, rose by 33,000 to 1.867 million for the week ended 28 December.

Separately, private sector employment data from ADP showed a softer-than-expected gain of 122,000 jobs in December, below the forecast 140,000.

While large businesses contributed most of the growth, small and medium businesses posted modest gains.

Wage growth continued to decelerate, with pay for job-stayers rising 4.6% year-over-year, the slowest pace since mid-2021.

"The labour market downshifted to a more modest pace of growth in the final month of 2024, with a slowdown in both hiring and pay gains," said Nela Richardson, chief economist at ADP.

"Health care stood out in the second half of the year, creating more jobs than any other sector."

On home shores, UK consumer spending reached a festive high, as total food and drink sales hit a record £14.6bn in the four weeks leading to Christmas, according to research from NIQ.

While overall sales growth slowed to 3.2% compared to November's 3.7%, late-month promotions and the timing of Christmas Eve buoyed demand.

23 December emerged as the peak shopping day.

"In the last four weeks we've seen the highest levels of promotions in the last three years, with 27% of all fast-moving consumer goods sales being purchased on promotion," said Mike Watkins, UK head of retailer and business insight at NIQ.

"This has no doubt helped to boost purchasing over the Christmas period."

On the continent, inflationary pressures intensified in the eurozone's industrial sector.

Producer prices climbed 1.6% month-on-month in November, exceeding economist expectations of a 1.5% rise, driven by a sharp 5.4% increase in energy prices.

On an annual basis, however, wholesale prices fell 1.2%, reflecting easing inflationary pressures in other sectors.

Consumer confidence across the bloc also hit an eight-month low, with economic sentiment at its weakest since late 2020.

Germany saw particularly disappointing data, with retail sales falling 0.6% in November against forecasts for a 0.5% increase, and factory orders plunging 5.4% month-on-month, defying expectations of stability.

Shell in the red, Flutter reverses losses to close higher

On London's equity markets, Shell shares fell 1.11% after the oil major flagged weaker fourth-quarter results compared to the prior period.

The company disclosed $700m in well write-offs and a $1.3bn cash flow hit, alongside a reduction in its liquefied natural gas production guidance to between 6.8 million and 7.2 million tonnes, down from previous estimates of 6.9 million to 7.5 million tonnes.

Ashmore Group slumped 5.84% after Jefferies downgraded the emerging markets-focused asset manager to 'hold' from 'buy', citing prolonged macroeconomic and geopolitical uncertainty weighing on fund flows.

The broker also cut its price target to 170p from 220p, stating that a catalyst for recovery may take longer to materialise.

Financial sector peer St James's Place also fell 4.92% on the back of the downgrade.

Utilities were also under pressure, with United Utilities Group and Severn Trent declining 4.6% and 2.89%, respectively.

InterContinental Hotels edged 0.39% lower after Morgan Stanley downgraded its rating to 'underweight' from 'equalweight', adding to the day's sector-specific losses.

On the upside, Flutter Entertainment eked out a 0.19% gain after reversing earlier losses.

The gambling firm downgraded its US revenue and adjusted EBITDA guidance for 2024, citing customer-friendly outcomes in the NFL season.

Despite the revised outlook, the stock recovered late in the session.

Relx was a standout performer, rising 2.05%.

The information and analytics provider benefitted from Redburn reinstating coverage with a 'buy' recommendation and a 4,500p price target, bolstering investor sentiment.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,251.03 0.07% FTSE 250 (MCX) 19,952.24 -1.96% techMARK (TASX) 4,603.00 -0.41%

FTSE 100 - Risers

BAE Systems (BA.) 1,154.00p 3.12% Pershing Square Holdings Ltd NPV (PSH) 4,026.00p 2.44% Standard Chartered (STAN) 987.00p 2.08% Relx plc (REL) 3,699.00p 2.05% Smith (DS) (SMDS) 543.00p 2.03% HSBC Holdings (HSBA) 776.00p 1.96% Antofagasta (ANTO) 1,633.50p 1.87% London Stock Exchange Group (LSEG) 11,425.00p 1.66% Reckitt Benckiser Group (RKT) 4,845.00p 1.32% Compass Group (CPG) 2,629.00p 1.29%

FTSE 100 - Fallers

Barratt Redrow (BTRW) 420.00p -5.07% St James's Place (STJ) 863.00p -4.92% United Utilities Group (UU.) 1,024.50p -4.91% JD Sports Fashion (JD.) 101.50p -3.90% Legal & General Group (LGEN) 230.20p -3.82% Taylor Wimpey (TW.) 114.60p -3.80% British Land Company (BLND) 358.60p -3.57% Phoenix Group Holdings (PHNX) 508.50p -3.44% M&G (MNG) 197.75p -3.26% Airtel Africa (AAF) 118.20p -3.05%

FTSE 250 - Risers

Raspberry PI Holdings (RPI) 571.00p 2.98% Bellevue Healthcare Trust (Red) (BBH) 145.40p 2.61% SThree (STEM) 278.00p 2.34% Hochschild Mining (HOC) 217.00p 2.30% CMC Markets (CMCX) 239.50p 1.04% Endeavour Mining (EDV) 1,472.00p 0.88% Schroder Oriental Income Fund Ltd. (SOI) 275.50p 0.73% BlackRock World Mining Trust (BRWM) 472.00p 0.64% Ithaca Energy (ITH) 126.00p 0.63% Hill and Smith (HILS) 1,790.00p 0.56%

FTSE 250 - Fallers

Ashmore Group (ASHM) 155.80p -7.64% Greggs (GRG) 2,832.00p -7.27% Syncona Limited NPV (SYNC) 96.70p -6.93% OSB Group (OSB) 392.60p -6.81% Ferrexpo (FXPO) 99.30p -6.36% Paragon Banking Group (PAG) 747.50p -6.35% IP Group (IPO) 52.40p -5.82% Future (FUTR) 955.00p -5.65% Grafton Group Ut (CDI) (GFTU) 927.40p -5.53% Kainos Group (KNOS) 791.00p -5.31%