Closing post
The FTSE 100 has dipped back from this morning’s record high, to just below the 7,900 point mark.
So it’s time to wrap up – here are today’s main stories so far:
UK experiences largest loss of purchasing power since mid-1970s
The UK economy has suffered the biggest loss of purchasing power since the 1970s oil crisis, after Russia’s invasion of Ukraine sparked a surge in energy prices.
That’s according to new analysis from the Office for National Statistics today. It explains that higher energy and commodity prices on the UK economy has recently reduced the purchasing power of the UK, as the country is a net energy importer.
The report shows that the UK’s real domestic income shrank by 0.2% year-on-year in the third quarter of 2022, even though real GDP expanded by 1.9%.
The ONS says…
….which shows the UK experienced a negative terms-of-trade effect in response to the recent energy price shock. That is, there was a decline in how much a unit of UK GDP can purchase on global markets.
We’ve published a new article highlighting how the spike in global energy prices has impacted the UK’s income and global purchasing power.
— Office for National Statistics (ONS) (@ONS) February 8, 2023
➡️ https://t.co/kypsBvRobN pic.twitter.com/c7xowhoDfA
The UK wasn’t the only country suffering, as the ONS points out:
European countries have experienced a negative purchasing power effect as net energy importers; Italy, Germany, and Japan experienced a larger negative terms-of-trade effect than the UK in the year to Quarter 3 2022.
The CMA’s provisional ruling today is a real risk to Microsoft’s takeover of Activision, says Ben Barringer, equity research analyst at Quilter Cheviot:
“Following Brexit, the Competition and Markets Authority has been keen to put its stamp on things and influence how deals are made. To this point, it has become one of the strictest consumer protection agencies globally. This is important context for the Microsoft-Activision deal and may mean significant changes to the structure of the acquisition are required. Often when one agency rules in a particular direction, others follow suit so it does become a real risk for Microsoft that this deal becomes harder to get through.
“The CMA effectively calls for the divestment of the Call of Duty franchise, as well as some other potential household games, due to Microsoft’s dominance in cloud-based gaming and consoles. It is likely Call of Duty, as well as the likes of World of Warcraft, were key elements of why Microsoft wanted to buy Activision, and it will be interesting to see how to responds and progresses from here. Certainly if Call of Duty were not part of the deal, the value would be significantly impacted.
“Interestingly, this ruling has a significant impact for impending deals across the tech sector and shows the CMA will not hesitate to step in if it feels competition is being impeded.”
Shares in Manchester United have jumped by 15% in early trading, after news broke that the Emir of Qatar, Sheikh Tamim bin Hamad al-Thani, is interested in buying the club.
Shares in Activision dropped 3% at the open, but are now down 1.7%.
⚠️ ACTIVISION BLIZZARD SHARES DOWN 3.2% AFTER BRITAIN'S ANTITRUST REGULATOR SAYS MICROSOFT'S DEAL TO BUY CO COULD HARM GAMERS
— PiQ (@PriapusIQ) February 8, 2023
- https://t.co/wXVagA44VK
The New York stock market has opened slightly lower, despite hopes that interest rate increases are slowing.
The Dow Jones industrial average has dipped by 28 points, or 0.1%, to 34,128 points, while the broader S&P 500 index is 0.25% lower.
Shares in Microsoft have jumped 3%, despite the CMA dealing a blow to its hopes of buying Activision.
Investors are encouraged by Microsoft’s push in artificial intelligence – it is revamping its Bing search engine and Edge Web browser with AI, using technology behind the wildly popular ChatGPT service.
Administrators for collapsed airline Flybe have applied for a temporary operating licence, the Civil Aviation Authority (CAA) has announced.
This would give the administrators from Interpath the chance to put the regional carrier on a firm footing, but flights would not initially resume.
It is the first time the CAA has received an application for a temporary licence from a failed airline, PA Media reports – and comes almost two weeks after Flybe ceased trading and cancelled all its scheduled flights.
A spokesman for the regulator said:
“Flybe’s administrators have applied for a temporary operator’s licence.
“If approved, it would allow the administrators to start the process of restructuring the business.
“The UK Civil Aviation Authority has not yet made a decision on whether to grant a temporary licence.
“Flybe’s licence currently remains suspended in accordance with the undertakings given by the administrators.”
Activision Blizzard says it hopes to help Britain’s competition regulator to “better understand” the gaming industry, after the CMA ruled today that Microsoft’s takeover could harm gamers.
An Activision spokesperson said:
“These are provisional findings, which means the CMA sets forth its concerns in writing, and both parties have a chance to respond.
“We hope between now and April we will be able to help the CMA better understand our industry to ensure they can achieve their stated mandate to promote an environment where people can be confident they are getting great choices and fair deals, where competitive, fair-dealing business can innovate and thrive, and where the whole UK economy can grow productively and sustainably.”
Workers employed by the City of London Corporation are being balloted on whether to hold strike action in a long running pay dispute.
The Unite union say the City of London Corporation, which is the local authority for the City of London, has imposed a pay increase for 2022 worth just three per cent, on average.
With RPI inflation at 13.4%, that is a “substantial real terms pay cut”, Unite says.
Ballot papers are being sent to members from today, with the ballot closing on Wednesday 15 March. If workers support taking industrial action then strikes could begin before the end of next month.
6th Feb - CoL ballot closes, if you haven't voted yet, Vote now!
— GMB London Region (@GMBLondonRegion) February 3, 2023
A GMB member said:
▶️"I have had to take out loans and am using a card to get by each month."◀️
✅yes to industrial action
✅yes to decent pay
✅💯City of London Corp must pay up pic.twitter.com/8ThYEfqW2I
Unite regional officer Nick West says the City of London Corporation can fully afford to deliver a pay rise.
West adds:
Our members’ are being forced to use food banks and borrow money to pay bills. All of this is happening whilst the corporation spends hundreds of thousands on lavish entertainment for the wealthy.
Unite has exhausted every avenue of negotiation and, for the first time in the union’s history, are balloting our members at the City of London Corporation for industrial action over pay. Our members are united in the demand for fair pay and are prepared to take industrial action, halting the City’s key services until the corporation puts forward an acceptable offer.”
Uber stock rises after earnings as company gives upbeat outlook
Ride-sharing company Uber has reported its strongest quarter on record, as demand rebounded as pandemic restrictions were rolled back.
Uber has reported adjusted profits, on an EBITDA basis, of $665m, an increase of $579m year-on-year.
Gross Bookings grew 19% year-over-year, with ‘Mobility’ bookings (journeys) up 31% and ‘Delivery’ (such as food orders) rising 6% year-on-year.
“We ended 2022 with our strongest quarter ever, with robust demand and record margins,” said Dara Khosrowshahi, Uber’s CEO, adding:
“Our global scale and unique platform advantages position us well to accelerate this momentum into 2023.”
Last year, a global investigation revealed how Uber broke the law, duped police and regulators, and secretly lobbied governments across the world.
Today, the company says it is confident of growth in the current quarter. It predicts gross bookings will grow by 20% to 24% year-on-year in Q1 2023, and expects adjusted EBITDA of $660m to $700m.
Nelson Chai, Ubers’s CFO, says the company “significantly exceeded” its profitability outlook last year.
Chai adds:
“Our outlook for a Gross Bookings and Adjusted EBITDA step up in Q1 builds on that progress, and sets us up for yet another record year.”
Shares in Uber are up almsot 8% in pre-market trading.
$UBER Uber up +7% in premarket following Q4 earnings report! 🚗📈
— Market Premium Signals (@MpsAutoTrader) February 8, 2023
~EPS: $0.29 vs $(0.15) est
~SALES: $8.61B vs $8.48B est pic.twitter.com/0vFd6dwkTI
Microsoft has said it was committed to addressing the concerns raised by Britain’s competition regulator about its acquisition of “Call of Duty” maker Activision Blizzard today.
Rima Alaily, MS’s corporate vice-president and deputy general counsel, says:
“We are committed to offering effective and easily enforceable solutions that address the CMA’s concerns.”
“Our commitment to grant long-term 100% equal access to ‘Call of Duty’ to Sony, Nintendo, Steam and others preserves the deal’s benefits to gamers and developers and increases competition in the market.”
Her’es our news story on the UK’s competition regulator’s ruling that Microsoft’s $68.7bn (£59.6bn) deal to buy Activision Blizzard, the video game publisher behind hits including Call of Duty, will result in higher prices and less competition for UK gamers.
Shares in Activision Blizzard have dropped by 4% in pre-market trading.
They’re down to $72.70.The stock had already been trading at a substantial discount to the $95 per share value of Microsoft’s offer, given concerns that regulators might block the deal.
Updated
Back in the City of London, the FTSE 100 has climbed to a new alltime intraday high.
The index touched 7934.30 points, as traders continue to grasp hopes that inflation is easing, meaning borrowing costs could soon peak.
George Lagarias, chief economist at Mazars, says investors should be cautions, though.:
“The FTSE 100 broke yet another record, as a result of the general global equity rally. Despite the buoyancy, investors need to stop for a moment and think: what is driving positive sentiment?
Presently, it’s really one single factor: the belief that we are at, or very close to, peak interest rates. However, none of the major central banks have yet actually confirmed that they are pausing rate hikes. Given that we are in the midst of an economic slowdown, and possibly a recession, we would approach the rally with optimism, but also a lot of caution.”
The CMA’s ruling come just hours after the head of Activision accused Sony of “trying to sabotage” Microsoft’s takeover.
Bobby Kotick, the Activision chief executive, also told the Financial Times that a “fragile” UK government could miss a post-Brexit opportunity to attract thousands of jobs if it blocks Microsoft’s acquisition of Activision Blizzard (as the CMA is indeed threatening to do).
Kotick told the FT that UK prime minister Rishi Sunak is “smart” and “understands business”, Kotick said, adding that the UK government seemed to lack leadership.
He added:
“If I look at our hiring plans, we’re more likely to find the next 3,000 to 5,000 people that we need in the UK than almost any other country.”
Kotick also denied that the deal would hurt competition (as the CMA fears), saying:
“The whole idea that we are not going to support a PlayStation or that Microsoft would not support the PlayStation, it is absurd.”
CMA: Microsoft-Activision Blizzard deal would hurt competition and harm gamers
Breaking: the UK’s competition watchdog has provisionally concluded that Microsoft’s proposed $69bn takeover of computer games maker Activision Blizzard could result in higher prices, fewer choices, and less innovation for UK gamers.
In the provisional findings of its inquiry into the deal, just released, the Competition and Markets Authority has warned that the deal would result in a substantial lessening of competition in gaming consoles and cloud gaming services in the UK.
Microsoft announced in January 2022 that it would pay $68.7bn in cash for Activision, the firm behind Call of Duty, World of Warcraft and Candy Crush.
Today, the CMA says that in the gaming console world, Microsoft’s Xbox and Sony’s PlayStation compete closely with each other, and that Activision’s Call of Duty (CoD) is important to the competitive offering of each.
Microsoft, it fears, could restrict Call of Duty on the PlayStation. The CMA says:
The evidence suggests that, after the Merger, Microsoft would find it commercially beneficial to make CoD exclusive to Xbox or available on Xbox on materially better terms than on PlayStation.
We provisionally found that this would substantially reduce competition in gaming consoles to the detriment of gamers—Xbox and PlayStation gamers alike—which could result in higher prices, reduced range, lower quality, worse service, and/or reduced innovation.
The regulator also has concerns over cloud gaming services – fearing that Microsoft could make Activision’s titles exclusive to its own cloud gaming service, or available there on materially better terms than on rival cloud gaming services.
They say:
We provisionally found that, after the Merger, Microsoft would find it commercially beneficial to make Activision’s titles exclusive to its own cloud gaming service or available there on materially better terms than on rival cloud gaming services.
The CMA suggests that it could block the merger.
Alternatively, it could requiring a partial divestiture of Activision Blizzard, which could mean the sale of the business associated with Call of Duty, or the sale of either the Activision or the Blizzard segments of the company.
Updated
Price of diesel falls below 170p per litre for first time since March 2022
The price of a litre of diesel has fallen below 170p for the first time since last March, in a boost to some motorists and businesses.
Figures from data company Experian show UK forecourts were charging an average of 169.9p per litre on Monday.
It is the first time the price has been cheaper than 170p in 11 months, since the invasion of Ukraine drove up fuel prices.
RAC fuel spokesman Simon Williams said:
“This is good news for drivers of diesel vehicles as they have had to endure some tough times with the average price of a litre nearly hitting £2 at the end of June. Since then the price has tumbled 30p, saving more than £16 on a full tank.
But, if retailers play fair with drivers, the price should fall further still as the wholesale price is now back to a level last seen around the time Russia invaded Ukraine. Even with retailers taking a higher than average margin of 10p a litre, the price of diesel should really be 10p lower at 160p.”
Network Rail boss suggests Grant Shapps ‘galvanised’ workers to strike
The boss of Network Rail has suggested that government minister Grant Shapps “galvanised” rail workers into continuing strike action when he was transport secretary through “noisy political rhetoric”.
Andrew Haines said negotiations with trade unions have been conducted in a less confrontational and more “measured tone” since Mark Harper took on the role in October last year.
Widespread strikes over jobs, pay and conditions began in June 2022, when Mr Shapps was transport secretary.
Last June, Shapps accused the Rail, Maritime and Transport (RMT) union of a “total lie” over claims that he disrupted negotiations. In July, Shapps said the power of “these very militant, extreme-Left unions” to cause disruption should be curbed.
Asked whether Harper and his rail minister, Huw Merriman, have “changed the narrative with the unions”, Mr Haines said:
“They have taken some of the more robust rhetoric out and said ‘We’re prepared to talk, we’re prepared to meet’.
“The conversations are equally direct and blunt but they’re done in a measured tone that isn’t confrontational.
“The underlying realities haven’t changed but what that’s allowed us to do is avoid the distraction.
“It’s a harsh reality that, however well-intentioned, noisy political rhetoric, if anything it galvanised the workforce against settling.”
Haines made the comments during a question and answer session last night, after Harper gave the rail industry’s annual George Bradshaw address in central London.
The previous approach created a “them and us approach” and “demonised” rail workers, Haines said, adding:
“I’ve seen a very material change in the sentiment among Network Rail colleagues because the heat’s been taken out.
“However well-intentioned, bashing people up in the newspapers doesn’t work if you want to get people to vote for something.”
Shapps moved to run the BEIS department in October, and was yesterday named as the head of a new Department for Energy Security and Net Zero.
Turkey’s stock market halts trading after main index drops 7%
Trading on Turkey’s stock market has been suspended this morning after the country’s benchmark equities index fell 7 per cent.
Stocks dropped sharply again on Wednesday, following heavy losses on Tuesday after Turkey and Syria were hit by a devastating earthquake that has killed thousands of people.
The Bist 100, which contains the hundred largest companies listed on the Borsa İstanbul, has been suspended after dropping 7%. The index twice tripped a “circuit breaker” that is in place to calm trading this morning.
Turkey’s Borsa Istanbul says:
“Trading in Equity Market and Single Stock & Index Futures and Options Contracts in the Derivatives Market has been suspended.”
The stock market operator did not say when trade would resume.
According to Bloomberg, this is the first time that Turkey’s stock exchange has suspended trading in 24 years.
Last night, Turkish president Recep Tayyip Erdoğan declared a state of emergency in areas hit by the region’s worst earthquake in decades.
The earthquake has also put pressure on the turkish lira, which has tumbled to a record low this week. The lira weakened last year as Turkey’s central bank cut interest rates several times, which helped to push Turkey’s inflation rate to a 24-year high of 85.5% in October.
The earthquake will add to Turkey’s economic pressures. Md. Shabbir Ansari, senior insurance analyst at GlobalData, says:
“The preliminary estimate of economic loss due to the current catastrophic event is more than $1.0 billion, and it will take years for Turkish insurers to settle the insured losses.
The economic loss is expected to be more than two times the losses from a similar earthquake in 2020.
Emergency services are continuing to search for survivers from the earthquakes. And today, a container blaze at Turkey’s southern port of Iskenderun has been brought under control (our liveblog reports).
The FTSE 100 continues to hit new alltime highs this morning, and just touched 7928 points, up 0.8% today.
Federal Reserve chair Jerome Powell has soothed the markets with his comments last night about inflation easing, says AJ Bell investment director Russ Mould.
“Concerns that last Friday’s bumper jobs report would see the Fed react to what it perceived as an overheating labour market were eased, with Powell’s relatively relaxed response possibly reflecting the seasonal anomalies which often affect the January numbers.
“Whether Powell will remain so relaxed if the next set of payroll figures are similarly elevated is open to question and investors will be keeping a close eye on next week’s US inflation figures for January. If there is any sign of a renewed uptick in prices, then the market would likely respond very negatively.
“For now, the positive sentiment has allowed the FTSE 100 to reach new sunny uplands, hitting a fresh all-time high. Now the milestone has been achieved though there may be a bit of an inquest into why it has taken the FTSE 100 so long when many of its global counterparts were making records years ago.”
Maersk forecasts plunge in profits as container shipping boom ends
Shipping group A.P. Moller-Maersk has warned this morning that its profits will tumble this year as the transportation sector cools.
Maersk predicted that lower container volumes and freight rates would drive a roughly four-fold plunge in profits this year, after reporting record earnings for 2022.
Maersk benefitted from the jump in freight rates as in the pandemic, due to the surge in consumer demand and supply chain problems such as logjams at ports.
In its annual report, Maersk predicts that the global ocean container market could contract by as much as 2.5% this year, if global GDP growth remains muted.
It predicts underlying profits of between $8.0 and $11.0, down from the record $36.8bn recorded in 2022.
Vincent Clerc, Maersk’s new chief executive, has told the Financial Times that its customers, who include most of the world’s largest retailers, had over-ordered during the congestion of recent years.
That’s led to a glut now, meaning less demand for container shipments.
As Clerc puts it
“When this congestion goes away, you get more goods, your warehouses are full, your inventory is high.”
Updated
European shares have hit their highest level in over nine months this morning.
Investors are cheered by Federal Reserve Chair Jerome Powell’s remarks overnight about inflation starting to ease.
German gas giant Linde and Dutch paints maker Akzo Nobel have jumped 2.4% and 6.5%, respectively, after giving higher 2023 earnings forecasts, Reuters flags.
In CopenHagen, the OMX share index has hit a record high.
⚠️ OMX COPENHAGEN 20 INDEX HITS RECORD HIGH, LAST UP 1.1%
— PiQ (@PriapusIQ) February 8, 2023
- https://t.co/wXVagA44VK
The pound is also having a decent morning, up half a cent against the US dollar to $1.2095.
Yesterday sterling hit a one-month low against the dollar, but is perkier today as the dollar languishe on the back foot.
Hopes that US inflation is easing are hitting the dollar, as Ricardo Evangelista, senior analyst at ActivTrades explains:
The greenback’s weakness started late on Tuesday, after a public address by the Federal Reserve Chairman, Jerome Powell, who mentioned that interest rates may end up climbing higher than previously thought but also acknowledged an ongoing disinflation process.
The markets chose to focus on the second part of Powell’s message, finding reasons to be cheerful in the fact that the Fed remains data dependent and therefore a pause, and even a monetary policy pivot in the not-too-distant future, could still be on the cards should inflation continue to stabilise.
With moderate optimism returning to the markets, the US dollar lost ground to other major currencies, halting the rally that followed Friday’s monster jobs report.
UK equity markets remain on the front foot today, says Neil Wilson of Markets.com.
Wilson says China’s economic reopening has lifted the FTSE 100, and predicts the index could soon reach 8,000 points. He adds:
Bulls pushed the FTSE 100 to a new record intraday high at 7,926 in early trading as investors continue to shrug off just about most things. 8,000 looks assured.
Updated
The UK’s smaller share index, the FTSE 250, has jumped by over 1% this morning.
The FTSE 250, which is more domestically-focused than the FTSE 100, is approaching the 10-month highs it reached last week.
Optimism that China’s relaxation of Covid restrictions has also pushed the FTSE 100 index higher in recent weeks.
The share index is packed with major multinationals, such as mining companies and financial stocks, whose fortunes could benefit from a pick-up in China’s economy, after it weakened in 2022.
China’s slowdown in growth is “almost certainly behind it”, predicts Craig Erlam, senior market analyst at trading firm OANDA, adding:
In fact, the transition from zero-Covid to living with it is reportedly going very smoothly which could boost the economy earlier and by more than expected, leading to higher growth forecasts for 2023.
While that could support the global economy through a difficult period, it may also worsen the inflation problem due to much higher demand for commodities including crude oil. Oil prices have been trending higher in recent days on these improved forecasts, although they still remain around the middle of the range they’ve traded within since early December.
Oil giant BP is the top riser on the FTSE 100 this morning, up 3.2%.
BP shares have hit 533.5p, the highest since August 2019.
Yesterday BP smashed its annual profits record, with earnings more than doubling to $27.7bn (£23bn) as fossil fuel prices soared following Russia’s full-scale invasion of Ukraine.
BP also lifted its shareholder dividend by 10%, and slowed its plans to cut oil and gas production.
FTSE 100 hits new record
Newsflash: The UK’s FTSE 100 index has hit a new alltime high at the start of trading in London.
The blue-chip share index has hit 7926 points, as it surges over the record high set on Friday (which was the first since 2018).
As explained in the opening post, the rally comes as hopes build that the UK economy could fare better in 2023 than feared, with the NIESR thinktank predicting a recession could be avoided.
Shares are also benefiting from hopes that central banks could end their interest rate increases soon.
Victoria Scholar, head of investment at Interactive Investor, tells us:
The FTSE 100 has hit a record high again, surpassing Friday’s peak. Following a wobbly start to the week in which global equities were hit by concerns about a more hawkish path from the Fed after a strong US jobs report as well as heightened US-Sino tensions, the UK large-cap index has restored its bullish momentum.
Yesterday Fed Chair Jerome Powell said inflation is easing, raising hopes that the US could be approaching the peak for interest rates. A strong close on Wall Street with the Nasdaq closing up by 1.9% has helped drive a positive start to the European session.
Over a one-year period, Pearson is the best performing stock on the FTSE 100 followed by BAE Systems and Antofagasta. Over the past one month, JD Sports is the top performer with IAG and 3i in second and third place.
The pound is trading higher against the greenback driven by US dollar weakness against most European currencies today following Powell’s relatively hopeful remarks about the outlook for US inflation.”
Updated
Charlie Huggins, Head of Equities at Wealth Club, says the housing market is very difficult to call right now.
There has clearly been a marked slowdown in housing market activity in the last six months. Faced with higher mortgage costs and soaring bills, it’s no surprise that new home buyers are exercising greater caution.
Barratt has responded by battening down the hatches, significantly reducing land approvals and placing restrictions on hiring and new site openings. This is sensible in the circumstances.
However, the picture is not looking as grim as it was back in the Autumn, following the disastrous mini budget. Despite rising interest rates, mortgage rates have fallen in recent months due to intense competition between lenders. And there is a growing sense that interest rates are close to peaking. If that turns out to be the case, confidence in the housing market could quickly return.
David Thomas, chief executive of Barratt Developments, warns that the economic background has “clearly been challenging” for housebuilders.
Thomas tells shareholders this morning:
“We have delivered a strong operating performance for the six months to 31 December 2022. This was possible because of our significant forward order book at 30 June 2022 and the tremendous efforts of our employees, sub-contractors and supply chain partners.
However, the economic backdrop has clearly been challenging and consumer confidence weakened significantly during the half, which meant we saw lower reservation rates for future sales - particularly in the second quarter.
Whilst we have seen some early signs of improvement in current trading during January, we will need to see continued momentum over the coming months before we can be confident that these challenging trading conditions are easing.
Barratt: Marked slowdown in UK housing market
Britain’s largest homebuilder, Barratt Developments, is warning this morning that high mortgage rates are hitting the housing market, as demand slows.
Barratt’s latest half-year results, for the six months to 31 December 2022, also show that the drop in UK house prices has hit its sales and profit margins, as its costs also rise.
Barratt reports that there was a “marked slowdown in the UK housing market” in the first half of its financial year (the second half of 2022), as the mini-budget hit confidence and drove up borrowing costs.
The company tells the City:
Political and economic uncertainty impacted the first quarter; this was then compounded by rapid and significant changes in mortgage rates which reduced affordability, homebuyer confidence and reservation activity through the second quarter.
Barratt completed 8,626 homes in the second half of last year, a 6.9% increase on a year earlier. Gross profits rose 15.2%, but its gross profit margins dropped to 23.3% from 25% in the six months to 2021.
Barratt, July to December results show pre-tax profits up 15.9% to £501m over same period in ‘21 generated from completions up 6.9% to 8,626 from 8,067. Critical driver of profit rise was 23.9% rise in revenues to £2,783m gained from full order book and higher prices. But…… pic.twitter.com/AqPjuZStiP
— Peter Bill (@peterproperty) February 8, 2023
Demand has been weaker in 2023, although Barratt does say that trading has picked up a little in January.
In January, Barratt’s net private reservations per active outlet per average week has fallen by 45%, due to “more tentative demand”. This slowdown prompted the company to freeze hiring in January.
Forward sales are down too. On 29th January, they were 10,854 homes, worth £2.665bn, compared with over 15,000 at 30 January 2022 (which were worth £4,109.7m).
Barratt sales collapsed by 45.6% since January 1st from 0.9 to 0.49 sales per outlet per week. Forward sales are down from 15,736 to 10,854. Boss, David Thomas, seen ‘early signs of improvement” but, ‘need to see continued momentum before agreeing ‘challenging conditions easing,’
— Peter Bill (@peterproperty) February 8, 2023
Yesterday, Halifax reported that UK house prices were roughly flat in January, having fallen in the previous four months.
Introduction: UK may avoid recession, as FTSE 100 heads towards record
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Britain’s FTSE 100 share index is heading back towards last Friday’s record high, as hopes build that the UK economy could avoid a recession.
The blue-chip index is rallying in premarket trading, and on track to open just below Friday’s intraday record high of 7906.58 points.
This would extend the Footsie’s gains in 2023, as stock markets rally on hopes that central banks will slow, or stop, their interest rate increases soon.
Last night, the Federal Reserve chair, Jerome Powell, warned, though, that more US interest rates rise will be needed to cool inflation and the red-hot US jobs market.
“We think we are going to need to do further rate increases,” Powell said on Tuesday at the Economic Club of Washington. “The labor market is extraordinarily strong.”
Investors were cheered, though, that Powell said he US was in the “very early stages of disinflation.”
European markets are also set for a higher open, as shares continue to rally in 2023.
Indices Update: As of 05:00, these are your best and worst performers based on the London trading schedule:
— DailyFX Team Live (@DailyFXTeam) February 8, 2023
Germany 40: 0.98%
France 40: 0.89%
FTSE 100: 0.59%
US 500: -0.02%
Wall Street: -0.05%
View the performance of all markets via https://t.co/2NUaqnUPED pic.twitter.com/0B9aiJE1fG
The FTSE 100 is dominated by multinational companies, so its strength does not reflect the UK’s economic state.
But there are hopes that Britain may avoid a recession this year, despite the gloomy forecasts from the Bank of England and the International Monetary Fund.
The National Institute of Economic and Social Research (NIESR) predicts this morning that the UK economy will grow marginally in 2023 despite high prices hitting household budgets.
But it warned while the UK may not fall into recession, it will feel like one for at least seven million households.
According to NIESR, households in Britain will suffer a hit to their finances of up to £4,000 this year, with low and middle-income households facing the biggest financial hit from the cost of living crisis.
The agenda
9am GMT: Italian retail sales for January
Noon GMT: US weekly mortgage applications
3pm GMT: Poland’s interest rate decision
Updated
