Stocks see muted open; oil majors rise

(Alliance News) - Stock prices in London opened largely flat on Tuesday, failing to capitalise on broadly positive market sentiment elsewhere.

The FTSE 100 index opened up 3.03 points at 7,490.73. The FTSE 250 was up 12.41 points, 0.1%, at 19,088.05, and the AIM All-Share was up 0.19 of a point at 735.53.

The Cboe UK 100 was slightly lower at 748.83, the Cboe UK 250 was flat at 16,507.91, and the Cboe Small Companies was down 0.1% at 14,847.06.

In European equities, the CAC 40 in Paris and the DAX 40 in Frankfurt were up 0.1%.

In early UK economic news, government borrowing dropped sharply in December, figures from Office for National Statistics showed. Public sector net borrowing, excluding public sector banks, amounted to GBP7.8 billion - some GBP8.4 billion less than the prior year. It was the lowest level for December since 2019.

Borrowing in the financial year to December was GBP119.1 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 GBP2.686 trillion, which is provisionally estimated to be around 97.7% of the UK's annual gross domestic product.

"Next month's data for January, which will include self-assessment income tax receipts, will be particularly revealing about the potential room Chancellor [Jeremy Hunt] has for tax cuts," Lloyds Bank analysts said.

Sterling was quoted at USD1.2742 early Tuesday, higher than USD1.2717 at the London equities close on Monday. The euro traded at USD1.0908, higher than USD1.8990.

Associated British Foods rose 0.8%.

The company said revenue rose 2.8% to GBP6.89 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.

The rise in Primark sales is "no small achievement at a time when consumers are feeling the pinch", according to Aarin Chiekrie, equity analyst at Hargreaves Lansdown.

"The demise of Debenhams and Topshop in recent years has been a tailwind for the group, pushing more customers towards its stores, including more middle-class shoppers...While many other large physical retailers are closing their doors, Primark opened eight new stores, with plans to open many more by the end of 2026," Chiekrie added.

Oil majors BP and Shell got a boost from rising oil prices, up 1.4% and 0.9% respectively.

Brent oil was trading at USD80.34 a barrel, rising from USD79.73 on Thursday afternoon, following the latest escalations in the Middle East.

The US and Britain launched new strikes on Yemen's Houthis Monday, saying their second round of joint military action against the Iran-backed rebels was in response to continued attacks on Red Sea shipping.

Meanwhile, Crest Nicholson rose 1.4%.

The housebuilder said it has appointed Persimmon's Martyn Clark as its new chief executive, replacing Peter Truscott, who is retiring after joining the firm in 2019. Clark is currently the chief commercial officer at rival Persimmon, and will join Crest later this year. Persimmon shares were up 0.5%.

Crest also reported its annual results for the year ended October 31. Revenue fell 28% year-on-year to GBP657.5 million from GBP913.6 million, while pretax profit dropped 30% to GBP23.1 million from GBP32.8 million. Home completions dropped similarly by 26% to 2,020 from 2,734. Still, the firm left its total dividend unchanged at 17.0 pence per share.

The housebuilder shared a cautiously optimistic outlook for its current financial year.

"Recently there have been some positive macro trends with inflation and mortgage rates falling, which bode well for the housing sector. Although it is too early to gauge customer behaviour, we have been encouraged by an increase in customer interest levels and inquiries this calendar year," said outgoing CEO Truscott.

Among London's small-caps, Marston's rose 2.1%.

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.

Meanwhile, Henry Boot dropped 11%

The property developer warned it expects profit for 2024 to be significantly below current market consensus. It points to "extended payment profiles" with major housebuilders on strategic land sales, which will keep gearing at the upper end of its optimum range. It anticipates profit in 2023 to meet market expectations, however.

In the US on Monday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.4%, the S&P 500 up 0.2% and the Nasdaq Composite up 0.3%.

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.

Analysts had predicted the BoJ would stand pat, partly to avoid further disruption after an earthquake on New Year's Day killed at least 233 people in central Japan.

The BoJ sees the increases in prices as driven by temporary factors including higher energy costs, and on Tuesday it revised down its inflation forecast for the next fiscal year to 2.4% from 2.8%.

Against the yen, the dollar was quoted at JPY147.57, down versus JPY147.94.

In China, the Shanghai Composite was up 0.6%, while the Hang Seng index in Hong Kong jumped 2.7%.

Traders were cheered by reports that Chinese authorities were considering a blockbuster boost to equities after a painful start to the year.

Authorities are looking at a raft of initiatives, Bloomberg reported, adding that policymakers were seeking to mobilise nearly USD280 billion, mainly from the offshore accounts of state-owned enterprises.

The S&P/ASX 200 in Sydney closed up 0.5%.

Gold was quoted at USD2,031.07 an ounce early Tuesday, higher than USD2,024.07 on Monday.

Still to come in Tuesday's economic calendar, there will be consumer confidence data out for the eurozone.

By Elizabeth Winter, Alliance News deputy news editor

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