- FTSE 100 falls 15 points to 8,234
- Retailers inflation warning following unspectacular festive period
- Next upgrades profit guidance after further solid sales
10.07am: Euro CPI rises
Gains for German and French shares have been cut after an early ‘flash’ inflation estimate for the euro zone showed an annual rise of 2.4% for the consumer price index, up from 2.2% as economists forecast.
Month-on-month, CPI was up 0.4%, also as expected, after a fall of 0.3% in November.
Core CPI, which excludes more volatile prices like food and fuel, remained at 2.7% on an annual basis, as predicted.
The eurozone unemployment rate also remained at 6.3% in November, as foecast.
9.55am: London lagging Europe
London’s shares are lagging most of Europe this morning.
The FTSE 100 and 250 are down 0.3% and 0.6%, compared to a 0.2% gain for Germany’s DAX and 0.4% improvement for France’s CAC 40.
Spain’s IBEX is flat, while Italy’s FTSE MIB is down 0.3%.
The Euro Stoxx 600 is just above flat, as gains for German forklift truck-maker Kion, Swedish carmaker Volvo and JD Sports, are just offsetting losses for French cater Sodexho, rolling stock maker Alstom, shipping giant Moller-Maersk and UK water company Pennon.
Market analyst Kathleen Brooks at XTB highlights the 3% gain for Next this morning.
“The market was not deterred by Next’s concerns around higher costs from the Budget, which bodes well for the UK’s largest retailers,” she says.
Oh look, Next $NXT beat forecasts again. How surprising. pic.twitter.com/R9Fvkg4Fm1
— Chris Beauchamp (@ChrisB_IG) January 7, 2025
Shares in retailers JD Sports, Burberry, Watches of Switzerland, Moonpig, AO World are also among the top risers on the FTSE 350 after bellwether Next was the first of the big sector names in the UK to announce their Christmas trading figures, with BRC and Kantar numbers also out this morning.
“It has gone some way to easing fears about a weak consumer in the all-important ‘golden quarter’,” says Brooks.
Next reported less footfall in its shops, with retail sales falling by 2.1%. In contrast, online sales in the UK surged by 6.1%.
“This suggests that retailers with the biggest online presence will outperform this winter, and bodes well for Next’s competitors including M&S.”
M&S reports its Christmas trading update on Thursday.
Elsewhere, Brooks says markets are “taking a breather on Tuesday, and European stock indices are also mostly lower as we wait for European inflation”, which is out in a few minutes and expected to have climbed 2.4% year-on-year in December up from 2.2% a month earlier.
9.28am: GSK cancer drug boost
GSK PLC (LSE:GSK, NYSE:GSK) shares are little moved after it received a major regulatory boost for an experimental drug that targets a rare and aggressive bone cancer called osteosarcoma.
The US Food and Drug Administration (FDA) has granted ‘breakthrough therapy designation’ to the treatment, which is being tested for patients whose cancer has returned after at least two prior treatments.
The drug is also being explored for other cancers, including lung cancer and sarcoma, as part of GSK’s ongoing global trials.
9.12am: Card spending was flat over Christmas
Consumer card spending growth remained flat in December, figures from Barclaycard show, which is significantly lower than the latest UK inflation rate.
Cutbacks in card spending on essential categories were offset by growth in discretionary spending, supported by entertainment (up 6.0%) and cinemas (up 52.1% with Wicked, Gladiator and Paddington luring people out), with holiday bookings for 2025 seeing travel spending up 4.7%.
Restaurants, pubs, bars and clubs saw modest increases, the data shows, as Brits limited socialising amid the “quad-demic” and cut back on eating out to save money.
Furniture stores saw the highest level of growth since March 2022.
Barclays survey also finds that 35% of Brits plan to participate in ‘dry January’ this year, anticipating saving £57.70 each on average due to cutbacks, while one in four will try ‘veganuary’ and just over one in four say they’re trying to eat fewer processed foods.
8.53am: FTSE cuts losses
The initial losses for the FTSE have been mostly erased.
Top of the leaderboard is JD Sports Fashion PLC (LSE:JD.), up 4.6% amid the flurry of industry data. It was up yesterday too, after being one of the biggest fallers in the index last year.
Next PLC (LSE:NXT) is up 3% after its positive trading update earlier.
Miners, including Antofagasta PLC (LSE:ANTO), Fresnillo PLC (LSE:FRES) and Glencore PLC (LSE:GLEN) are among the risers, along with bookmaker Entain PLC (LSE:ENT) and drinks maker Diageo PLC (LSE:DGE).
8.33am: Supermarkets data mixed
UK supermarkets saw sales growth tail off at the end of last year, fresh figures from Kantar show.
Take-home sales at the grocers rose by 2.1% over the four weeks to 29 December compared with last year, which was down from the 2.5% growth reported a month earlier.
Grocery price inflation ticked up to 3.7% in the period, its highest level since March 2024.
Market leader Tesco PLC (LSE:TSCO) generated a 5.0% increase in sales over the 12 weeks to 29 December, down from 5.2% in the previous report. Its shares are down 1.4% this morning.
Closest rival J Sainsbury PLC (LSE:SBRY) also achieved its highest share since December 2019 at 16.0% as sales grew 3.5%, which was faster than the wider market but down from 4.7% a month earlier. SBRY shares are down 1.2%
Fraser McKevitt, Kantar’s head of retail and consumer insight, called it a “solid Christmas” for the supermarkets.
Kantar found that more people chose to do some of their Christmas grocery shopping online this year, with 5.6 million households opting to do this on at least one occasion as online spending for the month reached a record £1.6 billion.
This saw Ocado Group PLC (LSE:OCDO) boost its sales by 9.6% over the 12 weeks, taking its overall share to 1.8%. Its shares are up 0.45%.
8.14am: London shares fall
UK shares have slipped on the ice this morning, with the FTSE 100 index dropping 57 points or 0.7% to 8,192.4 in initial trading.
The mid-caps of the FTSE 250 are down 0.4% to 20,526.8 too.
Housebuilders, retailers and banks are among the blue-chip fallers, with Tesco PLC (LSE:TSCO) and Taylor Wimpey both down 2%, followed by HSBC Holdings PLC (LSE:HSBA), NatWest Group PLC (LSE:NWG), Barclays PLC (LSE:BARC) and J Sainsbury PLC (LSE:SBRY).
7.59am: UK retail sector grows modestly
The UK retail sector enjoyed a 3.2% increase in sales in December, figures from the British Retail Consortium show this morning, bouncing back from a 3.3% fall in November.
Like-for-like sales rose 3.1% year-on-year, which was stronger than the consensus forecast from economists, who expected a 0.2% decline.
For the three months to December, the festive period known in the trade as the Golden Quarter, sales grew just 0.4% year on year.
For 2024 overall, UK retail sales increased 0.7% on the previous year, with food growth of 3.3% offsetting a decline of 1.5% in non-food.
In December alone, food sales increased 1.7%, while non-food sales bounced back with 4.4% growth after a decline of 2.1% in December 2023 and above the three-month average decline of 1.1% and a 12-month average decline of 1.5%.
7.49am: Next outlook assumes slowing UK growth
Digging deeper into the Next trading statement, the FTSE 100-listed retailer said its guidance takes account of a cautious outlook for both the UK and overseas.
“We believe that UK growth is likely to slow, as employer tax increases, and their potential impact on prices and employment, begin to filter through into the economy.”
UK costs are expected to include a £67 million increase in the cost of wages, driven by a combination of general wage inflation, the recent increase in the minimum wage and changes to National Insurance, though the policy changes do not come into effect until April and are expected to have a full-year effect of £73 million.
It expects to offset around £13 million of wage costs through raising prices, which will require an increase of around 1% in selling prices, and operational savings of around £23 million from efficiencies in warehouses, distribution networks and stores.
Overseas, growth is expected to moderate from the 24% achieved so far this year to 14% in the year ahead.
In the current financial year to 5 April, overseas sales benefited from an +85% step change in marketing expenditure, funded by some price increases.
“We do not believe we can profitably increase our overseas marketing expenditure by the same percentage next year, and expect the growth to be closer to +20%.”
7.40am: Next raises outlook again
Next PLC (LSE:NXT) has, in classic style, upped its guidance again, after seeing unexpectedly strong overseas sales over the festive period.
The clothing retailer is now more confident in generating a £1 billion profit for the first time this year, as it lifted its profit before tax growth guidance to 10%, up from 9.5%.
Full-price sales in the nine weeks to 28 December rose 5.74% if the effect of the end-of-season sale is excluded.
This is stronger than previous guidance for the Christmas period of 3.5% growth.
7.22am: UK house prices unexpectedly fall
UK house prices unexpectedly fell last month, according to research from lender Halifax.
The index fell 0.2% month-on-month in December, when economists expected it to rise 0.8%, following the previous 1.3% gain.
Compared to the a year earlier, house prices were up 3.3%, following the 4.8% gain in November.
7.15am: FTSE 100 on course to reverse
The FTSE 100 is on course to tumble back down on Tuesday while the pound continues to strengthen, ahead of further updates from the retail sector.
Futures markets are predicting a 44-point fall for the London benchmark, after an up-and-down day where it eventually added almost 26 points to finish at just under 8,250.
Overnight, Wall Street had a mixed session, with the Nasdaq adding 1.2% and the S&P 500 0.55% but the Dow Jones and Russell 2000 falling slightly.
Gains were driven by chip stocks, with Nvidia rising to a new all-time high with a market cap of $3.66 trillion.
Asian markets are mostly higher this morning, outside of the Hang Seng, which is down 1.7%.
5am: What to look out for on Tuesday
Next’s report and retail sector figures on Tuesday will kick off a string of updates covering the key Christmas period.
Can Next PLC (LSE:NXT) meet ambitions for its first £1 billion-plus profit… Read more
In data releases, there’s a couple of UK retail releases, house prices and construction PMIs, while later the US ISM services index will follow. as well as the JOLTS report and the trade balance for November.
For the euro area, we’ll also get a flash CPI inflation release and the unemployment rate for November.
Announcements due:
Trading updates: Next
US earnings: RPM International Inc
AGMs: Inspired PLC
Economic announcements: Kantar Grocery Market Share (UK), BRC Retail Sales (UK), Halifax House Prices (UK), PMI Construction (UK), Balance of Trade (UK), ISM Services (US),