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FTSE 100 closes lower on renewed recession fears

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  • FTSE 100 finishes 24 points lower
  • Dow Jones rallies to be almost flat after US PMI data
  • UK composite PMI hit 24-month low but expectations improve

4.40pm: FTSE in the red

At the close of trading Tuesday, the FTSE 100 had fallen 24 points to 7,757 for a 0.4% loss on the day.

Markets across Europe experienced a bit of a pullback after some mixed flash PMI numbers painted a patchy outlook for certain parts of the economy in the UK and Europe, CMC’s Michael Hewson noted.

“In Germany services pushed into expansion territory, while France disappointed. Manufacturing on the other hand was weak in Germany, while it rebounded in France, whereas in the UK manufacturing showed a modest improvement, while services disappointed,” Hewson said.

3.55pm: Premium bonds boosted

National Savings and Investments (NS&I) has said it will increase the Premium Bonds prize fund rate to 3.15% from the next prize draw in February.

The latest increase takes the fund rate to a 14-year high and comes after NS&I added £80 million to its prize fund last month.

Notably, there are three more prizes of £100,000 and six more prizes at £50,000. Meanwhile, there will be over 121,000 more £50 and £100 prizes each to be won. 

Despite this rate rise, the odds of winning some sort of prize remain unchanged at 24,000 to one. This is partly due to fewer £25 winnings on offer, with NS&I set to cull these prizes by nearly 242,000 next month.

3.15pm: US flash PMI touch better than feared

Private sector firms in the US registered a further decline in output at the start of 2023, according to the latest ‘flash’ purchasing managers index (PMI) data from S&P Global.

The fall in business activity softened to the slowest in three months, however, as manufacturers and service providers signalled moderations in their respective downturns.

The headline flash US PMI composite output index registered 46.6 in January, up from 45.0 at the end of 2022. A reading below 50 represents a contraction in activity but while the contraction was solid overall, it was the slowest since last October.

Goods producers and service providers recorded similar rates of decline, with service sector firms indicating a notable slowdown in the pace of decrease since December. Nonetheless, US companies continued to highlight subdued customer demand and the impact of high inflation on client spending.

In reaction to the slightly better-than-expected data, the US blue-chip index eased off opening lows, with the Dow Jones Industrial Average off 0.3% at 33,515. But the S&P 500 stayed 0.4% lower at 4,002, and the tech-heavy Nasdaq Composite also shed 0.4% at 11,327.

In London, at 3.15pm, the FTSE 100 index was down 38 points, or 0.5% at 7,746.

2.45pm: US stocks retreat

The FTSE 100 index remained lower midafternoon as Wall Street fell at the open on Tuesday following back-to-back daily gains, as investors continued to weigh a slew of corporate earnings, with Microsoft due to report after the US close.

Just after the New York market open, the Dow Jones Industrial Average was down 166 points to 33,463, while the S&P 500 eased 27 points at 3,993, and the tech-heavy Nasdaq Composite lost 45 points to 11,320. The Russell 2000 small-cap index, though, climbed more than 1.2%.

Notable stock movers included Verizon Communications, which jumped more than 7% despite posting mixed results for its fourth quarter of 2022.

“We do not see much scope for markets to rally in the near term, especially given our outlook for continued pressure on corporate profit growth,” UBS Global Wealth Management chief investment officer Mark Haefele said in a note to clients.

In London, at 2.45pm, the FTSE 100 index was down 34 points, or 0.4% at 7,750.

2.35pm: Power down

National Grid has said its Demand Flexibility Service will be offered for a second time to eligible households between 4.30pm and 6.00pm GMT on Tuesday.

Those who have signed up get discounts on their bills if they do things like delay using their oven. The scheme ran for the first time on Monday from 5.00pm to 6.00pm GMT.

According to National Grid’s electricity system operator, more than a million households and businesses in England, Scotland and Wales have signed up to take part, the BBC News website reported.

The scheme – which is only available to homes with smart meters – was introduced last year and is scheduled to run until March this year.

2.20pm: Running on fumes

“Oil prices are marginally higher again”, noted Craig Erlam, senior market analyst, UK & EMEA, OANDA, “continuing the good run they’ve been on since early in the year, but momentum is starting the fade. 

“The China reopening trade has boosted oil prices considerably but we perhaps need more data to justify a continuation of that.”

Erlam added: “Reports suggest that OPEC+ delegates expect the panel to recommend no changes to output when they meet next week which indicates they believe the market is fairly balanced at the moment. Of course, there’s considerable uncertainty in the global outlook and the China transition so that remains subject to change.”

1.32pm: London’s movers

A quick look at some of today’s fallers and risers in London.

Fallers

Oxford BioDynamics– down 2% to 14.95p

Operating losses for the biotechnology company fell to £8.6mln in the year-ended 30 September compared to £7.5mln the year earlier. It blamed this on increased staff, general and administration costs, as well as depreciation.

Velocity Composites– down 7% to 59.5p

The supplier of material kits to the…



Read More: FTSE 100 closes lower on renewed recession fears

2023-01-24 16:50:51

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