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Retail and banks push FTSE 100 to an eight-month high

A shopping mall

In what has been a positive start to the year, European markets have seen a bit of a pause today in the wake of last night’s release of the latest US Federal Reserve minutes, today’s better-than-expected US jobs data, and ahead of tomorrow’s US December jobs report.


Having slowed the pace of its rate rises to 50bps last month the US central bank appears to be in no mood to call an imminent halt to its policy of raising rates. That said, there are signs on the margins that we are seeing a rise in concern about the pace of current rate policy, and that a slower pace is required even as the end point for calling a halt gets pushed further out.

Some of the tone of the more hawkish Fed members like Bullard of the St. Louis Fed, who suggested a Fed funds rate as high as 7% might be required in comments made last year, jars against what the market is seeing on the inflation numbers, which have been trending down since June last year. Nonetheless, given what we are seeing currently in the US jobs market there appears little incentive for the Fed to slow its current policy which means we could well see at least another 100bps of rate hikes by the end of Q1.

The FTSE 100 has shrugged off today’s softer vibe in Europe, with another positive session as it benefits from resilience in consumer discretionary and banks, as a host of different retailers report some resilient quarterly updates in the lead-up to Christmas, while a weaker pound is also lending support.  

Next shares have surged towards the top of the FTSE 100 after the retailer said that full price sales grew by 4.8% in the 9 weeks to the end of December, as well as increasing their full year profit before tax guidance by £20m to £860m. Somewhat surprisingly, given the transport-related disruption seen over the period, retail full price sales rose by 12.5%, while online contributed a mere 0.2% gain. For the rest of the financial year Next says it expects to see full-year sales to decline by -1.5%, and profits before tax to fall by -7.6% to £795m. Cost price inflation is expected to peak at 8% in the summer, before slipping back to 6% in H2.  

Next has been joined by Standard Chartered bank, whose shares jumped sharply to their highest levels since early 2018 on reports that First Abu Dhabi National Bank is said to be considering a bid for the Asia-focused bank. These gains proved to be somewhat short-lived after it was later reported that talks were no longer taking place. 

B&M European Retail also reported a strong pre-Christmas quarter, with Q3 revenues rising 12.3%, prompting an upgrade to full year group adjusted EBITDA to between £560m to £580m. The retailer also announced a special dividend of 20p per share to be paid on 3 February.

Greggs the baker also reported a Q4 like-for-like sales increase of 18.2%, with total sales for the year up 23% to £1.51bn, although like-for-like sales were slightly lower, rising by 17.8%. The sales of shop baked mince pies and festive bakes helped to drive Q4 sales, with the retailer saying that despite higher cost inflation, full year results are expected to come in line with expectations.  

Ryanair’s announcement that it expects full-year profits after tax to come in up to €350 higher than previous forecasts late last night, after a strong performance during December, has seen the likes of easyJet and Wizz Air shares also rise sharply today. For December Ryanair said it carried 11.5m passengers, a rise of 3% on pre-Covid levels in 2019. Today’s profit upgrade has seen the airline revise its annual profits outlook to between €1.325bn and €1.425bn, although the guidance was caveated against a backdrop of rising Covid-19 cases and an escalation in Ukraine.  


US markets have slipped back on the open after the latest ADP employment numbers, and weekly jobless claims came in better than expected. In December ADP reported a gain of 235,000 jobs, with average wages coming in at 7.3%, while weekly jobless claims fell sharply from 225,000 to 204,00.

The resilience of these numbers has lent support to the idea that we will probably see the Fed hike rates by another 50bps at the start of February pushing the funds rate up to 5%. 

Despite today’s resilience in the jobs data, we’ve seen further announcements of job losses in the tech sector, although they remain small when compared to their hiring seen since the start of the pandemic. In a sign that the US economy might be weaker than it appears, Amazon has taken the decision to decrease the number of roles it is looking to shed from 10,000, to 18,000, with most of the losses coming in the areas of retail and human resources. Having seen the workforce grow by over 1m people since 2019 this appears to be a natural consequence of readjusting to what is ultimately a global economic slowdown and much higher margins.

Salesforce has also announced it is looking to cut costs in a regulatory filing issued yesterday. The company said it will cut 10% of its workforce having hired too many people during the pandemic, in a move that is likely to cost between $1.4bn and $2.1bn.  

The owner of Boots UK, Walgreens shares have slumped despite Q1 sales beating forecasts, due to an increase in demand for cough and flu medicine. Q1 revenues came in at $33.38bn, while profits came in at $1.16c a share. Despite this Walgreens posted an unadjusted loss of $3.7bn due to a provision of $5.2bn of in relation to litigation the company was required to pay for opioid related litigation after several US states alleged the retailer mishandled prescriptions by overprescribing.

Bed Bath and Beyond shares have plunged after the company revealed that it was considering Chapter 11 bankruptcy after saying it expects to see a Q3 loss of $385.8m when it reports next week on revenues of $1.26bn, well below forecasts of $1. 4bn.The company has also asked for added time to complete its quarter end close procedures.

The air has continued to come out of the Tesla share price despite the company reporting a new record for quarterly deliveries of 405,278 during Q4. This was below expectations of 431,000, with the company still reporting an increase of 40% during 2022, falling slightly short of Musk’s 50% target. The shortfall came about despite Tesla cutting prices during the quarter as the company tries to fend off increasing competition from the more established automakers.


It had all been set up to be a fairly quiet session for currencies until we got the latest jobs data out of the US early this afternoon, which while positive for the US economy and the US dollar, points to a US central bank that will probably need to hike rates much further in the coming months, beyond what markets are currently pricing.

Not only did the ADP employment report come in much better than expected for December at 235,000, but weekly jobless claims fell to their lowest levels since late September at 204,000, pushing yields as well as the greenback sharply higher.

In further signs that inflationary pressure is easing across the EU, November PPI saw a further decline of -0.9%, with October PPI also revised lower on a monthly basis by 3%. This has seen annualised PPI fall to 27.1%, well below the August peaks of 43.4%. Nonetheless there still remains some way to go before prices come down to a much more manageable level.

The pound appears to be feeling the effects more than most simply on the basis that markets think that the Bank of England won’t be in any position to hike rates by anywhere near as much as the Federal Reserve in the coming months.


Crude oil prices have managed to see a modest rebound today after seeing their worst start to a year since the 1990’s. Concerns over demand from the likes of China as well as a slowdown in the US has offset the supply worries that dominated sentiment throughout most of 2022. Nonetheless the recent weakness is still welcome news for hard pressed consumers along with unseasonably warm weather which has also seen natural gas prices slide sharply in the opening days of 2023, back to levels last seen in the summer of last year.

Gold prices have got off to a strong start to 2023, hitting six-month highs yesterday, breaking above $1,840 and retracing 50% of the decline from last year's peak above $2,070 and the lows in September. The next target sits just below $1,900, and the May 2022 peaks. Nonetheless, todays rebound in yields and the US dollar has pulled prices off their highs


Another day of gains for the Spanish equity index saw the IBEX being the stand-out for the asset class, with the financial sector lending a degree of support here. With the underlying having advanced close to 4% since the start of the year, one day vol on the index sat at 21.45% against 17.32% for the month.

The NASDAQ also saw a rather turbulent session with last night’s more hawkish than expected Federal Reserve meeting minutes adding to the price action here. Although the index is managing to trend slightly higher right now as outright recession fears ebb away, the update from the Fed did initiate something of a sell-off. One day vol printed 29.8% against 26.6% for the month.

That reopening of the Chinese economy along with a degree of US Dollar weakness provided support for precious metals, with palladium proving to be something of a stand-out on Wednesday. The underlying has recovered most of its losses from earlier in the week, with daily volatility coming in at 57.37% against 48.98% for the month.

And rounding off with fiat currencies, it’s the Aussie Dollar that has seen the most notable levels of activity with gains of more than 2% being recorded against the greenback at one point on Wednesday. Media reports that China would drop its ban on imports of coal from Australia were seen as being a key driver behind the move. One day vol on the pair printed 16.68% against 13.07% for the month.

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