Our head of investment rounds up the morning's big news.
The FTSE 100 has hit a fresh record high, surpassing its all-time peak from Friday, with BP (LSE:BP.) and Glencore (LSE:GLEN) leading the charge, while Smurfit Kappa Group (LSE:SKG) is dragging on the index.
Following a wobbly start to the week in which global equities were hit by concerns about a more hawkish path from the Federal Reserve 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 ending the session up by 1.9%, has helped drive a positive start to the European session.
Over a one-year period, Pearson (LSE:PSON) is the best performing stock on the FTSE 100 followed by BAE Systems (LSE:BA.) and Antofagasta (LSE:ANTO). Over the past one month, JD Sports Fashion (LSE:JD.) is the top performer with International Consolidated Airlines Group SA (LSE:IAG) and 3i Ord (LSE:III) 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.
Elsewhere, in Europe earnings are in focus from Volkswagen AG (XETRA:VOW) and Societe Generale SA (EURONEXT:GLE), with both stocks trading modestly lower defying broader strength for the DAX and the CAC.
UK REC LABOUR MARKET DATA
The latest KPMG and REC UK jobs report saw a further fall in permanent staff hires while temporary hires rose at the fastest pace since last September. Overall vacancy growth, however, picked up for the first time in nine months and labour shortage pressures eased in January. Pay pressures remain high, driven by the weak labour supply and the rising cost of living.
Uncertainty around the economic outlook is weighing on permanent staff hiring as businesses remain cautious about their expansion plans. This is helping to boost demand for temporary workers who are stepping in to fill the gaps. Wage inflation continues to be a key feature of the current employment market, given that labour shortages mean workers have more bargaining power in negotiations. However, pay in permanent roles grew at the slowest pace in almost two years.
The Bank of England is paying close attention to the state of wage inflation and the tightness of the labour market as an indication of the extent to which inflation pressures will start to ease in the UK economy this year. A cooling labour market with slowing pay growth could spur the central bank to shift towards a less hawkish monetary policy stance.
PZ Cussons (LSE:PZC) reported a 7.8% increase in half-year profit in the six months to 3rd December of £34.5 million versus £32 million year-on-year. The firm behind Carex and St Tropez said full-year 2023 adjusted profit before tax is expected to meet current market expectations. It declared a half-year interim dividend of 2.67p, unchanged versus the first half of the year. Adjusted net debt rose sharply from £9.8 million in May 2022 to £35.7 million in December due to cash outflows related to the payment of its final dividend and loans.
Traders are selling the shares following its latest earnings release which has failed to inspire investors. PZ Cussons has been struggling with cost inflation, a weakening consumer and higher net debt. Although it has been raising prices, customers are increasingly price sensitive given the cost-of-living squeeze on household budgets.
However, it said operating margins picked up in the second half thanks to improvements in Europe and Americas. Shares have been regaining ground since the October trough, but the stock is giving back some of those gains today.
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