London midday: FTSE pares gains to trade flat; Mann comments in focus
By Michele Maatouk
Date: Tuesday 11 Feb 2025
(Sharecast News) - London stocks had pared gains by midday on Tuesday after hitting fresh record highs, as investors continued to mull Trump's latest tariff announcement, with comments from Bank of England rate-setter Catherine Mann in focus.
The FTSE 100 was flat at 8,768.23.
Kathleen Brooks, research director at XTB, said: "President Trump's tariff policy remains unclear, and thus, difficult to price in by financial markets. Trump said on Monday that tariffs on metals could go higher, and other tariffs could be announced later this week.
"At this stage, traders have little clarity about how far Trump's tariff policies will go, whether they are mostly a negotiating tactic or if they will have a more long-lasting economic impact. It is also unclear if it will spark a wave of protectionism."
On home shores, BoE policymaker Mann said that subdued domestic demand and a weak labour market are likely to keep a lid on inflationary pressures this year. Mann voted for an 'activist' 50-basis point cut in interest rates last week.
Mann, who's been a member of the Monetary Policy Committee since 2021, said the 6 February decision to lower interest rates to a two-year low of 4.5% was taken "against a backdrop of surprisingly weak economic activity in the second half of 2024 along with a modest further loosening in the labour market".
The American economist, previously known as one of the more hawkish members of the MPC, was one of the two policymakers who voted for a 50bp cut in the Bank Rate; they were outvoted by the seven remaining members who opted for a 25bp reduction.
In a statement on Tuesday outlining reasons behind her vote, Mann said that GDP is expected to remain weaker than projected last November, while the unemployment rate is forecast to be "somewhat higher".
Meanwhile, inflation is projected to rise to 3.7% in the third quarter of 2025 but won't return to the 2% target until the fourth quarter of 2027.
"I judge that the current and likely continued weak demand conditions will lead to a further loosening of the labour market which tend to follow non-linear dynamics. Thus, even if near-term inflation expectations firm on the back of the inflation hump, these factors likely will restrain pass-through to wages and prevent second-round effects from setting in," Mann said.
Data released earlier showed that UK shoppers braced stormy weather in January to take advantage of promotional deals, with sales rising strongly compared with the year before.
According to the British Retail Consortium-KPMG retail sales monitor, total retail sales increased at an annual rate of 2.6% last month, down from the 3.2% year-on-year growth seen in December but well ahead of the 1.2% gain recorded in January 2024.
Results were boosted by an earlier start of the reporting period, the BRC said, which added a few more post-Christmas shopping days into the mix.
Following a 3.3% annual slump in sales in November, the three-month average growth rate stood at just 1.1%, while the 12-month average growth rate was 0.8%.
Food sales rose 2.8% year-on-year, while non-food sales were up 2.6%. Meanwhile, in-store non-food sales were 2.6% higher while online non-food gained 2.2%.
"January sales kicked off a solid month for retail with stores delivering their strongest growth in almost two years, albeit on a weak comparable," said the BRC's chief executive, Helen Dickinson.
"Consumers headed to the shops to refresh their homes for the year ahead, taking advantage of big discounts on furniture, bedding and other home accessories. With growth across nearly all categories, only toys and baby equipment remained in decline. While the bouts of stormy weather put a temporary dampener on demand, sales growth held up well throughout the rest of the month."
However, Dickinson painted an uncertain picture looking ahead, with inflationary pressures and £7bn of new costs for retailers - comprising higher national insurance contributions, a higher National Living Wage, and a new packaging levy - likely to lead to price increases and lower investment.
"Government can mitigate this by ensuring its proposed business rates reforms do not result in any shop paying more in business rates," she said.
In equity markets, sports betting and gaming group Entain tumbled as it said chief executive Gavin Isaacs has left the company with immediate effect after just five months.
Entain, which runs brands like Coral, Ladbrokes and Foxy Bingo as well part-owning the BetMGM brand in the US, did not disclose a reason for the abrupt departure, but said that the decision was "by mutual agreement".
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: "Details are scarce, and while Entain used the moment to reassure investors that it's on track to meet 2025 profit expectations, sudden leadership shake-ups rarely go down smoothly - questions will be flying."
Wizz Air and EasyJet both flew lower after disappointing results from travel firm Tui.
Bellway tumbled as the housebuilder reported strong growth for the first half and reiterated its full-year guidance, but highlighted the "sensitivity of customer demand" amid a rise in mortgage rates over recent months.
FTSE 100 peers Persimmon, Barratt Redrow, Taylor Wimpey and Berkeley all fell.
Oil giant BP lost ground lower as it said fourth-quarter underlying replacement cost profit declined to a four-year low of $1.17bn from $2.99bn in the same period a year earlier.
Derren Nathan, head of equity research at Hargreaves Lansdown, said: "It faced seasonal weakness, ongoing challenges at its refineries and downtime due to maintenance work. This was well trailed in prior guidance, so shouldn't come as much of a surprise.
"Free cash flow was the ray of light that burst through the clouds, rising from $2.2bn to $3.7bn over the quarter, underpinning a further quarterly share buyback of $1.75bn and dispelling some speculation of a drop in shareholder payouts."
On the upside, Ashtead gained as the equipment rental firm said it was pushing ahead with plans for a US primary listing.
Market Movers
FTSE 100 (UKX) 8,768.23 0.00%
FTSE 250 (MCX) 20,923.60 -0.30%
techMARK (TASX) 4,753.81 0.00%
FTSE 100 - Risers
Intertek Group (ITRK) 5,240.00p 2.75%
Diploma (DPLM) 4,582.00p 1.91%
Games Workshop Group (GAW) 14,770.00p 1.86%
Hikma Pharmaceuticals (HIK) 2,346.00p 1.65%
Tesco (TSCO) 395.70p 1.51%
Haleon (HLN) 392.70p 1.42%
Sainsbury (J) (SBRY) 266.40p 1.37%
Compass Group (CPG) 2,785.00p 1.24%
Centrica (CNA) 141.25p 1.18%
Smiths Group (SMIN) 2,066.00p 1.18%
FTSE 100 - Fallers
Entain (ENT) 664.00p -10.54%
easyJet (EZJ) 502.60p -3.94%
Anglo American (AAL) 2,427.00p -3.02%
Glencore (GLEN) 350.15p -2.59%
Whitbread (WTB) 2,739.00p -2.56%
Persimmon (PSN) 1,233.00p -2.22%
Barratt Redrow (BTRW) 436.80p -2.22%
Legal & General Group (LGEN) 241.30p -2.15%
Antofagasta (ANTO) 1,797.50p -2.07%
Taylor Wimpey (TW.) 117.10p -1.84%
FTSE 250 - Risers
PRS Reit (The) (PRSR) 113.40p 3.85%
GCP Infrastructure Investments Ltd (GCP) 77.60p 3.47%
Foresight Group Holdings Limited NPV (FSG) 398.00p 2.31%
AO World (AO.) 102.20p 2.00%
SThree (STEM) 257.00p 1.98%
NCC Group (NCC) 146.20p 1.95%
TBC Bank Group (TBCG) 3,665.00p 1.81%
Babcock International Group (BAB) 604.00p 1.34%
4Imprint Group (FOUR) 5,760.00p 1.05%
JTC (JTC) 960.00p 0.95%
FTSE 250 - Fallers
Wizz Air Holdings (WIZZ) 1,450.00p -6.69%
Bellway (BWY) 2,430.00p -5.23%
Ferrexpo (FXPO) 90.30p -3.11%
Aston Martin Lagonda Global Holdings (AML) 109.50p -3.10%
Raspberry PI Holdings (RPI) 717.75p -2.48%
Ocado Group (OCDO) 324.90p -2.26%
Vistry Group (VTY) 592.50p -2.15%
Bytes Technology Group (BYIT) 463.60p -2.11%
Mobico Group (MCG) 70.30p -2.09%
Chrysalis Investments Limited NPV (CHRY) 103.40p -2.08%
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