London close: Stocks down as PMI rises, consumer sentiment slips
By Josh White
Date: Friday 24 Jan 2025
(Sharecast News) - London stocks ended lower on Friday as investor sentiment weakened following a decline in consumer confidence and another drop in private sector employment.
The FTSE 100 index fell 0.73% to close at 8,502.35 points, while the FTSE 250 was nearly flat, slipping just 0.01% to 20,518.05 points.
In currency markets, sterling rose 1.14% on the dollar to trade at $1.2494, as it gained 0.19% against the euro, changing hands at €1.1883.
"Asian stock indices rallied following President Trump's comments that he wishes not to impose tariffs on China if a deal can be struck between the country's leaders," said IG senior technical analyst Axel Rudolph.
"European and US indices began the day on a positive note with the FTSE 100, DAX 40 and S&P 500 hitting marginally new record highs, before end of week profit taking kicked in.
"US output growth slowing provoked some selling which existing home sales rising to a 10-month high couldn't stem."
Rudolph noted that on home shores, the FTSE 100 sold off amid a strengthening sterling, as private sector activity expanded for a second straight year.
"President Trump's wish to see lower interest rates led to a drop and one-month low in the US dollar.
"This benefitted the gold price, which rallied to within a whisker of its all-time high.
"Meanwhile the oil price extends its rout and sees its first weekly drop in a month."
UK business activity grows modestly, consumer confidence weakens
In economic news, UK business activity showed modest growth in January, with the S&P Global flash composite purchasing managers' index (PMI) rising to 50.9 from 50.4 in December, signalling a continued but fragile expansion.
The services sector edged up to 51.2, while manufacturing output remained in contraction at 49.3 despite an improvement from the previous month.
However, private sector employment declined for the fourth consecutive month, as firms faced mounting cost pressures.
Rising payroll expenses, driven by inflation and anticipated increases in National Insurance contributions, contributed to hiring freezes and reluctance to replace departing staff.
"The loss of confidence, combined with widespread concerns over higher staff costs associated with the Budget, pushed employment sharply lower again," said Chris Williamson, chief business economist at S&P Global Market Intelligence.
"Barring the job cutting seen during the pandemic, the rate of job losses signalled by the PMI over the past two months has been the highest since the global financial crisis in 2009."
Meanwhile, consumer confidence in the UK weakened significantly at the start of the year.
The GfK consumer confidence index fell to -22 in January, down five points from December and lower than the same period last year.
Concerns over personal finances and the broader economic outlook weighed on sentiment, with spending intentions declining and savings preferences rising.
The major purchase index dropped to -20, while the savings index climbed to 30, reflecting a cautious approach among households.
"New Year is traditionally a time for change, but looking at these figures, consumers don't think things are changing for the better," said Neil Bellamy, consumer insights director at NIQ GfK.
"These figures underline that consumers are losing confidence in the UK's economic prospects."
He added that the sharp increase in saving intentions was "unwelcome, because it's another sign that people see dark days ahead and are therefore thinking of putting money aside for safety".
On the continent, eurozone business activity returned to growth for the first time in five months.
The flash composite PMI rose to 50.2 in January from 49.6 in December, exceeding market expectations.
Growth in the services sector, though slightly slower, helped offset the ongoing weakness in manufacturing, which saw a modest improvement.
The manufacturing PMI increased to 46.1, up from 45.1, though it remains in contraction territory.
Across the Atlantic, US existing home sales ended 2024 on a stronger note, rising 2.2% in December to an annualised rate of 4.24 million, surpassing forecasts.
That marked the fastest pace of monthly growth since February, though total sales for the year remained at their lowest level in three decades.
On an annual basis, sales increased by 9.3%, the sharpest rise since mid-2021, driven by improved affordability and a steady labor market.
Earlier in the global day, Japan's central bank took a decisive step in tightening monetary policy, raising interest rates to their highest level in 17 years.
The Bank of Japan lifted its short-term policy rate to around 0.5% following a sharp rise in inflation, which accelerated to 3.6% in December.
Core inflation, which excludes volatile food prices, reached 3%, marking the fastest pace in 16 months.
Policymakers signalled that further adjustments could follow as inflationary pressures persist.
JD Sports and Burberry rise, energy firms sink on Trump oil price comments
On London's equity markets, rising base metal prices provided a boost to miners, with Antofagasta gaining 1.42%, Glencore rising 0.43%, and Rio Tinto adding 1.16%.
"Copper, aluminium, lead, zinc and tin all saw higher prices amid a weaker dollar," said Russ Mould, investment director at AJ Bell.
"Metals are typically priced in dollars and a decline in the US currency makes the commodities cheaper for buyers holding other currencies.
"Also putting a shine on metals prices was speculation that Donald Trump might not take the nuclear option regarding tariffs on China, potentially imposing a lower rate than has previously been suggested."
Elsewhere, JD Sports Fashion rebounded 3.18% after suffering losses in the previous session.
The stock had declined following a downgrade by Citi, which revised its stance to 'neutral' from 'buy' and lowered its price target due to a weaker growth outlook.
Citi cited disappointing peak trading results and a full-year guidance downgrade, leading it to cut its 2025 financial year forecasts for like-for-like and organic growth.
Burberry Group surged 10.18% after reporting a slower rate of sales decline in its third quarter.
The luxury fashion house posted retail revenues of £659 million for the three months to 28 December, representing a 7% year-on-year decline compared to a 22% drop in the first half.
Burberry attributed the improvement to its 'Burberry Forward' brand reset and positive customer responses during the festive period.
The company said it now expected its second-half performance to offset first-half losses, despite ongoing macroeconomic uncertainties.
On the downside, Rolls-Royce Holdings fell 0.85%, despite securing a £9bn nuclear submarine contract from the UK Ministry of Defence.
Energy stocks were under pressure after US president Donald Trump called on Saudi Arabia and OPEC to lower oil prices.
Oil major BP slipped 0.81%, while FTSE 100 peer Shell declined 2.09%.
Mid-cap energy firms also took a hit on the FTSE 250, with Harbour Energy dropping 7.73%, Energean down 4.98%, and Diversified Energy Company losing 4.1%.
Reporting by Josh White for Sharecast.com.
Market Movers
FTSE 100 (UKX) 8,502.35 -0.73%
FTSE 250 (MCX) 20,518.05 -0.01%
techMARK (TASX) 4,712.31 -0.31%
FTSE 100 - Risers
Diageo (DGE) 2,503.50p 4.25%
JD Sports Fashion (JD.) 84.00p 2.82%
Mondi (MNDI) 1,229.00p 2.03%
Smith (DS) (SMDS) 615.00p 1.99%
WPP (WPP) 739.80p 1.79%
Antofagasta (ANTO) 1,757.50p 1.42%
Intertek Group (ITRK) 5,045.00p 1.35%
Coca-Cola HBC AG (CDI) (CCH) 2,796.00p 1.23%
Fresnillo (FRES) 685.50p 1.03%
Weir Group (WEIR) 2,416.00p 0.92%
FTSE 100 - Fallers
Marks & Spencer Group (MKS) 321.50p -3.40%
Shell (SHEL) 2,620.00p -2.35%
Centrica (CNA) 134.70p -2.11%
Next (NXT) 9,340.00p -2.03%
Hiscox Limited (DI) (HSX) 1,066.00p -2.02%
NATWEST GROUP (NWG) 421.40p -1.91%
Severn Trent (SVT) 2,437.00p -1.89%
Barclays (BARC) 293.05p -1.88%
Flutter Entertainment (DI) (FLTR) 21,430.00p -1.83%
Tesco (TSCO) 360.00p -1.80%
FTSE 250 - Risers
Burberry Group (BRBY) 1,176.00p 9.86%
Kainos Group (KNOS) 805.00p 5.09%
Babcock International Group (BAB) 519.50p 3.69%
Pets at Home Group (PETS) 211.00p 3.33%
Mitie Group (MTO) 118.40p 2.78%
Pagegroup (PAGE) 320.40p 2.76%
Bloomsbury Publishing (BMY) 672.00p 2.75%
Bakkavor Group (BAKK) 137.00p 2.62%
TBC Bank Group (TBCG) 3,205.00p 2.40%
Trainline (TRN) 369.60p 2.33%
FTSE 250 - Fallers
Harbour Energy (HBR) 254.10p -7.73%
Energean (ENOG) 963.50p -5.07%
Diversified Energy Company (DEC) 1,273.00p -3.41%
Ocado Group (OCDO) 301.70p -3.19%
AJ Bell (AJB) 457.50p -3.17%
Hammerson (HMSO) 274.80p -2.90%
Ithaca Energy (ITH) 123.80p -2.67%
Currys (CURY) 88.20p -2.54%
Balfour Beatty (BBY) 441.60p -2.43%
Investec (INVP) 527.50p -2.41%
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