London close: Stocks finish January on a positive note
By Josh White
Date: Friday 31 Jan 2025
(Sharecast News) - London's financial markets concluded the week on a positive note, with Smiths Group in the green on breakup plans, as investors looked to the latest PCE inflation reading across the pond.
The FTSE 100 index rose 0.31% to close at 8,673.96 points, and the FTSE 250 advanced 0.7% to 20,950.48 points.
In currency markets, sterling was last up 0.19% on the dollar to trade at $1.2442, as it rose 0.15% against the euro, changing hands at €1.1968.
"US stock indices seem to have shrugged off Monday's sell-off and look to be on track to overcome their January peaks, having closed their price gaps with last Friday's lows," said IG senior technical analyst Axel Rudolph.
"US PCE inflation rising by 0.3% in December as expected relieved markets with the US 10-year bond yield falling to a six-week low, boosting stocks.
"Apple shares soaring after their earnings beat helped the Nasdaq 100 gain close to 1.5% on the last day of the month."
Rudolph noted that closer to home, Germany's inflation rate unexpectedly fell, pushing the DAX 40 index into the red after three straight days of hitting record highs.
"The dollar continues to appreciate as markets expect a 25% tariff to be imposed on Canadian and Mexican imports into the US as of 1 February.
"The oil price has little changed, though, as president Trump hinted that the commodity may be excluded.
"The gold price is seeing small gains to a new record high while the silver price slips ahead of next week's US payrolls and an expected BoE rate cut."
UK house price growth slows, US consumer spending accelerates
In economic news, UK house price growth slowed at the start of the year, according to data from lender Nationwide.
Prices in January edged up just 0.1% on the month, down from December's 0.7% gain and missing expectations for a 0.3% rise.
On an annual basis, growth eased to 4.1% from 4.7% in December, with the average property price slipping to £268,213 from £269,426.
"The housing market continues to show resilience despite ongoing affordability pressures. As we highlighted in our recent affordability report, while there has been a modest improvement over the last year, affordability remains stretched by historic standards," said Nationwide chief economist Robert Gardner.
"A prospective buyer earning the average UK income and buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 36% of their take-home pay - well above the long-run average of 30%.
"Furthermore, house prices remain high relative to average earnings, with the first-time buyer house price to earnings ratio standing at 5.0 at the end of 2024, still well above the long run average of 3.9."
On the continent, Germany's inflation rate declined more than anticipated, with preliminary estimates showing a drop to 2.3% in January.
Economists had expected the figure to remain unchanged from December.
The Federal Statistics Office reported that consumer prices fell 0.2% month-on-month, while core inflation, which excludes food and energy, stood at 2.9%. Final figures will be published in mid-February.
Meanwhile, German retail sales recorded their steepest monthly decline in over two years.
Destatis data showed a 1.6% drop in December, following a slight 0.1% contraction in November, defying forecasts for a modest rebound.
Food sales fell by 1.7% from the prior month, while non-food sales dipped 0.7%.
Compared with a year earlier, retail sales rose 1.8%, though the pace of growth weakened from November's 2.9% increase.
For 2024 as a whole, retail sales rose 1.1% in real terms, with stronger consumer activity in the second half offsetting weakness earlier in the year.
Across the Atlantic, US consumer spending accelerated in December while inflation eased as expected.
The Commerce Department reported that personal consumption expenditures rose 0.7% for the month, ahead of the anticipated 0.5% gain, following a 0.6% increase in November.
Personal income growth held steady at 0.4%, but the savings rate declined from 4.1% to 3.8% as households spent more.
The Federal Reserve's preferred inflation gauge, the personal consumption expenditures price index, showed annual inflation slowing from 2.8% to 2.6%, with core inflation holding steady at 2.8%.
Paul Ashworth at Capital Economics was somewhat upbeat on the outlook for prices, noting how the quarterly annualised pace of core PCE inflation slipped back to 2.2% in December and to 2.3% in six-month annualised terms.
"A lot now depends on whether we see any repeat of the surge in prices at the start of last year," he said.
"If we are right in our belief that there is no residual seasonality at work, then the annual core PCE inflation rate should fall markedly over the first few months of this year.
"Beyond that, however, the growing risk that Trump will impose tariffs a little earlier than we are assuming presents an upside risk to inflation."
Smiths rises on breakup plans, Next in the green after broker upgrade
On London's equity markets, Smiths Group surged 10.78% after announcing plans to sell its interconnect unit and either demerge or offload its detection business.
The engineering company also extended its share buyback programme to £500m, and reassured investors that the recent cyberattack had only affected internal enterprise systems, with most critical operations now restored.
Elsewhere, high-street fashion stalwart Next gained 1.8% after UBS upgraded the retailer to 'buy' from 'neutral', citing an "inflection point" in both growth and valuation.
The bank also raised its target price from 10,500p to 11,700p.
Moonpig Group advanced 3.66% as Berenberg reiterated its 'buy' rating on the online greeting cards and gifts retailer.
Specialist lenders Paragon Banking Group and OSB Group rose 4.9% and 3.62%, respectively, after a positive sector note from Panmure Gordon boosted sentiment.
On the downside, J Sainsbury dropped 1.47% following a downgrade to 'hold' by HSBC.
Admiral Group edged 0.15% lower after Peel Hunt cut its rating to 'reduce'.
Reporting by Josh White for Sharecast.com.
Market Movers
FTSE 100 (UKX) 8,673.96 0.31%
FTSE 250 (MCX) 20,950.48 0.70%
techMARK (TASX) 4,775.81 0.65%
FTSE 100 - Risers
Smiths Group (SMIN) 2,066.00p 10.78%
Land Securities Group (LAND) 585.00p 2.72%
Mondi (MNDI) 1,262.50p 2.39%
St James's Place (STJ) 1,054.00p 2.33%
JD Sports Fashion (JD.) 89.12p 2.23%
Centrica (CNA) 142.50p 2.19%
Smurfit Westrock (DI) (SWR) 4,305.00p 1.92%
Next (NXT) 9,952.00p 1.80%
Intermediate Capital Group (ICG) 2,370.00p 1.72%
Rolls-Royce Holdings (RR.) 606.00p 1.68%
FTSE 100 - Fallers
Fresnillo (FRES) 698.00p -2.04%
Prudential (PRU) 677.40p -1.66%
Associated British Foods (ABF) 1,902.00p -1.45%
Antofagasta (ANTO) 1,720.00p -1.43%
BT Group (BT.A) 141.60p -1.43%
Sainsbury (J) (SBRY) 254.80p -1.32%
Marks & Spencer Group (MKS) 335.80p -1.29%
Whitbread (WTB) 2,813.00p -1.26%
Spirax Group (SPX) 8,095.00p -1.16%
Croda International (CRDA) 3,344.00p -1.15%
FTSE 250 - Risers
Bridgepoint Group (Reg S) (BPT) 381.20p 6.07%
Wood Group (John) (WG.) 72.30p 5.93%
Paragon Banking Group (PAG) 803.50p 4.90%
OSB Group (OSB) 421.40p 4.41%
Moonpig Group (MOON) 226.50p 3.66%
Softcat (SCT) 1,616.00p 3.59%
SSP Group (SSPG) 183.00p 3.33%
Polar Capital Technology Trust (PCT) 375.00p 3.02%
Harworth Group (HWG) 175.00p 2.94%
Just Group (JUST) 165.20p 2.86%
FTSE 250 - Fallers
Auction Technology Group (ATG) 618.00p -2.98%
Aston Martin Lagonda Global Holdings (AML) 105.20p -2.95%
RS Group (RS1) 650.50p -2.55%
Indivior (INDV) 957.50p -2.25%
Trainline (TRN) 360.00p -2.17%
Hochschild Mining (HOC) 176.00p -2.11%
Syncona Limited NPV (SYNC) 95.10p -1.86%
Energean (ENOG) 926.50p -1.65%
Pantheon International (PIN) 321.00p -1.53%
Bluefield Solar Income Fund Limited (BSIF) 82.20p -1.44%
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