London close: Stocks slip as US jobless claims rise
By Josh White
Date: Thursday 20 Feb 2025
(Sharecast News) - London equities ended lower on Thursday as investors reacted to a higher-than-expected rise in US jobless claims and a decline in UK consumer confidence.
The FTSE 100 index slipped 0.57% to 8,662.97 points, while the FTSE 250 fell 0.46% to 20,612.77 points.
In currency markets, sterling was last up 0.45% on the dollar to trade at $1.2643, while it edged down 0.05% against the euro, changing hands at €1.2068.
"The recent decline in yields has undergone a bit of a reverse this week after hotter than expected wages and inflation data from the UK and comments from ECB governing council member Sabine Lautenschlager that the central bank may look at a pause in its rate cutting cycle," commented independent market analyst Michael Hewson.
"This rebound in yields appears to be weighing on European markets which have slipped back from last week's record highs, and where we've had to absorb the possibility that mining giant Glencore is considering abandoning its primary UK listing, and exploring a listing in New York."
Hewson noted that Glencore would not be the first miner to do so after BHP abandoned its primary UK listing three years ago, with chatter suggesting that Rio Tinto could look to follow suit after calls from activist shareholders to move its primary listing to Sydney.
"We've also seen big moves in the defence sector this week and while the likes of BAE Systems and Rolls-Royce have been getting all the headlines.
"We also have the likes of Babcock, QinetiQ and Chemring which could see the benefits of a pickup in European and UK defence spending in the weeks and months ahead."
US jobless claims rise more than expected, UK consumer confidence deteriorates
In economic news, US jobless claims increased last week, with initial filings rising by 5,000 to 219,000, slightly above expectations.
Continuing claims remained in line with forecasts at 1.869 million, while the four-week moving average ticked lower to 215,250.
The insured unemployment rate held steady at 1.2%, reflecting stability in the broader American labour market despite signs of softening.
Manufacturing activity in the US mid-Atlantic region meanwhile slowed in February, reversing a sharp increase in January.
The Philadelphia Federal Reserve's index fell from 44.3 to 18.1, missing expectations.
New orders declined, while price pressures intensified, with the prices-paid index rising to 40.5.
Employment growth also softened.
On home shores, UK consumer confidence deteriorated further, according to a British Retail Consortium survey.
Half of respondents expect the economy to weaken in the next three months, up from 48% in January.
Views on personal finances also declined, with a net balance of -11, down from -4.
Despite slightly improved retail spending expectations, concerns persisted over rising costs, as retailers anticipated £7bn in additional expenses from higher taxes and levies.
"People's expectations of the economy reached a new low, having fallen almost 40 points since July 2024," said the BRC's chief executive Helen Dickinson.
"With many businesses warning of the impact that April's employer NIC's increase will have on hiring, and the rising energy price cap pushing up the cost of domestic bills, it is little surprise that many households are worried.
"With many businesses warning of the impact that April's employer NIC's increase will have on hiring, and the rising energy price cap pushing up the cost of domestic bills, it is little surprise that many households are worried."
Manufacturing output in the UK meanwhile continued to contract in February, but sentiment improved.
The Confederation of British Industry's survey showed a net balance of -12 for output volumes, little changed from January's -13.
However, manufacturers now expected growth in the coming months, with a balance of +8% anticipating higher output.
Order books remained weak but showed signs of stabilising.
"The survey paints a downbeat picture of the manufacturing sector over the last three months, which can be attributed in part to low domestic business confidence following the Autumn Budget combined with a subdued international environment," said Ben Jones, lead economist at the CBI.
"Manufacturers expect to raise output in the quarter ahead.
"But with firms having rapidly run down stocks of finished goods, it's possible that the need to re-build inventories partly explains this rebound."
On the continent, eurozone construction output was flat in December following a 0.6% rise in November.
EU-wide construction rose 0.4%, but annual declines were recorded for both regions.
Civil engineering activity in the eurozone remained unchanged, while building construction slipped 0.1%.
The largest monthly gains were seen in Poland, Czechia, and Portugal, while Bulgaria, the Netherlands, and Italy posted declines.
Elsewhere, Germany's producer prices rose 0.5% in January compared to a year earlier, driven by higher costs for consumer and capital goods.
However, prices edged down 0.1% from December, as falling energy prices offset broader increases.
In China, the central bank kept key interest rates unchanged, with the one-year loan prime rate at 3.1% and the five-year rate at 3.6%.
The decision from the People's Bank of China was in line with expectations.
Centrica jumps on better-than-expected results, ex-dividend stocks prove a drag
On London's equity markets, Centrica jumped 6.66% after the British Gas owner lifted its dividend and announced a £500m share buyback following full-year earnings that exceeded expectations.
Lloyds Banking Group rose 4.87% despite reporting a 20.4% decline in annual profit, missing estimates.
The bank set aside an additional £700 million for potential claims related to motor finance commission deals.
"The more positive response to Lloyds' full-year numbers compared with its immediate peer group is less a reflection of the results themselves and more related to the fact it had lagged behind its rivals heading into this earnings season," said AJ Bell investment director Russ Mould.
"A significant increase in provisions associated with motor finance mis-selling is unlikely to have caught investors on the hop.
"However, the fact the government's attempt to intervene on lenders' behalf was rejected by the Supreme Court is obviously unhelpful and the increased provision meant profit came in below forecasts."
Anglo American climbed 3.97% even after posting a $3.1bn full-year loss due to a significant impairment at its De Beers diamond business.
Investors looked to instead focus on the company's restructuring efforts, prioritising copper and iron ore.
Ithaca Energy surged 9.3% after reporting a full-year performance at the top end of guidance and strong fourth-quarter production.
Wood Group added 4.33% after securing a $120m contract extension from Shell for engineering and construction services.
However, the firm also announced the immediate resignation of its chief financial officer due to inaccuracies in his publicly stated professional qualifications.
On the downside, several stocks including Imperial Brands, BP, AstraZeneca, Land Securities, GSK, and easyJet, declined as they traded ex-dividend.
Opioid addiction treatment specialist Indivior tumbled 13.59% after warning that full-year revenue is expected to drop by 17%.
Ferrexpo plunged 26.49% following reports that Ukrainian officials planned to nationalise the company's Poltava mining and processing plant.
Authorities reportedly alleged illegal mining activities and fund misappropriation.
Recruiter Hays also slipped 1.85% after it reported a fall in first-half profit, citing challenging market conditions and uncertainty affecting client and candidate confidence.
Reporting by Josh White for Sharecast.com.
Market Movers
FTSE 100 (UKX) 8,662.97 -0.57%
FTSE 250 (MCX) 20,612.77 -0.46%
techMARK (TASX) 4,712.84 -1.14%
FTSE 100 - Risers
Centrica (CNA) 143.55p 5.63%
Lloyds Banking Group (LLOY) 65.90p 4.87%
Anglo American (AAL) 2,429.00p 2.49%
Fresnillo (FRES) 787.00p 2.14%
Taylor Wimpey (TW.) 115.05p 1.41%
Prudential (PRU) 713.80p 1.25%
Coca-Cola HBC AG (CDI) (CCH) 3,286.00p 1.11%
International Consolidated Airlines Group SA (CDI) (IAG) 329.90p 0.98%
SEGRO (SGRO) 709.20p 0.88%
GSK (GSK) 1,447.00p 0.66%
FTSE 100 - Fallers
BAE Systems (BA.) 1,284.00p -4.54%
CRH (CDI) (CRH) 8,086.00p -3.92%
Rolls-Royce Holdings (RR.) 618.40p -3.77%
Smurfit Westrock (DI) (SWR) 4,212.00p -3.37%
Flutter Entertainment (DI) (FLTR) 22,490.00p -2.77%
Barclays (BARC) 298.40p -2.47%
BP (BP.) 452.00p -2.44%
Rentokil Initial (RTO) 406.60p -2.28%
InterContinental Hotels Group (IHG) 9,920.00p -1.78%
Scottish Mortgage Inv Trust (SMT) 1,105.00p -1.78%
FTSE 250 - Risers
Ithaca Energy (ITH) 143.40p 9.30%
Wood Group (John) (WG.) 25.80p 6.35%
Raspberry PI Holdings (RPI) 676.00p 3.84%
Endeavour Mining (EDV) 1,805.00p 3.68%
Safestore Holdings (SAFE) 600.00p 2.65%
Hochschild Mining (HOC) 194.00p 2.65%
Howden Joinery Group (HWDN) 839.00p 1.88%
Shaftesbury Capital (SHC) 126.60p 1.77%
Fidelity China Special Situations (FCSS) 265.00p 1.73%
North Atlantic Smaller Companies Inv Trust (NAS) 3,760.00p 1.62%
FTSE 250 - Fallers
Ferrexpo (FXPO) 68.70p -30.82%
Indivior (INDV) 732.00p -15.67%
Diversified Energy Company (DEC) 1,150.00p -6.43%
Carnival (CCL) 1,733.00p -5.66%
Kainos Group (KNOS) 753.00p -4.80%
Bakkavor Group (BAKK) 143.00p -4.35%
NCC Group (NCC) 130.40p -4.12%
Future (FUTR) 990.50p -3.74%
Wizz Air Holdings (WIZZ) 1,494.00p -3.61%
Crest Nicholson Holdings (CRST) 153.80p -3.21%
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