London midday: Stocks extend losses as St James’s Place, Reckitt drop
By midday on Wednesday, London stocks had extended their losses, weighed down by disappointing results from St James’s Place and Reckitt Benckiser. Investor attention was firmly set on the impending US GDP data and key inflation figures.
Market watchers are keeping a keen eye on the forthcoming US economic growth figures and pivotal inflation data, expected to be released later today and Thursday, respectively. The anticipation surrounds the US economy’s performance in the last quarter, with growth expected to show a decrease from the third quarter’s 5% to 3.3% in the fourth quarter. Despite this anticipated slowdown, the growth rate remains impressive for an economy that has experienced significant tightening in its monetary policy.
Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, shared insights on the potential implications of the US GDP numbers. She highlighted the balancing act between achieving robust growth without igniting higher inflation rates. The possibility exists if supply outpaces demand, but current indicators suggest the US might not be in such a situation. With strong demand persisting despite recent downturns in consumer spending and durable goods orders, inflation concerns are heightened, especially with core PCE inflation data imminent, anticipated to show a significant increase.
Ozkardeskaya also discussed market expectations regarding Federal Reserve’s monetary policy, indicating a significant anticipation for rate cuts within the year, albeit with skepticism about the timing and pace of these adjustments. The potential for inflation to delay or diminish expected rate cuts poses a challenge for risk sentiment in the market.
In the equity markets, the news was somewhat bleak for certain firms, with St James’s Place experiencing a particularly sharp decline as it reported a full-year loss, prompting a dividend cut and the earmarking of funds for potential client refunds. Similarly, Reckitt Benckiser faced a downturn as its fourth-quarter sales fell short of expectations.
Other companies also witnessed declines. Taylor Wimpey reported a significant drop in profits due to the adverse impact of higher mortgage rates on demand, though the housebuilder noted some positive signs of recovery in the market. Aston Martin’s shares dipped as it reported a decrease in annual losses, attributed to higher vehicle prices. Direct Line faced setbacks following a downgrade by Citi.
Outside the FTSE 350 index, Halfords announced a reduction in its profit guidance for the year, pointing to a noticeable weakening across three of its four core markets and resulting in a sharp decline in like-for-like revenue growth in its retail segment.
As London’s stock market navigates these mixed results and anticipates key economic data from the US, investors remain cautious, aware of the delicate balance between growth and inflation and its implications for global financial markets.
