HL commentary as it happens

The British Retail Consortium-Sensormatic Footfall Monitor shows visits were down 2.5% over the ‘golden quarter’ and 2.2% lower over the year.

There was a distinct lack of lustre for UK retailers in what was meant to be a golden quarter for retailers. Consumer caution and the convenience of online shopping saw shopper visits down 2.5% compared to 2023 according to the BRC, wrapping up a year of decline. Higher energy and housing costs are forcing people to be more wary about their budgets and big shopping sprees were fewer and further between. Without the Christmas markets trend, helping to lure in visitors, the picture could have been even bleaker. Consumers are demanding better experiences and are becoming much choosier about where they shop. It looks set to be a highly challenging year ahead for retailers who will be faced with the double whammy of shoppers increasingly focused on getting value for money, while their own costs rise due to the increase in employer National Insurance taxes.

Oil prices hover around 8-month highs with Brent Crude trading just below $76 barrel.

Prices at the pumps are set to creep up again after oil prices reached two-month highs. Brent Crude dipped back slightly but is still hovering near $76 a barrel, having gained around 5% in a week. The rise is set to filter through to forecourts and will be another penny pincher on already squeezed household budgets. A bigger than expected drawdown of oil stocks in the US and hopes for a fresh stimulus boost for the energy hungry Chinese economy are behind the push higher in crude prices. However, the outlook for the year ahead isn’t certain, especially given the threat of fresh tariffs from Trump which could affect global trade, and potentially demand for energy.

Wall Street set to open higher, but investors are likely to remain more cautious.

Wall Street looks set for a higher open, but it may end up being a replica of yesterday’s performance, with early optimism fading. With the US economy showing so much resilience, the hopes for successive interest rate cuts this year have fizzled out, with only two now expected, at the most. Given the super-stellar year for US stocks in 2024, it’s not surprising a bit more caution has crept in amid uncertainty about monetary policy, especially with unpredictable changes from the White House expected.

FTSE 100 struggles for direction in early trade in London.

Stocks are struggling for a sense of direction in early trade in London, with the New Year rally losing steam. Oil prices have stabilised at two-month highs, while the outlook for UK retailers looks challenging.

The pound has gained a little ground but remains at eight-month lows against the dollar. Given the strength of the US economy, the Fed looks set to be more reticent about cutting rates than the Bank of England. The lower pound has been benefitting multinationals with big overseas earnings like miners, but as sterling has clawed back a little higher, it’s being reflected in valuations.

The FTSE 100 gains back ground, after a flat open

The FTSE 100 has gained back ground after a flat start, making a positive start to the New Year. There was a pulse of positivity initially as markets opened, optimism then waned but the blue-chip index is higher in afternoon trade. Mining stocks are among the big gainers amid hopes of fresh stimulus in China, while it's been a mixed day for housebuilders, after fresh house price gains were reported by Nationwide for December.

Futures indicate higher open on Wall Street as optimism for US economy remains buoyant.

Optimism about the strength of the mighty US economy remains buoyant for 2025. Growth has kept outpacing forecasts, as consumers and companies have shrugged off the impact of high interest rates, with the unemployment rate remaining low. The S&P 500 is set to open higher, with investors hopeful that a Goldilocks scenario will be the story of 2025, amid promises of lower taxes and the deregulation under a second Trump presidency. But with fresh trade wars looming, if the worst of the tariff threats are imposed, the bears could be back to disrupt what has been a fairytale performance for the US stock market.

Energy stocks head higher as Brent Crude gains ground to trade above $75 a barrel.

Energy stocks are pushing higher, helped by a climb in oil prices amid increased demand for energy in the United States and expected fresh economic stimulus in China. Industry data from API showed crude stocks fell by 1.4 million barrels last week, the third weekly fall in a row.

China’s manufacturing data disappoints, showing a slowdown in factory activity.

Investors have been assessing more disappointing data from China, highlighting weakening factory activity, and it has dampened the mood. The Caixin General Manufacturing PMI showed another slowdown in November. There are expectations for further promised stimulus for the economy, to boost confidence and kick start orders. But the snapshot of the sector shows how much work needs to be done. The waiting game is on for more proactive steps to propel growth in the world’s second largest economy.

Miners and builders toward the bottom of the pack

Down at the bottom of the leaderboard, mining giants hit a rough patch over the year, weighed down by a sluggish Chinese economy and stimulus measures that fell short of sparking the hoped-for rebound. Closer to home, the UK housing and real estate markets have also taken a hit. Housebuilders and real estate firms have been stuck near the bottom of the pile, as stubborn inflation has slowed the path to rate cuts, leaving the sector feeling the squeeze. But it’s not all doom and gloom. As we head into 2025, there’s a glimmer of hope for some of this year’s underperformers.

Banking stocks steal the show over 2024

Finance stocks have been cashing in over 2024, with the UK’s banking heavyweights leading the charge, closely followed by standouts in the insurance and asset management sectors. Fears of economic turbulence and a wave of loan defaults never materialized, and with interest rate cuts arriving at a gentler pace than anticipated, it’s been smoother sailing than some had feared. As we approach 2025, the banks look firmly anchored on solid ground. Meanwhile, air travel and holiday stocks have been flying high, despite facing headwinds from rising costs, consumers seem determined to prioritize pleasure over prudence, proving they’re all-in on making memories - even when the budget’s tight.

FTSE 100 closes in the green, up 5.8% for the year

The FTSE 100 wrapped up 2024 on a high note, shaking off a slow start to the session to finish the year in positive territory. After an impressive climb early on, the index hit an all-time high in May but couldn’t quite muster the momentum to break out of a rangebound pattern in the months that followed – ending the year up 5.8%. Meanwhile, it played second fiddle to the tech-fuelled US markets, where AI excitement sent the S&P 500 soaring. Back home, UK investors navigated a year of twists and turns, with two interest rate cuts offering relief while a tax-hiking budget put pressure on some domestic companies. It was a year of resilience rather than runaway success for the UK’s blue-chip benchmark.

Crude oil climbs above $74

Brent crude oil climbed above $74 per barrel, extending its winning streak to three sessions in a row amid thin holiday trading. Fresh data from China, the world’s top crude importer, revealed a third consecutive month of manufacturing growth, albeit at a slower pace - hinting that recent stimulus efforts are keeping the economic engine humming. Oil is set to close the year with a modest loss, marking a year of range-bound trading and teeing up a potentially volatile 2025, with supply concerns, geopolitical tensions, and shifting US policy looming large.

Tech stocks drive US markets lower

Across the Atlantic, tech stocks remained under pressure, dragging the S&P 500 and Nasdaq lower in yesterday’s session, with holiday-season volatility and year-end profit taking amplifying the losses.

UK markets look soft heading into 2024’s final session

UK futures are set for a lower open on the final trading session of 2024, after sliding 0.4% yesterday. The cautious mood aligns with global trends, as investors pare back positions ahead of the New Year amid uncertainty over monetary policy and the economic outlook under a Trump presidency.