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4.30pm: Market mood changes

The FTSE 100 closed 27.31 points lower at 7,757.36 as investors mulled a surge in public borrowing and news that UK business output fell in January at the fastest rate in two years.

Primark owner Associated British Foods fell even as it posted a 20% rise in sales during the Christmas period as consumers continued to hunt for bargains amid the cost-of-living crisis.

Primark posted a 18% rise in sales over the 16 weeks to 7 January as it enjoyed strong Christmas trading. 

The company reported strong footfall footfall compared with the previous year’s omicron period.

However, it said it sees cost pressures ahead this year and kept its profit guidance unchanged.

Owner Associated British Foods said the retailer’s profit margins will be squeezed this year as it struggles to pass on higher costs.

Danni Hewson, AJ Bell financial analyst, said: “It’s been a mixed affair, with some pretty gloomy data suggesting the UK private sector has had its confidence knocked by the economic storm buffeting the country.

“Strikes, rising interest rates and that cost-of-living crisis have all played a part in holding back business – not exactly a recipe for growth.”

7am: Inheritance tax

The Treasury raked in £5.3 billion in inheritance tax receipts in the months from April to December 2022. This is £700 million more than in the same period a year earlier, continuing the upward trend. 

The increase maybe largely a result of house price increases, especially in London and the south-east, pushing more people over the threshold.

The inheritance tax threshold of £325,000 has also been frozen until April 2028, dragging more people into the payment trap. 

7am: Capricorn board changes

Seven directors at Capricorn Energy have resigned in response to pressure from shareholders.

Full story here

7am: Artisanal Spirts Company

David Ridley is stepping down as managing director of the Artisanal Spirits Company, owner of the Scotch Malt Whisky Society, and is being replaced with immediate effect by finance director Andrew Dane as chief executive.

Full story here

7am: Marston’s

Pub operator Marston’s said like-for-like sales for the 16-weeks to 21 January grew 12.9% compared to last year which was hit by the Omicron variant.

The group said momentum improved throughout the period with sales up 6.8% in the first eight weeks followed by a 19.2% increase in the following eight weeks.

For the five key festive days like-for-like sales were up 26% on last year and 12.9% compared to 2019/20.

Total retail sales in the group’s managed and franchised pubs were up 14.0% on last year with drink sales continuing to outperform food sales.

CEO Andrew Andrea, said: “Our primary focus remains to meet our strategic goals of achieving £1bn sales and reducing our debt to below £1bn with all the subsequent benefits that both of those milestones will bring to our shareholders.” 

Global markets

Rallies in New York and Tokyo equity markets ahead of PMI readings for many of the world’s major economies are expected to see the FTSE 100 continue its good start to the year.

Wall Street ended higher on Monday, with the Dow Jones Industrial Average up 0.8%, the S&P 500 up 1.2% and the tech-heavy Nasdaq Composite up 2%.

In Tokyo today, the Nikkei 225 index rose 1.5%, as preliminary survey results showed the Japanese private sector returned to growth in January.

Markets in Shanghai and Hong Kong remained closed to mark Lunar New Year.