Market report

ECB holds rate, US economy ‘anything but sluggish’


euros

The European Central Bank left its key interest rate at a record high on Thursday afternoon and noted underlying inflation had continued to fall, also thanks to high borrowing costs.

The bank reiterated its key rate would say at at 4% for some time, as investors continue to bet on hefty rate cuts this year.

US gross domestic product grew at an annual rate of 3.3% in the last quarter of 2023, the Bureau of Economic Analysis said.

The fourth-quarter figure was higher than markets had forecast, with economists expecting US GDP to come in at 2% for the last three months of 2023.

Lindsay James, investment strategist at Quilter Investors, deemed the economy as “anything but sluggish”.

She said today’s figures showed the US economy is not “grinding to a halt” with recessionary fears remaining on hold for the time being.

The FTSE 100 was up 0.03% at 7,529.73. CMC Markets chief market analyst Michael Hewson said: “Today’s ECB press conference may have seen a slight dovish shift in the prevailing narrative here of no early rate cut, although the ECB might seek to deny it.”

St James’s Place declined 4.38% after its fourth-quarter net inflows missed estimates.

Wizz Air Holdings plunged 4.11%, driven by the airline’s announcement of widened losses in the third quarter.


Smart Metering Systems

Takeover offer documents relating to Kohlberg Kravis Roberts’ £1.3 billion bid for Glasgow-based Smart Metering Systems have been posted to shareholders.

The recommended offer will remain open for acceptance until 24 March and replaces the previously proposed scheme of arrangement which would have required a higher level of acceptances.

The scheme was formally dropped at a meeting on Monday.

The 955p-per-share bid was announced on 7 December and the earliest date on which it may be declared unconditional is 14 February.


Dr Martens

Bootmaker Dr Martens held full year guidance despite a slump in third-quarter revenues which it blamed on weakness in the US and its wholesale channel.

The company, which issued a profits warning in November, posted a 21% fall in income to £267m for the last three months of 2023.

“Trading in the quarter was volatile and we saw a softer December in line with trends across the industry,” said chief executive Kenny Wilson in an update.

“Whilst the consumer environment remains challenging, we are taking action to continue to grow our iconic brand and invest in our business. We remain confident in our product pipeline for autumn/winter 2024 and beyond.”


Halfords

Cycling and motor components group Halfords said third quarter sales came in below expectations, the conditions had improved.

“We continue to expect [pretax profit] to fall within the previously communicated range of £48 million to £53 million,” it said in an update.

“Whilst Q3 sales were below expectations, a strong start to Q4 trading, further cost action and resilient areas such as B2B performing well, mean that we are confident in the Q4 outlook,” it added.

Revenue rose 2% on a like-for-like (LFL) basis in the quarter, with stronger sales in motoring and needs-based categories partly offset by weaker spend in discretionary areas.


Tesla

Tesla

Shares in electric car maker Tesla slumped by more than 12% after it warned its sales growth would be weaker this year than in 2023.

That wiped around $80bn (£63bn) off the company’s stock market value.

The electric carmaker, which is led by multi-billionaire Elon Musk, said its sales growth “may be notably lower” in 2024 despite cutting prices.

It slashed the price of its most popular car Model Y in Europe and China this month amid a price war with rival BYD.

The Chinese giant last year knocked Tesla off the top spot to become the biggest maker of zero-emission cars in the world.

Tesla reported fourth quarter earnings of 3% to £19.7bn, below expectations, and warned about “notably lower” sales growth in 2024 as it prepares to launch its next-generation vehicle.

Profit of £1.6bn for the final three months of last year compared to £3bn in the previous year.

Tesla owner Elon Musk has warned that high interest rates have led to more subdued demand, prompting Tesla to offer cheaper deals.

The company is planning to start production of a mass market electric vehicle affordable to millions of drivers. Musk has long whetted the appetites of fans and investors with the promise of a cheaper range of Tesla cars.



Leave a Reply

Your email address will not be published. Required fields are marked as *

This site uses Akismet to reduce spam. Learn how your comment data is processed.