London open: Stocks edge up as investors mull borrowing figures

22nd Jan 2025 07:54

(Sharecast News) - London stocks edged up in early trade on Wednesday as figures revealed the government borrowed more than expected in December.

At 0845 GMT, the FTSE 100 was up 0.2% at 8,562.95.

Data from the Office for National Statistics showed the government borrowed £17.8bn in December, up £10.1bn on December 2023.

It was above the £14.6bn expected by the Office for Budget Responsibility and consensus expectations of £14.2bn.

It was also the highest figure in four years and the third highest December figure on record.

The ONS said the interest payable on central government debt was £8.3bn in December, largely because of movements in the retail prices index. This was up £3.8bn on December 2023 and the third highest December figure since monthly records began in January 1997.

Danni Hewson, head of financial analysis at AJ Bell, said: "If anyone needed a reminder of the huge challenge being faced by Rachel Reeves, this morning's public sector borrowing figures spell it out in underlined, bold and capital letters.

"Despite a chunky rise in the tax take of £4 billion the cash coming in just isn't covering what's going out, especially when those increases are offset by a fall in National Insurance contributions.

"Add in a significant uptick in debt interest and you've got a recipe for continued jitters from financial markets, even if borrowing costs have dropped back from recent highs.

"Finding efficiencies and spending every penny productively is what the Treasury has promised will help, but as the government has spelt out time and again, it's only growth that can offer an alternative to reigning in ambitions as the chancellor has ruled out pulling any of the other levers available to her.

"It's important to recognise that these figures do include a one-off payment of £1.7 billion for the repurchase of over 36,000 military homes and that next month will be bolstered by that looming self-assessment deadline, though £2.5 billion of that was paid early and is included in the December data.

"Courting investment, giving the green light to projects like a third runway at Heathrow and pushing regulators to cut red tape are all in the mix but making sure any decisions are the right ones for the country and not just for right now mustn't be tuned out in all the noise."

In equity markets, Intermediate Capital Group was the top gainer on the FTSE 100 as it hailed strong fundraising in the third quarter and a 5.1% increase in quarter-on-quarter assets under management.

Aviva jumped after an upgrade to 'overweight' from 'neutral' at JPMorgan, while Halma was boosted by an upgrade to 'buy' from 'hold' at Berenberg.

Wealth manager Quilter was a high riser as it reported a jump in assets under management after net inflows soared.

Updating on end of year trading, the firm - a specialist in affluent and high net worth customers - said fourth-quarter reported assets under management and administration were £119.4bn, up from £106.7bn 12 months previously.

On the downside, budget airline easyJet flew lower even as it said it was on track to hit targets this financial year after an in-line performance over its first quarter, as losses halved year-on-year. The company reported a headline loss before tax of £61m for the three months to 31 December, compared with a loss of £126m a year earlier, as group revenues rose 13% to £2.04bn.

Auto Trader took a hit after BNP Paribas Exane slashed its price target on the shares.

Hochschild Mining tumbled even as the South America-focused miner said full-year production had met guidance after a strong final quarter and full contribution from the new Mara Rosa operation in Brazil.

RBC Capital Markets downgraded the shares to 'sector perform' from 'outperform' and cut the price target to 260p from 300p after the production report.

"Hochschild closed the year broadly in line with expectations, but inflation and the lack of a devaluation in the Argentinian peso have left 2025 cost and capex guidance ahead of our expectations," it said.

Trainline slid after the Department for Transport confirmed its plans to establish Great British Railways (GBR) as the central online ticket retailer for the rail network once legislation was passed.

Pub chain Wetherspoons was little changed as it said rises in the minimum wage would cost £60m as it reported a 5.1% jump in like-for-like sales in the 25 weeks to 19 January.

Bar sales increased by 4.5%, food by 5.6% and slot/fruit machines by 11.7%. Hotel room sales fell 6.5%.

Market Movers

FTSE 100 (UKX) 8,562.95 0.17%

FTSE 250 (MCX) 20,626.19 0.15%

techMARK (TASX) 4,706.68 0.25%

FTSE 100 - Risers

Intermediate Capital Group (ICG) 2,212.00p 4.44%

Aviva (AV.) 506.00p 2.43%

Halma (HLMA) 2,884.00p 1.73%

Airtel Africa (AAF) 128.80p 1.42%

St James's Place (STJ) 933.50p 1.41%

Pershing Square Holdings Ltd NPV (PSH) 4,240.00p 1.39%

Entain (ENT) 688.00p 1.24%

Diploma (DPLM) 4,508.00p 1.03%

Haleon (HLN) 370.90p 0.98%

Compass Group (CPG) 2,727.00p 0.96%

FTSE 100 - Fallers

Auto Trader Group (AUTO) 764.20p -3.39%

easyJet (EZJ) 494.70p -3.23%

Vodafone Group (VOD) 68.36p -1.84%

Marks & Spencer Group (MKS) 337.60p -1.23%

United Utilities Group (UU.) 988.80p -1.08%

Smurfit Westrock (DI) (SWR) 4,447.00p -1.07%

Rentokil Initial (RTO) 377.10p -1.02%

Flutter Entertainment (DI) (FLTR) 21,910.00p -0.72%

Fresnillo (FRES) 689.00p -0.65%

Coca-Cola HBC AG (CDI) (CCH) 2,806.00p -0.50%

FTSE 250 - Risers

Quilter (QLT) 165.90p 4.54%

Empiric Student Property (ESP) 83.60p 3.34%

Alpha Group International (ALPH) 2,445.00p 2.73%

Abrdn (ABDN) 151.70p 2.57%

Kier Group (KIE) 146.60p 2.23%

Bloomsbury Publishing (BMY) 660.00p 2.17%

Edinburgh Worldwide Inv Trust (EWI) 193.60p 2.11%

Marshalls (MSLH) 241.00p 1.90%

TBC Bank Group (TBCG) 3,175.00p 1.76%

Bank of Georgia Group (BGEO) 4,675.00p 1.74%

FTSE 250 - Fallers

Hochschild Mining (HOC) 194.80p -14.93%

Trainline (TRN) 375.00p -4.34%

Me Group International (MEGP) 200.00p -2.91%

Foresight Solar Fund Limited (FSFL) 71.40p -1.92%

Wizz Air Holdings (WIZZ) 1,407.00p -1.81%

AO World (AO.) 94.20p -1.67%

Greggs (GRG) 2,060.00p -1.62%

Foresight Environmental Infrastructure Limited (FGEN) 67.80p -1.60%

Wood Group (John) (WG.) 68.35p -1.37%

Carnival (CCL) 1,903.50p -1.35%