The FTSE 100 (^FTSE) and European stock markets managed to recover some of its losses on Thursday after a heavy red day the session before. This was due to heightened expectations that interest rates will be cut later than previously hoped as UK and European inflation rose in December.
London’s benchmark index was just 0.2% higher by afternoon trade, after opening lower, while the CAC (^FCHI) gained 0.9% in Paris, and the Frankfurt DAX (^GDAXI) advanced 0.7% despite uneven sectorial performances
“European markets posted their third successive daily decline as markets continued their New Year hangover, after the pre-Christmas euphoria of what was perceived as a December rate pivot from the Federal Reserve,” Michael Hewson of CMC Markets said.
“The FTSE 100 had its worst day since August sliding to its lowest levels since late November, dragged down by a combination of poor performance from real estate, basic resources and energy after disappointing Chinese economic data, and the prospect of rate cuts getting pushed further into 2024.
“In the last few days, we’ve seen a concerted effort from assorted central bankers in Europe, as well as the US to dial back the expectation of early rate cuts, while a surprise uptick in UK inflation and some solid US retail sales numbers torpedoed the idea that we would see early rate cuts in March.”
Across the pond losses were fairly contained last night despite the sharp rebound in yields. The S&P 500 (^GSPC) slipped 0.6%, and the tech-heavy Nasdaq (^IXIC) was 0.6% lower. The Dow Jones (^DJI) lost almost 0.3% on the day.
The US dollar which initially rallied strongly to one-month highs, gave up most of its gains to close flat on the day.
Read more: Trending tickers: TSMC, Birkenstock, Flutter and Sainsbury’s
Pierre Veyret, technical analyst at ActivTrades, said: “We expect even more market volatility to occur during today’s trading session as market sentiment is likely to be shaken by multiple speeches from FOMC members and ECB officials.
“At the same time, investors will face another slew of economic data, such as the ECB account of its monetary policy meeting, the US jobless claims, crude oil inventories and the Philadelphia Fed Manufacturing Index for January.”
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Tata Steel to possibly shut down bulk of production at Port Talbot
A steel worker wearing a badge on his jacket outside the UK’s largest steel works in Port Talbot, South Wales. (Ben Birchall, PA Images) Tata is expected to announce job losses at its Port Talbot plant as it moves to a greener form of steelmaking to cut emissions and shore up its losses.
Unions representing steelworkers will meet industry giant Tata for talks about the future of the company.
Charlotte Brumpton-Childs, GMB national officer, said unions had produced a “well thought-out and researched” alternative proposal aimed at saving jobs.
She said: “Our position remains any compulsory job losses are wholly avoidable and the people of South Wales, as well as the industry as a whole, deserve the support and consideration that our plan outlines.”
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Best UK mortgage deals of the week
Mortgage rates are continuing to fall, providing some relief to UK households and prospective homebuyers, with deals under 4% now available on the market.
The average rate on a two-year fixed deal this week stood at 4.83% while for a five-year deal, rates came down to 4.49%, according to figures from Uswitch.
The big lenders have cut mortgage rates this year as competition between banks heats up and borrowing costs ease.
HSBC and NatWest have both reduced rates this week, with Metro Bank (MTRO.L) and TSB also announcing cuts.
Find out the best deals of the week here
Will mortgage rates go down in 2024?
Mortgage rates have risen substantially as the Bank of England increased the interest rates to a 15-year high in a bid to tackle inflation.
However, the consensus is that interest rates have peaked and that 2024 will see the Bank of England will begin to cut rates as inflation eases.
The BoE’s interest rate is currently set at 5.25%. Markets are expecting interest rates to fall to 5% by May, 4.75% in June, 4.5% in August and 4% in November.
However, a surprise increase in inflation is forcing market analysts to reprice their bets, with some saying that cuts will only start in August.
If the Bank of England cuts interest rates as expected, mortgage rates will continue to come down throughout 2024.
About 1.6 million existing borrowers have relatively cheap fixed-rate deals expiring this year.
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Bitcoin price falls a week after ETF approval
Bitcoin’s price has fallen by over 7% in the week since the US Securities and Exchange Commission, SEC, approved multiple spot ETF filings.
A spot bitcoin ETF is a financial product that investors hope will open the gateway for mainstream capital to flood the crypto market.
There has been over $11bn (£8.67bn) in spot bitcoin ETF trading volume in the four days of trading since the funds were launched from Wall Street players, such as BlackRock (BLK) and Franklin Templeton (BEN).
However, over most of the past week the price of bitcoin (BTC-USD) has traded just below the $43,000 mark.
Bitcoin’s value has dropped by more than 7% from the brief highs observed shortly after the approval of the ETF, when the price exceeded $46,000 last Thursday.
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Train tickets from station twice as expensive as online
Travellers buying tickets at train station ticket machines are being charged up to double the price of a booking online, research shows.
A same-day, one-way ticket from Holmes Chapel in Cheshire to London cost £66 at the station’s ticket machine but online the same trip was £26, a 156% difference, according to consumer group Which?.
Someone buying a same day, one-way ticket from Northampton to Cardiff would have paid £107 for their ticket from the machine, 148% more than buying online, where the price was just £43.
Overall, fares purchased online were cheaper around three-quarters of the time, and on average, same day journeys cost 52% more from machines. In 2022, around 12% of tickets were purchased from a machine — some 150 million journeys.
Services offered by different ticket machines could vary significantly, with passengers often facing restricted choice and, as a result, higher prices.
One of the key reasons why tickets from machines are often more expensive is because most don’t offer “advance” fares — cheaper tariffs which are available to buy in advance of travel. Depending on the route, these can even be available up to 10 minutes before departure.
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Watch: How does inflation affect interest rates?
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