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FTSE and European markets higher amid UK tax cut hopes

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FTSE FILE PHOTO: People walk over London Bridge looking at a view of Tower Bridge in the City of London financial district in London, Britain, October 25, 2023. REUTERS/ Susannah Ireland/File Photo

The FTSE 100 has made a bright start to the day after US markets hit record highs. (Reuters / Reuters)

The FTSE and European stocks were higher on Tuesday with London getting a boost after the lower than expected UK government borrowing figures boosted hopes of tax cuts for consumers.

The FTSE 100 (^FTSE) rose 0.5% to 7,524 points at the open, while the CAC 40 (^FCHI) in Paris gained 0.5% to 7,448 points. In Germany, the DAX (^GDAXI) climbed 0.4% to 16,741. The Stoxx 600 (STOXX) gained 0.3%.

Across the pond, S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=F) were all in the green as trade began in Europe.

UK public sector borrowing rose by £7.8bn in December, about half the borrowing made in the same month in 2022, according to the Office for National Statistics on Tuesday. It is the lowest for the month borrowing since 2019 and significantly lower than the £14bn expected by the Office for Budget Responsibility.

Read more: UK public debt slows and raises hopes for tax cuts

In Wall Street, US stocks edged higher on Monday, with the S&P 500 and Dow notching another record high close, as investors became more upbeat about the health of the economy and looked to coming earnings for signs of an AI boom for techs.

The Dow Jones (^DJI) rose 0.4% to close at 38,001 points. The S&P 500 (^GSPC) climbed 0.2% to finish at 4,850 points and the tech-heavy NASDAQ (^IXIC), closed 0.3% higher at 15,360.

Hong Kong stocks rebounded Tuesday to lead gains in Asia markets, while Japan’s Nikkei 225 index was slightly lower after the Bank of Japan kept its monetary policy unchanged in its first policy meeting of the year.

The Hang Seng (^HSI) in Hong Kong rose 2.3% to 15,315 while the Shanghai Composite (000001.SS) climbed 0.5% to 2,770 points. Tokyo’s Nikkei 225 (^N225) lost almost 0.1% to close at 36,517 points.

Chinese stocks struggled as speculation of a huge rescue package from Beijing underwhelmed investors worried about the shaky economy.

Read more: UK interest rates to fall to 4% this year, say experts

Meanwhile, oil prices were little changed as traders weighed a host of conflicting supply and demand worries, from rising tensions in the Middle East to cold weather woes disrupting production in the United States.

West Texas Intermediate (CL=F) slipped 0.2% and was trading at $75 per barrel. Brent (BZ=F) crude climbed 0.4% to $80 per barrel.

Live4 updates

  • China weighs stock market rescue package backed by $278bn

    Jan Craps (L), chief executive officer of Budweiser Brewing Company APAC Ltd, attends the listing ceremony of the AB InBev's Asia-Pacific unit at the Hong Kong Stock Exchange in Hong Kong, China, on Monday, Sept. 30, 2019. Zhang Wei/CNS via REUTERS ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY. CHINA OUT.

    Beijing wants to revive the country’s slumping stock market. (REUTERS / Reuters)

    Authorities in China are considering taking steps to stabilise the slumping Chinese stock market, Bloomberg reported.

    Policymakers are seeking to mobilise about RMB2trn (£218bn/$278bn), mainly from the offshore accounts of Chinese state-owned enterprises, as part of a stabilisation fund to buy shares onshore through the Hong Kong exchange link.

    They have also earmarked at least RMB300bn of local funds to invest in onshore shares through China Securities Finance Corp. or Central Huijin Investment Ltd, citing familiar with the situation said.

  • ECB expected to hold interest rates on Thursday

    Gabriele Foà, portfolio manager at Algebris Investments, expects the European Central Bank to keep interest rates unchanged this Thursday.

    “The ECB will likely hold rates this week, but market focus is on guidance for the timing and magnitude of forthcoming cuts. The meeting offers no new projections, but questions will focus on the committee’s current assessment of recent data, which saw inflation and gas prices falling further. Tuesday’s Bank Lending Survey and Wednesdays’ PMIs will give key insights into the direction of travel the Bank may now take. At this point, markets only see 16% odds for a March cut.”

  • UK public debt slows and raises hopes for tax cuts

    The UK government borrowed much less than expected last month, fuelling hopes that chancellor Jeremy Hunt will have room for tax cuts in the spring budget.

    Public sector borrowing rose by £7.8bn in December, about half the borrowing made in the same month in 2022, according to figures from the Office for National Statistics (ONS).

    It is the lowest for the month borrowing since 2019 and significantly lower than the £14bn expected by the Office for Budget Responsibility (OBR).

    Read the full story here

  • Primark festive sales rise after warm autumn weather hit

    The owner of budget fashion chain Primark posted a rise in sales over its Christmas quarter as higher prices helped it overcome a hit from warm autumn weather.

    Associated British Foods (ABF.L) said Primark sales grew 2.1% on a like-for-like basis in the 16 weeks to January 6, with total revenues at the retailer up 7.9%.

    In the UK, comparable store sales rose by 3.8% as it said strong growth in the run-up to Christmas helped offset a knock from unusually warm autumn weather at the start of the quarter.

    The group said the Primark sales rise was driven by higher average selling prices as well as strong demand for Christmas ranges and lines such as its collection designed in collaboration with singer Rita Ora.

Watch: US stocks are due for a pullback – CIO

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