Plan B measures hit retailers by more than expected in December as official figures today showed sales volumes slumped 3.7%.
Clothing retailers and department stores were among the worst affected, with today’s headline number from the Office for National Statistics much worse than the 0.6% decline forecast.
City traders, meanwhile, are enduring a difficult end to the week after sentiment was hit by a late sell-off on Wall Street and Netflix shares fell more than 20% in after-hours trading due to disappointing subscriber numbers.
FTSE 100 Live Friday
Retail sales figures take Plan B hit
Bitcoin below $40,000
Netflix subscriber figures hit tech sector
A key support level for bitcoin needs to hold or see a further 22% drop
15:27 , Brian McGleenon
Fairlead Strategies' Katie Stockton highlights $37,361 as the key support level that the world's premier cryptocurrency needs to hold.
If bitcoin dips below this level it could indicate a move to a low of $30,000 before a readjustment from buy-backs.
Speaking to Market Insider Stockton said: "We expect a 'hard' test of support given room to short-term oversold territory, meaning bitcoin is likely to spend some time below support before recovering."
She added that the key support level for bitcoin is $37,361, not the psychological level price of $40,000.
She added that this key support level "defines the long-term uptrend and is far more important than any interim level on the way down. $40,000 was not a key level for us."
Tech sell-off spreads to Wall Street as Netflix leads the plunge downwards
15:15 , Brian McGleenon
Global stock markets have seen a severe downturn today as a sell-off of tech shares spreads to other sectors.
At the opening of trading at the New York Stock the blue-chip S&P 500 fell 0.4%.
The tech-heavy Nasdaq Composite fell 0.7%.
Netflix saw the heaviest sell-off, now trading at $384, down $124, or 24.4%.
Red charts were not isolated to tech stocks, American Airlines dropped 1.9% and General Motors fell 1.4%.
Share prices in US banks and energy producers also suffered after the NYSE opening bell.
Netflix crashes 22% as Wall Street opens lower in reaction to global market slump
14:53 , Brian McGleenon
Netflix shares began plummeting in value on the opening bell of the New York Stock Exchange at 2.30 pm today.
After traders began shedding stock the Netflix share price fell to $392.85, down $115, a fall of 22.7%.
The sharp sell-off of the streaming giant's stock was in response to a Netflix report that its subscriber growth would slow substantially in early 2022.
Red was the dominant colour across the majority of US stock listings.
The Dow Jones Industrial Average fell 13.70 points, or 0.04%, at the open to 34,701.69.
The S&P 500 opened lower by 11.35 points, or 0.25%, at 4,471.38.
The Nasdaq Composite dropped 107.80 points, or 0.76%, to 14,046.22 at the sounding of the Wall Street opening bell.
IMF boss warns Fed interest rate rise could 'throw cold water' on global recovery
14:35 , Brian McGleenon
The International Monetary Fund (IMF) chief said interest rate hikes by the Federal Reserve would “throw cold water” on the global economic recovery.
IMF managing director Kristalina Georgieva warned that any interest rate rise would have a significant effect on conutries that have high levels of dollar-denominated debt.
At a panel discussion at the Davos Agenda Georgieva warned that the global recovery is “losing some momentum.”
Global markets have reacted with sharp sell-offs after the forecast of a tightening of monetary policy by the Federal Reserve.countries
US traders braced for a sea of red following stock tumble in Europe and Asia
14:19 , Brian McGleenon
Wall Street traders are bracing for US stocks to follow the FTSE 100 into the red.
The FTSE 100 has dropped 102 points today after a sell-off of tech stocks hits markets.
The value of the London Stock Exchange's top 100 companies has fallen by 1.35% as of the time of writing.
The spiralling trend into the red is forecasted to be replayed when US stocks open for trading at 2.30pm (UK time).
Futures tracking the S&P 500 and Dow Jones fell by 0.4% and 0.2% respectively.
Rising inflation is predicted to prompt a tightening of monetary policy by the Federal Reserve.
Next week the US central bank is set to make a decision on an interest rate rise.
This led the chief of the International Monetary Fund to announce a Fed rate hike could dampen the global recovery.
One key stock to watch with concern is Netflix which plunged 20% in pre-market trading.
The streaming service has reported a reduced rate of subscriber growth.
13:03 , Simon Freeman
All eyes on Wall Street now as Netflix looks set for further falls.
The Squid Game streamer was down 20% from last night’s $500 close in pre-market trading after telling investors it only expects to add another 2.5 million viewers in the current quarter.
If that holds, it will be the biggest drop in a decade. Goldman slashed its price target from $580 to $450
Peloton, another pandemic darling which suffered a 24% hit yesterday after cutting its 2022 forecast by $1bn, was on a steadier course, back up 5% before the bell rings.
Stay-at-home stocks Zoom, DocuSign, Etsy have all tanked this week on optimism the pandemic is in the rear view.
Playtech takeover in doubt
12:47 , Oscar Williams-Grut
Playtech shares have crashed as the online gambling software firm’s multibillion pound takeover looked in doubt.
One interested party ruled itself out, while Playtech admitted it was unsure if a remaining £2.7 billion bid would win investor approval.
A consortium led by Formula One tycoon Eddie Jordan that was circling Playtech today said it won’t make an offer. Jordan said his team had “worked tirelessly to assemble a bid that would create value” but was dropping out of the race.
That leaves Australian gambling group Aristocrat, which tabled a £2.7 billion bid last October. However, Playtech admitted today it does not have “a clear understanding” of whether all shareholders are supportive of the deal.
Rio Tinto rattled by Belgrade
12:08 , Simon Freeman
Rio Tinto has been sent reeling by Serbia’s decision to revoke the exploration licence for a planned $2.4 billion lithium mine.
The surprise overnight move sent the FTSE 100 titan’s shares down 3% on opening, to the bottom of a gloomy FSTE 100.
The vast Jadar project is key to Rio’s ambition to become a top supplier of the electric car battery metal.
It is now reviewing the legal basis of Prime Minister Ana BrnabiÄ’s “extremely concerning” decision.
BrnabiÄ’s populist government faces a general election in April and Rio’s project has provoked fierce environmental protests.
Meanwhile, The world faces a shortage of lithium as manufacture of EVs outpaces production of new supplies.
Jadar was expected to yield 58,000 tonnes annually, enough for one million vehicles a year.
Lithium futures jumped 170 to a record $38/kg.
Photo-Me boss tables takeover offer
12:05 , Simon Freeman
The chief executive of photo booth and vending machine operator Photo-Me has tabled a lowball takeover bid for the company.
Serge Crasnianski, a 79-year-old Frenchman who made his name with an automatic key-cutting machine, has announced a 75p-a-share offer, valuing the business at £284.5 million.
The bid is being supported by his daughter Tania Crasnianski and Jean-Marc Janailhac, both of whom are executive directors of the company.
The mandatory offer comes after Crasnianksi, who has been with the business since the early 1990s and in charge for a decade, bought a 7.7% chunk of shares. It takes his and his allies holdings to 36.5%.
Crasnianksi’s proposal is a slight discount to Photo-Me’s closing price on Thursday.
An independent committee of board members not associated with the deal told investors to take no actions for now and promised a full assessment of the offer in due course.
M&C Saatchi upgrades profits
11:35 , Oscar Williams-Grut
M&C Saatchi today looked to draw a line under its historic accounting scandal once and for all, as a watchdog investigation into the matter ended and it upgraded profit forecasts.
The storied ad agency, which has close links to the Conservative Party, said the Financial Conduct Authority had closed a year-long investigation into M&C’s 2019 scandal, which pushed the company to the brink and led to the exit of co-founder Maurice Saatchi and three other directors. The FCA is taking no enforcement action over the matter.
In the same update, M&C Saatchi said a flurry of business at the tail end of 2021 meant profits for the year were now set to be “materially” ahead of forecasts and have put the company in a position to resume paying dividends.
Shares rose 6.4p, or 3.6%, to 182.4p, valuing the business at around £220 million.
Netflix update sends Scottish Mortgage lower
10:36 , Graeme Evans
Slowing subscriber growth figures at Netflix made uncomfortable viewing for London investors today as the jitters over lofty valuations in the tech sector intensified.
The streaming giant's shares slid 20% after Wall Street's closing bell, having revealed it expects to add 2.5 million new paying subscribers in the current quarter compared with four million last year.
The Squid Game creator blamed the timing of content releases, but with margins also under pressure it bore the brunt of weaker sentiment caused by the prospect of faster monetary policy tightening.
Tech and high growth stocks on both sides of the Atlantic are vulnerable to US rate hike expectations as their present values are built around future cash flows.
The Nasdaq is at a three-month low and the S&P 500 more than 6% lower so far this year amid other disappointing earnings updates.
The UK stock market has been much more resilient and continues to be in positive territory for 2022, but the margin is narrowing after the FTSE 100 index fell 57.23 points to 7527.78.
Scottish Mortgage Investment Trust, which has 2% of its portfolio invested in Netflix, fell 4% or 47p to 1107p to leave the popular Baillie Gifford fund down 25% since early December.
Other tech fallers included cyber security firm Darktrace and consumer reviews business Trustpilot after falls of 4% in the FTSE 250 index.
Fears that Russia could be about to invade Ukraine added to London's risk averse mood, with commodity stocks including Anglo American down 2%. BP shares retreated 5p to 384.15p after higher-than-expected crude inventories sent the Brent price down 2% towards $86 a barrel.
A shortened FTSE 100 risers board was led by Rentokil Initial after analysts at Berenberg gave the pest control firm a “buy” recommendation with 640p target price. Shares were 4.4p higher at 531.6p.
Traditionally defensive stocks were in favour after rises for healthcare business Reckitt Benckiser and British American Tobacco. The FTSE 250 index fell 320.24 points to 22,394.74, with corporate merchandise firm 4imprint among the small number of risers after revealing full-year profits will be towards the top end of City forecasts.
Bitcoin falls below $40,000
09:18 , Oscar Williams-Grut
itcoin has dipped below the $40,000 mark amid a wider tech sell-off and predictions of a looming interest rate hike, in a blow to investors hopes that it could act as a hedge against inflation.
Bitcoin has fallen from its previous all-time high of over $68,000, reached just two months ago, to trade at $39,216.32 on Friday.
According to price-tracker Coingecko, the entire cryptocurrency market has fallen over 7% in the last 24 hours, with bitcoin slumping 8% in the week.
Victoria Scholar at Interactive Investors said: “Bitcoin has broken below critical support at $40,000 to reach the weakest level since August, retreating more than 40% from the November high.
“The notoriously volatile asset has now retraced more than 75% of its gains since the summer with the potential for risk-off sentiment in equities to continue to weigh on cryptos.”
Retail sales point to 0.5% GDP hit
08:51 , Graeme Evans
Some of the weakness in December's retail sales may have been due to households bringing forward Christmas shopping into November amid fears of supply chain delays.
But the most important driver came from Plan B restrictions and the uptick in virus caution prompted by the Omicron outbreak.
Capital Economics said the bigger-than-expected fall in retail sales volumes in December supports its view that Omicron may have dragged down GDP by 0.5% month-on-month, if not more.
With Plan B restrictions due to be lifted next week, its UK economist Bethany Beckett remains hopeful that UK retail sales will recoup some of the fall in January and probably all of it by February and March.
But she warned: “With the UK’s cost of living crisis looming, we expect a weaker consumer recovery to restrain retail sales further ahead.”
Inflation pressures mean she continues to expect the Bank of England to increase interest rates from 0.25% to 0.50% in early February.
FTSE 100 index falls 1%
08:40 , Graeme Evans
The UK stock market has outperformed this year, but even the FTSE 100 index is caught in today’s global sell-off after falling 1% or 67.99 points to 7517.02.
Baillie Gifford's tech-focused fund Scottish Mortgage Investment Trust fell 4% or 47p to 1107p and commodity giants BHP and Rio Tinto retreated 3%.
Earnings disappointments and ongoing concerns over an accelerating monetary tightening schedule had earlier sent Wall Street lower.
Richard Hunter, head of markets at Interactive Investor, said: “The next few weeks are becoming increasingly pivotal in setting the scene for the medium term, both in terms of corporate earnings as well as the equally important outlook and guidance statements coming from those companies on the ground.”
A shortened risers board was led by Rentokil Initial after analysts at Berenberg gave the pest control firm a “buy” recommendation with 640p target price. Shares were 4.4p higher at 531.6p.
The FTSE 250 index was 1.2% lower, down 263.08 points to 22,451.90. Big fallers included cyber security firm Darktrace after a decline of 4% or 17.6p to 418.8p.
Worse-than-expected Christmas sales slump
08:11 , Oscar Williams-Grut
Retail sales suffered a worse-than-expected slump over Christmas, new data published this morning shows.
Figures from the Office for National Statistics (ONS) show retail sales dropped by 3.7% in December, against expectations of just a 0.8% fall. Sales were still 2.6% higher than pre-pandemic levels.
The heavy fall in the run up to Christmas comes as Omicron led to a drop in people visiting shops as they were told to work from home. In-store sales fell particularly sharply, dropping by 7.1% for non-food retailers.
Netflix subscriber figures disappoint
07:56 , Graeme Evans
Netflix shares slumped 20% in after-hours trading after the streaming service revealed it added 8.3 million new paid subscribers in the fourth quarter, below its expectations of 8.5 million but still bringing the overall total to 222 million.
The Squid Game creator expects to add 2.5 million new paying subscribers in the current quarter, down from four million last year due to the timings of new content releases. It comes amid competition from the likes of HBO Max, Apple TV+ and Disney+.
Hargreaves Lansdown analyst Laura Hoy said: “If the content timing isn’t to blame, Netflix could be in for a rough ride after a spending spree at the end of last year that pushed margins six percentage points lower.
“Investors were prepared for the margin decline, but worries over how the group will continue to foot the bill for blockbuster releases are creeping in. Add to that the perils of a sizable debt pile in a rising rate environment, and you have the makings for some very nervous investors.”
Netflix said its full year revenues rose 18.8% to $29.7 billion and operating income lifted 35% to $6.2 billion.
Hoy added: “Netflix needs splashy content to attract new subscribers, whose fees in turn fund new projects. The group’s aiming to expand further within the entertainment space to include gaming as well, so we can’t foresee content spend slowing.
“With that said, management has said it expects to be cash flow positive in 2022 and beyond, so they’re clearly unphased by the slowdown in new members.”
Late Wall Street slide hits sentiment
07:38 , Graeme Evans
A late Wall Street sell-off will mean a sharply lower session for European markets today, with the FTSE 100 index forecast by CMC Markets to drop 80 points to 7505.
The Nasdaq gave up gains of more than 2% earlier in yesterday's session to finish in negative territory at a fresh three-month low. For once, investors couldn’t blame rising rising bond yields as the US 10-year fell for a second day in a row.
The S&P 500 is also heading for a third consecutive weekly decline for the first time since September 2020, a move that set the tone for Asia markets to follow Wall Street's lead as the Nikkei 225 also slipped at a three-month low.
CMC's Michael Hewson said: “The inability of US markets to hold onto yesterday’s move higher is a worry and could well indicate the potential for further losses in the coming days.”
Traders expect another weak session in the US later, with sentiment not helped by Netflix shares sliding more than 20% on the back of the streaming service reporting a slowdown in subscriber growth.
Brent crude oil reached a seven-year high above $89 a barrel earlier in the week, but is back at $86.80 today after selling pressure caused by an increase in crude stockpiles.