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Important information: The value of investments can go down as well as up so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. This is a third-party news feed and may not reflect Fidelity’s views.

London close: Stocks slip as focus shifts to US earnings

(Sharecast News) - London's stock markets experienced a downturn on Tuesday, despite the release of favourable UK borrowing figures as investors turned their focus to earnings from prominent US companies on Wall Street. Key results from Procter & Gamble, Netflix, Verizon, Texas Instruments, and General Electric were all on the menu.

The FTSE 100 index ended the day with a slight decline of 0.03%, closing at 7,485.73 points, while the FTSE 250 dropped 0.44% to 18,992.62 points.

In currency markets, sterling was last down 0.45% on the dollar, trading at $1.2652, while it gained 0.02% against the euro to change hands at €1.1680.

"The past few sessions have seen the FTSE 100 pinned just below 7,500, as buyers and sellers fight hard to establish control," said IG chief market analyst Chris Beauchamp.

"The urge to go dip-buying remains strong, but last week's UK CPI figure continues to loom large as traders reprice expectations around the BoE's next move.

"And without any AI or tech stocks to lift it, the index finds itself unable to match recent gains in the US."

Beauchamp added that traders who were cheering on the US market as it rallied to fresh highs, meanwhile, now found themselves adopting a more cautious tone as they awaited Netflix earnings later in the global day.

"As the first of the 'magnificent seven' to report, the video-sharing giant will likely have an outsize move on the market in the short-term.

"Having gained 45% since October the stock does look ripe for a little profit-taking, even if the medium-term outlook remains solid."

UK government borrowing undershoots estimates in December

In economic news, the UK government's borrowing figures surprised economists, as data from the Office for National Statistics revealed that public sector borrowing, excluding banks, increased by £7.8bn in December.

That figure was significantly below the anticipated £14.1bn, and represented an £8.4bn reduction compared to borrowing during the same period in the prior year, marking the lowest December borrowing level since 2019.

Over the nine months through December, total public sector net borrowing amounted to £119.1bn, which was £5bn less than the Office for Budget Responsibility's projection of £124.1bn.

"After nine months of the 2024 fiscal year, borrowing is on track to undershoot the OBR's full-year borrowing forecast of £123.9bn by £5bn," said Ruth Gregory, deputy chief UK economist at Capital Economics.

"What's more, with market interest rate expectations and long-dated gilt yields having fallen since November, we suspect the OBR will revise down its borrowing forecast significantly from 2026."

Gregory said that could provide the Chancellor with 'headroom' against his fiscal mandate of around £20bn in the Budget.

"That will probably allow him to unveil a freeze in fuel duty in April, costing about £6bn a year, but perhaps also to announce more crowd-pleasing measures, such as a 1p cut to income tax costing £6.9bn a year, while still maintaining fiscally prudent appearances."

Elsewhere, the Bank of Japan took expected steps by maintaining its short-term interest rate at -0.1% on Tuesday.

As widely predicted by economists, the central bank reaffirmed its commitment to purchasing Japanese government bonds, with the aim of maintaining 10-year yields at approximately 0%, capped at an upper bound of 1%.

Its decision was accompanied by a downward revision of inflation forecasts for the year, attributed to falling oil prices.

"We maintain our view that the BoJ will abolish its negative interest rate policy (NIRP) at the April meeting, after confirming the wage settlement," said Oxford Economics senior economist Norihiro Yamaguchi.

"The bank will likely argue that the economy is on track to achieve 2% inflation, but it will take several years.

"Thus, they will stress that the end of NIRP is not tightening - rather, it strengthens monetary easing by enhancing financial intermediation in money markets."

Miners rise on China reports, Diversified Energy tumbles again

On London's equity markets, miners were in focus as Anglo American rose 2.19%, Antofagasta added 2.88%, Glencore was ahead 1.33%, and Rio Tinto grew 2.31% amid reports that Chinese authorities were deliberating a comprehensive set of measures aimed at stabilising stock markets.

According to Bloomberg, policymakers were contemplating the mobilisation of around CNY 2trn, primarily sourced from the offshore accounts of state-owned enterprises.

These funds would be channelled into a stabilisation fund intended for purchasing shares onshore through the Hong Kong exchange link.

Other Asia-focussed shares also saw a boost, with Prudential up 1.66% and Standard Chartered jumping 4.33%, with the former benefitting from a positive note by JPMorgan.

Associated British Foods advanced 1.68% after the company reported a 2.1% increase in like-for-like sales at its clothing retailer Primark during the Christmas period, despite milder weather conditions.

AB Foods also expressed confidence in its supply chain, stating that it did not anticipate disruptions resulting from recent attacks on commercial shipping in the Red Sea.

On the downside, Diversified Energy Company tumbled 12.78%, adding to last week's 12% slump, which prompted the company to release a statement emphasising that there were no operational or company-specific reasons for the fluctuations.

Premier Foods dipped 0.14% after reporting that it remained on track to achieve its profit forecasts for the year.

The positive outlook followed a solid third quarter with double-digit sales growth across the group.

Crest Nicholson Holdings declined by 1.56% after the housebuilder disclosed a larger-than-expected decrease in annual profits.

However, the company expressed encouragement due to an increase in customer inquiries, attributed to falling borrowing costs.

In broker note action, Rolls-Royce Holdings saw a modest decrease of 0.26%, despite receiving an 'overweight' rating from JPMorgan, while Royal Mail parent International Distributions Services added 2.04% after receiving a 'buy' rating from HSBC.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,485.73 -0.03% FTSE 250 (MCX) 18,992.62 -0.44% techMARK (TASX) 4,337.99 -0.14%

FTSE 100 - Risers

Standard Chartered (STAN) 605.80p 4.34% Endeavour Mining (EDV) 1,377.00p 2.99% Prudential (PRU) 816.00p 2.46% Antofagasta (ANTO) 1,597.00p 2.40% Entain (ENT) 983.00p 2.40% WPP (WPP) 745.40p 2.39% Ocado Group (OCDO) 576.40p 2.39% Rio Tinto (RIO) 5,410.00p 2.31% Anglo American (AAL) 1,789.60p 2.19% International Consolidated Airlines Group SA (CDI) (IAG) 148.05p 2.10%

FTSE 100 - Fallers

CRH (CDI) (CRH) 5,382.00p -2.92% Admiral Group (ADM) 2,485.00p -2.89% Compass Group (CPG) 2,109.00p -2.59% Unite Group (UTG) 982.00p -2.48% Persimmon (PSN) 1,450.00p -2.36% Rolls-Royce Holdings (RR.) 301.80p -2.30% Bunzl (BNZL) 3,178.00p -2.06% Taylor Wimpey (TW.) 143.85p -1.94% Pershing Square Holdings Ltd NPV (PSH) 3,654.00p -1.77% Berkeley Group Holdings (The) (BKG) 4,785.00p -1.75%

FTSE 250 - Risers

Wizz Air Holdings (WIZZ) 1,940.00p 6.68% Indivior (INDV) 1,350.00p 5.88% QinetiQ Group (QQ.) 355.00p 4.78% NCC Group (NCC) 128.00p 3.06% International Distributions Services (IDS) 261.90p 2.99% Fidelity China Special Situations (FCSS) 191.20p 2.80% Mobico Group (MCG) 88.75p 2.78% Asia Dragon Trust (DGN) 339.00p 2.73% Petershill Partners (PHLL) 168.80p 2.55% Auction Technology Group (ATG) 459.00p 2.46%

FTSE 250 - Fallers

Diversified Energy Company (DEC) 845.00p -12.16% Oxford Instruments (OXIG) 2,110.00p -4.95% Carnival (CCL) 1,164.00p -3.80% TBC Bank Group (TBCG) 2,860.00p -3.54% Wood Group (John) (WG.) 170.20p -3.51% Future (FUTR) 684.00p -3.33% Abrdn (ABDN) 172.30p -3.18% Hays (HAS) 95.90p -2.94% British Land Company (BLND) 365.60p -2.90% Pagegroup (PAGE) 447.00p -2.87%

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Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

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