Mounting hopes of lower interest rates, alongside weaker sterling, rising oil prices, and renewed interest in non-technology stocks, propelled the FTSE 100 Index to new highs during January.
- Inflationary pressures eased in December
- Consumer confidence deteriorated
- UK economic growth remained lacklustre
FTSE 100 Index hits record high: mounting hopes of lower interest rates, alongside weaker sterling , rising oil prices , and renewed interest in non-technology stocks, propelled the FTSE 100 Index to new highs during January. The blue chip index rose by 6.1% over the month, while the FTSE 250 Index climbed by 1.6%.
“18.8% of UK-listed companies issued a profit warning in 2024”
Muted economic growth: the UK economy expanded by only 0.1% during November, posting its first month-on-month growth since August. Over the three months to November, the economy is estimated to have stagnated. Nevertheless, UK growth is set to outperform Germany, France and Italy this year and next, according to the International Monetary Fund , which raised its 2025 UK growth forecast from 1.5% to 1.6% and maintained its 2026 forecast at 1.5%.
Inflation cools: consumer price inflation fell from 2.6% to 2.5% year on year in December, representing the first decline since September. Core inflation also eased, falling from 3.5% to 3.2% and boosting hopes for a cut in interest rates at the Monetary Policy Committee’s February meeting. The data reduced pressure on bond yields, which had risen earlier in the month amid concerns that impending US tariffs could push up inflation.
Gloomy outlook for businesses and consumers: the Confederation of British Industry warned of “widespread” pessimism across the UK’s private sector, with many companies expecting “a significant fall in activity” exacerbated by lacklustre demand and cautious consumers. Meanwhile, GfK reported that UK consumer confidence had fallen to its lowest level in more than a year during January and warned of “dark days ahead”.
2024 profit warnings: 18.8% of UK-listed companies issued a profit warning in 2024, according to a quarterly survey by EY Parthenon , representing the third-highest total in 25 years. 34% of those companies cited contract and order cancellations or delays. The sectors with the most warnings included industrial support services, software and computer services, and retailers.
Mining sector curbs 2024 dividend payouts: UK dividends rose at a headline rate of 2.3% to reach during 2024, boosted by special dividend payments, according to Computershare’s Dividend Monitor . On an underlying basis, however, they fell by 0.4% during the year, dampened by dividend cuts in the mining sector. Looking ahead, Computershare expects dividends to rise at a headline rate of 0.7% to £92.7 billion in 2025.
To view the series of market updates through January, click here
