On Thursday, British equities marked a notable advance, with the FTSE 100 up 1.07% at closing as investors cautiously entered 2025, seeking to analyze the implications of recent economic data. This uptick comes amidst ongoing concerns regarding the UK manufacturing sector, which has reportedly slipped deeper into contraction territory as of December 2024.
S&P Global confirms that the sector faced accelerated declines in key areas, including output, new orders, and employment. The final S&P Global UK Manufacturing PMI reported an 11-month low of 47, down from 48 in the preceding month and slightly lower than the flash estimate of 47.3. Rob Dobson, the director of S&P Global Market Intelligence, stated that "The survey price gauges edged higher, reflecting rising transportation, labor, and material costs, in some cases due to supply chain stresses pushing up global market prices." This position is supported by widespread predictions that costs will continue to escalate into early 2025 as announced budget changes start to manifest.
Given these factors, the Bank of England is likely to take a cautious approach towards further interest rate cuts, especially with increasing signs of economic difficulties on the horizon. In terms of housing market trends, the annual rate of house price growth in the UK saw an increase to 4.7% in December 2024, up from 3.7% a month prior, as reported by the Nationwide Building Society.
Analysts had anticipated a more tempered increase of 3.8% during this timeframe, suggesting stronger than expected demand in the housing market. From a corporate perspective, the telecommunications giant Vodafone Group ($VOD) made significant waves by completing the sale of its Italian subsidiary, Vodafone Italia, to Swisscom for a substantial 8 billion euros.
The company aims to utilize the proceeds from this transaction to reduce its overall debt load and return up to 2 billion euros back to its shareholders. Following this announcement, Vodafone's shares ticked up by 0.85% at market close. Meanwhile, BP ($BP) experienced a jump of 2.58% in its stock prices after the company commenced gas production at the first phase of its Greater Tortue Ahmeyim liquefied natural gas project, which is located offshore Mauritania and Senegal.
This project aims for an impressive annual capacity of 2.3 million tonnes once it is fully commissioned. Gordon Birrell, BP's executive vice president for production and operations, remarked, "First gas flow is a material example of supporting the global energy demands of today and reiterates our commitment to help Mauritania and Senegal develop their natural resources." In summary, while the FTSE 100 gains traction, the ongoing challenges in the manufacturing sector, coupled with strategic corporate moves in telecommunications and energy, are setting the stage for a cautious yet interesting financial landscape as we look toward 2025..