- FTSE 100 off to a sluggish start on final trading day of 2023
- British American Tobacco fined $110m by Nigerian competition watchdog
- Oil on course for first annual loss since 2020
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown:
“There isn’t too much festive cheer for UK stocks on the final trading day of 2023. The FTSE 100 has barely budged in early trading, with news of sluggish house price growth in December adding weight behind the theory of slowing activity. There is an especially strong lens on consumer-facing stocks – we’re only a couple of weeks away from hearing how retailers fared over the crucial Christmas period. Short sellers are circling some areas of the sector in the expectation of bad news. A combination of life becoming more expensive and the prevalence of online options means momentum for the bricks and mortar players has become even harder to harness. The FTSE is also suffering from an information vacuum, which is usual for this time of year, but makes it difficult for it to find its feet. So far, it looks as though the FTSE 100 will have moved largely sideways for the year, thanks in large part to extreme uncertainty and the upwards march of interest rates. Questions now of course turn to next year’s trajectory, and there’s every chance inflation is going to remain stubbornly above the Bank of England’s target – making meaningful interest rate cuts potentially an outside option.
British American Tobacco has been hit by a $110m fine from the Nigerian competition watchdog. The investigation has been known about for some time, and there will be an element of relief that there’s clarity in the outcome. The tobacco giant stood accused of abuse of dominance, including penalising retailers that offered the same platform to competitors. The sheer size of British American means probes like this are a constant possibility. The inherently sticky nature of revenue means paying the fine won’t cripple the group, and will serve more as a slap on the wrist than a derailment of the investment case. Larger concerns for investors centre around the long-term take up and regulatory landscape for next generation products, which include things like vapes and heated tobacco.
The oil price is sliding towards its first annual loss since 2020, as geopolitical conflicts and OPEC+ production cuts failed to lift prices. A barrel of Brent crude is hovering around the $77 mark. The price has whipsawed this year as expectations of sluggish demand, inventory build ups and conflicts in key locations all amalgamated into volatility. The overall theme of the year though seems to indicate that heat has come out of the price for now – but that can change at very short notice.”
