Time to wrap up.

Here are today’s main stories:

Microsoft has overtaken Apple to become the world’s most valuable listed company today.

Shares in Microsoft rose 1.5% in early trading, giving it a market valuation of $2.888 trillion. Apple were down 0.3%, with a market capitalization of $2.887trn.

Both shares are a little lower now, though.

This is the first time since 2021 that Apple’s valuation has fallen below that of Microsoft, reports Reuters.

Apple has made a poor start to 2024, as concerns grow that demand for its products could weaken due to poor consumer demand.

Microsoft has benefitted from its close links to OpenAi, as investors back the potential of artificial intelligence.

Stocks have opened a little higher on Wall Street, as traders digest the rise in US inflation last month.

The S&P 500 index of US shares is up 0.2% at 4,793.75 points, and reportedly briefly traded above its record closing high set two years ago (which was 4,796.56).

The Dow Jones Industrial Average, of 30 major US stocks, is up 0.1%.

Inflation ticked higher in the United States last month as the Federal Reserve weighs the latest stage of its battle against price growth, my colleague Callum Jones reports.

The headline consumer price index increased at an annual pace of 3.4% in December, according to the Bureau of Labor Statistics, up from 3.1% in the previous month, and exceeding economists’ expectations of about 3.2%.

On a month-to-month basis, the index climbed 0.3%, from 0.1% in November. Housing costs drove the index higher, and were responsible for more than half the headline increase.

But there were some signs that inflation continued to soften in December. The so-called “core” consumer price index – a measure that does not include volatile food and energy prices – slowed to an annual rate 3.9%, from 4% the previous month.

More here.

Some better economic news: The number of Americans filing new claims for unemployment support has fallen.

There were 202,000 fresh ‘initial claim’s for jobless support, a drop of 1,000 compared with the previous week.

That’s encouraging news for US workers; it suggests firms are holding onto staff. But that may disappoint the Fed, as a weakening labor market and rising unemployment would dampen inflation.

Newsflash: US inflation has risen, in a blow to the White House ahead of November’s presidential elections.

Consumer prices rose by 3.4% in the year to December, new data shows, as American households were hit by pricier housing costs and energy.

That’s up from an annual rate of 3.1% in November, when cheaper gas prices slowed the rising cost of living in America.

Economists had expected a smaller rise, to 3.2%.

In December alone, prices rose by 0.3%, including a 0.2% rise in food costs.

The US Bureau of Labor Statistics says:

The index for shelter continued to rise in December, contributing over half of the monthly all items increase. The energy index rose 0.4 percent over the month as increases in the electricity index and the gasoline index more than offset a decrease in the natural gas index.

It’s not all bad news, though. Core inflation (which strips out food end energy) rose by 3.9% in the year to December, down from 4% in November.

Recent polling has shown that more than half of voters feel worse off under President Biden, even though inflation has dropped back from the 40-year highs seen in 2022.

There has been a near-40% jump in the number of UK households failing to pay their energy bills, compared with a year ago.

More people missed mortgage payments too, as the cost of living squeeze hits homes across the country.

New data released by the Office for National Statistics shows that the total Direct Debit failure rate in December 2023 increased by 15%, when compared with the previous year

This was driven mainly by increases of 39% in the “electricity and gas” spending category and 20% in the “mortgages” category, the ONS says.

Although the UK energy price cap, which limits the maximum cost of energy, fell in October, households are still paying much more than before the energy price spike.

The price cap was lowered to £1,923 per year for a typical user in October, much higher than the £1,277 cap in October 2021.

Households also suffered because the £400 support from the government given to all homes in winter 2022-2023 is no longer available.

In a sign of the tensions in the Red Sea, an oil tanker involved in a dispute between the U.S. and Iran has been boarded by armed individuals east of Oman and appeared to be changing course towards Iranian waters.

That’s according to Reuters, which cites a British maritime security firm and the United Kingdom Maritime Trade Operations (UKMTO) authority.

Reuters says:

The security firm Ambrey said the Marshall Islands-flagged tanker’s AIS tracking system was turned off as it headed in the direction of the Iranian port of Bandar e-Jask at the time it made the report.

The ship, which loaded in the Iraqi port of Basra, and was heading to Aliaga in western Turkey, tracking data from LSEG showed.

While Ambrey did not name the vessel, shipping tracking service TankerTrackers said the vessel was the St Nikolas, which in 2023 had been seized by the United States in a sanctions enforcement operation under a different name, Suez Rajan.

Reuters adds:

UKMTO said earlier on Thursday it had received a report that a vessel located around 50 nautical miles east of Oman’s coast was boarded by four to five armed persons.

The armed intruders were reported to be wearing military style black uniforms and black masks.

Despite the disruption to supplies in the Red Sea, the petrol price has hit the lowest level in over two years.

According to the AA, the average pump price of petrol has fallen below 140p a litre for the first time since mid October 2021.

Yesterday, it averaged 139.97p a litre across the UK, the AA say, the cheapest since 13 October 2021 when it averaged 139.55p.

Petrol is now more than 50p per litre cheaper than in July 2022, when it hit a record high of 191.53p.

This means it now costs £77 to fill up the average 55-litre tank, down from £105 at the peak.

Diesel prices have dropped to the lowest since early August, at an average of 147.83p.

Luke Bosdet, the AA’s spokesman on pump prices, says:

“While the dramatic improvement in pump prices gives big savings to families and businesses, and also redirects millions of pounds from fuel sales potentially back to the high street, pump prices remain historically very high. Before covid and the Ukraine war, the worst drivers faced was 142.48p record set in April 2012.”

“The danger is that current pump-price levels are baked in as the new normal.”

The Bank of England has fined the former chief executive of Sanjeev Gupta-linked Wyelands Bank nearly £119,000 for breaching three conduct rules.

The Bank’s Prudential Regulation Authority has fined Iain Mark Hunter £118,808 for breaching three PRA Conduct Rules between 7 March 2016 and 28 May 2020.

The PRA says:

Mr Hunter failed both to act with due skill, care and diligence, and to take reasonable steps to ensure that Wyelands had adequate systems and controls in relation to the large exposures regime and PRA record keeping requirements.

This follows the public reprimand issued to Wyelands Bank by the Bank of England last April, after it discovered “wide-ranging significant regulatory failings” at the lender.

The BoE has previously warned that Wyelands had made too many loans and complex financial agreements with companies linked to its owner, Gupta Family Group Alliance (GFG).

Today, the PRA says Hunter failed to take reasonable steps to ensure that Wyelands:

• had adequate systems and controls to identify, assess and manage connected parties’ risks in relation to large exposures;

• submitted large exposures returns which properly aggregated its exposures in respect of certain transactions with connected parties;

• had a formal and appropriate document retention policy in accordance with the record keeping obligations set out in the PRA Rulebook; and

• clearly apportioned responsibility for conducting analysis of Wyelands’ connected parties before March 2019.

Wyelands is owned by steel magnate Gupta, boss of the troubled Liberty Steel which was accused of “financial engineering” in 2021.

In May 2021, the Serious Fraud Office launched an investigation into the financing of GFG Alliance, which was dragged into a crisis after the collapse of Greensill Capital that year.

The boss of shipping giant AP Møller-Maersk has told the Financial Times that it could take months to reopen the crucial Red Sea route to trade.

If so, that could risk creating an economic and inflationary hit to the global economy, companies, and consumers.

Vincent Clerc, Maersk’s chief executive, told the FT Times that the closure of the Red Sea to most shipping after a series of attacks was “brutal and dramatic”.

There are “no winners”, Clerc said, as vessels are forced to take a lengthy and costly detour around South Africa instead.

Clerc added:

“It’s unclear to us if we are talking about re-establishing safe passage into [the] Red Sea in a matter of days, weeks or months . . . It could potentially have quite significant consequences on global growth.”

More here.

Global trade dropped by 1.3% in December as the Houthi attacks on merchant ships in the Red Sea disrupted operations, new data shows.

IfW Kiel, the German economic institute, has reported that the volume of containers transported in the Red Sea has plummeted by more than half and is currently almost 70 percent below the usual volume.

According to Kiel, shipments in the Red Sea have fallen to around 200,000 containers per day, down from around 500,000 containers in November.

Instead of sailing through the Red Sea, ships are now sailing around Africa and the Cape of Good Hope, a detour that takes 7 to 20 days.

The longer journey time has significantly increased freight rates, with the transport of a 40-foot standard container between China and Northern Europe currently costing over $4,000, up from around $1,500 in November, Kiel says.

Kiel explains:

As a result, freight costs and transportation time in goods traffic between East Asia and Europe have risen and imports and exports from Germany and the EU are in some cases significantly lower than in the previous month of November 2023.

Keil reports that imports into the European Union fell by 3.1% in December, with exports 2% lower.

Julian Hinz, director of the Kiel Institute’s Trade Policy Research Center, says:

“The detour of ships due to the attacks in the Red Sea around the Cape of Good Hope in Africa means that the time it takes to transport goods between Asian production centers and European consumers is significantly extended by up to 20 days.

This is also reflected in the declining trade figures for Germany and the EU, as transported goods are now still at sea and have not already been unloaded in the ports as planned.”

Kiel’s report, titled Cargo volume in the Red Sea collapses, is online here.

Shares in Boohoo have dropped this morning after a BBC investigation found it had mislabelled items of clothing made in South Asia as “Made in the UK”.

A Panorama investigation found the company removed the original labels on T-shirts and hoodies at the retailer’s controversial factory at Thurmaston Lane in Leicester between January and October last year.

A spokesperson from Boohoo told the BBC the mislabelling was an “isolated incident” and a result of “human error”, adding:

“We have taken steps to ensure this does not happen again.”

Boohoo is considering closing its Leicester factory and relocating operations, as reported on Tuesday.

Shares in Boohoo dropped 6% in early trading, and are now down 1.5%.

Tesco’s CEO Ken Murphy has told reporters he is “cautiously optimistic” about the British consumer in 2024.

Murphy predicted that the UK will enjoy a period of relative stability for as long as unemployment is low.

He also only expects a minimal impact to business from the disruption to shipments through the Red Sea.

Murphy told reporters:

“Having to go around Africa to get to Europe extends shipping times, constrains shipping space and moves up shipping costs.

“It could inflate the cost of some items but we just don’t know at the minute and don’t know how long the situation will last.”

In the transport world, Heathrow’s Terminal 5 has clocked up its busiest year ever.

More than 33 million passengers passed through Terminal 5 in 2023, Heathrow reports, for the second time since it opened 15 years ago.

Heathrow has also reported its busiest December ever.

It says:

Christmas and New Year festivities raised passenger numbers with more than 6.6 million travelling through Heathrow in December - bringing the total number of passengers up to 79 million in 2023

Averaging at around 216,000 daily passengers last month, our busiest day over the festive period was Friday 22^nd December with almost 250,000 passing through the airport to reunite with loved ones in time for the holidays.

The City is not as impressed with Marks & Spencer’s results as I thought!

Shares in M&S have dropped by 4.5% at the start of trading in London, to a three-week low.

They are the worst performer on the FTSE 100, despite many analysts hailing its Christmas trading figures.

There may be some disappointment that M&S hasn’t upgraded its profit outlook this morning. Investors will also have noted its warning about rising costs….

Also, M&S shares have had a good run; they doubled in value in 2023.

City analysts are lauding Marks & Spencer’s performance over Christmas, after it reported an 8.1% increase in like-for-like sales over Christmas.

Richard Lim, CEO at Retail Economics, says:

“These are fantastic results delivered in a challenging market. Shoppers have fallen back in love with M&S, buying into the re-energised proposition that’s centred around a leading omnichannel service. It’s been a mightily impressive turnaround and there’s lots of momentum in the business heading into 2024.

“While the outlook remains challenging, they are well-positioned to navigate through these choppy waters.”

Robyn Duffy, senior analyst at RSM UK, says Marks & Spencer has bucked the trend with “stellar” Christmas results.

Duffy explains:

“M&S’s strong results in the food arm of the business support the notion that Christmas 2023 was all about time spent at home with friends and family for consumers. 2022’s acquisition of Gist – a deal geared to improve the food supply chain network of the business - has enabled M&S to be more competitive on pricing, a timely strategy considering food inflation is still over 9%. It could also be why M&S has seen a flurry of new customers and an increase in basket size with more customers doing their full shop in M&S food stores.

Clothing and home also performed strongly. Womenswear continues to be a success and is fast becoming a favourite for Millennial women. In addition to gearing the food business to be able to offer greater value to customers, M&S also put this ethos at the forefront of their Christmas ranges. One third of gifts were priced at £10 and under, and 70% at £20 or less. Christmas decorations were down 6% year on year and entry prices for Christmas trees were down 25%. Ultimately, M&S did everything they could to appeal to UK consumers amid cost-of-living pressures and it paid off.”

And here’s Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club:

“M&S has sustained good momentum over the Christmas period, especially in Food which delivered 7% volume growth, making M&S the top performing grocer over the Christmas period.

M&S also continued to gain share in Clothing and Home, supported by a good womenswear performance. This suggests the turnaround plan to revitalise the brand and reignite growth is very much on track.

The Clothing and Home division has been a problem child for M&S for many years. The new strategy, launched last year, aims to improve brand perception and designs, reduce discounting and improve the online offering, while taking a knife to costs and instilling a more entrepreneurial culture. Early signs are this plan is resonating with consumers.

While the UK consumer backdrop remains uncertain, there are more positive signs than this time last year, with interest rate cuts likely to relieve some pressure. Combine this with M&S’ self-help initiatives and execution that continues to impress, it suggests recent trading momentum could be sustained.”

Marks & Spencer has warned that it faces extra cost pressures, including on pay, and from business rates on its stores.

M&S told shareholders in its Christmas trading update:

As we enter the new year and FY25, expectations for economic growth remain uncertain, with consumer and geopolitical risks. We also face additional cost increases from higher than anticipated wage and business rates related cost inflation.

Nevertheless, the strong Christmas trading performance provides confidence that the results for the year will be consistent with market expectations.

The minimum wage is due to rise by almost 10% in April, from £10.42 to £11.44 per hour.

And although the government froze business rates for small firms in last year’s Autumn Statement, larger businesses will see a 6.7% rise in rates this year.

Here’s the details of Tesco’s Christmas trading:

And here’s Marks & Spencer’s report card:

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Tesco and Marks & Spencer have emerged as Christmas winners this morning.

Tesco, the UK’s largest supermarket chain, has raised its forecast for profits this financial year, after ringing up record sales in the weeks leading up to Christmas.

Tesco’s like-for-like sales in the six-week Christmas period across the UK and the Republic of Ireland were 6.4% higher than a year earlier.

That followed growth of 7.3% in the previous 13 weeks, to 25 November.

The group now expects to post operating profits of £2.75bn this financial year, above its previous guidance range of £2.6bn to £2.7bn.

Chief executive Ken Murphy says it was Tesco’s best Christmas ever, adding:

As part of our focus on value, we offered a full Christmas dinner for just £2.09 per person, helping to drive record sales in the weeks leading up to Christmas and further market share gains. We put a strong focus on quality and innovation too, with over 550 new and improved festive products. Over 18 million customers took the opportunity to treat themselves by shopping from our Finest range, which saw sales growth of nearly 17%.

Over the period we cut nearly 2,700 prices, with a further 150 prices cut just this week, cementing our position as the UK’s cheapest full-line grocer.

Tesco also reports it cut prices cut on nearly 2,700 products, with savings of around 10%, another sign that inflation pressures are easing.

Marks & Spencer has also posted solid like-for-like sales growth, up 8.1% across the UK in the last 13 weeks of the year. That’s better than expected.

M&S’s total food sales increased 10.5%, with strong growth in meat, poultry, produce, grocery and in-store bakery products.

The recent turnaround in the clothing department continued too, with Clothing & Home sales increasing by 4.8%. M&S says its market share increased, led by the strong performance of womenswear.

Chief executive Stuart Machin says M&S enters 2024 “with a spring in our step, but clear eyed on the near-term challenges”.

Machin says:

We are determined to deliver our objective of driving 1% growth in market share in both businesses and to up the pace of our transformation: keeping a relentless focus on trusted value; accelerating our store rotation and renewal plans; doubling down on our supply chain programmes to improve availability and lower costs; and resetting our data, digital and technology strategy to unlock benefits in future years.

Our vision is to be the most trusted retailer, doing the right thing for our customers, with quality products at the heart of everything we do, and we are just at the beginning of what we can achieve. Lots done, lots to do, lots of opportunity ahead.”

Also coming up today

Hopes are building that the Bank of England could cut interest rates sooner than thought, after several economists predicted inflation could fall to its 2% target as soon as April.

Investors are watching for the latest US inflation figures, due this afternoon, which will influence how soon America’s Federal Reserve can start cutting borrowing costs.

The agenda

• 9.30am GMT: Latest ONS business insights survey

• 1.30pm GMT: US inflation report for December