FTSE 100 Live: Stocks flat, full steam ahead for Trainline

Proactive Investors - It’s full steam ahead for shares in Trainline which have surged 20% after the Department for Transport withdrew proposals to create a new Great British Railways ticket retailing website and app.

The proposals were originally outlined by the DfT in May 2021, as part of the Williams-Shapps Plan for UK Rail white paper.

JPMorgan (NYSE:JPM) said this removes a “key overhang to Trainline’s investment case we believe, where the narrative has faced growing investor concern on the risk surrounding the emergence of a new, online retail competitor in the UK, and threat to Trainline’s market share position.”

The broker said while it expects some investor focus to also remain on the emergence of Uber (NYSE:UBER) as an online ticket aggregator, “indications continue to suggest little in-roads on traffic share to-date, and we expect investor focus to now turn to Trainline’s strong passenger momentum and improved operational delivery.”

It rates Trainline ‘overweight.’

Elsewhere, the decision prompted analysts at Barclays (LON:BARC) to upgrade the stock to ‘equal weight’ from ‘underweight’.

It said the decision is "good news for Trainline and a thesis-changer for us."

The FTSE 100 made a muted start to proceedings as investors took stock after central bank meetings and the implications for interest rates.

At 8:15am, London’s blue-chip index was little changed at 7,648.46 while the FTSE 250 rose 68.33, 0.4%, to 19,325.29.

Despite retaining its hawkish tone, the Bank of England is still expected to lower rates next year although the timing remains uncertain.

Economists at Citi feel the BoE’s hawkish stance leaves it “at growing risk of overtightening.”

New forecasts in February may present an opportunity to re-evaluate, the bank said.

“But with little sign today of a nascent shift in the MPC’s thinking, we think the current guidance is more likely to survive through Q1,” Citi said.

The broker continues to expect cuts from August, if with risks skewed towards an earlier move.

The mood was given a further lift by a survey showing an improvement in consumer confidence.

Gabriella Dickens at Pantheon Macroeconomics said: “The ongoing recovery in consumers’ confidence adds weight to our view that households’ spending will partially rebound in Q4, supported by an increase in real wages.”

It's a quiet morning for company updates but there is some good news on consumer confidence as we hit the peak Christmas trading period.

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GfK's closely watched consumer confidence index rose for the second consecutive month in December, suggesting households could be more inclined to splash out more this Christmas.

The consumer confidence index, a measure of how people view their personal finances and broader economic prospects, rose two points to minus 22, its highest level since September and the second-highest since January 2022.

“UK consumer confidence edged higher in December as households looked forward to lower inflation and a slightly improved economy in 2024. GfK’s sentiment measure increased 2 points to minus 22.” - BBG pic.twitter.com/96iYaqI9Jl

— Michael Brown (@MrMBrown) December 15, 2023

“Despite the severe cost of living crisis still impacting most households, this slow but persistent movement towards positive territory for the personal finance measure looking ahead is an encouraging sign for the year to come,” said Joe Staton, client strategy director at GfK.

The data showed that confidence was also sharply higher from minus 42 in December 2022.

For the year ahead, expectations of their personal financial situation rose one point to minus 2 in December, up strongly from minus 29 in December 2022.

Staton said the recovery in that sub-index was encouraging because it indicated household “financial optimism and control over personal budgets”.

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