Yahoo Finance FTSE 100 Live: Shares set for strong week; Tesco offers inflation hope; gilts still near 15-year highs
Tesco’s latest sales update and a profit warning by Travis Perkins are among key developments in the City today.
The FTSE 100 index is higher after US markets maintained their strong run last night on hopes that interest rates have nearly peaked.
In contrast to elsewhere, Japan has maintained its ultra-loose approach to monetary policy by leaving its short-term interest rate at -0.1%.
FTSE 100 Live Friday
Tesco boss says inflation beginning to ease
Travis Perkins warns on profits
ITV mulls buying Gogglebox maker All3Media
Capital flows through London like the Thames. Don’t divert it
15:49 , Daniel O'Boyle
Financial capital flows through London like the River Thames, which has functioned as a conduit for commerce over centuries.
But too much of that capital is flowing off elsewhere these days when there are world-beating ideas to invest in within yards of the Thames’s towpath.
We have the perverse situation that the vast majority of our pension savings are being used to back companies outside the UK. That far-flung search for returns is designed to make for happy retirements, but funding global competitors so enthusiastically will only challenge the quality of life for our children down the line.
Most Brits are aware of AI but think it’s not for them, ONS survey finds
15:28 , Daniel O'Boyle
Most Brits are now aware of new artificial intelligence technologies but don’t consider them relevant to their work, a new survey has found.
More than 70% of adults said they could give at least a partial explanation of AI, according to data collected by the Office for National Statistics. However, only 5% said they used AI a lot, while 78% said AI-powered tools like chatbots and facial recognition were not applicable to their businesses.
“The surge of artificial intelligence developments have been well documented in recent months, increasing public awareness,” the ONS said.
City Comment: Caution is still the word on inflation
15:18 , Jonathan Prynnn
Maybe I am reading too much into it but I detected a bucketful of caution in Ken Murphy’s careful choice of words on inflation today.
“Encouraging” is good, obviously, but “early signs” and “starting to ease” do not smack of a huge breakthrough in the battle with the inflation monster.
Clearly there has been some progress in categories such as dairy but there are still major structural supply issues keeping other prices elevated.
US shares up slightly
14:54 , Daniel O'Boyle
US shares are up slightly, in what could end up as Wall Street’s best week since March.
Shares are up 2.9% for the week, as the Federal Reserve paused its cycle of interest rate rises.
Top risers included Adobe, General Electric and Domino’s Pizza.
Tesco boss offers cautious hope that inflation is easing
14:05 , Daniel O'Boyle
Tesco boss Ken Murphy offered cautious hope on the cost of living, saying he sees “encouraging early signs” of inflation starting to ease.
But while he pointed to the supermarket cutting prices for milk and pasta lately, he said the journey to slow down price growth was “not all straightforward”, with prices still rising quickly for most goods.
“We are very conscious that many of our customers continue to face significant cost-of-living pressures and we have led the way in cutting prices on everyday essential items,” he said. “There are encouraging early signs that inflation is starting to ease across the market and we will keep working tirelessly to ensure customers receive the best possible value at Tesco.”
Competition watchdog approves Amazon’s £1.3bn takeover of robot-vacuum maker
13:08 , Daniel O'Boyle
The competition watchdog has given the thumbs up to digital giant Amazon to buy a major maker of automatic vacuum cleaners.
The 1.7 billion dollar (£1.3 billion) deal between Amazon and iRobot Corporation will now be allowed to go ahead in the UK after the Competition and Market Authority’s ruling.
It had investigated fears that the purchase would worsen competition in the market for robotic vacuum cleaners.
Banks raise rates again in further mortgage pain
12:25 , Daniel O'Boyle
Mortgage rates jumped yet again on Friday piling more pressure on anxious home owners and first time buyers.
The average rate on a two-year deal jumped to within a whisker of six per cent, up from 5.92 per cent to 5.98 per cent. On five-year fixes the average rate rose from 5.56 per cent to 5.62 per cent, according to latest figures from analysts Moneyfacts.
Ocado higher in strong FTSE 100 session, AO World rally continues
10:34 , Graeme Evans
A strong handover from Asia and Wall Street on hopes that US interest rates are near their peak meant the FTSE 100 index rallied 0.7% or 57.35 points to 7685.61.
The improved risk appetite boosted tech and growth-focused stocks as Ocado finished a strong week with a gain of 15.5p to 445.5p and Auto Trader added 8.6p to 646.2p. British Land’s last session in the FTSE 100 saw shares improve 5.3p to 340p.
Investors also backed housebuilder Persimmon as it lifted 19p to 1201p in a session when rival Barratt Developments fell 4.7p to 443.5p.
The FTSE 250 index rose 84.27 points to 19,123.68, led by cyber security firm Darktrace after shares jumped 10% or 29.4p to their highest level this year at 336.2p.
Mid-cap investors also tuned in to electricals chain Currys, up 0.6p to 52.2p after it said a sale of Greek division Kotsovolos was an option as part of a strategic review.
Among the small caps, Mears jumped 5% or 13.6p to 276.6p after the affordable housing services provider forecast annual profits materially ahead of City expectations.
AO World rose another 3.1p to 84.3p as it emerged this morning that Sports Direct owner Frasers Group now held a 21.3% stake, up from the 18.9% revealed on Monday when the two companies disclosed a strategic partnership.
Bolton-based AO World’s shares finished the week up more than 20%, similar to the surge by ASOS after Frasers yesterday disclosed an increased holding of 10.6%.
In today’s last session before its relegation from the FTSE 250, ASOS added 17.1p to 393.5p as sentiment in the former high-flying stock also benefits from signs of turnaround progress after a better-than-expected trading update.
Frasers Group, whose shares have fallen recently, returned to form by lifting 2% or 16p to 700p near the top of the FTSE 100 index.
Public sees inflation falling to just 3.5% next May
10:20 , Daniel O'Boyle
The public is optimistic that inflation will soon come down, with prices expected to be only 3.5% higher in May of 2024.
The bank of England’s survey of 2,200 adults found that the average expectation for inflation next year is 3.5%, down from 3.9% in a version of the survey conducted in February.
Expectations for 2025 were also improved, with the public predicting inflation of just 2.6% - close to the Bank of England’s 2% target - by this point.
The survey eased gilt markets, with the average yield on a two-year gilt falling back from the 15-year high reached earlier today.
London IPO market ‘effectively closed’ says Peel Hunt
09:38 , Michael Hunter
The City’s dealmaking drought meant the London IPO market was “effectively closed” according to broker and investment bank Peel Hunt today, as it swung to an annual loss.
With a lack of companies floating on the stock exchange, the broker and mini-investment bank revealed that the number of equity capital market transactions it worked on tumbled to 27 from 46 a year earlier.
That slowdown helped wipe out profits. The Liverpool Street institution reported a loss of £1.5 million for the 12 months to March 31 2023, down from a profit of over £41 million a year ago. Revenue slumped to £82.3 million from £131 million, down over 37%. It will not pay an annual dividend.
FTSE 100 higher but Tesco shares fall, ASOS leads FTSE 250
08:42 , Graeme Evans
A strong handover from Asia and Wall Street means the FTSE 100 index is 31.11 points higher at 7659.37, building on yesterday’s 25 point improvement.
Frasers Group is the best performing stock after the Sports Direct owner rallied 2% or 15.5p to 699.5p. Investors also backed Persimmon, which lifted 22p to 1204p in a session when other housebuilders including Barratt Developments were lower.
Tesco shares fell 2.2p to 262.3p despite maintaining full-year profits guidance in a trading update that showed UK and Ireland sales up 8.8% on a like-for-like basis in the 13 weeks to 27 May.
B&Q owner Kingfisher also fell 1% or 2.2p to 233.8p after today’s profit warning by Travis Perskins, whose shares slid 6% or 55p to 811.8p in the FTSE 250 index.
The UK-focused second tier benchmark rose 47.73 points to 19,087.14, led by fast fashion chain ASOS after a further rise of 6% or 22.6p to 399p.
Today’s market snapshot
08:41 , Daniel O'Boyle
Shares opened slightly higher this morning, while gilt yields continues to climb.
Take a look at our full market snapshot.
City sees 6% interest rates as more likely than not
08:15 , Daniel O'Boyle
City traders see 6% interest rates as more likely than not, as short-dated gilts crept further up to another 15-year high.
Two-year gilts are yielding 4.92%, a rate not seen since 2008, as investors continue to expect higher interest rates. Three-year and five-year gilts are also at 15-year highs.
Swap markets, meanwhile, suggest that there is a greater than 50% chance of interest rates hitting 6% early next year. That would be the highest Bank of England rate since 2000.
Japan keeps interest rate at -0.1%, Tokyo stocks close higher
08:01 , Graeme Evans
Japan’s ultra-loose monetary policy continues to contrast sharply with the rest of the world after its central bank today maintained its -0.1% short-term interest rate target.
The Bank of Japan’s no change in approach comes despite core inflation rising to 4.1%, its highest level since the 1980s following a long battle with deflation.
Policymakers believe that inflation will slow later this year as they voted to maintain stimulus measures put in place to support Japan’s economic recovery.
The significantly dovish stance weakened the yen after this week’s meetings by the Federal Reserve and European Central Bank fuelled expectations of further rate rises.
Monetary policy continues to be a tailwind for stocks in Japan, with Tokyo’s Nikkei 225 up another 0.7% to close at its highest level in more than three decades.
Travis Perkins warns on profits as higher interest rates hit housing markets
07:56 , Michael Hunter
Builders’ merchant Travis Perkins issued a profit warning today, as higher interest rates slow the housing market, curtailing demand from people renovating homes.
The company said it expected profits of £240 million, down from the £295 million it reported last year. It added that the “easing” of conditions in the housing market it had expected in the second quarter had not arrived.
Markets for new build and refurbished homes “continue to be impacted by higher interest rates and weaker consumer confidence driven by persistent, higher than anticipated consumer price inflation,” Travis said.
Peel Hunt reports annual loss after ‘challenging’ year including ‘disastrous’ mini-Budget
07:39 , Michael Hunter
City investment bank and stockbroker Peel Hunt reported a drop in annual revenue of over a third and swung to a loss, with banking revenues down 60%.
It pointed to “an extraordinary level of market turmoil” during the year to the end of March. It lost £1.5 million overall, down from a profit of over £41 million a year ago. Revenue slumped to £82.3 million from £131m, down over 37%. It will not pay an annual dividend for the year.
Steven Fine, chief executive said: “The challenges faced by the financial services sector in the past 12 months have been well documented, with the impact on market activity and investor sentiment felt across the industry. This can be seen in our FY23 results.”
In the wider statement alongside its numbers, Peel Hunt pointed to “economic and geopolitical events” at home and abroad:
“The ongoing war on European soil combined with the fallout from the UK Government’s disastrous mini-budget have contributed to rapidly rising interest rates, which are now at their highest level for 14 years. This, together with the biggest bank failures since 2008, has weighed heavily on investor confidence and market volumes in the UK.”
It also said the year was “difficult” for UK equity markets, with very low volumes, especially around initial public offerings, when companies float on the stock exchange. That pushed Peel Hunt’s investment banking revenues to £23.4 million from £57.9 million a year ago. The number of equity market transactions it worked on tumbled to 27 from 46.
CEO Fine added: “We remain confident that we will be ready and well-positioned to capitalise when market activity normalises.”
Wall Street and Asia markets higher, FTSE 100 consolidates gains
07:21 , Graeme Evans
The march higher by US markets continued yesterday as the S&P 500 index added another 1.2% to complete its sixth session in a row in positive territory.
The benchmark closed above 4400 for the first time since April 2022, while the tech-focused Nasdaq Composite continued its momentum by lifting 1.1%.
The gains followed higher-than-expected weekly figures on US jobless claims, which fuelled expectations that the Federal Reserve is unlikely to follow through with the additional two rate rises forecast at its meeting on Wednesday.
The Wall Street rally came even though the European Central Bank issued higher-than-expected inflation projections alongside its latest 0.25% interest rate hike.
Christine Lagarde, the ECB president, indicated it was likely the central bank will also increase rates at its meeting next month.
The FTSE 100 index closed 25.52 points higher at 7628.26, with CMC Markets forecasting a further rise of seven points to 7635 this morning. It follows a robust session in Asia, with the Hang Seng up more than 1% following Wall Street’s strong performance.
ITV confirms plan to buy Gogglebox maker All3Media
07:18 , Michael Hunter
ITV said today that it is “actively exploring” the acquisition of All3Media, one of the UK’s biggest independent programme makers and the company behind Call the Midwife and Gogglebox.
The UK’s main free-to-air broadcaster added that there was “no certainty as to whether any transaction will take place”.
All3Media is owned by Warner Bros Discovery and Liberty Global, which is an ITV shareholder.
Reuters reported the potential deal yesterday, saying that it could value All3Media at over £1 billion.
Currys prepares to sell off Greek unit
07:17 , Simon Hunt
Currys is exploring a sale of its Greek retail unit Kotsovolos.
The firm, which has over 90 stores in Greece, was acquired by Dixons in 2005 before it merged with Currys.
The company said in a statement: “The strength of the Kotsovolos brand, the long-term track record of profitable delivery and leading market position are not currently reflected in the Group’s valuation.
“Given the robust economic outlook for Greece and future growth opportunities for the business, the Board believes that now is the right time to explore all options for Kotsovolos.”
Tesco boss says inflation beginning to ease
07:14 , Daniel O'Boyle
Tesco boss Ken Murphy says there are signs of inflation starting to ease, as the supermarket giant said it expects profits of between £1.4 billion and £1.8 billion this year.
Murphy - who made £4.4 million last year - said the supermarket has “led the way” in lowering prices.
“We are very conscious that many of our customers continue to face significant cost-of-living pressures and we have led the way in cutting prices on everyday essential items,” he said. “There are encouraging early signs that inflation is starting to ease across the market and we will keep working tirelessly to ensure customers receive the best possible value at Tesco.”
Sales came to £13.8 billion, up 8.8%, with £10..8 billion of that from the UK.
Recap: Yesterday’s top stories
06:48 , Simon Hunt
Good morning. Here’s a summary of our top stories from yesterday:
London fintech CAB payments confirmed its LSE listing plans despite a decision by WE Soda to abort its IPO.
Scandal-hit Odey Asset Management is preparing to break itself up.
ASOS shares got a lift as the CEO set out details of his turnaround plan.
