Yahoo Finance FTSE 100 Live: ECB hikes rates, ups inflation forecasts; FTSE closes at 7628; gilts hit new 15-year high
The European Central Bank took centre stage today as policymakers hike dinterest rates by 0.25% for an eighth meeting in a row.
Their meeting comes after the Federal Reserve paused interest rate hikes but signalled the need for further rises later in the year.
In today’s corporate developments, ASOS shares surged after the fast fashion chain posted a trading update. Legal & General also announced the appointment of a new chief executive.
FTSE 100 Live Thursday
European Central Bank to hike rates 0.25%
Fintech firm CAB Payments confirms IPO
ASOS shares jump after update
End of day snapshot
17:00 , Daniel O'Boyle
Take a look at all the key market data as the FTSE closed higher and bonds remained near 15-year highs.
FTSE closes at 7,628.26
16:43 , Daniel O'Boyle
The FTSE 100 closed at 7,628.26 today after a late climb following stronger-than-expected retail sales from the US.
Shares were steady through most of the day as the ECB hiked interest rates as expected, but picked up as markets opened on Wall Street.
Ocado was again the top gainer of the day, continuing an extremely strong week for the grocery delivery board that has spent more time on the falllers’ board this year.
City Voices: The FCA is tying itself in knots on non-financial misconduct
16:05 , Daniel O'Boyle
“Who knew? I’m going to admit a gaping lacuna in my knowledge, that in several decades reporting the City, I did not know the beaks had it in their grasp to boot someone out for non-financial misconduct,” Chris Blackhurst writes.
“They do and they have done.
“The Financial Conduct Authority can excommunicate and fine those whose behaviour makes them not fit and proper to work in financial services.”
US shares up slightly
15:08 , Daniel O'Boyle
Wall Street shares are up slightly after the Federal Reserve held interest rates where they were yesterday.
Regional bank Comerica was the biggest gainer, while the dollar lost some ground against the pound and the euro.
City comment: Fundamentals need fixing to save the IPO revival
14:40 , Jonathan Prynn
Now the ash is settling on WE Soda’s bombshell decision to scrap its IPO yesterday, two schools of thought are emerging.
The company and its advisers insist that this was a well run business that had its flotation plans unfairly scuppered by London’s “extreme investor caution”. Strong words indeed. They say that the valuations being offered them by the City were 35% below their own expectations, a discount that was simply too big to swallow.
ECB “cannot afford to be wrong”.
13:36 , Daniel O'Boyle
ING Global Head of Macro Carsten Brzeski said the ECB is more hawkish than might be expected from its forecasts, because it cannot afford to be wrong on inflation.
“Despite good arguments against further rate hikes, the ECB simply cannot afford to be wrong on inflation. The Bank wants and has to be sure that it has slayed the inflation dragon before considering a policy change. This is why they are putting more than usual emphasis on actual inflation developments.
“Even if this completely contradicts forward-looking monetary policy, the ECB is in no position to take a chance. This is why we will be listening carefully to what ECB President Christine Lagarde has to say at the press conference.”
ECB hikes rates, more pessimistic on inflation
13:34 , Daniel O'Boyle
The European Central Bank hiked interest rates by another quarter of a percentage point as it now expects inflation to be even higher than previously thought.
The Bank said: “Inflation has been coming down but is projected to remain too high for too long.
“The Governing Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner. It therefore today decided to raise the three key ECB interest rates by 25 basis points.”
Gilts back toward 15-year highs
13:01 , Daniel O'Boyle
Two-year gilt yields have risen further to 4.89%, the peak level reached on Tuesday, ahead of the European Central Bank’s rates decision.
Gilts hit 4.9% on the back of stronger-than-expected wage growth on Tuesday, and while the market calmed somewhat yesterday, yields were still above even the levels reached during last year’s mini-Budget.
NatWest boss: Customers becoming more ‘confident’ despite cost woes
12:57 , Daniel O'Boyle
NatWest chief executive Dame Alison Rose has said UK households and businesses are becoming more confident despite ongoing pressures from higher interest rates and the cost-of-living crisis.
Dame Alison told the Goldman Sachs European financials conference in Paris that she was seeing resilience among the bank’s customers despite wider economic uncertainty and “very rational behaviour” from borrowers.
She said borrowers were over-paying on their mortgages and paying down more expensive debts as rates jump, with no signs yet of customers across the board struggling with repayments.
Mortgage mayhem: London homeowners feel pain as repayments soar
11:56 , Daniel O'Boyle
The biggest mortgage crisis in more than 30 years will hit London hardest, bringing financial misery to thousands of homeowners in the capital, the Standard can reveal.
The huge home loans taken out by buyers to get a toehold on the property market mean they now face crippling rises in their monthly bills as fixed-rate interest deals taken out when rates were at all-time lows expire and have to be replaced.
One housing expert said homeowners faced “a big shock” that will have huge implications for the property market.
Apple Store opens in Battersea Power Station
11:23 , Daniel O'Boyle
Aple opens its first “next generation” store in Europe today at Battersea Power Station home of its new UK headquarters.
The design of the eighth Apple store in London incorporates higher standards of accessibility and sustainability first pioneered at the Tysons Corner branch near Washington DC that opened last month.
Features include wider aisles for wheelchairs to pass through the store easily, assistive loops built into fixtures to help customers with hearing impairment and use of sustainable European oak and plant based terrazzo flooring in the fit out. Original brick pillars have also been retained.
Halma and Bunzl under pressure in FTSE 100, miners fall back
10:49 , Graeme Evans
Record profits for a 20th year in a row failed to protect Halma today as shares in the safety products conglomerate skidded to the bottom of the FTSE 100 index.
The retreat of 5% or 119.6p to 2309.4p came as jittery investors used annual results to lock in a 20% year-to-date jump by one of London’s safe haven stocks.
Halma’s defensive qualities were in evidence today as adjusted profits rose 14% to a record £361.3 million and the dividend lifted by more than 5% for a 44th year in a row.
A slight miss on the full-year margin front clouded the City’s reaction to the results, but new boss Marc Ronchetti believes Halma is well placed for further progress this year based on encouraging order book trends.
Analysts at Investec are also upbeat after lifting their price target by 100p to 2950p.
They said the critical nature of Halma’s product portfolio underpinned prospects, adding: “Halma has a proven business model, which should continue to generate long-term revenue and profit growth.”
Halma was joined at the top of the fallers board by another stock whose reliable record has provided comfort for investors amid the economic uncertainty.
Shares in distribution firm Bunzl had been 10% higher this year, but slipped 2% or 75p to 3031p in today’s session after its first half update showed a slowdown in organic revenues growth alongside a higher-than-expected margin.
Chief executive Frank van Zanten, whose company provides business customers with essential day-to-day products, said: "Bunzl continues to demonstrate resilience.”
Such qualities are likely to remain in demand amid the ongoing economic worries after the Federal Reserve last night signalled that it may not be done raising interest rates.
The prospect of two more increases weighed on sentiment as the FTSE 100 index slipped 1.56 points at 7601.18.
Mining stocks including Anglo American and Rio Tinto retreated more than 1%, even though China’s central bank cut another key lending rate in an effort to support the country’s slowing recovery.
The FTSE 250 index stood 8.91 points lower at 19,166.59, with Games Workshop higher for a second session in a row with a gain of 150p to 10,360p.
Odey hedge fund ‘in advanced discussions’ to sell funds to other asset managers
10:41 , Daniel O'Boyle
Odey Asset Management (OAM) is in discussions to sell off some of its funds in a sign of a deepening crisis at the hedge fund.
The business told investors that it is to transfer some of its activities and staff to other asset managers.
The hedge fund is “in advanced discussions”, it said in a letter.
ASOS shares jump as boss convinces investors turnaround plan is on track
10:39 , Daniel O'Boyle
ASOS shares soared today as new boss José Antonio Ramos Calamonte convinced investors the company was on the right track to bounce back from its recent troubles despite a 14% slump in sales.
The online retailer lost £290.9 million last year but launched a new plan to cut costs by stocking less clothes. This, the firm said, meant a decline in sales was expected as it puts “more stock than [it] would like” on clearance to get rid of clothes it hadn’t been able to sell at full price.
In total, ASOS plans to almost halve the value of clothes it holds from around £1.1 billion in 2020 to £600 million today.
Hugo Boss ups 2025 sales target to €5 billion
09:30 , Daniel O'Boyle
Frankfurt-listed fashion house Hugo Boss now expects revenue of €5 billion (£4.3 billion) and €600 million in profit by 2025, as it’s already on course to hit its previous revenue target of €4 billion this year.
The boost mostly comes from its menswear range, where sales are expected to reach €3.5 billion, with much of the increase coming through brick-and-mortar stores.
Sales in Asia, where luxury fashion sales have boomed as countries rebound from Covid-19, are set to more than double to €1 billion.
The fashion house, which will turn 100 next year, also plans to “explicitly seize opportunities in denim” to win over Generation Z, while introducing womenswear versions of more of its men’s lines.
CEO Daniel Grieder said: “We have everything needed to continue our success story.”
We’re going ahead with our London IPO, says CAB Payments
09:28 , Simon Hunt
Hopes for a rejuvenation of the London stock market were handed a much-needed lifeline this morning after fintech firm CAB Payments said it was pressing on with its IPO plans, just hours after industrial giant WE Soda abruptly scrapped its flotation.
Sutton-based CAB, which processes international payments for businesses, confirmed its intention to float on the London Stock Exchange, which it said underscored its “confidence in the UK as the home for innovative and growing global businesses.”
Last night, WE Soda, the world’s largest producer of natural soda ash, cancelled a planned listing that could have valued it at as much as £6 billion as its CEO, Alasdair Warren, blasted what it called “extreme investor caution in London” which “meant that we were unable to arrive at a valuation that we believe reflects our unique financial and operating characteristics.”
Joshua Mahoney, chief market analyst at Scope Markets, said: “Given the underlying level of market volatility, an IPO of this scale was only ever likely to fly with sound institutional backing. Questions now have to be asked given the timing of this as to whether it was anything more than a summer kite-flying exercise, especially given the scale of the promised imminent dividend payout.
“The fact appetite was lacking for a company to raise $800m in order to pay down debt and fund a $500m dividend isn’t difficult to understand given the current demand to show tangible returns in capital. The era of free money is behind us.”
London is back, says Fullers boss
09:06 , Simon Hunt
The boss of Fullers has hailed the ‘re-emergence of London’ after the firm reported a jump in sales.
The 178-year-old pub chain, which owns the Churchill Arms in Kensington, the Admiralty on Trafalgar Square and The Flask in Highgate, posted a 33% jump in revenues for the year to April to £336.6 million, while pre-tax profits fell slightly to £10.3 million.
Sales in central London were particularly high, rising more than 40% over the period, amid a return to offices, a revival of office parties and a surge in tourism, with stronger trading on Fridays and Saturdays, reversing a previous drop-off caused by working from home patterns. Sales might have been even higher, but for a £5 million knock as a result of train strikes, according to the firm’s estimates. Shares rose 2.7% to 565p.
Fullers boss Simon Emeny said: “London is now driving our growth. The Elizabeth line is surpassing all expectations and sites we have close to the line are among the strongest performers.
“We had acquired some sites that we knew would benefit once Crossrail got going and they did exceptionally well.
"I am more optimistic about the future than I have been since before the pandemic.”
Informa up 4% in FTSE 100, ASOS rallies 12% after update
08:42 , Graeme Evans
Publishing and exhibitions business Informa leads the FTSE 100 index, with shares up 4% or 27.8p to 732.2p on the back of an improvement to its full-year guidance.
Halma, the safety equipment technology conglomerate, raised its dividend for a 44th year and posted a 20th year of record profit but shares still slumped 6% or 139p to 2290p.
Outsourcing firm Bunzl, another of the top flight’s defensive stocks, fell 70p to 3036p after an in-line trading update.
The FTSE 100 index fell 6.59 points to 7596.15, while the FTSE 250 index stood 18.33 points higher. ASOS led the second tier benchmark, with shares rebounding 12% or 39.3p to 367.3p following the fast fashion chain’s trading update.
Market snapshot as FTSE 100 opens slightly lower
08:27 , Daniel O'Boyle
Take a look at the key market data as the FTSE 100 started slightly down.
China rate cut lifts Asia markets
08:00 , Graeme Evans
Asian stock markets mostly advanced today after China’s central bank took further steps to support the country’s faltering economic recovery.
The People’s Bank of China cut its one-year medium-term lending facility rate by 0.1% to 2.65% in the first reduction since August.
The move was announced as figures showed May industrial production growth of 3.5%, down from 5.6% the previous month and slightly below forecasts. It also emerged that retail sales rose 12.7% year-on-year, versus the rise of 13.7% expected.
The Hang Seng rose 1.7% in Hong Kong and the SSE index lifted 0.6% in Shanghai but Tokyo’s Nikkei 225 gave up initial gains to trade slightly lower.
Informa ups guidance beyond 2019 levels as trade shows rebound
07:59 , Daniel O'Boyle
Publishing and exhibitions business Informa upped its guidance for the year to levels higher than before the pandemic, as companies return to trade shows.
The group now expects revenue of around £3 billion for the year and profit of around £770 million. That would put revenue above 2019 levels as business exhibitions complete their rebound from a near-total stoppage during the Covid-19 pandemic.
Stephen A. Carter, Group Chief Executive, Informa, said: “The Informa Group is delivering accelerating growth in revenues, profits, earnings and cashflows, with a strong balance sheet and increasing shareholder returns.
“This enables us to increase our guidance for 2023 and create further opportunities for growth and acceleration in 2024 and beyond.”
Legal & General appoints Santander executive Simões as new CEO
07:58 , Michael Hunter
Legal & General has named its new CEO.
António Simões will take the top job at one of the biggest names in the City, succeeding Sir Nigel Wilson, who is leaving after over a decade in charge.
Simões will join the insurance giant and asset manager from Santander, where he has been regional head of the Spanish bank’s European operations since 2020, ending a “rigorous” recruitment process that has been running since January, when Rudd announced plans to retire.
Simões will take up the job at the start of 2024.
He said: “Legal & General is a great company with an iconic, highly respected brand, strong financial track record and a deep-rooted commitment to social purpose. I’m proud to be appointed as Group CEO to build on the success of Nigel and the team.”
Wilson will stay on until the end of 2023.
£1 million share payment for City Pub Group’s Clive Watson
07:37 , Simon Hunt
City Pub Group’s Clive Watson today exercised share options worth £1 million under the firm’s long term incentive plan.
That brings his holding in the £100 million chain to just under 4%.
Watson told the Standard: “As we reported only last week, trading has been strong with sales so far this year up 20%. The hot weather over the last few days has been excellent for trading with customer utilising our extensive outside space and enjoying the warmth.
“We have seen record London trading over the weekend. Summer is here and City Pub is in great shape. We are optimistic for the remainder of 2023 and beyond.”
ECB set to raise rates after Fed pause, FTSE 100 seen lower
07:29 , Graeme Evans
Wall Street took the Federal Reserve’s signal of possibly two more interest rate rises largely in its stride last night, with the S&P 500 index finishing broadly unchanged.
The central bank left rates unchanged at 5-5.25% last night, a move dubbed a “hawkish” pause after dot-plot projections pointed to further increases and killed speculation over rate cuts later in the year.
The S&P 500 initially fell 0.7% until Federal Reserve chair Jerome Powell calmed the mood by reiterating that future moves will be data dependent.
Michael Hewson, chief market analyst at CMC Markets, said: “If inflation continues to slow and jobs growth remains steady, the question needs to be asked as to whether the Fed will really pull the trigger on more rate hikes? It seems unlikely.”
The Dow Jones Industrial Average closed 0.7% lower, but the Nasdaq Composite continued its run of gains by adding 0.4%. The FTSE 100 index closed 7.96 points higher last night and is expected by CMC to open 10 points lower at 7592 today.
Attention now turns to the European Central Bank (ECB), with policymakers this afternoon set to announce another quarter point increase in the deposit rate to 3.5%. Markets currently expect one more hike at a subsequent meeting.
Deutsche Bank strategist Jim Reid said: “Our European economists expect the message to tilt hawkish and think the ECB will emphasise the persistence of underlying inflation and ongoing risks to the upside.”
ASOS sales slide as firm says it bought too much stock
07:18 , Simon Hunt
Asos sales fell 14% in the three months to the end of May as the firm vowed to sell down its stock to improve profitability.
The online fashion retailer said it took out a new long-term £275m financing facility in order to “provide the stability of a structure in place to April 2026.”
The firm said: ”The build-up of stock based on ASOS' view of e-commerce as having an 'infinite aisle' was exacerbated by the perfect storm created by unpredictable demand and global supply chain disruption.
“While it's a frustrating issue to solve, we have a clear plan to fix things and we are making great progress.”
Recap: Yesterday’s top stories
06:54 , Simon Hunt
Good morning. Here’s a summary of our top stories from yesterday.
WE Soda has aborted its billion-pound London IPO citing “extreme investor caution in London.”
Vodafone announced a merger with Three in a deal to create the UK’s biggest mobile network, but the firms could face questions by the competition watchdog.
The economy grew 0.2% in April, according to the ONS, in line with City forecasts.
HSBC put its mortgage prices up for the second time in a week in further signs of chaos in the market.
