Yahoo Finance FTSE 100 Live: 'Rate cuts could come sooner' as GDP falls by 0.3%, blue-chip shares higher
A surprise 0.3% decline in GDP for October today fuelled the UK’s winter recession fears and appeared to push interest rate cuts a little closer on the horizon.
The disappointing update comes ahead of tonight’s US Federal Reserve policy announcement and those by the Bank of England and European Central Bank tomorrow.
Meanwhile, Ladbrokes owner Entain is looking for a new boss after it announced today that Jette Nygaard-Andersen has left the business with immediate effect.
FTSE 100 Live Wednesday
GDP falls by 0.3% in October
Entain chief executive steps down
Zara owner Inditex records sales jump
Central London office rents forecast to climb for high quality space
Wednesday 13 December 2023 14:01 , Joanna Bourke
Rents for the capital's greenest and most high end offices have climbed over the last five years, by more than a quarter for some space in the West End, and further growth is predicted.
Property agent Carter Jonas used a mix of its own and CoStar data and found in the West End prime rents for top quality space have risen to £135 per sq ft this year from £105 per sq ft in 2018. Read more HERE
GDP figures deal blow to one of Sunak’s five priorities
Wednesday 13 December 2023 13:38 , Daniel O'Boyle
News that the economy shrank in October has dealt a blow to one of Rishi Sunak’s five priorities.
But he may see hope that another of his priorities can be achieved after seeing off a backbench rebellion on his Safety of Rwanda Bill – viewed by some Conservatives as vital to “stopping the boats”.
The priorities have dominated the Prime Minister’s public appearances this year, after he promised in his new year’s speech to halve inflation, grow the economy, reduce debt, cut NHS waiting times and stop small boat crossings.
The entrepreneurs who make Christmas
Wednesday 13 December 2023 12:44 , Daniel O'Boyle
Christmas lasts all year for Mike and Alison Battle. The married couple start planning their festivities every January and meet Father Christmas “hundreds of times'' throughout December. Christmas shopping never ends: they buy festive props at antique fairs and antiquarian book sales year-round for their annual immersive experience, Lapland UK.
It’s not to be mistaken for the so-bad-they’re-funny winter wonderlands, with expensive tickets to view limply-strung fairy lights and plastic polar bears in a muddy field triggering complaints. The Battles’ £60-plus-per-head extravaganza has been running for 15 years, with attendees including Elton John, Paul McCartney, Tom Hardy, Idris Elba, the Beckhams, Andy Murray, and “most of the British royalty, including the Duke and Duchess of Wales - who insisted on a standard tour with other families just like them.”
The LaplandUK business hit a £17.2 million turnover this year, selling out of all 160,000 tickets for its six-week run in one day in March.
Berry Bros. & Rudd revenues top a quarter of a billion pounds as it celebrates 325 years
Wednesday 13 December 2023 12:09 , Daniel O'Boyle
Britain's oldest wine merchant has toasted another year of successful growth, bring its revenues past a quarter of a billion pound for the first time.
Berry Bros. & Rudd, which is based on St James's Street and was founded in 1698, said its revenues rose 11.1% in the year to end March to £254.3 million. Earnings slipped back slightly to £20.7 million which the company put down to investment in a new fine wine storage facility based in Andover.
The firm, which sells rare wines for as much as £10,000 a bottle, said its fine wine and spirits business plus joint ventures Hotaling and No. 3 Gin all experienced sustainable growth, while Hotaling, its import and distribution business in the USA, delivered double digit growth and No 3 Gin more than doubled its sales during the year.
Another GDP slump — Where's the 'Brexit dividend' we were promised?
Wednesday 13 December 2023 11:22 , Daniel O'Boyle
Rishi Sunak's Government has failed to offer a vision of how a post-Brexit Britain can thrive and prosper, Jonathan Prynn writes
Here we go again.
Two steps forward in September, now three steps back in October. The fall in GDP in the month revealed by the ONS continues a pattern that has haunted the British economy for two years. There is just no forward momentum.
A fascinating graph posted by Panmure Gordon economist Simon French illustrates it well. For every green bar of hope above the zero line showing monthly GDP growth there is a red bar of despair as output slips back again.
Interest rates to plunge in 2024 after GDP falls, City markets suggest
Wednesday 13 December 2023 11:05 , Daniel O'Boyle
City markets today priced in a full percentage point cut in interest rates by the end of next year after storms and strikes laid waste to economic growth in October.
GDP fell 0.3% in the month, according to latest figures from the Office for National Statistics (ONS), compared with a City consensus forecast of flat output in the month.
All three major sectors of the economy — services, production and construction — were in reverse gear, encouraging traders to bet that the Bank of England will order rate cuts sooner than previously expected to stave off recession.
Although the Bank of England is almost universally expected to leave rates on hold at 5.25% tomorrow, market pricing is now pointing to a first cut as soon as May — far earlier than most economists had been predicting — with a full point reduction to 4.25% possible by December.
The increasingly doveish expectations come just days after the CBI predicted there would be no cuts before 2026.
Oil stocks under pressure, B&M falls after share sale
Wednesday 13 December 2023 10:32 , Graeme Evans
Pressure on BP and Shell shares continued today after Brent Crude traded below $73 a barrel, having fallen 3% yesterday on oversupply concerns.
BP fell 1.95p to 459p, meaning its shares have fallen 18% since the oil giant neared its high point for the year in mid-October. Shell lost 10.5p to 2488.5p, leaving it 10.5% lower over the same period.
The oil market developments have improved the inflation picture ahead of tonight’s final Federal Reserve interest rate decision of the year.
The no change decision will be accompanied by updated “dot plot” projections showing where the central bank sees rates moving over the next couple of years.
Deutsche Bank’s US economists think the chart will point to 0.5% of cuts in 2024, which compares with futures markets pricing more than 1% by next December.
The rate cut optimism has left the S&P 500 index at its highest level in 20 months, whereas the FTSE 100 index is barely above breakeven point for this year.
Today’s session saw the top flight edge up 22.41 points to 7,565.18, with gains for AstraZeneca and BAE Systems helping to offset the energy sector weakness.
The biggest fall of the session was by B&M European Value Retail after 27.8 million shares were placed on the market at a 3% discount to last night’s price. The discount retailer dropped 32.4p from its recent year high to 568p.
Other stocks under pressure included mobile phone giant Vodafone, which shed another 1.3p to stand at a fresh record low of 65.8p.
The risers board featured Howden Joinery, which cheered 11p to 778.6p after analysts at Jefferies gave the kitchens supplier a “buy” recommendation.
The FTSE 250 index improved 44.83 points to 18,706.95, led by ventilation systems firm Volution after it forecast earnings ahead of City expectations. The shares rose 5% or 21.4p to 419.6p as the company said it had benefited from an increased focus on eliminating mould and condensation in buildings.
Lord Ashcroft in for £300m after Impellam sale
Wednesday 13 December 2023 10:27 , Daniel O'Boyle
Former Tory party deputy chair Lord Ashcroft is in for a £300 million payout after agreeing to sell AIM-listed tech recruiter Impellam to Dutch rival HeadFirst.
HeadFirst will pay 1084.4p per Impellam share, through a combination of cash, loan notes and dividends that values the Luton-based business at £483 million.
The billionaire corporate raider and conservative party donor Ashcroft owns 62% of Impellam, but set out plans to sell his stake in April 2022.
Ashcroft was at the centre of a political storm over his ‘non-dom’ tax status in 2017, when it was revealed he was still registered to pay tax in Belize.
ProCook sales pick up ahead of Christmas
Wednesday 13 December 2023 10:26 , Joanna Bourke
ProCook’s new boss has said first half sales were dented by volatile consumer confidence and teething issues from a website relaunch, but the Christmas season has got off to a stronger start.
Lee Tappenden said the kitchenware firm’s revamped website went live late September and challenges were around user experience, which impacted where it listed on Google rankings.
Read more HERE.
Will the BoE hint at rate cut timeline tomorrow?
Wednesday 13 December 2023 10:15 , Daniel O'Boyle
Paul Dales, chief UK economist at Capital Economics, said today's GDP reading suggests interest rate cuts might come sooner than previously thought, but that the Bank is unlikely to show its hand tomorrow.
"Whether or not the economy contracts, the big picture is that it remains very subdued and that’s probably going to be the story for 2024. Our 2024 GDP growth forecast of +0.1% is weaker than the consensus of +0.5%. But lingering constraints on domestic supply may prevent wage growth and CPI services inflation from falling as fast as most expect, which is why we think the Bank won’t cut interest rates until late in 2024 rather than in mid-2024 as most expect.
"That said, yesterday’s release of the soft wages figures for October implied that domestic prices pressures could ease a bit quicker and rate cuts could come a little sooner. But don’t expect to hear anything about that from the Bank tomorrow."
Mastercard and Visa face cross-border fee caps after ‘unduly high’ increases
Wednesday 13 December 2023 09:39 , Daniel O'Boyle
Mastercard and Visa look set to face a cap on their cross-border interchange fees after Britain’s payment watchdog raised concerns they have hiked charges to “an unduly high level”.
The Payment Systems Regulator (PSR) said a cap would protect UK business from overpaying on fees charged on transactions made between the UK and the European single market.
It said UK firms paid an extra £150 million to £200 million last year alone due to five-fold fee increases pushed through by the card firms in 2021 and 2022.
The PSR said its findings so far suggest that the market is “not working well”, with UK firms having “little choice but to pay the increased costs”.
FTSE 100 higher despite oil weakness, Entain shares up 3%
Wednesday 13 December 2023 08:44 , Graeme Evans
The FTSE 100 index is in positive territory, despite pressure on energy stocks after Brent Crude fell to its lowest level since June at below $73 a barrel.
Shell and BP shares lost 0.5% in this morning’s session but gains for AstraZeneca and BAE Systems meant the top flight rose 22.15 points to 7564.92.
Entain shares rose 3% or 28p to 833.6p following the departure of the chief executive, while Rolls-Royce continued its ascent with a rise of 5.6p to 310.3p.
On the fallers board, the strong run for B&M European Value Retail ended with a decline of 32p to 568.4p and Vodafone lost another 1.4p to stand at a fresh record low of 65.7p.
The FTSE 250 index improved 63.34 points to 18,725.46, led by ventilation systems firm Volution as it forecast earnings ahead of City expectations. The shares rose 5% or 20.6p to 418.8p.
Zara owner Inditex records sales jump
Wednesday 13 December 2023 08:38 , Joanna Bourke
A strong customer response to Autumn and Winter collections has helped fuel a double digit sales jump at Inditex, the world’s largest clothing retailer behind chains such as Zara.
The Spanish firm pointed to those collections being “very well received”, and added there was growth in stores and online.
Between February 1 and October 31 Inditex saw sales increase 11.1% to reach €25.6 billion (£22 billion), and net income was 32.5% higher at €4.1 billion. Read more HERE
Market snapshot
Wednesday 13 December 2023 08:36 , Daniel O'Boyle
Take a look at today's snapshot as markets react to the latest GDP data
Chancellor: Subdued GDP 'inevitable'
Wednesday 13 December 2023 07:58 , Daniel O'Boyle
After today's GDP data, Chancellor Jeremy Hunt said: “It is inevitable GDP will be subdued whilst interest rates are doing their job to bring down inflation. But the big reductions in business taxation announced in the Autumn Statement mean the economy is now well placed to start growing again"
"Recession indicators flashing red"
Wednesday 13 December 2023 07:55 , Daniel O'Boyle
Thomas Pugh, economist at audit, tax and consulting firm RSM UK, said: ‘The 0.3% m/m contraction in GDP in October, coming on the back of flatlining growth in Q3, has our recession warning indicators flashing red. However, growth should pick up over the rest of the quarter as a sharp fall in inflation, strong wage growth and government transfers to low-income households all give consumer spending a boost. As a result, we expect Q4 to look more like a repeat of Q3 than the start of a recession.
‘In any case, the big picture is still one of a stagnating economy. We doubt growth will materially pick up until towards the end of next year, meaning that the spectre of recession will hang over the UK economy for a long time yet."
Entain boss jets out
Wednesday 13 December 2023 07:29 , Daniel O'Boyle
Jette Nygaard-Andersen, boss of Ladbrokes owner Entain, has left with immediate effect, following reports that shareholders were unhappy with her leadership, dealmaking and private jet use.
She leaves just a week after the finalisation of a deferred prosecution agreement with the Crown Prosecution Service over alleged bribery at Entain’s former Turkey-facing arm.
Nygaard-Andersen became boss in 2021, after previous CEO Shay Segev stepped down after only months in charge. She led the business during a period where it aimed to distance itself from its past under Segev’s predecessor Kenny Alexander, who left over the Turkey probe. As CEO, Nygaard-Andersen set out plans to only do business in countries where gambling is specifically regulated.
Barry Gibson, Chairman of Entain, said: “Under Jette's leadership, Entain has executed a fundamental strategic shift towards regulated or regulating markets, overhauled its governance, transformed its operations, and significantly improved its customer offering."
US stocks higher ahead of rates announcement, Asia shares lower
Wednesday 13 December 2023 07:17 , Graeme Evans
The Dow Jones Industrial Average and the S&P 500 index closed at fresh 2023 highs last night after the US inflation rate slowed in line with hopes to 3.1%.
Strongly performing stocks included Facebook owner Meta Platforms and semiconductor firm Nvidia as their shares rose more than 2%.
Wall Street’s progress came ahead of tonight’s Federal Reserve policy announcement, when a dot plot chart will show where the central bank sees rates moving over the next couple of years.
Deutsche Bank’s US economists think it will point to 50 basis points of cuts in 2024, which compares with futures markets pricing more than 100 basis points by next December.
The mood in Europe was more risk averse as traders stayed on the sidelines ahead of Thursday’s policy meetings at the Bank of England and European Central Bank.
Asia markets were lower this morning, with the Hang Seng index in Hong Kong down by more than 1%. CMC Markets expects the FTSE 100 index to open nine points higher at 7551.
GDP falls by 0.3% in October
Wednesday 13 December 2023 07:03 , Daniel O'Boyle
UK GDP fell by 0.3% in October, below expectations and suggesting the economy could fall into a winter recession.
Economists had expected the economy to stagnate, with none of the 31 forecasters surveyed by Reuters seeing a decline this bad.
However, the decline also puts interest rate cuts a little closer on the horizon.
Over a three-month period, GDP was flat.
ONS Director of Economic Statistics Darren Morgan said: “Our initial estimates suggest that GDP growth was flat across the last three months. Increases in services, led by engineering, film production and education – which recovered from the impact of summer strikes – were offset by falls in both manufacturing and housebuilding.“October, however, saw contractions across all three main sectors. Services were the biggest driver of the fall with drops in IT, legal firms and film production - which fell back after a couple of strong months. These were also compounded by widespread falls in manufacturing and construction, which fell partly due to the poor weather.”
Recap: Yesterday's top stories
Tuesday 12 December 2023 23:02 , Simon Hunt
Good morning from the City desk of the Evening Standard.
A pack of snarling industry and financial watchdogs were off the leash today with the Competition and Markets Authority, Ofcom, the Office of Rail and Road, and the Financial Conduct Authority all issuing threats to investigate or regulate.
It is almost as if they wanted to empty their in-trays ahead of a looming deadline. But if the desk-clearing means that regulators’ minds can now start turning to mince pies and crackers they did not bring much festive joy for some of the companies likely to be affected. Ofcom’s threat to ban confusing mid-contract, inflation-linked tariff hikes — long overdue — knocked around £1 billion off the value of the telecom sector today.
There was also a big reaction in the broking and fund management sector where firms have been warned about the widespread, and increasingly lucrative, practice of “double dipping” — holding back interest on clients’ cash balances, and often also charging them a fee for the pleasure of sitting on their hard earned cash.Consumers have had a pretty tough couple of years. It is only reasonable that companies play fair with them and do not use loopholes and sharp practices to increase the cost of living burden any more than is necessary.
Here's a summary of our other top stories from yesterday:
CMA investigates Unilever for “greenwashing” claims for household brands such as Cif, Dove and Comfort
Interest rate cut hopes rise as wage growth eases faster than expected
Rail passengers being overcharged 10% for buffet tea and sandwiches because of lack of competition at station catering outlets says ORR
Astra Zeneca snaps up Icosavax in $1.1 billion deal
Fashion brand Sosandar sees record sales in November ahead of its high-street launch in spring 2024.
