Yahoo Finance FTSE 100 Live: Shares jump and sterling lower as UK inflation falls to 7.9%
Shares have rallied after the UK’s annual inflation rate fell by more than expected to its lowest level since March 2022.
Sterling dipped below the $1.30 threshold after June’s 7.9% reading eased some of the pressure on the Bank of England to deliver another outsized hike in interest rates at its August meeting.
Mining giant Rio Tinto’s second quarter production figures and an update by Severn Trent are among today’s corporate highlights.
FTSE 100 Live Wednesday
Inflation surprise boosts London shares
Traders revise BoE rate rise expectations
Under-fire Severn Trent ‘well positioned’
Canary Wharf adds life sciences in ‘evolution’
15:37 , Simon Hunt
Canary Wharf Group’s chief executive today said the “evolution” of the area which is diversifying beyond offices is well under way, after securing the green light to develop a major new 23-storey life sciences building.
The landlord behind the Docklands financial district, working with developer Kadans Science Partner, has got planning approval for a 823,000sq ft tower that can provide workspace to businesses such as in biotechnology, genomics and medical tech.
The North Quay scheme will be the largest commercial life sciences building in Europe. It is opposite the new Crossrail station and designed by Kohn Pedersen Fox Associates.
Due for completion in 2027, it marks the latest work between CWG and Kadans after the pair recently completed 40,000sq feet of labs and offices on the estate at 20 Water Street.
CWG has been hit by the rapid growth of working from home , and HSBC has announced plans to exit its 8 Canada Square skyscraper there by 2027. The property giant is becoming less reliant on offices and has invested in creating thousands of homes with more planned. Since 2019 it has also expanded from 36 restaurants, cafés and bars to more than 70.
Shobi Khan, CEO of CWG, has been focusing on growing the life sciences division. He said of the latest approval from Tower Hamlets council: “This is a significant milestone in our development of a world-class life sciences hub at Canary Wharf.”
New York opens higher as investors turn to defensive stocks
14:37 , Simon Hunt
Wall Street’s S&P 500 rose in opening trade, with demand for defensive stocks supporting the market after corporate results in the banking sector took a turn for the worse,
The broad stock gauge rose 15 points in opening trade to 4570.10, with healthcare and infrastructure stocks high on the leaderboard.
Goldman Sachs was in the spotlight after a slide in quarterly profit, in part due to the drop in dealmaking on both sides of the Atlantic. Shares in the bank, one of the biggest names in global finance, were down 1.2%.
Goldman Sachs shares slip in pre-market trade as quarterly revenue drops 8%
13:23 , Michael Hunter
A drop in quarterly revenue at Goldman Sachs, Wall Street’s emblematic investment bank, hit its shares in pre-market trade and stoked concern about the impact of the dealmaking slowdown on both sides of the Atlantic.
Goldman’s second-quarter numbers were worse than expected on the most-watch metric in the sector – diluted earnings per share – which fell by over 60%, a bigger decline than forecast. Total net revenue tumbled by 8.2% to just under $11 billion.
It was the lowest quarterly profits at the titan of world finance since the second quarter of 2020.
Investment banking fees slumped by a fifth to $1.4 billion. The slowdown in merger and acquisitions activity in the period has stoked fears over potential job losses in the City and on Wall Street.
Goldman’s stock slipped bu 0.2% ahead of the start of full trade. Futures markets also pointed to a flat start for the S&P 500.
FTSE 100 rallies after inflation drop
12:43 , Simon Hunt
Midway through the day’s trading session in London, the FTSE 100 is up 1.5% after rosier-than-expected inflation data.
Here’s a look at the key market information.
CMA provisionally clears Broadcom VMware deal
11:44 , Simon Hunt
The UK competition regulator has provisionally cleared a deal for semiconductor and software giant Broadcom to acquire VMware.
The Competition and Markets authority said the deal would not weaken competition in the supply of critical computer server products.
The CMA said it will now consult on its findings before issusing a final report in September.
Persimmon leads rebound for building stocks, British Land up 8%
10:18 , Graeme Evans
Relief over the outlook for mortgage rates following inflation’s big downside surprise today meant heavily-sold Persimmon shares rebounded 5% or 57.5p to 1149.5p and Barratt Developments surged by 21.4p to 445.7p.
Redrow and Crest Nicholson jumped by 6% in the FTSE 250 index as investors made sure not to be on the wrong side of a potential turning point in the sector.
Other interest rate-sensitive sectors such as property and utilities were also swamped with buyers, particularly logistics and warehousing business Segro up 5% or 37.6p to 780.8p and United Utilities 4% or 33.4p stronger at 988p.
Their support meant the FTSE 100 index rose 79.88 points to 7533.57 in contrast to initial expectations for a flat session, while the UK-focused FTSE 250 index returned to form with a surge of 2.5% or 455.63 points to 19,073.85.
Other big risers in the second tier included British Land, which rallied 8% or 25.15p to its highest level since early June at 350p.
Only a handful of stocks across the FTSE 350 were in negative territory, led by Antofagasta after the Chile-based miner cut its production guidance for the year.
Shares fell 2% or 35p to 1472p, alongside a decline of 44p to 5066p for Rio Tinto.
The iron ore giant’s latest update revealed momentum for its Pilbara assets in western Australia but this was offset by downgrades and “much more to do” in other operations.
Anglo American shares also fell 23p to 2288p and Glencore lost 2.9p to 451.1p in a further reminder to investors about the uncertain global economic outlook.
In the FTSE All-Share, Restaurant Group jumped 8% or 3.25p to 42.25p after it reported more market-beating growth from its Wagamama chain.
With Brunning & Price pubs also delivering an “exceptional” trading performance, the group stuck by expectations for its full-year results.
In contrast, shares in AIM-listed build-to-rent firm Watkin Jones slumped 30p to 47p after it downgraded forecasts for the second half of the year due to a deterioration in market conditions.
Odeon eyes bumper week from Barbie and Oppenheimer
10:11 , Joanna Bourke
Cinema chain Odeon is expecting to welcome as many as one million customers to its venues in the week following Friday 21st July – the joint release date for Barbie and Oppenheimer.
Interest in both films is soaring in the run-up to release. Odeon, which is owned by AMC, the US cinemas chain, has already sold more than 200,000 advance tickets in the run up to the release day.
Odeon added that 10,000 guests are expected to see both films in the opening weekend, the majority of whom have booked to see both films on the same day.
The company is gearing up for the biggest opening weekend since Avengers: Endgame in 2019.
Suzie Welch, interim managing director UK & Ireland at Odeon said: “We have been amazed by the response from guests in the run-up to this Friday, as excitement for the Summer 2023 slate, led by Barbie, Oppenheimer and Mission: Impossible 7, continues to build, showcasing what the big-screen experience is all about.”
City Comment
10:09 , Simon English
An upbeat note from Morgan Stanley chief and chair James Gorman, on the back of disappointing second quarter results out last night.
“Solid results….challenging market environment….subdued client activity….but…more constructive tone.”
The view from the trading floor is a bit less constructive, and goes like this: “Are they going to sack you or me?”
Post Covid investment banks decided it was possible to use their HR departments to do things other than shove people out the door.
Let’s ask our staff how they are doing, and let’s not go through that ridiculous hiring and firing frenzy ever time there’s a trading boom followed by an inevitable bust, they said.
Let’s cherish our people!
This cuddly phase was never going to last long.
Morgan Stanley paid out $308 million in severance costs for 3000 job cuts in the last three months alone.
Goldman Sachs, the bank that used to get cross at being called a great vampire squid but now wishes anyone thought it still had those sorts of killer instincts, reports results later today.
The debate on Wall Street is this: how bad will they be?
Goldman has already axed many thousands in New York and London but may not be done yet.
As for chief executive David Solomon, who moonlights as a DJ, questions are starting to be asked about whether he too should spend more time with his turntables.
I think we can assume a few more of his traders are going to have to dance out the door first, but the point remains: it’s grim out there.
If inflation does keep falling, interest rates follow and clients switch back to equities and away from bonds, things will look up.
Until then, it’s murder on the trading floor.
Under-fire Severn Trent ‘well positioned’ to raise water infrastructure spending
10:04 , Simon Hunt
Severn Trent said today it was “well positioned” to lift spending on its infrastructure, with the industry at the centre of a public outcry over sewage overflows into rivers and leaks from water mains.
The five-million-customer Midlands utility said its capital expenditure this year would be between £850 million and £1 billion. It has hedged 45% of its expected energy costs for 2024/25, at lower rates than in the current year.
The FTSE 100 utility’s CEO Liv Garfield (above) hit the headlines this month with another kind of leak. A confidential email she sent to other senior executives called for an “off the record roundtable” amid the threat of nationalisation of water companies.
Back on the record, Garfield said: “We recognise that there is more we can do and we are committed to going further, faster.”
Departing Revolution Beauty CEO in £800k payout
09:25 , Simon Hunt
Revolution Beauty today sought to draw a line over its public spat with shareholder Boohoo as it cancelled a last-minute general meeting and CEO Bob Holt collected a hefty payout after bowing to pressure for him to quit.
Holt, who previously blasted a board shake-up proposal by Boohoo as an “unwelcome and opportunistic attack…[which] could simply be part of an attempt by boohoo to distract its own shareholders from the various issues that boohoo itself is facing,” today exercised options over 5 million shares in the company and agreed to sell around half of those to the fashion retailer in a £835,000 deal.
Revolution shares fell 2.5% to 31p.
Hargreaves Lansdown warns of low investor confidence
08:56 , Simon Hunt
Fund management service Hargreaves Lansdown today bemoaned low investor confidence as it warned clients were making cash withdrawals to fund cost-of-living increases.
Customer asset retention slipped back last year to below 90%, offset by a 6% rise in net new business worth £1.7 billion.
The firm said: “Investor confidence across the quarter has been low with cost-of-living issues, rising interest rates and market volatility impacting deal volumes.”
Chair Deanna Oppenheimer is preparing to step down from the company, it was reported yesterday, after co-founder Peter Hargreaves, who owns a 20% stake in the business, called her five-year tenure a “disaster.”
Hargreaves Lansdown shares rose 4.9% to 881.4p.
FTSE 250 jumps 3% after inflation surprise
08:26 , Graeme Evans
Markets have reacted strongly to the surprise inflation reading, with the UK-led FTSE 250 index up by 3% or 548.93 points to 19,167.15.
The relief rally was also seen in the international FTSE 100 index as stronger housebuilders and property stocks helped the top flight post a bigger-than-expected rise of 1.45% or 109.37 points to 7563.06.
Across the FTSE All-Share, the best performing stocks were Crest Nicholson following a rise of 9% and the warehouse property firm Tritax Big Box up 7%.
Meanwhile, sterling fell 0.7% to $1.2947 on hopes that the Bank of England may no longer have to hike interest rates by 0.5% next month.
Stocks make gains and bond yields make biggest drops since March
08:22 , Simon Hunt
Stocks have made gains in the opening minutes of trading after this morning’s CPI data, while two-year bond yields fell 20 basis points, the biggest single drop since March.
Here’s a look at your key market data.
Sales rise for cake maker Finsbury Food Group
07:53 , Joanna Bourke
Finsbury Food Group today said annual sales have jumped 16%, despite persistent significant cost inflation and economic uncertainty.
Most of the growth to £413.7 million in the year to July 1 came from the bakery firm’s January acquisition of Lees Foods, a Scotland-based meringues and teacakes manufacturer.
But the increase was also in part due to Finsbury Food Group rising prices. It supplies breads, birthday cakes and other products to supermarkets, convenience stores, restaurants and fast-food firms . Those customers then decide if they pass on rises to the public.
Finsbury Food Group said it has operated in an “incredibly challenging environment” and chief executive John Duffy added that challenges are likely to remain in the short-term.
He said the latest performance “is testament to the ongoing demand for our products and the resilience and determination of the business”.
CPI figures “make or break” for half-point rate rise
07:45 , Simon Hunt
ING, the Dutch bank, said the CPI reading will “make or break” the prospects for a larger, half-point rate hike in August, as the BOE battles with inflation that is proving stubbornly high in the UK.
“Investors currently expect a peak for Bank Rate at 6.15%, said James Smith, developed markets economist. “The Bank of England can probably get away with hiking slightly less than markets expect.
“Progress on services inflation should be enough to convince the committee to pause its hiking cycle in November, which would suggest a peak rate of either 5.50% or 5.75%”
Rio Tinto lifts iron ore outlook
07:38 , Graeme Evans
Rio Tinto has said iron ore shipments from its Pilbara assets in western Australia should be in the upper half of this year’s guidance range of between 320 and 335 million tonnes.
In a trading update posted overnight, chief executive Jakob Stausholm said the Pilbara business had built further momentum after production of 81.3 million tonnes came in 3% higher than the same quarter of 2022.
He also highlighted faster-than-expected progress ramping up Mongolia’s Oyu Tolgoi high grade underground mine, meaning Rio remains on track to more than triple its copper production by the end of the decade.
Stausholm added that production downgrades during the quarter highlighted that the company still has “much more to do” in other areas of its operations.
Bauxite production of 13.5 million tonnes was 5% lower than the second quarter of 2022, meaning the full-year outturn will be at the lower end of Rio’s 54 to 57 million tonne range.
Rio’s Australian-listed shares fell 0.75% following the update.
Inflation gets steeper for some food items
07:35 , Simon Hunt
Food inflation has declined for fruit, vegetables, meat and fish.
But prices have risen even faster for items like spirits, soft drinks, coffee, tea, sugar and chocolate.
How does UK inflation compare globally?
07:22 , Simon Hunt
How does UK inflation compare globally?
Inflation in the UK fell faster than expected in June, but it remains the second-highest in the G10 nations.
Bank stocks boost Wall Street, FTSET 100 seen flat
07:12 , Graeme Evans
US markets rallied again yesterday thanks to better-than-expected earnings figures from Bank of America and Morgan Stanley.
Their shares jumped 4% and 6% respectively to help the Dow Jones Industrial Average post an improvement of 1% by the close.
The S&P 500 index added another 0.7% to set a 15-month high, while momentum continued for technology stocks to leave the Nasdaq Composite 0.8% higher.
The recent gains in the sector will be tested after tonight’s closing bell as Tesla and Netflix are due to post their quarterly updates.
Tokyo’s Nikkei 225 is 0.8% higher on the back of Wall Street’s latest advance, but other Asia markets are lower due to concerns over the health of China’s economy.
The FTSE 100 index is expected to open flat at 7453, having risen 0.6% or 47 points yesterday.
Inflation falls further than expected in June
07:06 , Simon Hunt
The headline rate of inflation for June has fallen faster than expected, in a drop that will ease nerves about the the Bank of England’s long and bitter fight against rising prices.
The Consumer Price Index hit 7.9% for June. having been forecast to fall to 8.2% from 8.7% last time.
After 13 consecutive interest rate hikes from the Bank of England, policy makers in Threadneedle Street have been looking for signs that their fight against soaring prices is kicking in.
Today’s set-piece numbers followed news of “incredibly high” grocery price inflation yesterday from Kantar, the market research and data analytics firm, which used the term to label the 14.9% rise in food prices. But it was also the fourth consecutive month of a drop, taking the number further away from March’s peak of 17.5%.
Nonetheless, the BOE looks likely to lift rates again at its next meeting in August, with a rise of a quarter-point or even a half-point expected, taking the base cost of borrowing up from 5%.
Morning refresh: What you need to know to start the day
06:45 , Simon Hunt
Good morning from the City desk of the Evening Standard.
All eyes are on UK inflation numbers this morning. Most major economies have experienced significant inflation in the past year, but while others have since seen price rises slow, they have remained stubbornly high in the UK, which now has the second highest rate in the G10 behind only Sweden.
Most City analysts are expecting only a modest decline in the CPI rate, suggesting more pain is on the way for consumers on squeezed incomes and further interest rate rises could be on the cards. As of this morning, nearly 60% of City analysts polled by Reuters expect the Bank of England to announce a half-point interest rate rise when it next meets.
The Bank of England faced accusations of hypocracy after it was revealed that it paid out £25 million in bonuses to staff despite senior figures urging wage restraint by employers.
And here’s an insightful essay by former City editor Chris Blackhurst on how the former boss of Vanity Fair has shown print media still has a long life ahead of it.
This morning we’re also expecting trading updates from water company Severn Trent, catering business Finsbury Food and mining business Antofagasta. In the afternoon we’ll get quarterly earnings numbers from US bank Goldman Sachs.
