Trump trades send FTSE 100 to best month since summer

Chris Price

Fri, Nov 29, 2024, 11:03 AM 42 min read

Asked about the impact of the Budget and tax raid on corporate Britain, he replied: “We are not at the moment seeing any signs of corporate distress” though he added that he was “watching carefully” how the impact of all the budget measures will “pass through” to markets and the wider economy.

11:26 AM GMT

Financial stability is the bedrock of having an economy, says Bailey

Andrew Bailey said there is no “trade off” between growth and financial stability as he was asked if the Chancellor’s warning that crisis-era regulation has “gone too far” would encourage too much risk-taking.

Rachel Reeves changed the Bank of England’s mandate to make it focus more on growth when policing financial institutions going forward.

Mr Bailey said: “We are obviously very supportive of growth... But it is very important to emphasise that there is no trade off between growth and financial stability.

“Financial stability is the bedrock of having an economy that supports households and businesses in which growth can take place.”

Once that’s in place, he added, there are choices that regulators are able to make in this knowledge, including the Bank’s decision today to switch what used to be an annual “stress test” about their ability to withstand a major financial shock to every two years instead.

“We can only take those decisions in a world of financial stability,” he added.

Bank of England governor Andrew Bailey said there was no 'trade off' between financial stability and growth — Bank of England governor Andrew Bailey said there was no ‘trade off’ between financial stability and growth - Hollie Adams/Bloomberg

11:21 AM GMT

No signs of rising corporate distress since Budget, says Bailey

Andrew Bailey said there had not been signs of increased corporate distress since the Budget.

He told the Financial Stability Report press conference: “We will watch very carefully to see how the effects pass through.”

11:18 AM GMT

Motor finance lenders could suffer £25bn blow from misselling scandal, says Bank

The Bank of England has estimated that the motor finance misselling scandal could deliver a £25bn blow to lenders.

Deputy Governor Sam Woods said that its estimate was “crude” and “quite conservative”.

He said that there is “plenty of headroom” in Britain’s financial system and that the misselling scandal - which has been described as the next PPI - would not be a threat.

11:11 AM GMT

Global risks ‘remain high’ warns Bailey

Andrew Bailey said the outlook for UK growth is steady in the Bank of England’s latest Financial Stability Report.

She added that global risk “remain high” and said that the outlook is more uncertain.

Bank of England governor Andrew Bailey said that the global outlook was more uncertain - Hollie Adams/Bloomberg

11:05 AM GMT

Households could have less access to credit amid geopolitical risks, warns Bailey

Geopolitical risks remain elevated, Andrew Bailey has warned during his press conference for the latest Financial Stability Report.

The Governor of the Bank of England said markets had absorbed shocks so far in an “orderly fashion”.

However, he said that an incoming correction might hamper the supply of credit to households.

Financial markets have been volatile in recent weeks amid rising expectations of higher borrowing in Britain, France and the Trump administration in the US.

11:02 AM GMT

Bailey: No a trade off between financial stability and growth

Andrew Bailey has begun his press conference on the Bank of England’s November Financial Stability Report.

He said there is “not a trade off between financial stability and growth”.

10:55 AM GMT

Pound loses gains after global debt warning

The value of the pound slipped as the Bank of England warned that the risk of a new trade war led by Donald Trump and rising geopolitical tensions all threaten to drive up borrowing costs.

Sterling was flat having earlier risen as much as 0.5pc against the dollar. It was last worth $1.269.

The Bank of England said in its Financial Stability Report (FSR) that governments across the world, led by China and the US, are borrowing heavily, threatening to push up interest rates globally.

It warned countries including Britain and France are also increasingly indebted.

10:43 AM GMT

Mortgage rates rising in wake of Budget

Advertised mortgage rates fell in October to their lowest level since September 2022 - the eve of Liz Truss’s mini-budget - but have since edged up, as financial markets reacted to heavier borrowing in Rachel Reeves’s Budget last month.

Now the average two-year fix for a mortgage borrower with a 25pc deposit stands at 4.4pc, with a five-year fix typically available for 4.2pc.

Overall households debts as a share of incomes have fallen to 130pc, down from 132pc three months ago and continuing the steady falls since late 2022, as workers’ incomes have risen faster than borrowing.

The share of household incomes which is spent on mortgages is set to rise from 7.2pc in June of this year to 8pc by the end of next year.

That is a smaller rise than previously anticipated and means households will be under less strain from mortgage payments than they were in the financial crisis or the recession of the 1990s, the Bank said.

However, the finances of households without their own home may be worsening.

“Pressures on renters and lower-income households continue,” the Bank said in its Financial Stability Report.

Savings buffers among households with lower incomes have fallen, it said, while surveys indicate “the share of renters who have fallen behind on payments has continued to rise as rents have risen substantially alongside the increase in mortgage borrowing costs.”

“Some renters and lower-income households intend to run down their savings in the next year to deal with the increased cost of living, making these groups less financially resilient,” the Bank said.

10:38 AM GMT

Millions of households face £1,750 mortgage hit from higher rates

Half of all mortgage borrowers are braced to move onto higher interest rates in the next three years, according to the Bank of England.

It means the pain from higher borrowing costs will keep on hitting household finances and the wider economy even as the Monetary Policy Committee cuts the headline base rate.

That is because 4.4m households’ fixed-term loans will expire forcing them to remortgage at a higher cost, according to the Bank’s Financial Stability Report, with an average increase of £146 in their monthly repayments - equivalent to £1,752 a year.

That includes around 1.5m homeowners in the unenviable position of suffering a second rise in rates. These families remortgaged onto a higher rate with a short-term fix since interest rates started going up at the end of 2021 and now face having to move onto a higher rate for a second time.

Some face a far higher hit than the £146 monthly average increase, with 2.7m households, or almost one-third of all mortgage borrowers, set to see their mortgage rate rise above 3pc for the first time.

The most severe hit will go to 420,000 families, or 5pc of all mortgagors, who will suffer an increase in their monthly repayments of more than £500 per month.

However, there are also 2.1m people - almost one-quarter of mortgage borrowers - who can expect to see a fall in their payments, as loans fixed at relatively high rates in recent years expire, allowing them to lock in a lower rate.

10:13 AM GMT

European Central Bank expected to cut interest rates next month

The European Central Bank (ECB) is still expected to cut interest rates by a quarter of a percentage point next month after inflation rose as expected.

Money markets have priced in cuts by policymakers at the next three meetings of the ECB Governing Council in December, January and March.

The chances of a heftier half a point cut - known as 50 basis points - next month stands at just 14pc after inflation rose to 2.3pc in November, as economists had forecast.

However, services inflation only fell from 4pc to 3.9pc, raising concerns about “stickiness” of price rises in the sector.

Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics, said: “The continued strength of eurozone services inflation in November reduces the chance that the ECB will cut interest rates by 50 basis points in December.

“But we still think services inflation will soon start to fall sustainably, prompting the Bank to cut interest rates by more than most expect.”

The ECB deposit rate stands at 3.25pc, having been cut three times this year from record highs of 4pc.

The European Central Bank is expected to cut interest rates at each of its next three Governing Council meetings - AP Photo/Bernd Kammerer

10:03 AM GMT

Eurozone inflation rises above target

Inflation in the eurozone rebounded above the European Central Bank’s 2pc target this month, according to preliminary official estimates, amid rising energy prices.

The consumer prices index for the single currency bloc rose from 2pc in October to 2.3pc in November, as expected, according to Eurostat.

Core inflation - which strips out volatile energy, food, alcohol and tobacco prices and is a key indicator for the bank in deciding whether to interest cut rates - was stable at 2.7pc.

09:45 AM GMT

Mortgage approvals hit two-year high

The number of new mortgage approvals hit a two-year high ahead of the Budget as buyers raced to secure deals before the end of stamp duty relief.

Banks and building societies approved 68,300 new home loans in October, which was the highest level since August 2022, according to the Bank of England.

It was up from 66,115 in September and higher than economists’ estimates for a fall to 64,500.

It marks five consecutive months of growth in mortgage approvals.

Similarly, approvals for remortgaging increased by 500 to 31,400.

Meanwhile, mortgage borrowing by individuals rose by £900m to £3.4bn in October.

Richard Merrett, managing director of Alexander Hall, said: “October’s mortgage approval figures demonstrate that, despite the looming uncertainty of the Autumn Budget, buyers continued to enter the market with intent, with a fifth consecutive monthly increase recorded.

“This market strength and consistency is a trend that has been apparent for much of this year and we expect it’s one that is now set to intensify considerably as we approach next April’s stamp duty relief deadline given that no extension was afforded during the Autumn Budget.”

09:30 AM GMT

German unemployment rises less than expected

The number of people out of work in Germany rose less than expected in November, official figures showed.

The office said the number of unemployed increased by 7,000 in seasonally adjusted terms to 2.86m. Analysts had expected that figure to rise by 20,000.

The seasonally adjusted job rate remained stable at 6.1pc.

Labour office head Andrea Nahles said: “Economic weakness continues to weigh on the labour market.”

There were 668,000 job openings in November, 65,000 fewer than a year ago, showing a slowdown in labour demand, the federal labour office said.

Amid economic uncertainty, companies in Germany are becoming more cautious in their personnel planning, the Ifo Institute said on Thursday.

The slower rise in unemployment comes despite announcements of mass layoffs at industrial giant Thyssenkrupp and expected job losses as Volkswagen.

09:14 AM GMT

Parents face childcare crisis as Budget tax raid to push up fees

Parents with younger children will be forced out of the workforce next year as the Budget tax raid pushes up the cost of childcare, business analysts have warned.

Childcare providers are expected to pass on the cost of the rise in employer National Insurance contributions (Nics) announced in the Budget, which come into force from April, according to Blick Rothenberg.

The Government’s own figures show that over 70pc of parents with children between 0-4 years old are using some form of childcare on a regular basis.

Ele Theochari, a partner at the firm, Blick Rothenberg said the Nics rise would “result in childcare fees dramatically increasing to cover the additional costs nurseries will be facing”.

She said: “As over 35pc of parents already find it difficult to meet existing childcare costs, there is the real risk of a childcare crisis causing wide-reaching consequences for employers and the UK economy.

“Childcare fees can often exceed mortgage or rental costs for a family, and many working parents find that there is already little or nothing left in their disposable finances after tax, Nic and existing childcare costs have been accounted for.

“This will increasingly lead to parents leaving the workforce as the cost of working and sending a child to full or part-time childcare becomes financially unviable.

“Taking any individual out of the workforce for up to four years will lead to a drop in economic productivity and lower tax receipts overall. This will disproportionately affect women as the primary caretakers of children.”

Parents could leave the workforce as the Budget increase in Nics forces up the cost of childcare - AP Photo/Steven Senne

08:48 AM GMT

French stocks flat amid rising inflation and budget turmoil

Europe’s markets were also muted on the final day of a turbulent week that saw French borrowing costs surge above those of Greece amid doubts about whether its budget would be passed.

The pan-European Stoxx 600 was flat and bracing for its fifth weekly decline in six.

The index was still on track for a modest monthly gain, even though the possibility of Europe being a US tariff target and France’s political woes have dampened investor sentiment towards the bloc.

France’s Cac 40 was also largely flat in early trading and down 1pc for the week. Prime Minister Michel Barnier dropped plans to raise electricity taxes in his 2025 budget, bowing to hard-Right pressure.

Meanwhile, French inflation for November edged up from October, in line with expectations, while German retail sales fell more than expected in October.

Euro zone inflation figures are expected later this morning and could be key in determining by how much the European Central Bank cuts interest rates next month.

08:35 AM GMT

Black Friday heralds scramble for sales for retailers

Black Friday has arrived and the bumper shopping event is as big as ever.

This year, you can snap up deals on everything from a comfortable new Emma mattress to a PS5 bundle.

Julie Abraham, chief executive of electricals retailer Richer Sounds, said companies were now embracing what she had previously described as a “necessary evil”.

She told BBC Radio 4’s Today programme: “It is not a day. It’s a month long event so it takes the pressure off a few days in November and spreads it over the entire month, which is better for our colleagues, better for our customers and better for the supply chain. It’s easier to deal with.

“I won’t lie, margins are squeezed this month, but we do make some money out of it.”

To help you shop for the best deals, we’ve collated our pick of the top offers to shop now.

Here are the 28 best deals live today and count yourself lucky that Britain is passed the scenes in Brazil as consumers race to bag a bargain.

Customers shop at a supermarket on the week of Black Friday shopping in Osasco, Brazil - REUTERS/Carla Carniel

08:22 AM GMT

British car parts maker bought in £1bn deal

A British car parts maker has been bought by a Canadian rival in a £1bn deal.

London-listed TI Fluid Systems will be taken over by ABC Technologies, which is owned by investment giant Apollo, for 200p per share after rejected several previous bids.

The deal represents a 37pc premium on TI Fluid’s share price before the Canadian company’s interest first emerged.

The FTSE 250 company makes fuel carrying and fuel tank systems and is considered a beneficiary of the switch to electric cars, which require additional fluid to manage heat.

Its shares rose as much as 2.4pc in early trading.

08:04 AM GMT

UK markets mixed amid thin trading

UK stock markets lacked direction at the open amid low trading volumes a day after Wall Street was closed for Thanksgiving.

The FTSE 100 was little changed at 8,280.84 while the midcap FTSE 250 was up 0.1pc to 20,775.76.

07:54 AM GMT

French inflation rises to 1.3pc

France said its inflation edged higher last month despite a slowdown in the prices of food.

The consumer prices index in Europe’s second largest economy edged up to 1.3pc in November, up from 1.2pc in October.

Prices rose after an acceleration in prices of services and a less marked fall in prices of energy compared with October.

It comes as benchmark French borrowing costs rose above Greece for the first time on Thursday amid doubts about whether the country’s budget would be passed.

07:37 AM GMT

Peel Hunt returns to profit amid surge in dealmaking

Investment bank Peel Hunt said its sales had jumped by a quarter over the past six months and it had returned to profit on the back of a stronger financial market and more dealmaking.

The London-listed company reported group revenues of £53.8m for the six months to the end of September, about 26pc higher than the same period last year.

It made a pre-tax profit of £1.2m, recovering from a loss of £800,000 the prior year.

Peel Hunt said it was able to “capitalise on improving market conditions”, with a gradual return of companies listing on stock markets - known as IPO (initial public offering) activity - and a pickup in mergers and acquisitions.

However, it warned that recovery slowed over the summer amid concerns among investors over what would be announced in the autumn Budget.

07:31 AM GMT

Nando’s opens more restaurants as sales rise

Nando’s has said it will step up its restaurant opening plans after sales lifted further over the past year.

The peri-peri chicken chain said sales surpassed pre-pandemic levels after “strong customer demand”.

Full accounts for the latest financial year also show the business cut its losses despite a “challenging” cost environment.

Rob Papps, group chief executive of Nando’s, said the economic backdrop remains “uncertain” but it is pushing forward with more investment to drive growth.

This will include a raft of new restaurants over the current financial year, including 14 in the UK. These include sites that have already opened in Edinburgh, Newcastle, Doncaster, Taplow, Bognor, Watford, Northampton and Belfast.

In the financial year to February 2024, the hospitality chain opened 17 restaurants, with 11 of these in the UK and Ireland.

Nando’s said the latest growth plans come after a positive first quarter of its 2024-25 financial year, where it was “extremely encouraged by customer demand”.

However, it stressed cost inflation has stayed at “elevated levels”, highlighting it is still seeking to address its costs across the business.

It came as the group reported revenues grew by 7.5pc to £1.4bn for the year to February 25, compared with the previous year.

Nando’s said it made £86.6m of capital investment over the year, as it opened more stores and refurbished a number of restaurants.

Nando's plans to open more restaurants this financial year — Nando’s plans to open more restaurants this financial year - REUTERS/Hannah McKay

07:31 AM GMT

Car makers could sell hybrids until 2035 under watered down electric car rules

Car makers will be allowed to sell hybrid vehicles until 2035 under plans being considered by ministers to water down rules aimed at pushing consumers towards electric models.

Business Secretary Jonathan Reynolds announced this week that the Government would launch a “fast-track” consultation on the sales targets faced by manufacturers under the so-called Zev mandate, under which companies face fines if goals are missed.

In its election manifesto, Labour vowed to scrap the sale of “new cars with internal combustion engines” by 2030 as part of efforts to reach net zero.

The language suggested that new hybrids – such as Nissan’s best-selling Qashqai which uses a petrol or diesel engine in conjunction with a battery – would be covered by the ban.

However, Mr Reynolds told the Commons this week that the review would focus on the switch to “purely” electric vehicles by 2030.

Shadow business secretary Andrew Griffiths accused the Government of making a “subtle change” to its plans, “the consequences of which are significant”.

Mr Reynolds said the consultation would look at the controversial rules introduced under the Tories that force manufacturers to ramp up sales of electric cars.

The regulations – known as the zero emission vehicle (Zev) mandate – require 22pc of cars sold by manufacturers to be electric from this year, rising gradually to 80pc by 2030.

In September, the Telegraph first reported that ministers are planning to back away from a total ban on the sale of new petrol-powered cars by allowing hybrid vehicles to remain on the market until 2035.

Car makers could be allowed to keep selling new hybrids up until that year, the Financial Times reported today.

07:19 AM GMT

Good morning

Thanks for joining me. Ministers could allow car makers to keep selling hybrid vehicles for another five years beyond their plans to ban petrol and diesel combustion engines.

The latest reports add weight to a Telegraph report from September that the Government is planning to back away from a total ban on the sale of new petrol-powered cars by allowing hybrid vehicles to remain on the market until 2035.

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What happened overnight

Asian shares were mixed after US markets were closed Thursday due to the Thanksgiving holiday.

Tokyo’s Nikkei 225 index fell 0.4pc to 38,191.93 after the government reported that inflation in Tokyo, considered an indicator for national trends, was 2.6pc in November, up from 1.8pc last month mainly due to a surge in fresh food prices.

Core inflation, which excludes fresh food prices, rose modestly to 2.2pc year-on-year from 1.8pc in October.

Higher inflation tends to reinforce expectations that the Bank of Japan will push ahead with more increases in its benchmark lending rate. That, in turn, pushes up the value of the Japanese yen, which was trading at 149.94 to the US dollar. A week earlier it was trading above 155 yen per dollar.

The central bank’s current policy rate is 0.25pc. It only ended a long spell of negative rates in March on the presumption that Japan had largely achieved its 2% inflation target.

South Korea’s Kospi lost 2pc to 2,454.78 after the central bank cut its benchmark interest rate on Thursday to relieve pressure on its slowing economy. Australia’s S&P/ASX 200 edged 0.1pc lower to 8,436.20.

Hong Kong’s Hang Seng index gained over 1pc in midday trading and increased by 0.1pc to 19,389.12 in the afternoon.

Meanwhile, the Shanghai Composite index surged 1.1pc to 3,332.50.

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Trump trades send FTSE 100 to best month since summer

In This Article:

06:03 PM GMT

Signing off...

05:44 PM GMT

WTO chief reinstated for second term as trade wars loom

05:16 PM GMT

S&P 500 hits all-time high big tech powers higher

05:08 PM GMT

Top Labour donor Dale Vince seeks to buy The Observer

04:52 PM GMT

FEST closes up

04:37 PM GMT

Volkswagen rejects union’s proposals as clash with labour escalates

03:55 PM GMT

European stocks rise amid quiet US trading

03:38 PM GMT

Frasers to release results amid war of words with Boohoo

03:35 PM GMT

Dow Jones on track for best month this year

03:12 PM GMT

Oil prices edge up ahead of meeting of Opec and allies

03:01 PM GMT

FTSE 100 rises as UK ‘less exposed to potential Trump tariffs’

02:45 PM GMT

Global shares poised for best month since May

02:32 PM GMT

US markets open higher on Black Friday

02:18 PM GMT

Pound poised for weekly gain after Trump picks treasury secretary

02:00 PM GMT

UK stocks ‘more shielded from trade war’, says economist

01:40 PM GMT

Surging government debts threaten Britain, warns Bank of England

01:16 PM GMT