FTSE ended the day in green while Wall Street began in red on Wednesday. (Sipa US, Sipa US)
Wall Street failed to get off on a positive footing on Wednesday while the FTSE 100 (^FTSE) and European stocks pushed higher on the back of a weaker pound. It came ahead of the Bank of England's interest rate decision on Thursday.
Threadneedle Street is expected to keep the bank rate unchanged at its upcoming meeting, but traders will be closely watching for any indications regarding monetary policy. Money markets are now pricing in a cut in August, with the BoE forecast to cut borrowing costs earlier and faster than the US Federal Reserve.
The US central bank is not expected to make its first move until after the summer.
Sterling has fallen 1.5% against the US greenback so far this year, although that has still made it the strongest performer among the G10 group of major currencies.
London’s benchmark index was 0.5% higher by the end of the session, hitting another all-time high
Germany's DAX (^GDAXI) rose 0.2% and the CAC (^FCHI) in Paris headed 0.8% into the green
The pan-European STOXX 600 (^STOXX) was up 0.3% on the day
European stock markets rose again...Wednesday to add to gains of around one percent on Tuesday as financials boosted the mainland indices," said Neil Wilson, chief markets analyst at FinalTo.
"The FTSE 100 added another half a percent for a fresh record above 8,350, whilst gilt yields fell further ahead of the Bank of England decision tomorrow, pushing utilities higher. Sterling trades lower against the dollar with traders cementing bets on the BoE moving faster than the Fed with cuts – two cuts this year is expected."
LIVE COVERAGE IS OVER24 updates
LaToya Harding
Blog close and recap
Well that's all we have time for today, thanks for following along Be sure to join us again tomorrow for Bank of England interest rate decision day.
Here's a quick recap of some of the top headlines from today...
TSB to close 36 branches and cut 250 jobs
Frasers Group closes in on Ted Baker deal
London trailing behind in stock market boom
Sweden cuts interest rates
Oil near two-month low
Wetherspoon hails soaring demand for Guinness
AstraZeneca withdraws COVID vaccine
Boohoo losses deepen
Toyota issues profit and sales warning after safety scandal
German factory output shrinks first time this year
LaToya Harding
London trailing behind in stock market boom
The UK is falling behind in the IPO market, with London securing only 2% of the $11.9bn (£9.5bn) raised via company flotations in Europe this year. This is according to data compiled by Bloomberg.
London’s share is the lowest in decades compared to an average of 31% between 2012 and 2023.
UK stocks are trading at a significant discount to major overseas markets like the New York Stock Exchange, meaning companies are likely to attract higher valuations when they list elsewhere.
Charles Hall, head of research at Peel Hunt, said:
“The UK has become relatively unattractive as a listing venue. The level of fund outflows has impacted both valuations and capital available for IPOs.”
LaToya Harding
Frasers Group closes in on Ted Baker deal
The Teb Baker store in Quakers Friars Broadmead Bristol UK (Mr Standfast)
Retail tycoon Mike Ashley’s is closing in on a deal for Ted Baker, according to the latest reports from Sky News.
Frasers Group has emerged as the preferred partner for the chain following the collapse into administration of No Ordinary Designer Label (NODL), Ted Baker’s current UK licensing partner.
Frasers and NODL’s administrators hope to reach agreement on a deal in the coming days, the broadcaster said, citing retail industry sources.
The deal would add to Ashley’s growing retail empire, whose brands already include Sports Direct, House of Fraser, Evans Cycles, Gives & Hawkes and Jack Wills.
LaToya Harding
Intel suffers hit as US revokes China export licenses
Intel had flagged a revenue hit after the US revoked some of the chipmaker's export licenses for China.
The company did not disclose the name of the Chinese customer in its filing with the Securities and Exchange Commission, but according to Reuters on Tuesday the US has revoked licenses that allowed companies, including Intel and Qualcomm, to ship chips used for laptops and handsets to sanctioned Chinese telecoms equipment maker Huawei Technologies.
Intel's shares fell 2.5% after it said it expects revenue for the second quarter to remain in the range of $12.5bn to $13.5bn, but below the midpoint.
LaToya Harding
Gas prices to remain steady this summer
Natural gas stove top heating a cooking pan with blue flames (John Hanson Pye)
Gas prices fell today for a second consecutive day thanks to a milder winter leaving stockpiles higher than usual.
Europe’s benchmark contract has dropped as much as 3.4% to about €30 per megawatt hour.
Goldman Sachs expects prices to remain at these levels throughout the summer.
Analyst Samantha Dart said:
Record-high gas storage in North West Europe continues to incentivise European gas markets not to compete with Asia for LNG supplies.
This is also illustrated by how European gas prices have remained fully below coal generation costs throughout the period, indicating gas balances remain comfortable this summer.
LaToya Harding
Markets afternoon update
European shares have climbed higher today as investors cheered on corporate results and macro data.
Pierre Veyret, technical Analyst at ActivTrades, said:
“Market sentiment strengthened for the third trading session in a row after traders witnessed another batch of reassuring corporate results, with Siemens and Anheuser-Busch InBev NV’s strong Q1 earnings.”
“At the same time, the German Industrial Production data also topped estimates this morning. It feels like the stars are aligning for stock investors this week as appetite for risk gets fuelled further by solid macro data, strong earnings and the prospect of rate cuts in the US.”
“Everything is falling into place for an equity comeback after a few weeks of uncertainty that drove benchmarks into correction territory in April.”
LaToya Harding
TSB: Decision never taken lightly
A spokesman for TSB said:
“The decision to close a branch is never taken lightly, but our customers are now doing most of their banking digitally and we need to move to a better balance of digital and face-to-face services.
“We remain committed to a national branch network and through innovation and integration with video, telephone, digital, branch and other face-to-face services TSB customers have more ways to bank with us than ever before.”
TSB will have 175 branches across the UK after the latest round of closures
LaToya Harding
TSB to close 36 branches and cut 250 jobs
Banking group TSB is set to close 36 branches and axe 250 jobs across the business.
The job cuts will be in the fraud operations department, central operations and staff who work at the branches earmarked for closure. This will be starting in September, and will continue through to May 2025.
Trade union Unite called the decision was a “grave mistake”. Unite’s regional officer Andy Case said:
“These workers perform essential work in the fraud departments and across the branch network. Through extensive negotiations Unite has been able to substantially reduce the number of jobs at risk.
“However, that isn’t sufficient, the union is pressing TSB to urgently reconsider its damaging bank branch closures plan.”
Unite said it will be holding fresh negotiations with TSB about ways to further reduce job losses and to support those affected by the changes.
TSB said it had decided to close the local branches because not enough customers were using them. Around 96% of the bank’s transactions now take place outside of a physical branch, with the number of in-store transactions falling by 43% over the past four years.
LaToya Harding
BoE expected to hold rates tomorrow
The pound is 0.2% down against the dollar at the moment as Threadneedle Street is expected to keep the bank rate unchanged at its upcoming meeting.
Money markets are now pricing in a cut in August, with the BoE cutting borrowing costs earlier and faster than the US Federal Reserve.
Jessica Shuman, senior investment specialist at Insight Investment, said:
"Although we haven’t heard from many members of the Monetary Policy Committee it is highly unlikely that the Bank of England will adjust its policy rate this week but, with the start of the easing cycle rapidly approaching, all eyes will be on the signalling that comes from both the voting patterns and accompanying statement.
"Ultimately, April’s inflation data, released later in the month, is likely to prove critical in any decision. A better than expected number could see July come into play, but if inflation proves stickier than expected there is no rush to cut.
"We have long held the view that this easing cycle will be later and shallower than many people expect, with inflation likely to be structurally higher in the decade ahead."
LaToya Harding
German factory output shrinks first time this year
German industrial production fell 0.4% March compared to the previous month, but it was less than expected, new data has shown.
Analysts surveyed by financial data firm FactSet had forecast a drop of 1%.
According to federal statistics agency Destatis, the fall followed strong increases in January and February as Europe’s largest economy struggles to recover from a turbulent period.
The economy ministry said that recent improvements in business climate and activity surveys pointed to “a further recovery in industrial production over the course of the year”.
Good morning from #Germany, where industrial production shrinks for 1st time this year. In March, industrial production shrank by 0.4%, not quite as much as the expected -0.7%. But the previous month was revised downwards significantly. pic.twitter.com/FVqetoEiD0
— Holger Zschaepitz (@Schuldensuehner) May 8, 2024
LaToya Harding
AstraZeneca withdraws COVID vaccine
Madrid, Spain. 09th Apr, 2021. A nurse prepares to administer a dose of AstraZeneca vaccine to a patient, at the WiZink vaccination center. The pharmaceutical company AstraZeneca will stop marketing its coronavirus vaccine in Europe from May 7, 2024, a decision made by the company itself to the European Commission. Credit: SOPA Images Limited/Alamy Live News (SOPA Images, SOPA Images Limited)
AstraZeneca’s share price rose on Wednesday after it announced it was withdrawing its COVID vaccine around the world.
The Anglo-Swedish drugmaker said the move comes due to a “surplus of available updated vaccines” that target new variants of the virus.
“According to independent estimates, over 6.5 million lives were saved in the first year of use alone and over 3bn doses were supplied globally,” the statement said.
“Our efforts have been recognised by governments around the world and are widely regarded as being a critical component of ending the global pandemic. We will now work with regulators and our partners to align on a clear path forward to conclude this chapter and significant contribution to the COVID-19 pandemic.”
LaToya Harding
Brewdog boss steps down after 17 years
James Watt, the boss of Brewdog is stepping down from the helm after 17 years, it has been annoucned.
Watt, who co-founded the Scottish brewer and pub group, is handing over the reins to chief operating officer James Arrow as he looks to focus on his other interests.
He will take on a newly created non-executive role of captain and co-founder and will retain a 21% stake in the firm.
BrewDog chairman Allan Leighton said:
"James Watt, alongside Martin Dickie, created this great business from a garage in Fraserburgh. Few have accomplished what he has.
"From very humble beginnings under his leadership, BrewDog has grown to become the world’s leading craft brewer, employing 2,530 people across its head office, four breweries and over 120 bars.
"I am especially pleased he will continue to offer his insight, creative genius and energy to the board."
LaToya Harding
Toyota issues profit and sales warning after safety scandal
Toyota (TM) the world’s largest carmaker, has forecast a near 20% drop in annual profit, after safety scandals forced it to cut back production targets while it reviewed business practices throughout the group.
The The Japanese firm forecast operating income to decrease around 20% to 4.3 trillion yen in the fiscal year through March 2025, falling short of the market’s consensus forecast of 5.3 trillion yen.
It also expects its net profit for the fiscal year through March 2025 to decline nearly 28% to 3.57 trillion yen.
Toyota plans to invest 1.7tn yen in electric vehicle and artificial intelligence technology to keep up with rivals.
Toyota last month said it sold 11.1 million vehicles across all brands in the 2023-24 fiscal year, up five percent and the first time they have exceeded 10 million. Sales of purely electric car sales were a much more modest 116,500.
LaToya Harding
How to make a tax-free income
Despite everything we’ve heard about tax cuts recently, there’s still a good chance you’re forking out more than you were.
The threshold at which you start paying income tax — and the level when the rate rises — have been frozen for years now, so any time we get a pay rise, the taxman is rubbing his hands in glee.
At the end of March, we'd paid 5% more tax than a year earlier — with the Treasury pocketing a total of almost £828bn since April last year.
And while we’re all prepared to pay our fair share of tax, at these kinds of levels, it’s no wonder so many of us are trying to think of ways to boost our income without troubling HMRC...
...and the good news is there are plenty of ways to make tax-free income.
New research by Yopa has revealed that London is home to the weakest ripple effect when it comes to house price growth across local authorities surrounding the city. Meanwhile the property market surrounding Manchester has seen the highest rate of all major cities.
Here's a breakdown of some of the key points -
The local authority housing markets surrounding London have struggled of late.
While house prices have increased by just 7.9% across London over the past five years, this rate of growth climbs to an average of just 12.2% across the local authorities that border the capital.
Bristol is home to the second weakest housing market ripple effect, however, house prices across the city itself are up 21.9% in the last five years
Manchester tops the table over the last five years. House prices in the city have soared by 37.4%, while the surrounding areas have seen an average increase of 35.1%.
Liverpool wasn't far behind its North West rival, where house prices are up 34.4%, while the city’s ripple effect has boosted house prices in surrounding local authorities by an average of 32.8% over the last five years.
Nottingham (32.6%), Edinburgh (32.2%) and Cardiff (31.4%) also boast some of the strongest rates of house price growth across the local authorities bordering each city.
LaToya Harding
Wetherspoon hails soaring demand for Guinness
And sticking with corporate results this morning...
Pub chain JD Wetherspoon (JDW.L) has hailed soaring demand for Guinness from younger clients and recovering ale sales as it reported growth over the past three months.
Wetherspoons, which runs 809 pubs across the UK, said like-for-like sales increased by 5.2% over the 13 weeks to April 28 compared with a year earlier, with total sales up 3.3%.
It represented a slight slowdown in growth and means the company has seen a 6.5% sales increase over the financial year-to-date.
As a result, the company said it expects annual profits to be “towards the top of market expectations”.
Chairman Tim Martin said:
“Sales in the period continued the steady recovery from the pandemic.
“Traditional ales, which were very slow in the aftermath of the lockdowns, are increasing momentum, with Abbot Ale, Ruddles Bitter and Doom Bar showing good growth, as indeed are ales from the many small and micro brewers with which we trade.
“The gods of fashion have smiled upon Guinness, previously consumed by blokes my age, but now widely adopted by younger generations.”
Guy Lawson-Johns, an equity analyst at Hargreaves Lansdown, said:
“Boohoo’s full-year results were a painful read for investors. Revenue declined at high double-digit rates across all regions, including 18% in the US, which is seen as the group’s pathway to major growth.
“For now, it remains a struggling company with a tarnished reputation, reflected in the group’s valuation, which has come down significantly over the last few years.”
LaToya Harding
Boohoo losses deepen
Undated file photo of signage for Boohoo. Fast fashion firm Boohoo has reported pre-tax losses of £159.9 million for the year to February 29, against losses of £90.7 million the previous year. The retailer has insisted it is on the path to recovery after a steep jump in annual losses and sales down by nearly a fifth. Issue date: Wednesday May 8, 2024. (Ian West, PA Images)
Shares at Boohoo (BOO.L) fell more than 3% on Wednesday after it posted deeper annual losses amid falling sales and heavy competition from Chinese online seller Shein.
The group reported pre-tax losses of £159.9m for the year to 29 February, compared to losses of £90.7m the year before. It added that it had built up net debts of £95m in the year to the end of February, down from almost £6m of net cash a year before.
Meanwhile, revenues slipped 17% to £1.5bn thanks to its “increased focus on profitability and difficult market conditions”.
However the fast fashion retailer saw improved trading of its core brands, including Debenhams, Warehouse, Dorothy Perkins and Pretty Little Thing, with declines in sales by gross merchandise value (GMV) paring back from 9% in the first half to 4% in the final six months.
John Lyttle, chief executive, said:
“The group is now well positioned to return to growth and we are focused on ensuring that growth is both sustainable and profitable.”
LaToya Harding
Stock buybacks hit highest level since 2018
Stock buybacks are soaring in a sign that corporate America is bullish on the US economy.
Companies have announced share repurchases of more than $383bn in the last 13 weeks, up 30% from the year-earlier period and the largest sum since June 2018, per research from Deutsche Bank.
The total includes Apple's $110bn plan, the largest buyback in history.
The equity strategy team at Deutsche Bank notes that the "boom" in buybacks extends beyond the big names like Apple (AAPL) and Alphabet (GOOG, GOOGL), which just announced a $70 billion buyback plan. Of the $262 billion in buybacks reported in first quarter earnings season, $82 billion has come from companies outside the large tech giants.
Shares in Apple (AAPL) were basically flat in premarket trading as analysts appeared to be unphased by the launch of a line of new iPad tablets revamped with a powerful AI chip that signalled the company is ready to introduce artificial intelligence across its devices.
The iPad Pro now includes the cutting-edge M4 chip. This offers a glimpse into Apple's vision for integrating artificial intelligence capabilities into its devices.
The Cupertino-based company has been criticised for going too slow on the AI revolution as Microsoft (MSFT) pipped its spot as the world's biggest company by market capitalisation.
"In my opinion, this is more about improving the costs for AI for Apple than it is necessarily a new product release leveraging artificial intelligence," Maxim Group Managing Director Tom Forte, told Yahoo Finance.
He added that despite the chip's potential to cut artificial intelligence operating costs, "I certainly wouldn't consider changing my hold rating on the news."
Watch: How does inflation affect interest rates?
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