- FTSE 100 closes 50 points lower
- US stocks hold firm ahead of jobs data
- Aviva higher after results, share buy-back
4.45pm: FTSE finishes in the red
At the close, the UK's blue-chip index was well into the red, finishing 0.6% lower at 7,880 points.
“While US markets have managed to make headway this afternoon, ex-dividends, a rising pound and broad-based weakness in a number of sectors have conspired to hold the FTSE 100 back," IG's Chris Beauchamp said.
"Rio Tinto’s ex-dividend status has not helped mining stocks, with others like Antofagasta down in sympathy despite a better showing for commodity prices in general. Good results from Informa and Aviva provided some relief, but overall the index continues to trade in the red, the outlier for the day.”
4.00pm: Cooler or hotter for longer
Investors were cautious in London ahead of Friday's February US non-farm payrolls report and the implications for the Federal Reserve's interest rate policy, with dollar earners a drag for the FTSE 100 index as the US currency retreated, while Wall Stocks rose ahead of the data.
Craig Erlam, senior market analyst, UK & EMEA at OANDA commented: "It would appear investors are taking a cautious stance ahead of tomorrow's jobs report, a little spooked by Powell's comments in Congress and fearful of being caught on the wrong side of another hot jobs report.
"That's clearly the danger at this point, that we get another hot report that confirms January was no blip and instead indicative of a labour market that not only isn't cooling but perhaps getting hotter. The trend pre-January across many indicators pointed to a cooling in the economy and that was expected to catch up to the jobs market eventually but a variety of data points at the start of the year threw that narrative into doubt."
Erlam added: "I expect the February data and that of the months that follow will see the pre-January trend continue, even accelerate given the additional tightening that will have worked its way through to the economy since. But following Powell's comments, we may need to see clear evidence of that on Friday or further cracks could appear in equity markets.
"We're already seeing a move back to 50 basis point hikes being priced in, with that now seen as more likely than 25 in two weeks. Powell's comments obviously fuelled that although I still believed he chose his words very carefully to ensure it's an option that's taken seriously rather than the base case. The data over the next couple of weeks could potentially cement it."
3.45pm: Energised again
EDF Energy has said it will extend the lifetimes of its Hartlepool and Heysham 1 nuclear plants in the UK by two years to March 2026, Reuters has reported.
The two plants had been slated for closure in 2024 but French firm EDF said last year it would review whether there was a case to keep them open beyond that.
EDF Energy, which operates all of Britain’s eight nuclear power plants providing around 13% of the country’s electricity, said it would invest £1 billion over 2023-25 to help the UK plants maintain output.
All but one of Britain's nuclear plants are scheduled to close by 2030 and EDF’s Hinkley Point C, the first new plant in more than 20 years is not expected to come online until 2027.
The UK is seeking to ramp up low-carbon nuclear power generation to help shore up its electricity supplies, Reuters noted, while also meeting a climate target of net zero emissions by 2050, and has a goal of meeting around 25% of electricity demand with nuclear power by the same date.
Along with the rest of Europe, the UK has also been suffering from high gas and power prices over the past year since Russia's invasion of Ukraine.
3.30pm: Tesco turnover
Staying with retailers, Tesco has reportedly begun sounding out candidates to replace long-serving chairman John Allan, according to Sky News.
The report said the supermarket chain is working with headhunters to identify a successor. City sources told Sky that a number of heavyweight boardroom figures had been approached in recent weeks about the role.
Allan will step down next year, by which time he will have served for nearly a decade and be 'timed out' under corporate governance guidelines which mean that he would no longer be regarded as independent.
The search for his successor is being led internally by Byron Grote, the former BP finance chief, who himself is due to step down from the Tesco board this year.
Allan, a former president of the CBI, has been an outspoken figure during his tenure as Tesco chairman, and has been lavishing praise on the Labour Party leadership in recent months, Sky News said.
3.15pm: Food for thought
Morrisons slumped to a £1.5bn loss during its first full year in private equity ownership, according to the supermarket chain’s latest results in an update from the chain’s parent company filed at Companies House, the Guardian reported.
The grocery firm – which employs more than 110,000 staff, including 95,000-plus working in its 500 supermarkets – made an operating loss of £58mln before exceptionals for the 65 weeks to 30 October, according to the trading update.
Morrisons was bought by the US private equity firm Clayton, Dubilier & Rice (CD&R) for £7bn in October 2021 after an intense bidding war.
Results for the period from late July 2021 to the end of October last year reveal the grocer’s struggles during the first year after it was taken private and delisted from the London Stock Exchange, the newspaper noted.
2.50pm: Wall Street wanted
The FTSE 100 index remained weaker even as US stocks edged into positive territory at the open after initial jobless claims for last week came in higher than expected ahead of Friday’s crucial US non-farm payrolls report.
After around 20 minutes of trading, the Dow Jones Industrial Average was up 183 points or 0.6% at 32,982 points, while the broader S&P 500 and the tech-laden Nasdaq Composite also both added 0.6%.
FOREX.com market analyst Fiona Cincotta noted that stock futures had eased from their earlier losses following the weekly jobless claims data, which were a case of “bad news is good news for stocks.”
“Jobless claims rising to a 10-week high had helped to ease concerns and could suggest that the labour market is starting to show some early signs of slack appearing,” she said. “All eyes are now on tomorrow’s NFP data to see whether it is another blowout report or whether it was a one-off.”
Pantheon Macroeconomics senior US economist Kieran Clancy added that jobless claims had been temporarily boosted by bad weather in the upper Midwest and California, but a sustained increase was in sight.
“The bigger picture here is that claims remain very low and range-bound,” Clancy said. “That said, the latest data from Challenger, released earlier today, show that the number of layoffs announced in January and February was the highest since 2009, and nearly double the pre-Covid trend. This will take time to filter through to the claims data, but we expect to see a clear and sustained increase by the spring.”
In London, around 2.50pm, the FTSE 100 index was down 35 points, or 0.4% at 7,894, above the session low of 7,862.01
2.25pm: ITV switched on
Deutsche Bank analysts have upgraded their rating for ITV PLC to ‘buy’ from 'hold' in the wake of the broadcaster’s annual results.
The note itself was fairly downbeat as the analysts said the European media market was facing a number of challenges, including a need to invest, a battle of eyeballs and a fall in advertising spend.
To add to the pain, legacy broadcasters are now seeing competition for their share of ad revenues from streaming services such as Netflix and Amazon, which have joined the fray.
On ITV, however, the Deutsche Bank analysts said: “We turn more positive, macro risks aside. We believe its streaming strategy appears to be the most appropriate in the current environment and the investment needs appear to be well-managed.”
In early afternoon trade, the stock was changing hands for 87.62p. The consensus price target is 93p.
2.10pm: US jobless claims jump
US initial jobless claims increased by 21,000 to a seasonally adjusted 211,000 last week, the Labor Department said Thursday. The four-week average of weekly claims, which smooths out volatility in the weekly numbers, rose slightly to 197,000.
Economists polled by The Wall Street Journal had estimated jobless claims rose slightly to 195,000 last week.
Weekly jobless claims have remained near or below the 2019 pre pandemic average of about 220,000 for several months, despite job cuts at large employers in white-collar industries such as technology, finance and real estate.
There were 10.8 million job openings in January, the Labor Department said this week, and employers added more than half a million jobs that month while the unemployment rate fell to 3.4%, its lowest level since 1969.
The numbers are a pointer towards the monthly US non-farm payrolls report due to be released tomorrow, which is especially key after the comments this week from Federal Reserve chair Jerome Powell indicating US interest rates can remain higher for longer.
1.30pm: London's movers
Here’s a quick round-up of the biggest risers and fallers on the junior market today.
IQE PLC (AIM:IQE) plunged over 30% as the supplier of compound semiconductor wafer products warned that a reduction in customer orders and forecasts is expected to result in a year-on-year decline of approximately £30mln in reported revenues for the first half of 2023.
NWF Group PLC (AIM:NWF) saw its shares jump nearly 7% higher after the AIM-listed firm said it anticipates that its full-year result will be "significantly ahead of market expectations".
Hammerson PLC (LSE:HMSO) shares fell over 12% after the property group failed to pay a final dividend and as asset valuations came in below City forecasts.
Jarvis Securities Plc (AIM:JIM) was jolted 13% lower after the retail stockbroker cut its dividend by 15%, reported a 20% decrease in pre-tax profit and said it is severing ties with some clients due to a regulatory process.
Billington Holdings Plc (AIM:BILN) saw its shares advance 11% after the AIM-listed firm said it now expects profit before tax for the year ending 31 December 2023 to be ahead of market expectations, as well as that for the year ended 31 December 2022, as previously indicated.
Atlantic Lithium Limited (AIM:ALL, OTCQX:ALLIF, ASX:A11) saw its shares jump 26% higher as trading in the stock resumed on Thursday after it issued a response to a "false and misleading report" regarding its partner Piedmont Lithium Inc (ASX:PLL, NASDAQ:PLL, XETRA:) released by Blue Orca Capital on March 8.
1.00pm: No relief for FTSE 100 as Wall Street to open lower
Wall Street is expected to open down as markets continue to digest two days of testimony to Congress by Federal Reserve chair Jerome Powell, with a monthly jobs report and next week’s consumer inflation data likely to determine the extent of the Fed’s next interest rate hike.
Futures for the Dow Jones Industrial Average (DJIA) fell 0.1% in Thursday pre-market trading, while those for the broader S&P 500 index shed 0.3%, and contracts for the Nasdaq-100 declined 0.6%.
US stocks ended mixed on Wednesday after Powell softened his tone on the second day of his semi-annual monetary policy report to lawmakers. The DJIA closed 0.2% lower at 32,799, while the Nasdaq Composite added 0.4% to 11,576, and the S&P 500 gained 0.1% to 3,992. The small-cap Russell 2000 index fell 1 point to 1,877.
“After the sizeable losses on Tuesday, markets showed signs of stabilising over the last 24 hours as Fed chair Powell put forward a slightly softer message on the pace of future rate hikes,” commented Deutsche Bank strategist Jim Reid.
“He was appearing before the House Financial Services Committee, where he delivered almost exactly the same testimony as he had to the Senate Banking Committee the previous day," he added.
"However, there was one important caveat added, since when referring to his comments that ‘we would be prepared to increase the pace of rate hikes’, he said ‘I stress that no decision has been made on this’. So a clear message that faster rate hikes were not a done deal just yet.
“Whilst Powell was trying to steer us away from a specific outcome, ultimately the decision was always going to depend significantly on tomorrow’s jobs report, as well as the CPI release on Tuesday," Reid said.
The US jobs report, out on Friday, is expected to show non-farm payrolls increased by 205,000 in February after showing a massive ga
12.45pm: Asda reportedly dropping certain customer purchase limits
Asda is dropping its customer purchase limits on certain fruit and vegetables, various sources including The Guardian are reporting.
Supermarkets including Asda, Tesco, Aldi and Lidl imposed limits in February on peppers, tomatoes, cucumbers and other fresh produce amid widespread supply shortages.
Asda confirmed it had removed limits of three on cucumbers, lettuce, salad bags, broccoli, cauliflower and raspberries, leaving restrictions on just tomatoes and peppers.
According to the Guardian, the supermarket has seen an improvement in overall availability, while supplies of tomatoes and peppers were also expected to rebound in the coming weeks.
12.30pm: FTSE 100 continues to lead European losses, junior propped up by natural resources stocks.
After making slight gains in the late-morning trading session. Footsie has retreated back to 7,883, marking 58 points of losses this Thursday.
Spirax and Rio Tinto remain at the bottom of the blue-chip pile following a drop in the Shanghai and the Hong Kong markets.
On the junior AIM market, natural resources shares are having a good showing. Top of the pack is Atlantic Lithium, which has chalked up 30% in gains after a brief trading suspension.
The company issued a response to "false and misleading” reports of impropriety made by short-seller Blue Orca Capital regarding its partner Piedmont Lithium Inc (ASX:PLL, NASDAQ:PLL, XETRA:) released by on March 8.
“The report is clearly intended to benefit Blue Orca Capital, which, in the report itself, has disclosed that it is short selling and stands to profit in the event that the stock price of Piedmont Lithium Inc (ASX:PLL, NASDAQ:PLL, XETRA:). declines,” said Atlantic, cautioning investors not to make decisions based on the report, which it considers “factually untrue”.
Smaller caps including Pathera Resources and Strategic Minerals are have also posted double-digit gains.
12.05pm: Pound on a good footing
Sterling has gained over 40 pips against the US dollar in the European trading window and a more modest 11 pips against the euro.
That is despite dovish rhetoric emerging from Bank of England policymaker Swati Dhingra.
Yesterday, Dhingra used her first external speech since joining the Monetary Policy in September 2022 to make the case for holding rates where they are.
“In my view, a prudent strategy would hold policy steady amid growing signs external price pressures are easing, and be prepared to respond to developments in price evolution. This would avoid overtightening,” Dhingra said.
Swati Dhingra has given her first speech since joining the Bank of England's Monetary Policy Committee @lizzzburden looks at what she had to say — and what it tells us about the BOE's next decision on interest rates https://t.co/LRwIGGSRNm pic.twitter.com/29biG9NGRx
— Bloomberg UK (@BloombergUK) March 9, 2023
Aviva remains top of the FTSE 100 pile, extending daily gains above 3% in early-afternoon trades after its strong trading update.
Fellow insurance firms Prudential and Legal & General are also at the top, alongside British publishing group Informa
11.45am: IQE plummets further, leads losses on junior market
British semiconductor manufacturer IQE has issued its second profit warning in three months, leading shares on the AIM market to crash over 30%.
IQE is dealing with an inventory pile-up due to a reduction in customer orders, although chief executive Americo Lemos stated that “the current inventory cycle is temporary”.
Barely a year ago, supply chain issues causes a global chip shortage, which has turned into a glut in recent months.
According to Lemos: “we expect IQE to return to growth in the second half of the year and remain excited about the future as we continue to execute our diversification strategy."
The AIM All-Shares Index is 70 points down, while the FTSE 100 index appears to be enjoying a late-morning recovery, heading above 7,888, though remains 50 points down from yesterday’s close.
11.25am: HS2 construction to be delayed to save money as costs soar
Certain sections of the HS2 rail line will be delayed to save money, according to emerging reports.
BBC reported that sections from Manchester to Crewe and Birmingham to Crewe will be mainly affected.
a statement expected imminently outlining both the extent of budget overruns and more cost-cutting proposals as soaring inflation hammers the high-speed rail line’s construction.
Costs have spiralled from an estimated £33bn in 2010 to the latest estimation of £71bn, with at least £2bn more needed for the first London-Birmingham stretch alone since the last update in October 2022.
Last week, Mark Thurston, chief executive of the HS2 project, told the BBC that the impact of inflation had been "significant" on the price of timber, steel, labour, concrete and just about everything else required for the project.
11.05am: Hugo Boss dragged lower, but DAX still outperforming European markets
Checking in on Frankfurt, Hugo Boss shares fell 3%, despite posting record profits in 2022, with currency-adjusted sales increasing 27% to €3.7bn.
Investors appear wary of the year ahead, with the group’s outlook pointing to a slower rate of sales growth in 2023.
DAX is broadly leading the European markets though, having lost 37 points against the FTSE 100’s 63 points. Paris is slightly behind Frankfurt at negative 39 points.
10.35am: Aviva’s Amanda Blanc doing an ‘enviable job'
AJ Bell investment director Russ Mould noted this morning’s FTSE 100 bright spot in the shape of Aviva, where currency chief executive Amanda Blanc has done an “enviable job”.
“Streamlining operations and selling off underperforming businesses is a well-worn strategy, but one Blanc has executed well and that’s evident in the 2022 numbers which show a big increase in profit and dividends accompanied by a big share buyback.”
On New York-listed Domino’s, which is on the slide in Thursday’s early deals as weaker-than-expected financials revealed tough conditions for fast-food operators, Mould warned of a “very difficult year ahead” due to fierce competition and lower margins.
A £20 pizza is now off the menu for a lot of people, hence why it has been offering cheaper-priced deals. That puts pressure on the business to get customers to order more frequently, which is a tough ask in the current economic environment,” said Mould.
Domino’s shares are down 11% in pre-market trades.
10.10am: FTSE 100 down 80 points, nudged lower by interest rate speculation
The FTSE 100 is down 0.85% morning, again nudged by Federal Reserve chairman Jerome Powell, who failed to spark confidence over US interest rate hikes in his second day of speaking to lawmakers.
In the UK, Harbour Energy, the North Sea’s biggest producer, laid into the government’s windfall tax on oil and gas firms, claiming the levy had all but wiped out it profits, which sat at US$2.5bn before tax, but just US$8mln after deductions.
Ladbrokes and Coral owner Entain reported a 13% rise in its 2022 underlying pre-tax profits to £993mln, meanwhile, adding it was confident in its long term strategic prospects.
Insurer Aviva also reported higher operating profit for the year, up 35% to £2.21bn, prompting it to kick off a £300mln share buyback programme.
And with the small caps, AFC Energy rose after announcing contracts for its hydrogen-powered generators to be used at construction sites for over 8,000 hours this year so far.
9.50am: Miners a big drag on China data
London's bue-chip index is continuing to extend its losses, now down over 60 points or 0.76% to 7869.
Miners Endeavour and Rio Tinto are bottom of the list, down around 5% apiece, with Antofagasta and Anglo American also down over 2%.
Market analyst Victoria Scholar at Interactive Investor says the falls in the miners follows Chinese data and a drop in the Shanghai and the Hong Kong markets.
“European markets have opened lower with US futures pointing to a softer open as markets digest a slew of corporate news and the testimony from Fed Chair Jay Powell.
"China’s inflation rate fell to 1% in February from 2.1% in January, reaching the lowest reading since February 2022. Producer prices fell 1.4%, accelerating from a 0.8% drop in the previous month to mark the fifth straight monthly of deflation. Despite the release of pent-up demand post the unwind of Beijing’s strict anti-covid measures, the inflation reading suggests that the economic outlook remains uncertain.
"However, with price pressures under control, this could embolden the authorities to carry out further stimulus as a way to boost demand.”
9.05am: FTSE 100 leads European losses, insurance stocks offer some relief
The FTSE 100 Index remains on the back foot this morning, leading European losses by being dragged 0.5% lower to 7,890.
Ladbrokes owner Entain PLC (LSE:ENT) took a surprising 3% dip given its relatively strong earnings (see below), while Endeavour, Rio Tinto, Antofagasta and others in the heavy industries are tallying up losses across the board.
On the other hand, the insurance segment appears buoyant, with Aviva PLC (LSE:AV.) adding 3.5%, and Prudential, Legal & General and Admiral also in the green.
Analysts said miners like Rio Tinto are languishing near the bottom of the basket following falls in Asia earlier in the morning.
There were milder declines for Paris and Frankfurt at the open.
In the FX markets, Tuesday’s hawkish statement from the US Federal Reserve should keep the greenback in a leading position in the longer term, though the GBP/USD pair has actually gained around 15 pips so far. The pound is also looking strong against the euro, with the EUR/GBP pair currently changing hands at 88.96p.
This morning we heard that the British Chambers of Commerce reckons the UK will avoid a recession this year, but sluggish growth means the economy won’t recover to pre-pandemic levels until the final quarter of 2024.
The lobby group upgraded its outlook after better-than-expected household spending and corporate investment at the end of 2022.
Yet housing market woes persist. As outlined below, the RICS UK Residential Market Survey fell to -48 in February 2023 from -46 in January, the lowest reading since April 2009 due to higher borrowing costs and a surge in the cost of living dampening demand and deterring would-be buyers.
Apart from RICS, there’s little else on the UK economic calendar to watch out for today.
8.40am: Sterling gains against US dollar
The US dollar headed into Thursday's session near recent highs, though fell back around 10 pips as the day got underway.
Hawkish comments from Federal Reserve chair Jerome Powell have been a tailwind for the greenback of late.
As he said on Tuesday: “The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated.”
This hawkish rhetoric is causing a persistently strong US dollar- in a year where we were supposed to see a retraction, the US Dollar Index (DXY) has surged nearly 3.5% since February 1.
UK Monetary Policy Committee (MPC) member Catherine Mann said earlier this week the pound risked coming “under pressure” from hawkish policy overseas, which was certainly evident when GBP/USD dipped 1.6% to 1.182 on Tuesday.
Though the past couple of days has seen the pair clawback a bit. This morning, GBP/USD added 0.25% to 1.188, though long-term projections remain bearish.
GBP/USD -- Source: capital.com
“We continue to favour EUR/GBP trading up to and staying near 0.90 over coming months given the risk of the Bank of England shifting to a pause far earlier than the Fed or the ECB,” said analysts at ING.
8.25am: Entain hits top end
Entain PLC (LSE:ENT) shares are down despite the owner of Ladbrokes and Coral reporting profits at the top end of expectations as growth in its retail operations offset a slowdown in online earnings.
Underlying earnings (EBITDA) rose 13% to £993mln in the past calendar year, from £881.7mln a year before, at the top end of upgraded guidance given in February.
Online EBITDA fell 8% to £828mln, reflecting strong comparisons during lockdowns and regulatory changes in major markets, but the picture was brighter in betting shops, where underlying EBITDA for the retail business jumped 319% to £280mln.
With the dividend resuming this past year after being paused during the pandemic, a second interim dividend of 8.5p per share was paid, taking the payout for the year to 17.0p.
Looking ahead, the FTSE 100-listed group said despite “some regulatory headwinds, we remain excited by the opportunities ahead“.
“We have started 2023 with positive underlying momentum and we remain confident in our long-term strategic prospects.”
7.00am: FTSE opens lower
The FTSE 100 is expected to open in negative territory on Thursday following a mixed showing in the US after Federal Reserve chair, Jerome Powell, completed his two-day grilling to lawmakers in Washington.
Spread betting companies are calling the lead index down by around 18 points.
Ipek Ozkardeskaya at Swissquote Bank noted the “second day of testimony was as hawkish as the first one, with one little exception.”
“Powell added a very small tweak to his Tuesday language, and said that the data will determine whether the Fed would increase the pace of the interest rate hikes, BUT that ‘no decision has been made on this’ yet.”
“If Powell’s intention was to cool down the 50bp hike bets yesterday, it didn’t go according to the plan. That probability went above 80% yesterday, as both the ADP report and the JOLTS data came in hotter-than-expected.”
Jobs data will be the main focus for the rest of the week with US weekly jobless claims figures today and non-farm payrolls figures tomorrow.
The Dow closed Wednesday down 58 points, 0.2%, at 32,799, while the Nasdaq Composite added 46 points, 0.4$, to 11,576 and the S&P 500 added 8 points, 0.1%, to 3,992.
In Tokyo on Thursday, the Nikkei 225 index was up 0.6%. In China, the Shanghai Composite was down 0.1%, while the Hang Seng index in Hong Kong was up 0.1%.
Back in London and the early focus will be results from Aviva and Entain.