- FTSE 100 finishes 88 points ahead
- Wall Street strong after in-line inflation data
- UK unemployment steady; average wage growth falls
4.45pm: FTSE 100 finishes higher
At the close, the UK's blue-chip index was up 1.2% at 7,637 points following a strong trading day helped by positive US inflation data.
Markets staged a recovery, as easing fears around the financial sector joined optimism off the back of a 0.4% decline in headline inflation, said Joshua Mahony, senior market analyst at online trading platform IG.
“Market sentiment appears to have a turn for the better today, with equities throughout Europe and the US moving higher despite ongoing concerns over the health of the banking sector. The demise of the Silicon Valley Bank brought concerns of further contagion throughout regional banks, leading to widespread calls over who could be the next to fall," Mahoney said.
"However, while there are likely to be others which will have to write down bond market investments, parallels to the global financial crisis should be limited. With US banking stocks seeing widespread gains, there is distinct feeling of confidence that we will not see widespread issues arise throughout the financial sector.”
3.50pm: Better days
The FTSE 100 index held just off session highs in late afternoon trading, bouncing back after two sessions of big losses in tandem with strong morning gains on Wall Street, as in-line US inflation data added to expectations that the Federal Reserve could stand pat on US interest rates at its next policy meeting in the wake of the market turmoil caused by the shock collapse of Sillicon Valley Bank (SVB) and Signature Bank.
Susannah Streeter, head of money and markets, Hargreaves Lansdown commented: ‘’US banking stocks are on a rollercoaster ride, rising sharply following the steep sell-offs yesterday as worries seem to be lifting a little about contagion from the SVB collapse. Hope is rebounding that the backstop of deposits of failed banks will stem further withdrawals and that more generous loan terms to struggling banks could help restore confidence. First Republic Bank shares have surged 44% but still haven’t made up the punishing losses of recent days, indicating that uncertainty remains about its robustness. The FTSE 100 has been swept upwards in afternoon trade, helped by the tailwinds from Wall Street."
She added: "There was also relief that US CPI data showed consumer prices rises cooling a little, adding to expectations that the Fed will press pause or at the very least go slow on rate hikes next week. However, with core prices rising 0.5%, slightly more than expected, it shows that inflation is still sticky and that the Fed is in a jam. Inflation is hot, but as worries continue to bubble about potential contagion from the SVB fallout the responsibility for maintaining financial stability is being pushed higher up the agenda.
"While sentiment is improving a little, there are concerns that bigger banks could become more risk averse in lending, which could dip the economy into a sharper downturn. This core inflation number is far from helpful for the Fed right now, as it decides where to head on a monetary policy journey which appears to have sparked the events leading to this state of high nervousness."
3.30pm: Racial overtones
Every constituent of the FTSE 100 except for six companies have at least one board member of an ethnic minority background, new research has found.
The Parker Review found that at the start of last year, there were 164 directors from a minority ethnic background out of a total of 1,056 positions across the biggest-listed UK companies.
Out of the 100 companies in the index, 42 were found to have between two and nine minority ethnic directors on their boards.
In 2015 John Parker, the head of the review, laid out a target for all FTSE 100 companies to have at least one ethnic minority director by December 2021.
Whilst the results indicated some companies still fell short of this target it is still a sharp rise from five years prior when only around 50% of constituents had a racial minority director.
“Increasing the population of ethnically diverse candidates in the boardroom will result in greater opportunities for candidates to move forward in the future into chair roles,” said John Parker.
He added: “You have got to build boards with the very best talent in today’s very competitive world, with a range of gender and ethnic diversity.”
However, the review did find that just under 90% of the ethnic minority directors are employed as non-executive directors. Only six chief executive officers at FTSE 100 companies are from racial minority backgrounds.
3.10pm: Crypto clamp-down
NatWest has imposed new limits on the daily and monthly amount customers can send to cryptocurrency exchanges, seeking to protect consumers from "crypto-criminals", Reuters has reported.
From Tuesday, customer transfers to cryptocurrency exchanges will be limited to £5,000 per 30-day period, with no more than £1,000 per day, NatWest said.
"We have seen an increase in the number of scams using cryptocurrency exchanges and we are acting to protect our customers," said Stuart Skinner, head of fraud protection at NatWest, Reuters reported.
In June 2021 NatWest introduced some daily caps on customers' crypto transfers to crypto exchanges, including top platform Binance, with the limits varying in size depending on the platform in question. It cited concerns over investment scams and fraud.
Consumers across the UK lost £329mln in crypto crime last year, NatWest said, with the cost-of-living crisis contributing to the problem as criminals lure investors with the promise of high returns.
2.45pm: Anti-social media
Facebook, Instagram and WhatsApp owner Meta is to cut 10,000 jobs globally, the BBC News website has reported, just months after the tech giant laid off 11,000 employees in November 2022.
In addition to the 10,000 jobs being lost, 5,000 open roles at the company will be left unfilled.
Meta chief executive Mark Zuckerberg said the cuts would be "tough", and formed part of a "year of efficiency", the news report said.
In a memo to employees on Tuesday, Zuckerberg said: "We expect to announce restructurings and layoffs in our tech groups in late April 2023, and then our business groups in late May 2023.
"In a small number of cases, it may take through to the end of the year to complete these changes.
"Our timelines for international teams will also look different, and local leaders will follow up with more details."
2.30pm: Not good enough
Although stocks in London and New York jumped higher after US consumer prices eased in February, in-line with expactations, Ian Shepherdson, chief economist at Pantheon Macroeconomics thinks the inflation data will not "be good enough to stop the Fed hiking next week, provided markets are calm".
Shepherdson noted: "Unfavorable rounding lifted the core above the consensus; the index rose 0.452%. Had airline fares not jumped by 6.4%, reflecting the temporary surge in fuel prices in January - it has now fully reversed - the core print would have been 0.4%"
He added: "Overall, the y/y rate for core services inflation is declining painfully slowly, dipping only a tenth in February to 6.2%. The peak was 6.5%, last September. This is not sufficient progress to placate Fed hawks, even if - as we believe - the downshift in wage growth will depress core CPI services inflation over the course of the next year.
"Assuming markets stay calm and no more banks fail, we think the Fed will hike by 25bp next week, and will raise their terminal rate forecast by 25-to-50bp. To be clear, we think further hikes now are unnecessary; the lagged effect of the increases over the past year are enough to push inflation back to target, but Fed officials have been unwilling so far to accept this argument and until last week they appeared set on further hikes. Recent events make a strong case for a pause until May, but at this point that would be a pleasant surprise rather than our base case."
2.10pm: Inflation helps
The FTSE 100 index held just off the session peak back above the 7,600 level as Wall Street opened strongly as in line US inflation numbers provided some respite, easing fears over further Federal Reserve rate hikes.
Around 40 minutes after the opening bell in New York, the Dow Jones Industrials Average was up 339 points, or 1.1% at 32,158, the tech-laden Nasdaq Composite jumped 1.8%, and the broader S&P 500 index gained 1.6%.
Markets responded positively to the latest US consumer price index (CPI) which rose 0.4% in February, an easing after increasing 0.5% in January, and in line with expectations.
Economists at ING commented: "Headline US CPI rose 0.4% month-on-month in February, as expected, but core (ex food and energy) was up 0.5%, versus the 0.4% consensus. As a result, the annual rate of headline inflation slows to 6% from 6.4% while the annual rate of core inflation moderates to 5.5% from 5.6%.
"On the face of it this supports the case for a Federal Reserve rate hike next week (we are up to about 19bp priced now), but that is still contingent on market calm. Financial stability risks always trump near-term inflation worries."
In London, around 2.10pm, the FTSE 100 index was up 72 points, or 1.0%, at 7,621, just off the day's high of 7,623.83
1.30pm: Here's a quick look at a few risers and fallers on the junior market today
Blue Star Capital PLC (AIM:BLU) rallied 47% on the recent announcement made by Pendulum, a company incubated by Blue Star's investee company SatoshiPay, of the release of "Spacewalk", its blockchain bridge connecting the Stellar and Polkadot networks.
Advertising company Tremor International Ltd (AIM:TRMR) added 14% to its share price following the announcement of a buyback of 85,747 ordinary shares at an average price of 232.99p each.
San Leon Energy PLC (AIM:SLE, AQSE:SLE, OTC:SLGYF) fell nearly 20% on news of a dispute in Nigeria surrounding the Oil Mining License (OML) 18, which San Leon has an economic interest.
Utilities firm Yü Group PLC (AIM:YU.) tanked almost 19% as it unveiled a broadly strong set of results, but hinted its corporate customers may struggle with energy bills if government support is cut on 1 April.
“We note that current lower commodity market pricing conditions still suggest a significant, though hopefully less material, impact on our business customers' bills,” it said in a statement.
Virgin Wines UK PLC (AIM:VINO) shares dropped 12.5% after the release of interim results where the group noted “tough trading conditions” and profits plunging.
Profit before tax for the direct-to-consumer wine retailer fell to £100,000 in the six months to end-December, down 97% from £3.2mln a year earlier, as revenue fell 17% to £33.6mln. as it had warned in January.
1.07pm: US futures extend gains
US stock futures extended their gains after the Bureau of Labor Statistics reported that the Consumer Price Index (CPI) rose 0.4% in February after increasing 0.5% in January, in line with expectations.
With less than an hour to go before the market opens, futures for the Dow Jones Industrial Average (DJIA) are 0.6% higher, while those for the broader S&P 500 index have gained 0.7%, and contracts for the Nasdaq-100 have added 0.6%.
Over the last year, the all-items index increased by 6%, the smallest 12-month increase since the period ending September 2021, the Bureau said.
However, core inflation, which excludes volatile food and energy costs, rose 0.5% month-over-month (m/m) in February and 5.5% on an annual basis, coming in above the 0.4% and 5.5% expected by the market.
The index for shelter was the largest contributor to the monthly all-items increase, accounting for over 70% of the increase, with the indexes for food, recreation, and household furnishings and operations also contributing, the Bureau added.
"The US CPI data has printed a mixed number today, but traders are paying less attention to the core CPI number which surged. Most traders are satisfied with the headline month-on-month data which matches the expectations," commented Naeem Aslam, chief investment officer at Zaye Capital Markets.
"But remember, CPI data isn’t the only factor that is going to move the markets and price of gold today. SVB’s fallout is more important here and the price action is likely to remain immensely choppy," he added.
1.01pm: FTSE 100 at best levels for the day after in line CPI
On today's US CPI numbers, John Leiper, Chief Investment Officer, Titan Asset Management said: "It’s been an eventful week for markets and today’s inflation print doesn’t change that."
"Headline inflation came in-line with expectations although core inflation picked-up slightly month-on-month. This keeps the Fed in a somewhat tricky position."
"The Fed cannot fall behind the inflation curve, its credibility is at risk if it does, but equally the lagged impact of prior tightening is now starting to show its face, as evidenced by the recent Silicon Valley Bank failure. This remains a delicate balancing act for Jerome Powell and markets won’t like the ongoing uncertainty.”
The data prompted a positive reaction in London with the FTSE 100 pushing to its best levels for the day now at 7,589.68, up 41.05 points, or 0.54%.
US futures which pared gains initially after the data have now pushed higher. Dow futures are up around 260 points.
The brighter mood in equities is reflected in Europe as well where the Dax has motored 1.3% higher while the Cac 40 is up 0.7%.
12.35pm: US CPI rises 6% y/y in February, core inflation up 5.5% - in line
US CPI numbers came in broadly in line with forecasts with both the headline and core figure as expected.
The consumer prices index in America slowed to an annual rate of 6.0% in February, down from 6.4% in January.
That matches economists expectations, and means inflation is running three times above the Fed’s target of 2%. Core inflation eased a little, to 5.5% from 5.6%.
The core figure of 5.5% was the lowest number since December 2021.
Dow futures remained firmer but initially fell from earlier highs as investors mulled whether the fall in inflation was enough to stop the Federal Reserve increasing interest rates.
Back in London and the FTSE 100's brief foray into the green came to an end after the figures, The lead index is now at 7,545.69, down 2.94 points.
US CPI Core (Y/Y) Feb: 5.5% (est 5.5%; prev 5.6%)
- US CPI Core (M/M) Feb: 0.5% (est 0.4%; prev 0.4%)
- US CPI (Y/Y) Feb: 6.0% (est 6.0%; prev 6.4%)
- US CPI (M/M) Feb: 0.4% (est 0.4%; prev 0.5%)
— LiveSquawk (@LiveSquawk) March 14, 2023
11.51am: Gains seen in the US, FTSE in the green
Wall Street is expected to open higher ahead of the release of February’s Consumer Price Index (CPI) which is now likely to carry less weight in the Federal Reserve’s next interest rate decision due to the fall-out from the collapse of Silicon Valley Bank (SVP) and Signature Bank.
Futures for the Dow Jones Industrial Average rose 0.5% in Tuesday pre-market trading, while those for the broader S&P 500 index gained 0.6% and contracts for the Nasdaq-100 also added 0.6%.
US stocks ended mixed in volatile trading on Monday as SVB dominated investor sentiment. President Joe Biden assured depositors that their money would be protected, and some speculated the bank's failure would mean an end to interest rate hikes when the Federal Open Market Committee (FOMC) meets next week.
The Dow closed 0.3% down at 31,819, while the Nasdaq Composite added 0.5% to 11,189 and the S&P 500 lost 0.2% to 3,856. The small-cap Russell 2000 index declined 1.4% to 1,749.
Ahead of the FOMC meeting, the Bureau of Labor Statistics releases February’s Consumer Price Index (CPI) at 8:30am ET Tuesday.
The CPI is expected to show both headline and core inflation up 0.4% month-over-month, which would pull annualized headline inflation down to 6% from 6.4% previously and core inflation to 5.4% from January’s 5.6% gain.
“The US CPI data due today could reshuffle the Fed expectations regarding what will happen next week,” commented Swissquote Bank senior analyst Ipek Ozkardeskaya.
“Both headline and core inflation are expected to have eased in February, but investors are cautious given that last month’s disappointment could be repeated this month, as the base effect – where we will finally start comparing the war months to the war months – won’t be in play until March as Russia invaded Ukraine by end of February last year.”
Ozkardeskaya noted that potentially faster rate hikes to contain inflation are no longer expected.
“On the contrary, there is now a massive lack of consensus in the market regarding what the Fed should do, and what the Fed will do," she said. "Some think that if today’s inflation data is not sufficiently soft, the Fed should continue hiking by 50 basis points.
Some others think that the Fed should simply hike by another 25 basis points this month and signal a pause starting from the next meeting – which would be the smoothest solution of all for the market.
An increasing number of investors and bank analysts including Goldman Sachs (NYSE:GS) (Goldman Sachs (NYSE:GS)) believe that the Fed will skip the March rate hike.”
Back in London and a rare sighting of green as London's lead index moves into positive territory, at 7,554.01, up 5.38 points, or 0.1%.
11.31am: Lloyds boss says banks not seeing a "flight to quality" yet
British banks are not yet seeing a "flight to quality" in deposits among customers nervous about the safe-keeping of their money following the collapse of U.S. lender Silicon Valley Bank last week, Lloyds chief executive Charlie Nunn said on Tuesday, reported by Reuters.
"What's happened with SVB is relatively idiosyncratic compared to the UK," Nunn told a Morgan Stanley (NYSE:MS) event, referring to the demise of the specialist lender, which has triggered widespread banking turmoil and a rout in stocks globally.
"We haven't seen what we've seen in the US, which is the flight to quality," Nunn said. "But let's see how that plays out and we'll see how people feel over the next period of time."
In a sign of stabilisation shares in Lloyds Banking Group PLC (LSE:LLOY) are now 0.4% higher, NatWest is 0.7% higher and Barclays is 0.9% higher.
11.15am: Oil prices fall but FTSE recovers ground
Oil prices have tumbled as fears that the turmoil in the banking sector could prompt a global recession intensify.
Investors are also gearing up for the latest US CPI figures. A strong inflation reading would leave the Federal Reserve with a delicate balancing act of retaining its commitment to taming inflation without sending the US economy into a slowdown.
Late morning and Brent crude was down 2.1% at US$79.12/barrel while West Texas Intermediate crude prices fell 2.8% to US$72.68/barrel.
In London oil majors BP PLC (LSE:BP.) and Shell PLC (LSE:SHEL, NYSE:SHEL) were lower, down 1.3% and 1% respectively.
Meanwhile the FTSE 100 has recouped most of its early losses now at 7,545.06, down 3.57 points, or 0.047%.
10.45am: Rate rises in the balance
The peak for interest rates has tumbled in the UK in the wake of the banking turmoil.
Andy Bruce at Reuters posted a chart which showed just how much markets markets have reined in bets that the Bank of England will keep on raising interest rates.
This chart shows just how much markets have reined in bets that the @bankofengland will keep on raising interest rates.
The different lines represent the expected increase in Bank Rate for future MPC meetings vs now, in basis points. MD0 = next meeting.
Based on the OIS curve. pic.twitter.com/cIbZSQAkhk
— Andy Bruce (@BruceReuters) March 14, 2023
He explained the pricing suggests the market sees roughly a 66% chance that they will raise rates at their next meeting.
Ed Conway at Sky noted as of Friday investors were expecting interest rates to peak at around 4.75% in August. Following the collapse of Silicon Valley Bank they’re now expecting a peak of just 4.25%.
As of Fri investors were expecting @bankofengland interest rates to peak at around 4.75% in Aug.
Following the collapse of Silicon Valley Bank and all that, they’re now expecting a peak of just 4.25%.
Things are shifting…
Below chart shows changes in expectations for AUG rates???? pic.twitter.com/GH4svt5KcS
— Ed Conway (@EdConwaySky) March 13, 2023
Rates is also a topic of debate across the pond. Neil Wilson at markets.com asked: “Could the Fed cut rates at its March meeting? Markets have repriced terminal rates aggressively in the wake of SVB’s collapse and subsequent roiling of financial stocks.”
He pointed out investment banks such as Nomura now expect the Fed to cut rates, while Barclays, Goldman Sachs (NYSE:GS) and NatWest have called for the Fed to pause rate hikes.
But Wilson warned “if the Fed even pauses, let alone cuts, it’s inflation-fighting reputation will be in tatters.” He noted the market pricing is at evens for 25bps or a pause.
10.10am: FTSE 100 lower but stable, US CPI to come
AJ Bell’s Russ Mould feels although the FTSE 100 may have been dragged lower by index heavyweights on Tuesday morning, “there was a sense some calm had been restored to markets after a bruising few sessions.”
But he noted “while the immediate fallout from the SVB collapse may have been contained for now, the edginess around the banking sector isn’t helped by the latest revelations from Credit Suisse as it identified material weaknesses in reporting controls.”
“It may have been a ‘technical’ issue according to the Swiss bank but in the current environment and given the company’s recent sketchy track record, investors were hardly in a forgiving mood.”
And Mould questioned whether the relative calm will survive the latest print of US inflation later.
“Given expectations have been ratcheted back for interest rate increases amid concern the current rate hiking cycle is starting to break things in the financial system, the markets, the Federal Reserve and politicians will be desperate to see an easing of inflationary pressures.”
“If inflation comes in ahead of expectations, volatility is likely to pick up once again as investors look ahead to the Fed’s meeting on 22 March.”
The FTSE 100 is currently at 7,524.73, down 23.90 points, or 0.32%. In Paris, the Cac 40 is up 1 point while the DAX is holding in the green, up 0.3%
9.38am: ECB member sees no impact on Europe's banks from SVB
The collapse of Silicon Valley Bank is not expected to affect the euro zone’s banks, Greek central bank chief Yannis Stournaras has said.
Stournaras, a member of the ECB’s Governing Council, told Kathimerini newspaper: "We don’t see SVB (Silicon Valley Bank) having an impact on the euro zone’s banks or the Greek ones."
Stournaras knows all about financial dramas. Ten years ago he was Greece’s finance minister, when the eurozone debt crisis threatened to push Greece into bankrupcy.
9.13am: Citi hikes Rolls-Royce price target
Away from the banks and one share doing rather nicely on Tuesday is Rolls-Royce Holdings PLC (LSE:RR.) with shares up 2% at 148p.
The investment bank, Citi, has set a price target of 255p and suggested the results of the performance review, closing performance gaps and releasing working capital could add a further 65p upside.
After looking at the FTSE 100-listed engineer’s underlying cash flow and the upside potential from the CEO’s as yet unquantified turnaround plan Citi concluded Rolls-Royce offers continued strong investment performance.
Citi sees strong underlying cash flow improvement over the next five years, with over £1bn improvement coming from non-systemic elements dropping out and “wide body recovery turning the Civil Aerospace business and improving sentiment.”
9.00am: FTSE 100 moves off early lows
The Footsie regained some poise and showed signs of stabilising after the heavy losses on Monday as European markets moved higher and US futures pointed to a positive restart in the US.
At 9.00am London’s lead index was down 11.84 points, or 0.2%, at 7,536.79. In Europe the Cac 40 was up 0.2% and the Dax jumped 0.6%. The Euro Stoxx banking index was down 1.2%.
Victoria Scholar, head of investment, interactive investor said: “In a frenetic period for markets, European indices have started the session oscillating between gains and losses with the FTSE 100 trading lower while the DAX is currently in the green.”
In London, the banking sector remained weak but stocks regained some of the opening falls. Lloyds is now down only 0.4% and NatWest has pushed into the green, up 0.1%.
Goldman Sachs (NYSE:GS) thinks the risk of direct banking sector contagion “appears limited, as European banks’ exposure to US deposits is low, and the Euro area and UK banking systems are well capitalised with ample liquidity.”
But the investment bank suggested “the US financial stress could lead to European banks curtailing lending to the real economy and therefore tighten broader financial conditions, amplifying the growth drag already underway.”
The fear that the banking crisis could prompt an economic slowdown saw the oil price fall further with Brent crude down 2% which weighed on BP PLC (LSE:BP.) and Shell PLC (LSE:SHEL, NYSE:SHEL), down 1.3% and 1.2% respectively.
One share moving higher was Rolls-Royce Holdings PLC (LSE:RR.) which gained 2.1% as Citi set a 255p price target and reiterated a ‘buy’ rating.
8.20am: FTSE moves lower at the open
The FTSE 100 moved lower in early trading on Tuesday as banking stocks continued to fall in the wake of the turmoil sparked by the collapse of SVB in the US.
At 8.15am London’s lead index was at 7,535.17, down 11.71points, or 0.16% while the FTSE 250 pushed higher, up 24.18 points, or 0.1%, at 18,849.26.
Financial stocks showed signs of stabilising but were still mostly in the red. Banks headed south with HSBC Holdings PLC (LSE:HSBA) down 1.5% after falls in Hong Kong, NatWest Group PLC (LSE:NWG) lost 0.4%, Lloyds Banking Group PLC (LSE:LLOY) fell 0.9%. But insurer Aviva PLC (LSE:AV.) rose 0.1%.
The unemployment rate for November 2022 to January 2023 was largely unchanged on the quarter at 3.7%, according to the Office for National Statistics.
Growth in average total pay (including bonuses) was 5.7% and growth in regular pay (excluding bonuses) was 6.5% among employees in November 2022 to January 2023.
Average regular pay growth for the private sector was 7.0% in November 2022 to January 2023, and 4.8% for the public sector. In real terms (adjusted for inflation), growth in total and regular pay fell on the year in November 2022 to January 2023, by 3.2% for total pay and by 2.4 for regular pay.
Total pay was in line with the market consensus and slowed from 6.0%. Regular pay growth came in below consensus of 6.6% and slowed from 6.7% in the three months to December.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics said: “Today’s labour market report strengthens the case for the MPC to hold back from raising Bank Rate further next week, which already had been bolstered by the collapse of two US banks over the weekend. Admittedly, labour market slack is increasing only gradually.”
“Nonetheless, surveys show that recruitment difficulties now are no more pronounced than in before the pandemic, and redundancies look set to pick up over the coming months.”
“Most importantly of all, wage growth has slowed substantially, despite the modest increase in labour market slack.”
Shares in GSK PLC (LSE:GSK, NYSE:GSK) rose 0.2% after it announced positive results from the phase III trial of its MenABCWY combination vaccine candidate in meningococcal, a major cause of meningitis and septicaemia.
The drug, a five-in-one amalgam of treatments, was administered in two doses given six months apart.
It was tested for its safety, tolerability and immunogenicity (its ability to vaccinate) in healthy people aged between 10 and 25 years.
The evaluation had 11 separate goals, or endpoints, and achieved all of them.
But Close Brothers fell 4.6% after it said half-year profit declined amid provisions at Novitas, a provider of loans for legal proceedings. Pre-tax profit in the six months to January 31 plunged 91% year-on-year to £11.7mln from £128.9mln.
Novitas provisions during the half totalled £114.6mln. Novitas was acquired by Close Brothers in 2017 and in 2021 the company decided to permanently cease the approval of lending to new customers across all the products offered by Novitas and withdraw from the legal services financing market.
7.54am: RS unveils new CEO
RS Group has a new boss. Simon Pryce has been named Chief Executive Officer with effect from 3 April 2023. David Egan, currently acting CEO, will work alongside Simon in his role of Chief Financial Officer.
Most recently, Prycw was CEO of Ultra Electronic Holdings PLC for over four years which was acquired by Advent in August 2022. Prior to this, he was group Chief Executive at BBA Aviation PLC for 10 years and previously held a range of international finance and management roles. He has been a non-executive director of RS since 2016 and chair of the remuneration committee since 2019.
7.51am: GSK scores phase III success with meningococcal disease vaccine
Good news from GSK PLC (LSE:GSK, NYSE:GSK) which announced positive results from the phase III trial of its MenABCWY combination vaccine candidate in meningococcal, a major cause of meningitis and septicaemia.
The drug, a five-in-one amalgam of treatments, was administered in two doses given six months apart.
It was tested for its safety, tolerability and immunogenicity (its ability to vaccinate) in healthy people aged between 10 and 25 years.
The evaluation had 11 separate goals, or endpoints, and achieved all of them.
7.45am: Credit Suisse identifies material weaknessess in reporting controls
Credit Suisse identified “material weaknesses” in its internal control over financial reporting, as it published its delayed annual report.
The Swiss bank had been forced to push back the publication of its annual report last week after receiving a call from the US Securities and Exchange Commission relating to cash flow statements going back three years, which it described as a “technical issue”.
Credit Suisse said its full year 2022 results were unaffected.
“Management did not . . . maintain an effective risk assessment process to identify . . . the risk of material misstatements in its financial statements,” the bank conceded.
7.38am: Centrica extends life of two nuclear power stations
Centrica PLC (LSE:CNA) has announced plans to extend the lives of two UK power stations.
The Heysham 1 and Hartlepool nuclear power stations are now expected to close in March 2026, two years later than previously forecast.
These extensions are expected to add 6TWh to Centrica's electricity generation volumes between 2024 and 2026 which equates to around 70% of Centrica's total nuclear volumes in 2022.
Chief executive Chris O'Shea said: “I'm delighted we've been able to work with EDF to strengthen the UK's energy security by extending the life of these critical power stations.”
“This continues our action to bolster security of supply in our core markets which includes reopening the Rough gas storage facility in the UK, sanctioning new gas-fired electricity generation capacity in Ireland, and securing increased volumes of gas and renewable power for our customers.”
“We will continue to focus on supporting energy security in our core markets during these uncertain times."
7.30am: J Sainsbury buys store portfolio for £431mln
J Sainsbury PLC (LSE:SBRY) (J Sainsbury PLC (LSE:SBRY)) has bought Supermarket Income REIT's 51% interest in the Highbury and Dragon investment vehicle, which hold the freehold to 26 stores, for £430.9mln.
The deal will result in Sainsbury's acquiring the freehold of 21 stores in the Highbury and Dragon investment vehicles which will continue to be operated as Sainsbury's supermarkets with the remaining five stores to be sold. Sainsbury's has held a 49% interest in Highbury and Dragon since it was created in 2000.
The deal will be settled in three tranches - £279.3mln will be paid on 17 March 2023 and £116.9mln will be paid on 10 July 2023. The third tranche of £34.7mln is conditional on the sale of the remaining five stores by Sainsbury's.
Additionally, Sainsbury's will fully fund the Highbury and Dragon bond redemptions of £170.5mln on 20 March 2023 and £130.4mln on 13 July 2023 respectively.
The payments will be funded by utilising the group's cash resources and also by drawing under a committed unsecured term facility.
Sainsbury said the assets acquired generated aggregate profits before tax of £110.4mln in their most recent respective financial years.
These profits, in part, reflected revaluation gains recognised on the investment properties held in the Highbury and Dragon investment vehicles.
Going forward, Sainsbury's will not recognise revaluation gains and losses on these assets as they will be held as owner operated freehold stores, instead seeing a reduction in depreciation and interest expenses, alongside a reduced cash outflow on rent.
The food retailer said it has entered into new 15-year leases on four of these stores with five yearly open market rent reviews and a tenant break option at year ten.
7.10am: Unemployment rate holds steady, pay growth slows
The unemployment rate for November 2022 to January 2023 was largely on the quarter at 3.7%, according to the Office for National Statistics (ONS).
The ONS said the number of payrolled employees for February 2023 showed another monthly increase, up 98,000 on the revised January 2023 figures, to 30.0mln.
Headline indicators for the UK labour market for November 2022-January 2023 show
▪️ employment was 75.7%
▪️ unemployment was 3.7%
▪️ economic inactivity was 21.3%
— Office for National Statistics (ONS) (@ONS) March 14, 2023
In December 2022 to February 2023, the estimated number of vacancies fell by 51,000 on the quarter to 1,124,000 with economic pressures cited as a factor in holding back on recruitment.
Growth in average total pay (including bonuses) was 5.7% and growth in regular pay (excluding bonuses) was 6.5% among employees in November 2022 to January 2023.
Average regular pay growth for the private sector was 7.0% in November 2022 to January 2023, and 4.8% for the public sector. In real terms (adjusted for inflation), growth in total and regular pay fell on the year in November 2022 to January 2023, by 3.2% for total pay and by 2.4 for regular pay.
Total pay was in line with the market consensus and slowed from 6.0%. Regular pay growth came in below consensus of 6.6% and slowed from 6.7% in the three months to December.
A larger fall on the year for real total pay was last seen in February to April 2009, when it fell by 4.5%, but it still remains among the largest falls in growth since comparable records began in 2001, the ONS said.
The report also showed there were 220,000 working days lost because of labour disputes in January 2023, down from 822,000 in December 2022.
7.00am: FTSE seen lower as banking crisis continues
The FTSE 100 is expected to extend its losses on Tuesday after the rout in banking shares continued in the US and extended into Asia.
However, more modest falls are expected at the open with spread betting companies calling London’s lead index down by around 20 points.
Shares of Japan’s biggest banks dropped sharply as global markets reacted to a US banking sector sell-off and uncertainty over interest rates in the wake of the collapse of Silicon Valley Bank. Japan’s Topix Banks index was down as much as 7.8%, on track for its worst day in more than three years, while the Topix fell more than 3.1%. The Nikkei 225 ended down 2.2% while the Hang Seng index in Hong Kong tumbled 2.4%.
US markets were mixed Monday. The Dow closed Monday down 91 points, 0.3%, at 31,819, while the Nasdaq Composite added 50 points, 0.5%, to 11,189 and the S&P 500 lost 6 points, 0.2%, to 3,856.
Banking companies, particularly regionals, were among the hardest hit. First Republic Bank saw its shares fall more than 60%, and Western Alliance Bancorporation stock dropped nearly 50%.
Bank of America and Wells Fargo closed 5.6% and 7.1% lower, respectively.
With markets now factoring in lower interest rate increases attention will focus later on US CPI figures which are expected to show a decline in the annual rate of growth to 6% from 6.4% in January.
Back in London and the early focus will be provided by results from Pennon and the release of UK unemployment and average earnings figures.