- FTSE 100 closes 79 points higher
- Wall Street lower after jobless claims weaken
- Shell up on upbeat outlook, oil price rise
4.50pm: FTSE 100 finishes ahead
At the close, the UK's blue-chip index had gained 1% to finish at 7,742 points.
The FTSE 100 stayed on course for its third successive weekly gain, although it remains well short of its March peaks, CMC's Michael Hewson noted.
In particular, banks and commercial real estate were still some way short of returning to the levels seen at the beginning of March when the UK index was trading around 7,900, Hewson said.
3.55pm: US market has jobs jitters
The FTSE 100 index held firm approaching the long Easter holiday weekend, but the mood across the pond was more cautious, with Wall Street staying weaker as investors await tomorrow's March US non-farm payrolls report, with the labor market a key pointer for the Federal Reserve's next monetary policy moves.
Craig Erlam, senior market analyst, UK & EMEA, OANDA commented: "We're seeing some cautious trading ahead of the jobs report on Friday, with today's jobless claims data offering signs of cracks appearing in the labour market.
"That primarily came from revisions to previous figures that show a clear trend higher in claims, a trend that is likely to worsen as mass layoff announcements find their way into the data.
"The next few months are likely to paint a very different picture of the labour market in the US and that could even be exacerbated by recent turbulence in the banking system.
"Soon enough, the Fed will likely have an abundance of evidence that rate hikes have taken the heat out of the economy, perhaps too well. At which point the rate cuts later in the year that has been priced into markets may look increasingly likely and necessary."
3.35pm: Rookery nook
World Chess PLC shares made their debut on the London Stock Exchange's main market on Thursday, though the company raised less than half the amount it had initially hoped for.
The company, which owns the exclusive rights to the official online chess gaming platform, FIDE Online Arena, raised £3.04mln at 6.25p a share giving it a market capitalisation on admission of £41.7mln. The shares had risen to 6.50p by late Thursday afternoon.
World Chess said the funds raised will be used to support the company's growth strategy, including the further development of the World Chess online playing platform and marketing initiatives.
"The completion of our IPO comes at an exciting time for chess. The number of players and spectators of the sport is growing and with this new commercial opportunities are opening up. Using our public profile and position as a public company, we are well-placed to capitalise on these opportunities and grow World Chess," the company's chief executive officer Ilya Merenzon said in the admission statement.
3.15pm: IMF boss gloomy on global growth
The global economy is heading for the weakest period of growth since 1990 as higher interest rates set by the world’s top central banks drive up borrowing costs for households and businesses, the head of the International Monetary Fund has warned, the Guardian reported.
Kristalina Georgieva, the IMF’s managing director, said a sharp slowdown in the world economy last year after the aftershocks of the Covid pandemic and the Russian invasion of Ukraine would continue in 2023, and risked persisting for the next five years.
In a curtainraiser speech before the fund’s spring meetings in Washington DC next week, she said global growth would remain about 3% over the next five years – its lowest medium-term growth forecast since 1990.
“This makes it even harder to reduce poverty, heal the economic scars of the Covid crisis and provide new and better opportunities for all,” Georgieva said, the newspaper's website noted.
2.50pm: Jobs report overshadows
The FTSE 100 index held firm but eased further from session highs as US stocks fell at the open on Thursday as traders held off from making any big moves ahead of the long holiday weekend and Friday’s key non-farm payrolls report, delivered when markets are closed.
Around 15 minutes after the New York open, the Dow Jones Industrials Average had shed 107 points, or 0.3% at 33,375, while the S&P 500 was down 0.5%, and the tech-heavy Nasdaq Composite dropped 0.8%.
The latest US initial jobless claims for the week ended April 1, 2023, came in higher than expected at 228,000, above consensus expectations of 200,000. The prior week’s figure was revised up to 246,000.
On Wednesday, data from private payroll firm ADP showed employers added 145,000 jobs in March, far below the consensus expectation of 210,000.
Pantheon Macroeconomics chief economist Ian Shepherdson said the huge revision to last week’s weekly jobless claims data revealed a clear rising trend.
Shepherdson noted: “The new data for the past two months show a much higher level of claims and a rising trend; the four-week average now stands at 231,000, the highest since February 2022. Looking ahead, the surge in layoff announcements captured in the Challenger survey points clearly to much higher jobless claims over the next few months.”
He said a rising trend in claims had been a key missing part of the labor market story, but it was now clear layoffs are increasing, while other data, notably the NFIB survey, pointed to much slower gross hiring.
“We still expect a 250,000 increase in March payrolls tomorrow, but we look for only 150,000 in April and we see a decent chance of zero readings around mid-year, consistent with our view that the economy is heading rapidly into a spring/summer recession,” Shepherdson said. “These data alone won’t stop the Fed from raising rates again in May, but they are a warning sign that should not be ignored.”
2.30pm: Energy drain
Regulator Ofgem could introduce a new capital floor for UK energy companies, requiring them to target £130 of adjusted net assets per dual fuel customer from March 2025.
The new licensing condition would aim to ensure suppliers are better shielded against market volatility, which has led to the collapse of 30 companies since August 2021.
These failures had costed the taxpayer £2.7bn by November, a Public Accounts Committee report found, averaging an additional £94 on households’ energy bills.
Bulb, the largest to fail with 1.7mln customers, entered government-handled administration in late 2021 after it had failed to hedge against soaring gas prices and Ofgem’s cap prevented it from passing on the resulting higher costs to customers.
Ofgem may also order companies to ringfence customer credit balances, which it says they are too reliant on to fund operations, requiring them to keep more cash in reserve.
2.15pm: Funds switching
Investors are shunning high-risk investments and opting instead for low-risk funds in the wake of the recent banking turmoil, according to Barclays.
Analysts at the bank predict that as much as £1.2trn might be switched out of stock markets over the next twelve months due to fears over a possible crash.
Inflows into low-risk money-market funds hit a new record last month of US$304bn, said Barclays, taking the total held in these types of assets to US$5.2trn.
Joseph Abate, Barclays money market strategist commented: "We expect money fund balances to increase sharply in the next year.
"Institutional investors have noticed that they were not getting as much compensation for taking on unsecured bank risk by keeping bank deposits above the $250,000 insurance cap."
1.30pm: A quick recap of some of London's movers
Risers
THG - up 5% to 66p: Shares jumped after the company announced a 10-year strategic partnership with beauty eCommerce retailer Maximo Group, whose websites include allbeauty.com and fragrancedirect.co.uk.
Avacta - up 7% to 130p: Shares moved higher after it announced the opening of two initial sites for its early-stage cancer trial. Phase I evaluations of AVA6000, its lead pre|CISION drug candidate for soft tissue sarcoma treatment, will take place at the Memorial Sloan Kettering Cancer Center in New York and the Fred Hutch Cancer Center in Seattle.
Fallers
Integrated Diagnostics - down 7% to 0.4p: Shares fell after the consumer healthcare group reported a 31% fall in revenues and a 54% tumble in underlying profits with its prelims. The group, which has operations in Egypt, Jordan, Nigeria and Sudan, said the challenging economic conditions seen in 2022 were unlikely to improve in the near term.
1.00pm: Mixed start seen in the US, Nasdaq set to extend losses
US stocks are looking at another cautious start on Thursday as investors try to wind down ahead of the long holiday weekend with one eye focused on the key March non-farm payrolls report which will be released when markets are closed on Good Friday.
In pre-market trading, futures for the blue-chip Dow Jones Industrials Average (DJIA) were up 0.1%, but those for the broader S&P 500 index shed 0.1%, and contracts for the Nasdaq-100 fell 0.4%.
On Wednesday, the DJIA closed 80 points, 0.2% higher at 33,483, while the S&P 500 fell 0.3%, and the Nasdaq Composite dropped 1.1%. The Nasdaq finished lower for the third session in a row.
Traders will eye the latest weekly jobless claims on Thursday which will offer further insight into the health of the labor market following two reports earlier this week that showed signs of weakness. Other data suggested a slowdown in manufacturing activity has added to market jitters.
Joshua Mahony, chief market analyst at Scope Markets commented: "Wall Street is looking at a flat start to the final session of the week, with opinions still divided as to what happens next for the US economy.
"However, with economic news released in the last couple of days becoming distinctly more gloomy and the fact that the non-farm payrolls will be published tomorrow when markets are closed for Good Friday, it’s becoming increasingly difficult to justify the idea that major US indices remain close to year to date highs.
"Economic data releases today are limited and it’s going to be tomorrow’s employment stats that carry the greatest weight. If we don’t see a shakedown before the end of Thursday’s session then when trading resumes on Monday."
12.39pm: Glass Lewis urges investors to block payout for former Barclays CFO
Proxy adviser Glass Lewis has urged investors to vote against pay proposals for Barclays PLC (LSE:BARC) top executives following a year of scandals that has cost the bank hundreds of millions in fines and settlements according to reports.
Barclays said in February that it had reduced the pay of top executives by a combined £1mln in response to the scandals.
But Glass Lewis objected to long-term awards of close to £3mln that vested last year for former chief financial officer Tushar Morzaria, meaning he was awarded more than two-thirds of his potential pay package.
In a report on Thursday, Glass Lewis said: “We believe shareholders could reasonably have expected the committee to further reduce this award to better reflect the financial and reputational impact of the risk and control issues over the period."
The FTSE 100-listed lender paid a US$200 million fine to US regulators last year for failures over several years that led it to oversell US$17.7bn of structured products and forced the restatement of 2021 financial accounts.
Morzaria was CFO of Barclays from 2014 until April 2022 when he retired.
The Financial Times and Reuters are among those reporting this news.
Barclays’ annual general meeting will be held in London on May 3.
12.10pm: Airbus to double production capacity in China
The FTSE 100 continues to make strong ground ahead of the long weekend, now up 58 points.
Gains are broad-based with BT, L&G, Entain, Barclays and GSK the top five risers.
In the FTSE 250, TUI and Ferrexpo lead the way after their positive updates, gaining 10% and 4.3% respectively.
Heading the other way was Smiths Group (LSE:SMIN), which traded ex-dividend, and JD Sports which slipped as footfall data showed that consumers were reeling from the effects of the cost of living crisis.
European planemaker Airbus will open a second final assembly line in China that will double its production capacity in the country, its CEO said.
"It makes a lot of sense for us, as the Chinese market keeps growing, to be serving local for the Chinese airlines, and probably some other customers in the region," Guillaume Faury said during a trip to China, where he is accompanying French President Emmanuel Macron on his state visit.
The framework accord for the new site was later signed by Faury at a ceremony attended by Macron and Chinese President Xi Jingping, an AFP journalist saw.
Asia has become a key market for both Airbus and its US rival Boeing as demand for air travel climbs with an expanding middle class.
11.42: Shell's trading update points to another bumper buyback
Shell's trading update points to a good operational delivery during the quarter, falling opex and a strong contribution from trading, according to Jefferies.
Lower than expected cash taxes and working capital unchanged at the mid-point of guidance should help Shell keep quarterly buybacks flat at US$4bn according to the broker.
The oil major had earlier updated investors on progress between January and March which was well received by the market with shares advancing 1.7%.
In Integrated Gas, Jefferies highlighted raised guidance for liquefaction from the previous quarter to 7-7.4mt from 6.6-7.2mt before and the broker’s own forecast of 6.8mt.
Production estimates were also tightened upwards to a range of 930-970kboe/d from 910-970kboe/d before with Shell indicating is “similar" quarter on quarter – Jefferies pointing out the fourth quarter was very strong.
Analysts at the broker highlighted a fall in operating expenditure to US$2.3-2.85bn from US$3bn in quarter four and improved sales volumes in marketing.
In chemicals and products refining margins have fallen materially quarter on quarter to US$15/barrel from US$19 in quarter four but trading and optimisation is expected to be significantly higher.
Tax payments of between US$2.6bn to US$3.4bn are favourable compared to the broker’s US$3.3bn forecast and the US$4.8bn paid in the fourth quarter while working capital inflows of between negative or positive US$3bn are set against Jefferies’ negative US$2bn prediction.
Jefferies has a buy rating on Shell and a 2,363p price target.
10.50am: German manufacturing tops forecasts easing fears of a recession
Leading European markets remain in the green with the FTSE 100, up 0.5%, outpeforming the Dax, up 0.2%, and the Cac 40, up 0.1%.
Better economic news from Germany today as German factories rebounded strongly with industrial production rising more than expected in the first two months of the year.
The 2% growth in factory output in February, was well above the 0.1% forecast by economists, positive news for Europe’s largest economy.
This is a much better headline than we had hoped said Claus Vistesen at Pantheon Macroeconomics.
He said it showed German manufacturing had come “roaring back” at the start of the year.
He saw it as an “encouraging sign for Q1 GDP growth.”
10.04am: Construction sector grows in March but momentum slows
Construction activity improved for the second month in a row in March but at a slower rate than the previous month, according to the latest figures.
The S&P Global/CIPS UK purchasing managers' index fell to 50.7 points in March from 54.6 in February, with the slowdown faster than the 53.5 reading expected by City analysts.
The civil engineering category saw the fastest rise in business activity, while house building was the weakest-performing area.
Lower volumes of residential building work have now been recorded for four months in a row, the survey noted.
Supply conditions improved in March, reflecting greater availability of construction products and materials, alongside fewer logistics bottlenecks.
Tim Moore, S&P Global economics director said: "UK construction companies experienced a sustained rebound in output levels during March as work on civil engineering and commercial projects picked up for the second month running.”
However, the "sharp and accelerated" decline in house building was the "main area of concern", Moore said.
On the bright side around 46% of the survey panel predicted an increase in business activity during the year ahead, while only 11% foresee a reduction with the resulting index reading signalling the strongest degree of positive sentiment since February 2022.
Optimism has rebounded strongly from the two-and-a-half year low seen in December, largely reflecting signs of a turnaround in client spending and a more favourable outlook for the wider UK economy, the report showed.
9.43am: TUI jumps on strong Easter trading, expects good Summer
Shares in TUI jumped 7.5% after the travel operator said bookings and trends for Easter holidays confirm strong demand across all markets for its sunshine destinations.
It expects over 500,000 customers to travel on holiday with TUI over Easter with load factor expected to be in the range of 95% – broadly in line with pre-Covid levels.
The Hanover, Germany-based firm said the Canary Islands, Turkey, Balearics, Mainland Spain, Egypt, Greece remained popular destinations.
TUI said customers continue to book at shorter notice and prefer package holidays and all-inclusive offers.
Chief Executive Sebastian Ebel commented: "Booking momentum remains encouraging with strong demand for Easter holidays.”
“We anticipate capacities to be close to pre-pandemic levels, we expect a good Summer 2023."
"Our products and strong brand are popular and in high demand - in the UK, Germany, the Netherlands, Belgium, Switzerland and many other markets where people are looking for relaxation in the sun and active experiences,” he added.
9.25am: House price data resilient but challenges remain
The latest house price data from mortgage lender Halifax is resilient but can’t hide the fact that a “slowdown in the housing market is at play.”
That was the view of Myron Jobson at interactive investor noted prices were holding up despite “a double whammy of rampant inflation and rising interest rates.”
“The recent fall in mortgage rates, with lenders seemingly engaged in a mortgage price war, and a strong labour market, with unemployment at a near record low, has helped keep prices elevated,” he explained.
“But there is mounting evidence that the housing market is seemingly in a pendulum moment — swinging back in a buyer’s market direction,” he cautioned.
He said the crucial spring-buying season could give us a clear indication of the state of the property market.
“In spring, home prices tend to rise due to increased seasonal demand, but current indicators do not signal that the season will be a robust one,” he pointed out.
The EY ITEM Club said taking the Halifax measure in isolation, “it offers another sign that the economy is holding up against headwinds from high inflation and rising interest rates much better than many expected.”
They noted mortgage approvals and survey evidence of housing transactions both appear to have bottomed out while there are signs of green shoots in the economy.
“However, prices still look very stretched on most affordability measures,” they added.
Housebuilders were mixed after the release. Persimmon PLC (LSE:PSN) rose 1.5%, Bellway gained 0.8% and Redrow firmed 0.6% but Barratt Developments PLC (LSE:BDEV) slipped 1.0%.
8.58am: Miners lead the Footsie higher
The FTSE 100 has motored higher, now up 38 points, led by gains in oil major Shell after its first quarter trading update and the mining sector.
Miners were given a lift by encouraging data from China where the services sector showed strong growth boosting hopes for an overall recovery in the country, a major consumer of base metals and other minerals.
Anglo-American, Antofagasta and Rio Tinto were all prominent risers.
Duncan Wrigley at Pantheon Macroeconomics said: "Consumer services led China’s reopening rebound, as elsewhere in the world. But now the services rebound is broadening out. Business activity readings in the official PMI were over 60 for retail, rail, road and air transport, internet services, financial services and leasing and business services."
He felt that "China’s recovery is gaining momentum, though still uneven."
Ferrexpo was also on the rise with shares up 5.4% in early deals after it reported a significant increase in first-quarter production thanks to an improved electricity supply for its operations in central Ukraine.
The company more than doubled its total iron ore pellet output to 900,000 tonnes during the quarter, compared to 420,000 tonnes in the three months prior.
THG advanced 6.5% after announcing a 10-year strategic partnership with beauty eCommerce retailer Maximo Group, whose websites include allbeauty.com and fragrancedirect.co.uk.
The partnership is expected to add over £150mln in gross merchandise value to the Ingenuity platform annually, with the ambition to re-platform the site by the end of Q2 2023.
8.20am: FTSE 100 pushes ahead
The FTSE 100 pushed ahead in early trading boosted by news of a rise in China’s service sector, a resilient housing market survey and gains in Shell after a first-quarter trading update.
At 8.15am, London’s lead index was at 7,695.31, up 32.37 points, or 0.42% while the FTSE 250 was little moved.
China’s service sector expanded at its fastest rate in more than two years in March, according to a closely watched private gauge, boosted by a recovery in demand as the country left behind strict Covid-19 curbs.
The Caixin China General Services purchasing managers’ index reached 57.8 for the month, ahead of February’s reading of 55 and the highest level since November 2020. A 50-point reading separates expansion from contraction.
The news was welcome after disappointing data in the US this week which raised concerns of a global economic slowdown.
Elsewhere, UK house prices unexpectedly rose by 0.8% between February and March according to mortgage lender Halifax, owing to an easing of mortgage rates.
The rise marks a slowdown from the 2.1% growth registered in the previous month but was above City forecasts for a fall of 0.3%.
The rise also contrasted with data from Nationwide which reported a 3.1% annual rate fall in March.
Kim Kinnaird, director at Halifax Mortgages, attributed the reading to an easing of mortgage rates and said borrowing costs had “largely reversed” after their November spike.
Sarah Coles, head of personal finance, Hargreaves Lansdown said: “The spring bump has brought a second month of rising house prices, and a whiff of optimism to the housing market.”
“Annual price rises at their lowest in three and a half years will keep a lid on enthusiasm, and sticky inflation could prove its undoing, but there’s an air of hope that the correction may not be as painful as had been feared.”
Shell PLC (LSE:SHEL, NYSE:SHEL) firmed 1.7% in early trading after its first quarter update. The oil major forecast a rise in Integrated Gas production in the first quarter though it predicted an adjusted corporate loss due to a number of one-off tax charges.
Shell forecast an adjusted loss in its corporate segment between US$900mln and US$1.2bn widening from US$600mln in the fourth quarter of 2022.
The oil major forecast integrated gas output would rise to between 930,000-970,000 boe in the quarter, up from 917,000 a quarter prior.
But international recruiter Robert Walters declined 3% after issuing cautious comments on recruitment activity in its first quarter update.
8.00am: House prices rise in March, annual rate of growth slows
House prices across the UK rose for the third month in a row in March, while the annual rate slowed to the lowest in three and a half years.
This suggests that the market is stable, although a further slowdown throughout this year looks likely as mortgage costs have risen, said mortgage lender Halifax.
A typical UK property now costs £287,880 (compared to £285,660 in February), according to the monthly house price index from Halifax.
Prices rose 0.8% in March from the month before, following February’s 1.2% gain, and were up 1.6% on a year earlier, the slowest annual pace since October 2019.
House prices rose in all UK nations and regions last month, though the annual rate of growth continued to slow in most areas. Mortgage costs have risen as the Bank of England has raised interest rates 11 times to 4.25% to fight double-digit inflation, which was at 10.4% in February.
Kim Kinnaird, director of Halifax Mortgages, said: "The UK housing market continues to show resilience following the sharp downturn at the end of 2022, with average property prices rising again in March."
7.57am: Robert Walters in cautious mood
Robert Walters PLC (LSE:RWA) reported a 4% rise in gross profit in the first quarter but warned market uncertainty continued to impact recruitment activity.
The international recruiter said gross profit in the quarter was £102.4mln up from £98.4mln in quarter four boosted by strong growth in its European business although the UK arm fell back.
Robert Walters, Chief Executive, commented: “As reported with our recent year-end results, the market uncertainty we experienced in the latter stages of last year has tipped over into the first quarter of 2023”
“Our businesses in Europe, the Middle East and South America held up relatively well whilst Asia Pacific and the UK experienced single-digit dips in net fee income albeit against tough and record prior year comparatives,” he added.
Asia Pacific net fee income fell 3% to £43.4mln, with net fee income in mainland China down 44% year-on-year with market conditions still impacted by Covid disruption.
It was a brighter picture in Europe where net fee income advanced 10% to £34.3mln but in the UK net fee income fell 9% to £16.3mln with activity levels more muted year-on-year across both London and the regions.
Walters added that market fundamentals such as vacancy levels and salary inflation remain relatively robust which “gives cause for optimism that activity levels will bounce back when global market conditions become more benign.”
7.38am: Shell sees flat upstream earnings, corporate hit by tax one-offs
Shell PLC (LSE:SHEL, NYSE:SHEL) (Shell PLC (LSE:SHEL, NYSE:SHEL), Shell PLC (LSE:SHEL, NYSE:SHEL)) has updated investors on trading in the first quarter forecasting upstream adjusted earnings between US$2.8bn to US$3.1bn compared to US$2.9bn in quarter four.
The oil major said profit of joint ventures and associates and Exploration well write-offs in the division are expected to be in line with the historical averages.
But the FTSE 100 company said a number of one-off tax charges would hit corporate earnings with adjusted losses forecast at between US$0.9bn to US$1.2bn, a widening from US$0.6bn in the fourth quarter.
The FTSE 100 listed firm expects first-quarter integrated gas adjusted earnings between US$1.2bn to US$1.6bn (Q4 2021: US$1.4bn) with a higher tax charge due to favourable movements in pensions in the previous period.
Shell forecast integrated gas output would rise to between 930,000-970,000 vbarrels of oil equivalent (boe) in the quarter, up from 917,000 boe in the prior quarter.
The company said marketing earnings are expected to be higher than in the fourth quarter although it gave an earnings range between US$0.2bn to US$0.6bn (Q4 2021:US$0.4bn).
In chemicals, the realised margin in the first quarter is expected to be below US$100 per tonne, mainly due to lower utilisation from a slower than expected ramp-up of Shell Polymers Monaca (US).
Earnings are seen in a range of between US$0.8bn to US$1bn (Q4 US$0.8bn).
7.00am: Subdued start expected in London
The FTSE 100 is expected to make a subdued start to trading ahead of the extended weekend break with investors likely to be wary ahead of US non-farm payrolls figures tomorrow.
Spread betting companies are calling London’s lead index up by around 3 points.
Two releases on the US jobs market have indicated the US economy is softening and Michael Hewson at CMC Markets said the payrolls data “is the next catalyst for that narrative, although judging by recent weekly jobless claims data the US labour market still seems pretty solid.”
“Today’s claims are expected to show a modest rise to 200k from 198k, however, the market picture is unlikely to become any clearer until next week when US markets will get the first chance to react to tomorrow’s payrolls report, as well as the March CPI report,” he added.
“The next few days will be key for whether we could see another 25bps rate rise from the Fed in May,” he suggested.
Asian markets were mixed with the Nikkei 225 down 1.1% while the Hang Seng and Shanghai Composite were little changed.
In the US, it was another mixed showing with the tech-laden Nasdaq Composite tumbling but the blue-chip Dow Jones Industrials Average gaining.
Back in London and there are trading statements from Ferrexpo and Robert Walters while the Halifax UK house price index will also be published along with a UK construction PMI reading.