- FTSE 100 closes 8 points higher
- US stocks cautious as earnings flow
- THG, Network International soar on bid approaches
4.45pm: FTSE closes higher
At the close, the FTSE 100 finished just in the green at 7,880 points for a 0.1% lift on the day.
Stocks "wandered aimlessly," IG's Chris Beauchamp noted.
“Stocks have been left bereft this afternoon with little on the calendar today, and ahead of earnings tomorrow. ‘Muted’ is perhaps the best way to describe the session, though it will no doubt heat up tomorrow once earnings start to come through thick and fast. Overall stocks continue to defy expectations of a fresh downturn, and while it is very early days earnings season has not yet provided much of a bearish catalyst.”
3.55pm: Oil prices ease
Gains by heavyweight energy stocks BP and Shell were eroded as crude prices turned lower after good gains last week as investors fretted over a potential May interest rate increase by the Federal Reserve which could weigh on oil demand, even as Chinese growth data due tomorrow could provide a boost.
In late afternoon trading in London, Brent crude futures were down 0.7% at $82.15 a barrel, while US West Texas Intermediate crude was off 0.8% at $81.77 a barrel. Last week both contracts recorded their fourth weekly gain in a row, the longest such streak since mid-2022.
After recent mixed US economic data, traders are betting the Fed will hike rates again in May by another 25 basis points and have pushed out to late this year expectations for any rate cut.
The release of China's first-quarter gross domestic product (GDP) data on Tuesday is expected to be positive for prices, however, with the International Energy Agency (IEA) last week forecasting that the country will account for most of the demand growth in 2023.
3.40pm: Bitcoin buckles
After recent rallies above the US$30k level, Bitcoin prices have retreated below that barrier at the start of a new week, with the leading crypto coin currently trading 2.8% lower at $29,471
Marcus Sotiriou, market analyst at digital asset broker GlobalBlock commented: "Bitcoin’s momentum has slowed now at the key resistance level of $30k. This coincides with optimistic sentiment from investors about a potential alt season over the coming weeks. This is due to Bitcoin’s dominance increasing significantly recently, leaving altcoins behind.
"In addition, ETH tends to lead the market in terms of weakness and strength, and ETH is currently showing strength as it climbs above the key level of $2,000. Could this be a sign that altcoins are largely lagging and are undervalued?"
He added: "Some indicators would suggest being cautious of a fakeout, such as altcoin funding turning positive over the past week, signalling an increase in leverage in the market. Altcoin funding remains high and positive despite Bitcoin’s drop today, suggesting altcoins may need a further flush in the short term. Whether an alt season follows a short-term flush or we see heavy drawdown remains to be seen."
3.10pm: AA break out
Sky News has reported that the owners of the AA are exploring the sale of a large stake in the breakdown recovery service just two years after taking it private.
Towerbrook Capital Partnrs and Warburg Pincus have reportedly hired investment bank Goldman Sachs to advise them on a potential deal. Sky said it was unclear what valuation the owners intend to seek, although one analyst said the two private equity firms could value the AA at more than £2.5bn including debt.
The AA has nearly 13mln roadside customers and 2mln insurance customers, making it one of the biggest financial services businesses in Britain.
Sky said that infrastructure funds are thought likely to show an interest in investing in the AA, although talks are yet to get formally underway. An eventual separation of the breakdown recovery and insurance arms is also considered a long-term possibility, it added.
2.45pm: Caution prevails in New York
The FTSE 100 nursed its gains as US stocks started the week cautiously ahead of a slew of earnings from big names this week by the likes of Bank of America, Goldman Sachs, Morgan Stanley, Johnson & Johnson, Procter & Gamble, Netflix, and Tesla.
Around 15 minutes after the New York opening bell, the Dow Jones Industrials Average was just 2 points higher at 33,888, while the Nasdaq Composite fell 0.1%, and the S&P 500 was flat.
FOREX.com market analyst Fiona Cincotta noted trade was subdued on Monday morning as US investors waited for earnings, specifically more banking sector results with regional institutions under the spotlight this week.
“Broadly speaking, the bar is low for earnings season, with a 4.8% decline in 1Q earnings expected,” she said. “Some sectors such as energy, are likely to perform better than most.”
Cincotta noted that, in addition to earnings, investors continue to weigh up the Fed’s next move with officials including New York Fed President John Williams and Cleveland Fed President Loretta Mester due to speak later this week.
“Federal Reserve Governor Christopher Waller said that the Fed will need to hike rates again to tame inflation, which is still far too high,” she said. “The market is currently pricing in an 83% possibility of a 25 basis point hike in May, up from 72% a week ago.”
2.30pm: HSBC could be pinged
HSBC's biggest shareholder Ping An is likely to vote in favour of splitting the bank up at its annual investor meeting on May 5, Reuters has reported, citing a source familiar with the Chinese insurer.
The source said Ping An, which has around an 8% stake in HSBC, would vote in favour of two resolutions tabled by individual investor Ken Lui, which call for HSBC to restore dividends to 51 cents per share and to provide regular updates on the possibility of spinning off its Asia business.
HSBC has recommended that shareholders vote against the resolutions, and has, since Ping An began urging the spin-off last November, maintained that its global presence is worth more than any such fragmentation would yield.
The global lender’s other institutional shareholders have so far shown little appetite for a break-up, Reuters noted.
2.15pm: Vote for Barclays board
Institutional Shareholder Services (ISS) has urged Barclays PLC investors to re-elect all board members at the upcoming annual meeting, despite protests against the board's support for former CEO Jes Staley, who is being investigated for his links with Jeffrey Epstein.
This is according to a report on the Reuters newswire that says ISS suggests waiting for the outcome of the various investigations before influencing director elections.
Barclays has received no new evidence challenging the findings of a regulatory investigation into Staley's relationship with Epstein since his resignation in November 2021, the article noted. Staley's unvested bonuses remain suspended.
ISS's rival advisor, Glass Lewis, recommended voting against bosses' pay over long-term bonuses awarded to former CFO Tushar Morzaria.
1.25pm: Here’s a quick round-up of come of the top risers and fallers
Network International Holdings PLC (LSE:NETW) shares rocketed up 9% to 360p after the payments company confirmed a bid proposal from a consortium comprising CVC Advisers and Francisco Partners Management.
THG PLC (LSE:THG)'s shares surged over 31% after confirming a preliminary bid approach from Apollo Global Management (NYSE:APO), continuing the recent pick up in M&A activity in London.
Sabien Technology Group PLC (AIM:SNT) saw its shares jump nearly 9% after it announced progress in developing a recycling centre. Specifically, Sabien has signed a memorandum of understanding with City Oil Field, Hanyang Corporation, and Woori Technology for a Recycling Project Cluster in the Midlands.
GRIFFIN MINING (AIM:GFM) rose 8% after announcing record first-quarter production since the commissioning of its Chinese Caijiaying Mine in 2005.
Supreme PLC (AIM:SUP) saw its share rise 10% after highlighting an expectation-beating performance in its financial year ended 31 March 2023.
BlueBird Merchant Ventures Ltd (LSE:BMV) saw its shares tumble by as much as 28% after it was revealed it had hit a stumbling block to its progress in South Korea. Specifically, the group faces delays in obtaining Mountain Temporary Use Permits (MTUP) for its Kochang and Gubong gold projects due to additional information and support requirements.
Quiz PLC (AIM:QUIZ) shares fell more than 17% after the company cautioned over the ongoing pressures on consumer spending, whilst reporting lower like-for-like revenues in recent months.
1.00pm: Mixed start seen across the pond
Wall Street is likely to open mixed as earnings season gains momentum in a week that will see companies including Johnson & Johnson, Bank of America, Goldman Sachs, Netflix and Tesla, among other large blue chips, report quarterly results.
Futures for the Dow Jones Industrial Average (DJIA) rose 0.1% in Monday pre-market trading and those for the broader S&P 500 index also gained 0.1%, while contracts for the Nasdaq-100 slipped back 0.1%.
Despite a positive start to earnings season on Friday as JPMorgan, Wells Fargo and Citigroup reported strong first-quarter results, all three major US indices closed in the red as expectations for another interest rate hike increased. The DJIA fell 0.4% to 33,886, while the S&P 500 finished 0.2% lower at 4,138 and the Nasdaq closed 0.4% down at 12,123.
“A robust early showing from US banks could not prevent a market slip as economic data pointed to the near certainty of another Federal Reserve interest rate hike in May,” commented Richard Hunter, head of markets at interactive investor. “The initial relief was palpable as reports from several banks suggested that the recent banking turmoil was not systemic and rather more applicable to smaller, regional banks."
Comments from JPMorgan that consumers were still spending and that businesses remained in good shape were “somewhat undone” by March’s retail sales report which showed a decline of 1% in March, as compared by an expected dip of 0.5%, Hunter said.
“While some of the fall was attributed to the lower cost of fuel, nerves remain on edge towards the consumer, which is a major driver of economic growth in the US, and any softness in further releases could presage a recession to come,” he added.”Meanwhile, an indicator of consumer sentiment saw a slight increase in inflation expectations.
Taken together, the economic picture pointed to an almost certain outcome, namely that the Fed will likely pursue its hiking policy with at least one more rise of 0.25% in May.”
Ahead of results from Bank of America and Netflix tomorrow, Charles Schwab and State Street Corp report first-quarter results today.
12.38pm: FTSE holds steady
The FTSE 100 has held steady for most of the day but has just dipped below 7,900 now, up 25 points.
Other stocks on the move today include Tesco PLC (LSE:TSCO), up 1.2% to 271.40p. UBS reiterated a buy rating but raised its price target to 300p from 280p.
But Vistry PLC moved in the other direction as the same broker put the housebuilder on its sell list.
Shares slipped 1.3% as UBS noted a de-coupling from the sector with the shares trading at the high end of the peer group. The broker did lift its price target to 725p from 655p.
Rentokil firmed 0.7% helped by Deutsche Bank raising its price target to 676p from 600p.
Reiterating a buy, Deutsche analyst Dominic Edridge said he believes that Rentokil has spent significant time and effort in order to minimise the risk from integrating Terminix.
He suggested there is a clear emphasis on delivering each priority in term, starting with Support Functions and IT and only then the Branch network.
"Given Rentokil's fairly aggressive approach to brand integration we believe that network synergies will be towards the top end of our prior forecasts, which when combined with back office synergies implies there could be upside to overall synergies (current guidance: $200mln)," he predicted.
With 600 branches moving to 400, he believes US$125mln of associated synergies appears conservative.
Packaging firms DS Smith and Smurfit Kappa were also on the rise as Jefferies reiterated its positive stance.
The broker is hosting an investor catch-up with CEO, Miles Roberts today.
12.03pm: UK rate rises over most economists believe - Bloomberg
The Bank of England will not raise interest rates again, economists think, as inflation is expected to fall back into single digits later this week.
The latest CPI print in the UK will be released on Wednesday and the figures from the Office for National Statistics is expected to reveal that inflation has dipped back below 10% for the first time since August, having unexpectedly risen the previous month.
Such a fall would ramp up pressure on the Bank of England to halt its programme of 11 consecutive interest rate increases, climbing to 4.25% - the highest since 2008.
More than half of economists in a Bloomberg News survey now think Andrew Bailey and other members of the Monetary Policy Committee will refrain from raising interest rates again.
Broker Citi thinks May’s MPC decision is on a “knife-edge.”
It continues to see a pause as more likely but believes the risks remain skewed in a hawkish direction and believes the inflation data will be definitive.
Citi predicts core CPI inflation to fall by 0.4 percentage points from 6.2% in February to 5.8% year-on-year and sees headline CPI inflation declining to 9.7% from 9.8%.
“For the MPC, we think the hawkish risks surrounding the labour market and PMI data are plausibly greater, with an uptick either in vacancies or wages plausibly sufficient to sow sufficient hawkish doubt,” the bank added.
11.32am: Capita falls on reports cyber attack worse than admitted
Shares in Capita PLC (LSE:CPI) slumped 7% after reports suggested the recent cyber attack was far more serious than the company has admitted.
The Sunday Times said personal bank account details, addresses and passport photos are now being leaked online, having apparently been stolen by the hacking group Black Basta.
Capita, which has £6.5bn in government contracts — including for the NHS, the army and the Cabinet Office — handles the personal details of millions of members of the public.
It admitted it had been infiltrated earlier this month but stressed that people’s personal details had remained secure.
However, security experts showed The Sunday Times how pages of details apparently obtained from Capita were being touted for sale on the dark web page of Black Basta.
This trove of information features people’s phone numbers, details of more than 100 bank accounts with sort codes, and home addresses.
The documents appear to be a sample of what was have obtained, as the web page states that anyone wanting access to more can buy it in bitcoin.
The data includes personal details of teachers applying for jobs at schools.
Other information appears to be the bank account details of people and firms supplying Capita with goods or services.
Meanwhile, the FTSE 100 is steady trading in a narrow range, just above 7,900, up 34 points.
11.08am: UK's economic prospects improving but growth to remain subdued
The EY Item Club is less pessimistic about prospects for the UK economy than before.
The economic think-tank believes the UK will avoid a recession but growth this year will be subdued.
Government cost of living payments and energy bill subsidies supported households psychologically and financially more than expected at the end of last year, the EY Item Club said.
The forecasting group expects the gross domestic product (GDP) measure of output to rise by 0.2% a significant upgrade from the 0.7% decline expected in its January forecast. Output is then expected to rise by 1.9% next year and 2.3% in 2025.
The economy is expected to flatline in the first half of the year and narrowly avoid meeting the recession criteria of two consecutive quarters of negative growth. In the second half of the year a return to growth is expected as inflation and household bills fall sharply.
Inflation will begin to decline quickly because prices this year are compared with already high prices last year, and household bills are set to drop from July once households benefit from the sharp decline in natural gas prices over winter, the EY Item Club said.
10.40am: THG surges on bid approach
The pick-up in M&A activity in London continues with news that THG PLC has received a preliminary approach from Apollo Global Management (NYSE:APO).
Shares surged over 35% as THG - which was responding to press speculation - said it had received a "highly preliminary and non-binding indicative proposal" from the private equity firm.
The news adds to the flurry of activity in London which has seen a number of companies confirm bid approaches.
Private equity firms are leading the way with Apollo itself engaged in ongoing talks to buy John Wood, while there have also been approaches for Network International from CVC and Dechra Pharmaceuticals from EQT.
9.48am: RS firms as RBC upgrades to outperform
RS Group sits on top of the FTSE 100 risers benefiting from an upgrade by RBC Capital Markets.
The broker pointed out the stock has underperformed the FTSE100 by around 30% since peaking on bid speculation last August.
Growth expectations have reduced, the CEO and US management uncertainty has been removed, RS1 has done an excellent job on margins and valuation has come back to an attractive level, RBC believes.
“We continue to see RS as a long-term winner with the potential for further share gains and the strong balance sheet provides options in the current environment,” the broker added.
As a result, it upgraded the stock to 'outperform' from 'sector perform' with a 1,000p price target.
Shares rose 2.3% to 868.80p. Meanwhile, the FTSE 100 is holding above 7,900, up 33 points.
9.32am: CFOs mood brightens according to Deloitte
Sentiment among CFOs has improved significantly since the start of the year helped by lower energy prices, falling inflation and easing of concerns over Brexit.
That was the findings of Deloitte’s quarterly survey of finance chiefs.
Confidence rose sharply in the first quarter, to above its long-term average, and perceptions of uncertainty have fallen at the fastest rate since the survey began more than 12 years ago.
CFOs reported a marked easing of supply chain and recruitment problems while expectations for inflation in one year’s time have declined from 5.8% to 4.2%.
But despite the improved sentiment, CFOs maintain a defensive strategy stance.
Risk appetite is below normal levels and CFOs are heavily focussed on cost control and building up cash.
Ian Stewart, chief economist at Deloitte said: “The economic unpredictability that marked the beginning of 2023 has started to clear, with CFOs reporting the largest decline in perceptions of uncertainty to date.”
“Business confidence has rebounded, helped by a decrease in energy prices, an easing of Brexit concerns and an improving inflation backdrop.”
“Crucially, finance leaders report little change in credit conditions, suggesting that March’s events in the global banking system have not affected the pricing and availability of credit for UK corporates.”
Stewart said CFOs foresee artificial intelligence helping to drive UK productivity, an outcome that could provide a lasting boost to business growth.
But they are divided, however, on how AI will affect the number of jobs in the economy, highlighting the need to ensure the gains from new technologies are widely shared.
9.00am: IDS rises after striking pay deal with CWU
The Footsie has continued its strong early progress, now up 35 points at 7,907 while the broader FTSE 250 is up 141 points at 19,384.
Royal Mail owner, International Distributions Services PLC (LSE:IDS)’s shares rose 5.6% after it reached an agreement with unions to end the long-running pay dispute.
In a joint statement, Royal Mail and the CWU said: "After almost a year of talks, Royal Mail and the Communication Workers' Union are pleased to announce they have reached a negotiators' agreement in principle.”
"The proposed agreement will now be considered by the executive of the union before being voted on by the union's membership.”
CWU general secretary Dave Ward and deputy general secretary Andy Furey said: "On the basis that the negotiators' agreement is endorsed by the postal executive, we will put in place a full communications plan to engage members.”
Analyst Gerald Khoo at Liberum said an agreement to end the dispute is likely to be well received.
However, he noted details of the deal on pay and restructuring have yet to be revealed and he expects Royal Mail to have made significant concessions.
“We see the execution risk as very high and continue to see an ongoing risk of value leakage from GLS into Royal Mail,” Khoo commented.
He pointed out Royal Mail management’s recent track record on implementing restructuring and delivering productivity improvements is poor, and that was before the year-long dispute.
“It will take a long time for productive working relationships to be re-established between staff and managers at the local level,” he added.
Khoo reiterated a sell rating on IDS with an unchanged sum of the parts-based target price of 135p.
Elsewhere John Wood remained firm, up 7.5%, after it said it was going to engage with Apollo Management over its recent 240p per share bid approach.
Victoria Scholar at interactive investor noted that "this deal adds to the flurry of private equity M&A activity in recent days alongside Dechra Pharmaceuticals, Network International and property company Industrials REIT."
"There is a sense among international investors that the UK is ripe with takeover targets," she suggested.
"The recent rebound for the pound suggests opportunistic buyers need to make the most of sterling’s weakness before it appreciates further and is too late as the FX discount subsides," she added.
8.15am: FTSE 100 makes strong early progress
The FTSE 100 pushed higher, and back above 7,900, as trading for the week got off to a positive start in London.
At 8.15am, London’s lead index was up 29.10 points, or 0.37%, at 7,901.01 while the FTSE 250 was also in an upbeat mood at 19,299.99, up 57.30 points, or 0.30%.
Susannah Streeter, head of money and markets, Hargreaves Lansdown said: “Cautious optimism is the Monday motivation mantra, as stronger US corporate news and signs of consumer resilience help to mask ongoing worries about the knock-on effect of higher interest rates.”
UK banks opened higher after the positive results from a number of leading US banks on Friday with JPMorgan, Citi and Wells Fargo all posting encouraging numbers.
Elsewhere, shares in Network International Holdings PLC (LSE:NETW) soared 21% after it confirmed it has received a non-binding proposal from CVC Advisers Francisco Partners Management regarding a possible cash offer of 387p per share.
The proposal follows a series of prior approaches to acquire Network, which were rejected.
Network International said it would be minded to recommend a bid at that level should a firm offer be made.
The bid saga surrounding John Wood Group PLC took another twist with the oil and gas engineering firm deciding to engage with suitor, Apollo Management, over its last 240p per share offer.
The firm said it had taken the decision after talks with shareholders. It had previously rejected a number of approaches. Shares advanced by 7%.
But PageGroup PLC (LSE:PAGE) eased 1% after it reported first-quarter gross profits slumped by nearly 10% in the UK in the first three months of 2023, which followed a 1.9% decline in the final three months of last year.
Page added it was also seeing challenging trading conditions continue in Asia and North America, where gross profits down by 21% and 14% respectively in the quarter.
Overall, group gross profits dropped 2.4% on a constant currency basis in the first quarter.
Heading the other way were shares in QinetiQ Group PLC (LSE:QQ.) which rose 4% after it forecast financial year 2023 results will be ahead of its previous guidance and towards the upper end of market consensus.
The defence group said it had delivered strong operational performance during the fourth quarter which saw it finish the year with full-year order intake up by 40% at a record-high of more than £1.7bn.
7.50am: QinetiQ sees top end results
QinetiQ Group PLC (LSE:QQ.) has forecast financial year 2023 results will be ahead of its previous guidance and towards the upper end of market consensus.
The defence group said it had delivered strong operational performance during the fourth quarter which saw it finish the year with full-year order intake up by 40% at a record-high of more than £1.7bn.
The firm expects to deliver high-teens percentage total revenue growth at stable margins, with underlying operating profit of at least £175mln, including the benefit of the Avantus and Air Affairs acquisitions.
In addition to the robust orders, revenue and profit performance, cash flow management continues to remain consistently strong, the firm added.
QinetiQ highlighted a good performance from Global Products, in particular, the US business has delivered well, with high order intake of US$280mln and impressive revenue growth of 25%, prior to the benefit of Avantus.
The integration of Avantus is progressing ahead of plan, the company added.
7.40am: Sir Martin Sorrell has operation to remove tumour
S4 Capital PLC (LSE:SFOR) noted that its bexecutive chair, Sir Martin Sorrell, had successful keyhole surgery in February to remove a tumour.
In a statement, the advertising guru, who founded WPP said he had made “excellent recovery,” and said he would be having preventative treatment over the coming months.
“My doctors have advised me that during this treatment, I should be able to work as normal most of the time, fully engaging with the company and our excellent executive team, although I have also decided to reduce my travel schedule for a few weeks,” Sorrell said.
Otherwise, it is “business as usual,” he declared.
7.26am: John Wood to engage with Apollo to see if firm bid can be made
The future of Wood Group PLC took another small step to being resolved after the company decided to engage with Apollo Management to see if a firm offer can finally be made for the FTSE 250 listed firm.
The move follows talks with shareholders and John Wood said it has granted Apollo full access to due diligence materials.
The company has been the subject of a number of approaches from Apollo the last of which valued the company at 240p per share.
John Wood said it had “weighed all relevant factors, particularly feedback received from Wood shareholders,” in coming to the decision.
The deadline for any bid has been pushed to May 17 after a request to the Take Panel.
On March 7, John Wood rejected a fourth unsolicited bid approach from Apollo which valued it at 237p per share, a 7p premium to the third and most recent attempt by Apollo to win over the company.
On 22 February, John Wood announced it had unanimously rejected three unsolicited proposals from Apollo.
7.05am: FTSE seen heading higher
FTSE 100 is expected to make a bright start to the week heading back towards the 7,900 mark taking encouragement from a positive set of earnings from a number of leading US banks.
Spread betting companies are calling London’s lead index up by around 21 points.
The results from JPMorgan, Citi and Wells Fargo went some way to reassure investors that the banking turmoil following the collapse of Silicon Valley Bank had not damaged trading.
Asian markets made progress, the Nikkei 225 index was up 0.1%. In China, the Shanghai Composite was up 1.2%, while the Hang Seng index in Hong Kong was up 0.8%.
In the US on Friday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.4%, the S&P 500 down 0.2% and the Nasdaq Composite down 0.4%.
Back in London and the early focus will be trading statements from FTSE 250-listed Ashmore and international recruitment company PageGroup.
There is little expected in the way of economic data before a raft of figures later in the week with UK unemployment figures on Tuesday, ahead of UK inflation data on Wednesday.