- FTSE 100 loses 11 points on the day
- Bank fails to rule further hikes, inflation to fall slower than predicted
- PacWest plummets
4.45pm: FTSE 100 rebounds
At the close, the FTSE 100 had regained a bit of ground but still finished 0.1% lower on the day.
Markets were under pressue as the pound slumped despite the BoE's rate hike.
“An initial positive reaction to the BoE’s latest rate hike has given way to steep losses for the pound, as the focus on the UK economy is overtaken by a broader bout of risk-off moves," wrote IG's Chris Beauchamp. "While the BoE seems set to hike at least once more, and gave its GDP forecasts a hefty boost, wider worries about a global recession have given the dollar pre-eminence.”
4.04pm: FTSE 100 to close lower
FTSE 100 saw a slight recovery in the final leg of Thursday trades, but is still set to close at least half a percent lower from yesterday’s closing price.
RollsRoyce remained the poorest performer for the day, having dipped 6.5% after a lukewarm trading update.
US markets are also looking bearish, with the Nasdaq index down 0.12% and the wider S&P 500 index 0.4% lower.
In continental Europe, Frankfurt fell 0.8% during the day while Paris was seen 0.17% lower.
Gold and oil have slipped 0.5% and 1.6% respectively.
3.44pm: Homeowners set for more post-hike pain
Homeowners face more pain following today’s decision by the Bank of England to increase interest rates another quarter of a percent, bringing the base rate to a 15-year high of 4.5%.
Those on a standard variable rate (SVR) could see their monthly mortgage repayments increase around £15.14, while tracker mortgages could increase by nearly £24, according to data published by UK Finance.
Since the onset of the BoE’s brutal 12-count hiking cycle tracker mortgages have increase by over £417 per month and SVRs over £266.
This latest hike is likely to bring on a yearly mortgage increase of more that £5,000 for the average borrower.
It's worth noting that about 81% of existing mortgages are fixed-rate deals.
Borrowers in this category will not experience the immediate impact of the base rate hikes until their fixed-rate period comes to an end.
3.18pm: PacWest plummets
PacWest Bancorp was knocked 25% lower when the US trading session opened on Thursday following news of a significant decline in deposits hitting the regional bank last week.
During the week ending on May 5, PacWest reported a decline of approximately 9.5% in deposits, with the majority of the outflows occurring on May 4 and May 5 following news reports speculating about the bank's future plans.
Investors were rattled despite PacWest's assurance that had sufficient liquidity to cover the bank’s US$5.2bn of uninsured deposits.
In response, the bank has decided to pledge an additional US$5.1bn as collateral to the US Federal Reserve, aiming to enhance its borrowing capacity.
"We pledged additional assets as collateral for borrowings to increase our liquidity position for potential deposit outflows," stated PacWest in a filing.
Shares in PacWest recovered as the day progressed, but still remain around 15% lower against the day.
Year to date, PacWest is nearly 80% lower after being battered following the collapse of Silicon Valley Bank in March.
2.52pm: US markets down, volatility up, Peloton gets a drubbing
US indexes are down across the board in the opening trading hours, with Nasdaq 0.14% lower against yesterday’s close and the broader S&P set losing over 0.4%.
Meanwhile, the Dow Jones industrial average looks likely to rack up at least one percent of trades continue their current trajectory.
The only index showing strength is the Cboe Global Markets Volatility Index (VIX), which is up 5%, though this can be taken as a bearish signal too.
VIX is a measure of expected volatility and is used as a barometer for market sentiment, with higher levels pointing to fear and uncertainty in the market.
VIX’s latest surge could be due to fears that the US debt ceiling is reaching breaking point, potentially leading to a default.
Furthermore, a political stand still on partisan lines is making it near impossible to agree on a remedy to the issue.
Elsewhere in US markets, Pelton plummeted over 10% tp US$6.84 in opening trades on news of a mass recall of over two million bikes.
Pelton shares have recovered to US$7.02 since.
2.32pm: Footsie sent even lower
London’s blue-chip FTSE 100 index continues to fall in the wake of today’s 25bps rate hike from the Bank of England, which brought borrowing costs to a 15-year high of 4.5%.
At the time of writing, footsie was 0.62% lower against yesterday’s close, trading at 7,693.
Among the day’s worst performers are Rolls-Royce, which was dragged lower following today’s trading update.
Most other players in the heavy industries, including Glencore, BP, Rio Tinto and Antofagasta, are similarly being pummeled.
2.19pm: Asos will need to raise cash, says Barclays
Asos’ failed to instil Barclays with confidence that the online retailer would not need to raise equity following yesterday’s interims.
Barclays remained equal weight on the stock while lowering its target price to 500p from 625p.
Analysts at the high-street lender noted its “stretched” balance sheet because of a £500mln convertible loan note, due in April 2026, £100mln in outflows and its £350mln revolving credit facility due in November 2024.
“We continue to believe it needs to raise equity,” Barclays said.
Barclays was also less upbeat about the online retailer’s plan to sacrifice sales to improve margins, labelling it “not sustainable.”
It comes at a bad time for Asos to raise cash, given today’s 25bps interest rate hike to a 15-year high of 4.5%, which will inevitably increase the retailer’s cost of raising capital.
Asos’ stock was down 7%, changing hands at 455p at the time of writing.
2.08pm: Interest rate rise a boon for Brits heading abroad
British holidaymakers are the big winners should today’s interest rate hike spur expected inflows into the pound from foreign investors looking to capitalise on attractive rates.
Though Cable has lost half a percent in today’s session, the pound is near 11-month highs against the dollar and five-month highs against the euro.
“Higher interest rates here make the pound more attractive to foreign investors, and sterling has been on a roll all week,” Simon Phillips, managing director at the travel money specialists No1 Currency.
“!All this is welcome news for anyone planning a summer holiday abroad, as their spending money will now go that bit further,” he added.
Look out Prague!
1.55pm: Sterling dips, recovers following rate hike
Cable slid back to 1.257 following the widely expected 25bps hike from the Bank of England.
In the following hours, the pound recovered back above 1.26 where it is currently straddling the line.
Gilts have hardly moved, with a slight improvement on 10-year bonds dropping 0.07% to 3.732% and two-year bonds also dropping 0.07% to 3.758%.
“This would suggest that markets perceive a high degree of uncertainty when it comes to whether we will see another rate hike when the Bank of England next meets on June 22nd,” said Michael Hewson, chief market analyst at CMC.
Hewson struck a critical tone against the Bank of England after today’s interest rate hike, stating that “the Bank of England procrastinated in getting ahead of the problem, and getting the plumber in earlier, when it had started to become increasingly obvious to almost everyone else that the central bank was behind the curve”.
Back to footsie, the blue-chip index has hit an intraday low of 7,699, marking a 0.56% day-on-day dip.
1.32pm: Here’s a quick roundup of the top risers and fallers on the junior market today
Shares in Ilika PLC (AIM:IKA, OTCQX:ILIKF) rose over 13% to 51p after it shipped its first stacked ultra-small batteries to customers, who waxed lyrical on the unique attractions of the Stereax cells.
Ilika shares have since corrected to 47.5p
Keywords Studios PLC (AIM:KWS, OTC:KYYWF), the video game services specialist, jumped 6% to 2,316 as broker Shore Capital upgraded to “buy” following its acquisition of Seattle-based Hardsuit Labs.
“The deal appears to be in a classic sweet spot, in terms of size and potential, where KWS has typically been able to add value, and further, it is consistent with management’s previously set-out growth strategy,” Shorecap said.
Shares in MobilityOne Ltd fell 20% to 6.44p after the digital payment platform said it had withdrawn its UK regulatory application after receiving feedback that included requests for further information.
Serinus Energy PLC (AIM:SENX) fell over 28% to 4.12p following the release of its interim results. Investors were alarmed over the significant drop in revenues, gross profit and EBITDA, with net losses totalling US$1.3mln.
1.00pm: Subdued start seen across the pond, PPI figures to come
US stocks are expected to open mixed but still enjoying the lift from softer-than-expected inflation data yesterday which helped fuel expectations of an interest rate reduction in the world's biggest economy or at the least a halt to the current rate hiking cycle.
Futures for the Dow Jones Industrial Average fell 0.3% in pre-market trading, while those for the broader S&P 500 index lost 0.1% and contracts for the Nasdaq-100 were unchanged.
The tech-heavy Nasdaq closed up 1.04% on Wednesday while the S&P 500 rose 0.45% and the Dow Jones Industrial Average slipped 0.09%.
"Yesterday's inflation data was particularly welcome as it supported the narrative of a pause in the Fed's rate hiking cycle at the next meeting," Michael Hewson, chief market analyst at CMC Markets UK.
"Today's April PPI numbers could well reinforce that narrative further, if they continue to slow at the pace we've seen in the past few months.
Since the end of last year PPI has fallen from 6.2% in December to 2.7% in March and is expected to slow further to 2.5% today," he added.
The PPI data is due out at 8.30 am ET.
In the background, however, concerns about the US debt ceiling continue to rumble on with no solution at hand so far.
President Joe Biden is due to meet with house speaker Ken McCarthy on Friday. Investors are holding on to hope of a last-minute solution.
12.45pm: FTSE 100 slips and pound advances after rate rise
The FTSE 100 slipped back following the Bank of England's interest rate decision as the UK central bank suggested it was not done with its monetary tightening.
The lead index is now down 30 points to 7,711.32.
But the pound rallied from its lows, now trading down 0.1% against the US dollar, after being down 0.4% ahead of the announcement.
Reaction to the announcement is coming in thick and fast.
Samuel Tombs at Pantheon Macroeconomics: "The MPC refrained from signalling clearly that today’s interest rate increase will be the last one this year, but the language in the minutes continues to suggest that it will hike again only if evidence emerges of more persistent inflationary pressures than anticipated in its forecasts."
"Our view remains that the MPC will keep Bank Rate at 4.50% for the remainder of this year, before cutting it by 25bp per quarter over the course of 2024, when it will be clear that the inflation genie has been pushed back into the bottle."
Susannah Streeter, head of money and markets, Hargreaves Lansdown: "The rate raising marathon has passed yet another milestone as policymakers try and pull back runaway inflation."
"The hike of 0.25% pushing the base rate to 4.5% was widely forecast, given that super-hot consumer prices are failing to cool off quickly despite rapid tightening. With wages staying elevated and consumer resilience strong, the finishing line of rate hikes may still be way off."
Oliver Faizallah, head of fixed income research at Charles Stanley (LSE:CAY) said: “Going forward, the Bank of England have a very difficult job, navigating high inflation with a fragile economy. "
"The Bank is likely to remain data dependent as they decide whether to pause or keep hiking. Policy makers and market participants will be looking closely for signs that show that the UK economy is finally giving in to the pressure of all the hikes to date, which would give them confidence that inflation will fall back to target sooner rather than later."
Rachel Winter, Partner at Killik & Co, said: “Sticky inflation means the Bank of England has once again turned to its weapon of choice in hope of stamping out the inflationary pressures the economy is facing."
“Another interest rate increase will be particularly unpopular with those on variable rate mortgages who’ve faced month after month of increased costs alongside higher bills and day to day costs."
Joseph Calnan, Corporate FX Dealing Manager at Moneycorp, commented: "Today’s 0.25 rate hike is being billed by many as the last in what’s been a relentless cycle."
"But if indicators thus far are anything to go by, it’s difficult to justify an end to hikes in the current context, despite the implications for consumers and businesses."
"In time, once the growth outlook is more upbeat and the medium-term inflation path shallower, the Bank of England can perhaps afford to switch to more infrequent rate hikes. But for now, with CPI stubbornly staying over 10%, further corrective action will be crucial - whether that’s through more rate rises or quantitative tightening."
Jeremy Batstone-Carr, European Strategist at Raymond James (NYSE:RJF) Investment Services said: "“We may therefore not yet be at the end of the rate hiking cycle. The MPC may be encouraged not to stop at 4.5%, but to carry on raising the base rate to 4.75% or even 5.00%, creating higher mortgage payments for UK homeowners."
Unite general secretary Sharon Graham said: “Every time interest rates rise the banks make bonanza profits - now in the billions. Meanwhile businesses, mortgage holders, and renters pay the price. This medicine is killing the patient.
“The Bank of England again are behind the curve. Whether it be asking the country to take a national pay cut or blindly increasing interest rates, the Bank of England is not living in the real world.”
12.12pm: Bank fails to rule out further rate rises, CPI to fall slower than expected
The Bank of England’s Monetary Committee voted by a majority of 7–2 to increase Bank Rate by 0.25 percentage points, to 4.5% with two members preferring to maintain Bank Rate at 4.25% and didn’t rule out further increases.
“The MPC will continue to monitor closely indications of persistent inflationary pressures, including the tightness of labour market conditions and the behaviour of wage growth and services price inflation,” the minutes of the latest MPC meeting showed.
“If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required.”
The Bank of England also warned it expects CPI inflation to fall back more slowly than it forecast in February.
“CPI inflation is expected to fall sharply from April, in part as large rises in the price level one year ago drop out of the annual comparison,” it said.
“However, food price inflation is likely to fall back more slowly than previously expected.”
CPI inflation is expected to decline to a little above 1% at the two and three-year horizons, materially below the 2% target.
“However, there remain considerable uncertainties around the pace at which CPI inflation will return sustainably to the 2% target,” the Bank added.
But there was better news on economic growth.
The BoE expects UK GDP to be flat over the first half of this year, although underlying output, excluding the estimated impact of strikes and an extra bank holiday, is projected to grow modestly.
The improved outlook reflects stronger global growth, lower energy prices, the fiscal support in the Spring Budget, and the possibility that a tight labour market leads to lower precautionary saving by households.
Although there are indications that the labour market has started to loosen, it is expected to remain tighter than in the February Report in the near term.
12.00pm: Bank of England increases interest rates by 25bp to 4.5%
The Bank of England has increased interest rates by 25 basis points to 4.5%.
The widely expected move is the 12th consecutive rise by the UK central bank and leaves interest rates at their highest level since 2008 as the battle to tame double digit inflation continues.
The Monetary Policy Committee voted 7-2 in favour of the latest increase.
11.50am: FTSE slightly higher ahead of rate decision, pound weaker
Ahead of the interest rate decision and the FTSE 100 is up 5 points while the pound has fallen 0.4% to $1.2569.
Victoria Scholar, head of investment, interactive investor said: "The Bank of England is widely expected to raise interest rates by a further 25-basis points at lunchtime today."
"This would lift the bank rate to 4.5%, the highest level since 2008, marking the twelfth consecutive rate increase."
"The central bank is also expected to upgrade its economic growth forecasts for this year as the risk of recession subsides. However it is also expected to raise its inflation forecasts for the year."
"The outlook for interest rates beyond today is less clear with the Bank of England likely to be closely guided by the speed at which the inflation data improves."
11.38am: UK consumer confidence improves in April
UK consumer morale has improved in April following a brief dip into negativity in March, according to YouGov and the Centre for Economics and Business Research.
Their latest consumer confidence index jumped by 1.9 points this month, from 99.4 to 101.3 (where a reading over 100 shows a positive score) as people’s view of their household finances improved, as did meaasures of job security and business activity.
The report said: "The most significant jumps were in household finance metrics: those tracking perceptions over the past 30 days jumped from 69.6 to 73.8 (+4.2), while outlook rose even higher, from 70.9 to 75.5 (+4.6)."
"These are still overall negative scores, but represent a meaningful improvement compared to a year ago, when measures for the past 30 days plummeted to 56.7 and 48.3 respectively."
"The cost-of-living crisis continues to impact households, but sentiment towards household finances has been gradually improving over the past six months."
11.08am: Rolls dragged lower by lack of news on New Markets
The recent one-way street in Rolls-Royce shares came to an end, at least for now, as investors reviewed the latest trading update from the FTSE 100-listed engineer.
Russ Mould at AJ Bell noted “Tough talk which suggested he got the seriousness of the challenge facing the company and a decent first set of numbers took new Rolls-Royce CEO Tufan Erginbilgic a long way with the market.”
“However, today’s trading update saw the first sign of investors taking a tougher line.”
Shares fell 4.7%, although they remain over 50% higher year-to-date.
Although Mould noted “there was nothing to really frighten the horses,” and the fall in the share price may just reflect some profit-taking, “there were some less than positive hints in the statement.”
Most significantly, “there was nothing on the company’s New Markets business – which encompasses its investments in areas like small modular reactors (seen as a cheaper and quicker way of developing nuclear power) and electrical aviation,” Mould pointed out.
Analysts at Shore Capital agreed noting there was “no information was provided on New Markets which perhaps is a little concerning.”
“It is not positive news that the Small Modular Reactor contract will be put up to a public tender which will be announced at the end of the year,” they said, before adding, “We still think Rolls-Royce is in prime position to win the contract, but it is not a certainty.”
For Shore Capital the update was “positive” and Rolls-Royce represents “a compelling turnaround story.”
The broker has a buy rating and 180p price target.
“Erginbilgic has made a good start in his transformation of Rolls but he still has plenty to do and he will need to demonstrate progress when the group reports its first-half results in August and, again, at an expected update on the turnaround programme later this year,” Mould commented.
10.52am: Bank of England faces "difficult trade off"
Ahead of the interest rate decision Alex Brazier, deputy head of Blackrock Investment Institute, has said the economy is "effectively overheating" after a "big labour supply shock".
He said the Bank's Monetary Policy Committee must decide "what price it is willing to pay" to damage the UK economy - what he dubbed creating "growth weakness" - to bring inflation down.
He told BBC Radio 4's Today programme: "The Bank faces this difficult trade off. The UK has had a reasonably big labour supply shock."
"The economy is effectively overheating and so if the Bank wants to bring inflation down quickly, it has to generate some sort of growth weakness or continued growth weakness."
"How much growth weakness is it looking to tolerate? What price is it willing to pay to bring inflation down? That's the thing where the market could do with a bit more guidance."
The BoE is widely expected to increase interest rates by 25 basis points at midday, its 12th consecutive rise, taking the Base Rate to 4.5%.
Ahead of the rate decision and the FTSE 100 is retracing its steps back towards its opening levels, now up 8 points.
10.36am: Heathrow cautions passenger numbers may be "levelling off"
Heathrow Airport has warned that the growth in passenger numbers since the end of coronavirus restrictions may be "levelling off".
The airport said in a statement: "There are early indications that passenger growth may be levelling off, with recovery now stable at 93-95% of 2019 levels across each of the first four months of this year."
Demand for air travel surged after the UK's travel rules were scrapped but it has flatlined compared with pre-virus levels in recent months.
Some 6.4mln passengers travelled through Heathrow in April, which was 94% of the total for the same month in 2019.
Heathrow said it "continued to deliver excellent passenger getaways" over Easter and the coronation, with "well over 90%" of people passing through security in under 10 minutes.
Shares in IAG, the owner of British Airways, held firm, up 1%.
Meanwhile, the FTSE 100 has continued to slip back after a bright start, now up 11 points.
10.10am: Trading in line at John Wood, bid deadline looms
John Wood Group PLC held guidance for 2023 despite what it called “an uncertain outlook.”
The FTSE 250-listed firm said against a backdrop of a weak first quarter in 2022, group revenue in this year’s first quarter increased to around $1,450mln, reflecting good momentum across all business units and higher pass-through revenue. Group adjusted EBITDA was in line with expectations.
The firm is awaiting news from Apollo Global about whether the US private equity giant intends to make a firm offer ahead of the May 17th deadline.
Last month it proposed a takeover price of 240p per share valuing Wood at £1.66bn.
The company said its order book at March 31 was around $5.7bn, slightly lower than at December 2022 reflecting the phasing of large multi-year awards in Operations.
Shares fell 0.2% to 221p in London while the FTSE 100 remained in good spirits, up 25 points.
9.47am: Yellen warns default could cause an "economic and financial catastrophe"
US Treasury Secretary Janet Yellen has said failure to avoid a US government debt default would undermine Washington's ability to provide international leadership and defend US national security.
Speaking in Japan at a meeting of G7 finance officials, Yellen has long warned a default could cause an "economic and financial catastrophe".
Treasury Secretary Janet Yellen said failure to avoid a looming federal government default would undermine Washington’s ability to provide international leadership and defend US national security https://t.co/j3pVwWrChF via @economics
— Andreas Landwehr (@andreaslandwehr) May 11, 2023
She added that a default "would spark a global downturn" and "would also risk undermining US global economic leadership and raise questions about our ability to defend our national security interests".
President Joe Biden and Republican congressmen made little progress in a meeting earlier this week in Washington that kicked off negotiations on the topic.
Republican aides and White House staff planned to begin budget discussions in its wake, with another meeting set for Friday between Biden and congressional leaders.
Asked by reporters if there were a long-term fix to the recurring debt-ceiling issue, Ms Yellen suggested it would be better for the US legislature to permanently do away with setting a cap on government borrowing that is independent of its own budget decisions.
9.30am: NIESR warns UK could miss flagship inflation target
Reflecting the challenges faced by the Bank of England today, a leading economic forecaster has warned Prime Minister Rishi Sunak is at risk of missing his flagship target to halve inflation this year.
The National Institute of Economic and Social Research said the soaring price of food and other basic essentials meant inflation was on track to remain persistently high for the rest of this year.
It said the combined impact of the Covid pandemic and the ongoing fallout from the cost of living crisis meant Britain’s poorest households would be about £4,000 a year worse off as a result – significantly higher than for richer households.
The report said inflation will not return to the Bank of England’s 2% target until late 2025 with the current double-digit rate of inflation predicted to fall to 5.4% by the end of the year, falling short of the government’s aims.
The think tank’s forecast is also above the 3.9% inflation rate the Bank expected for the end of the year in its last projections made in February.
The institute said inflation would only fall to the Bank’s 2% in the third quarter of 2025 making it more pessimistic than the Bank and the Office for Budget Responsibility, who think price growth will fall rapidly in the coming months.
The forecast comes ahead of the latest interest rate decision by the Bank of England in which it will also issue new forecasts for inflation.
Back in the markets and the FTSE 100 is now up 24 points. In Europe, the mood is even brighter with the Cac 40 in Paris up 1.0% and the Dax in Frankfurt up 0.4%.
9.10am: UK housing market stabilising but demand remains subdued
UK house prices are falling less sharply as sales pessimism eases, according to a survey of estate agents that suggests the property market is stabilising following the recent surge in mortgage costs.
The Royal Institution of Chartered Surveyors said that its house price balance, which measures the difference between the percentage of surveyors seeing rises and falls in house prices, rose to minus 39 last month from minus 43 in March, the highest figure in five months, and up from the 14-year low of minus 47 in February.
But Simon Rubinsohn, RICS Chief Economist, cautioned: “Although the newsflow around housing does appear to have steadied over the past month, key indicators from the RICS survey point to a series of challenges in both the sales and lettings space.”
“Most notably, buyer demand still appears to be subdued in the face of relatively high borrowing costs, the prospect of at least one more interest rate hike and ongoing affordability challenges.”
Expectations about future house prices also improved to minus 16 in April from minus 24 in March, well above the minus 61 posted in November last year.
Gabriella Dickens at Pantheon Macroeconomics said the survey “suggests the downturn in the housing market has further to run.”
“With mortgage payments likely to remain unaffordable or undesirable for many potential buyers, we expect the stock of unsold properties to continue to accumulate, until sellers reduce their prices further,” she said.
“We remain comfortable with our forecast for a peak-to-trough fall of around 8%, which implies that the official measure still has 6% further to drop from February’s level,” she added.
Sarah Coles, head of personal finance, Hargreaves Lansdown commented: “The green shoots of optimism in the property market risk being crushed by cruel reality.”
“Demand has now fallen every month for the past year, and with sales dwindling and house prices dropping, it’s proving more difficult to shift properties. It’s taking almost 20 weeks from first listing to final completion, as cautious buyers guard against hasty decisions.”
8.50am: FTSE extends gains, inflation falls in China
The FTSE 100 continued its strong start to the day, now up 42 points, as yesterday’s fall in US inflation figures yesterday was followed by a fall in China’s CPI today boosting hopes that a peak in interest rates is near.
Derren Nathan at Hargreaves Lansdown noted: "While big chunks of the world still battle painful price rises, China is dealing with disinflationary forces. Chinese consumer prices for April were up a mere 0.1%, the lowest seen for 2 years."
"Perhaps more worryingly the producer price index dropped 3.6% more than the 3.2% expected, reflecting continuing weakness in manufacturing," he added.
However, it is not expected to prevent a further increase in UK interest rates today.
Rolls-Royce remains top of the FTSE 100 fallers, now down 2.5%.
But Aarin Chiekrie, equity analyst at Hargreaves Lansdown said: “Rolls Royce has had a promising start to the year.”
Chiekrie felt it was “encouraging to see so called engine flying hours rise from 65% to 83% of 2019 levels, over the first four months of the year.”
Vodafone PLC eased 0.4% after it said it has entered a strategic relationship with shareholder Emirates Telecommunications - also known as e& and formerly known as Etisalat - which will see the company's chief executive take a seat on the board.
E& first took a stake in Vodafone in May 2022 and now owns a 14.6% interest.
As part of the new collaboration, Vodafone and e& will explore jointly offering cross-border digital services and solutions to multi-national customers and public sector organisations. Services will include fixed and mobile connectivity, Mobile Private Networks, IoT, cybersecurity and cloud-based services.
Asos PLC extended its falls, dipping a further 2.5% on further consideration of its half-year results yesterday.
Deutsche Bank analyst Adam Cochrane lowered his price target to 725p from 950p after what he called an "uninspiring" set of results.
"We believe there is limited likelihood of a re-rating until the sales trajectory recovers."
Shares in FirstGroup PLC (LSE:FGP) fell 4.1% after it was stripped of the TransPennine Express rail franchise in the north of England and part of Scotland after persistent poor service and cancelled trains.
Mark Harper, Transport Secretary, said the decision had been made after “months of commuters and Northern businesses bearing the brunt of continuous cancellations.”
8.15am: FTSE forges ahead
The FTSE 100 made steady progress on Thursday taking encouragement from yesterday’s fall in US inflation and looking ahead to the UK interest rate decision at midday.
At 8.15am London’s lead index stood at 7,770.87, up 29.54 points, or 0.38% while the FTSE 250 advanced to 19,306.71, up 33.42 points, or 0.17%.
With inflation still in double-digits the Bank of England is widely expected to raise interest rates for a 12th consecutive time, as it tries to restrain price rises by cooling demand.
A 25 basis points rise is forecast taking interest rates to 4.5% taking borrowing costs to the highest level since October 2008.
ING Economics expects a 25 basis point hike with a 7-2 vote split with the focus on inflation forecasts and forward guidance.
Ahead of the interest rate decision and Rolls-Royce Holdings PLC (LSE:RR.) slipped despite a broadly positive trading statement.
The company said trading was in line and its transformation was “moving at pace.”
The FTSE 100-listed firm said its underlying operating profit guidance of £0.8-£1.0bn and free cash flow guidance of £0.6-£0.8bn in 2023 is unchanged while large engine flying hours were 83% of 2019 levels in the four months to 30 April, and on track for the 80% to 90% range for the full year, as guided in February.
But shares took a breather, falling 3% today, leaving them 55% higher year to date.
Analysts at Shore Capital said it was a “positive” update and sees Rolls-Royce as “a compelling turnaround story.”
Shares in ITV PLC (LSE:ITV) dropped 4.6% as it reported a 10% fall in advertising revenue in the first quarter and predicted further declines in the second quarter.
The media firm said the advertising market was “challenging,” forecast a 12% fall in advertising revenue in the second quarter but had better hopes for the third quarter with Love Island and the Rugby World Cup likely to boost viewing numbers.
Overall, ITV said “all parts of the business performed in line with expectations” in the first quarter.
7.46am: Advertising revenue drops at ITV, trading in line
ITV PLC (LSE:ITV) reported a 10% fall in advertising revenue in the first quarter but said parts of its business performed in line with forecasts.
Carolyn McCall, ITV Chief Executive, said: “"ITV continued to make significant strategic progress in the quarter and all parts of the business performed in line with expectations.”
Total external revenue was down 7% at £776mln compared to £834mln a year prior with ITV Studios revenue flat at £457mln and ITV Media & Entertainment revenue down to £495mln from £545mln.
The company said the drop in advertising revenue was expected and forecast a further 12% fall in the second quarter describing the advertising outlook as “challenging.”
But it highlighted hopes for the third quarter when Love Island and the Rugby World Cup set to draw large broadcast and streaming audiences.
ITVX has sustained its strong launch, with a 49% increase in streaming hours and a 29% growth in digital revenue in the quarter, the firm said, while ITV Studios is on track to deliver mid-single digit revenue growth over the full year, ahead of the market.
ITV Studios is on track to deliver mid-single digit revenue growth, ahead of the market, and the group expects the division to deliver at least 5% average organic revenue growth per annum to 2026.
In the second quarter, Media & Entertainment continues to see strong growth in digital advertising with revenues expected to be up over 20%.
7.23am: Rolls-Royce trading in line, transformation "moving at pace"
Rolls-Royce Holdings PLC (LSE:RR.) reported its transformation programme was “moving at pace” as it told investors trading was in line with expectations.
In a statement ahead of the group’s AGM, Chief Executive Tufan Erginbilgic said: “We are making good progress and our financial performance year-to-date is in line with expectations.”
“"We are transforming Rolls-Royce into a high quality and competitive business with a strong balance sheet and growing profit, cash flows and returns.”
The FTSE 100-listed firm said its underlying operating profit guidance of £0.8-£1.0bn and free cash flow guidance of £0.6-£0.8bn in 2023 is unchanged while it anticipates free cash flow generation to be seasonally weighted to the second half of the year.
In Civil Aerospace, long term service agreement large engine flying hours were 83% of 2019 levels in the four months to 30 April, and on track for the 80% to 90% range for the full year, as guided in February. Shop visit volumes and OE deliveries are also on track with expectations, Rolls-Royce said.
In Power Systems, revenue growth is being driven by demand for aftermarket services and exceptionally high order intake in the prior year, especially for power generation solutions.
“We are getting improved pricing on new orders which will drive margins up with the benefits expected to start showing in the second half of the year,” it said.
Rolls-Royce said work on the transformation programme is moving at pace and the increased focus on efficiency and simplification is helping to keep costs down.
“Our strategic review is on track and as previously indicated, we will communicate the findings and medium term targets in the second half of 2023,” the company added.
7.00am: FTSE 100 expected to open slightly higher
Good morning. The FTSE 100 is expected to make steady progress ahead of the interest rate call by the Bank of England.
Spread betting companies are calling London’s lead index up by around 11 points.
The BoE’s Monetary Policy Committee is expected to increase interest rates by 25 basis points to 4.5%, the 12th successive increase since December 2021..
In New York, the Dow Jones Industrial Average fell 30.48 points, or 0.1% at 33,531.33. The S&P 500 rose 18.47 points, 0.5%, at 4,137.64 points while the Nasdaq Composite jumped 126.89 points, 1.0%, at 12,306.44.
Meanwhile, in Asia markets weakened. The Shanghai Composite was 0.1% lower, the Hang Seng in Hong Kong was down 0.5% and in Tokyo, the Nikkei 225 declined 0.1%.
Back in London and the early focus will be updates from Rolls-Royce, 3i, ITV and John Wood.