- FTSE 100 closes 15 points higher
- Nasdaq sinks again, but Dow Jones, S&P 500 hold firm
- Tesco sees signs of easing inflationary pressures
4.40pm: Strong gains for the week
At the close, the FTSE 100 had added 0.2% to finish at 7,643 points.
The UK's main index gained over 1% to close out a choppy trrading week firmly in the green.
It was the first positive week for the FTSE 100 in a month, IG's Axel Rudolph noted.
"Stocks weren't overly concerned by the apparently more hawkish stance of the Fed and another ECB rate hike as they continued to surge higher into Triple Witching Friday, the day at which stock options, stock index futures and stock index options expire in the US."
Top riser at the close is Ocado Group PLC (LSE:OCDO), up 7% after its US customer Kroger announce strong quarterly growth in its digital business, with delivery powered by technology from the British company leading the way.
3.50pm: Bring on the weekend
With just over half an hour of trading to go in London until the weekend, the FTSE 100 index was consolidating its gains above the 7,600 level, recaptured this week.
Craig Erlam, senior market analyst, UK & EMEA, OANDA commented: “Markets are ending the week on a positive note but there remains enormous uncertainty around inflation and interest rates that looks set to continue throughout the summer.
“Expectations are changing considerably on a very regular basis, with markets now pricing in no rate cuts in the US this year but a strong chance of one more hike, which still falls short of the median two from the Fed dot plot. The central bank opted to buy itself time on Wednesday which may prove to be a good decision given the scale of tightening already seen and the progress we're seeing across a selection of indicators.
“The ECB on the other hand believes there's still more to do, so much so that it insisted that barring material change, another 25 basis point hike will follow in July. Investors mostly took this on board but perhaps not as strongly as President Lagarde would have liked."
He added: “There are a number of other interest rate decisions to come next week, with the Bank of England being the standout considering its one of the few central banks that appears to have achieved very little in its battle with inflation. CPI data released the day before may deliver another hammer blow to ambitions to pause the tightening cycle, bringing the UK another step closer to recession. Could the central bank move back to super-sized hikes?”
3.35pm: Odey troubles continue
Odey Asset Management has suspended more of its funds after increased investor redemptions, Reuters has reported.
The firm has suspended trading in the Odey Special Situations and LF Odey Portfolio funds, after investors sought redemptions, according to two letters dated June 15 on the firm's website, the newswire said.
The hedge fund, once run by one of the UK’s best-known fund managers, Crispin Odey, has grappled with investor flight after the founder became the focus of sexual misconduct allegations in media reports last week.
Within hours of that report being published, Wall Street firms including Goldman Sachs, JPMorgan, and Morgan Stanley began reviewing financing ties with Odey Asset Management (OAM), which they then went on to cut.
Odey last week told Reuters that the report was a "rehash of an old article and none of the allegations have been stood up in a courtroom or an investigation."
3.15pm: Michigan sentiment strengthens
The preliminary University of Michigan consumer sentiment index reading has risen to 63.9 for June, up 7.9% from May's final reading of 59.2.
The current economic conditions index rose to 68.0 this month, up from 64.9 in May, and the index of consumer expectations was 61.3, up from 55.4.
In a statement, Joanne Hsu, the university's surveys of consumers director, noted: "Consumer sentiment lifted 8% in June, reaching its highest level in four months, reflecting greater optimism as inflation eased and policymakers resolved the debt ceiling crisis.
"The outlook over the economy surged 28% over the short run and 14% over the long run. Sentiment is now 28% above the historic low from a year ago and maybe resuming its upward trajectory since then. As it stands, though, sentiment remains low by historical standards as income expectations softened. A majority of consumers still expect difficult times in the economy over the next year."
She added: "Year-ahead inflation expectations receded for the second consecutive month, falling to 3.3% in June from 4.2% in May. The current reading is the lowest since March 2021. In contrast, long-run inflation expectations were little changed from May at 3.0%, again staying within the narrow 2.9-3.1% range for 22 of the last 23 months. Long-run inflation expectations remained elevated relative to the 2.2-2.6% range seen in the two years pre-pandemic."
2.50pm: Strong US week ending mixed
The FTSE 100 index consolidated its gains midafternoon as US stocks started the day on a mixed note though Wall Street is still set to close out a strong weekly performance ahead of the Juneteenth long weekend.
Around 20 minutes after the opening bell in New York, the Dow Jones Industrials Average was up 47 points or 0.1% at 34,455, while the S&P 500 index also added 0.1%, but the Nasdaq Composite slipped 0.1%.
FOREX.com market analyst Fiona Cincotta noted that global stocks were headed for their best week since March.
“The Dow Jones trades 1.6% higher this week, its third straight week of gains, while the Nasdaq is up nearly 4% this week, its eighth consecutive weekly rise.
“Traders have shrugged off hawkish comments from the Federal Reserve and are instead betting that the central bank will end its tightening cycle sooner rather than later after it paused interest rate hikes this week. Meanwhile, expectations are growing that the Chinese government will step in with further stimulus to boost spending, which is also helping risk appetite," she said.
2.30pm: Energy boost
Another major energy supplier has launched a fixed deal that is cheaper than the UK energy price cap to be imposed from July, according to newspaper reports.
Utility Warehouse is offering new and existing customers the chance to fix their energy bills at a cheaper rate offered to those on the standard variable tariff (SVT).
Its 'Fixed Saver 1' tariff will allow customers to fix their energy prices at an average cost of £1,974. For the average household, that would be £100 cheaper than sticking to the SVT, which is tied to Ofgem's price cap which will peg typical gas and electricity bills at £2,074 a year from July 1.
But while the deal looks good on paper, there is a catch: Customers wishing to take up the offer are required to sign up for at least two other services offered by UW, such as mobile, broadband or insurance.
2.15pm: GSK regulatory delay not a "red flag"
GSK shares were a touch higher in afternoon trading after news of a regulatory delay for the 'centrepiece' drug of its US$2bn Sierra Oncology acquisition last year "isn’t necessarily a red flag", according to an analyst. The FTSE 100 pharma group revealed the US Food & Drug Administration (FDA) has extended the review period for momelotinib by three months with a final decision now expected in September 2023.
It is the third of three new drug or vaccine approvals that GSK was aiming to deliver this year, noted Shore Capital's Dr Sean Conroy.
As the centrepiece of the Sierra purchase it made last year, "gaining approval for this drug is, in our view, a must for the company as it will provide important validation for GSK’s abilities to supplement its mid to late-stage pipeline through M&A", said Conroy.
He said the delay may not be a red flag as it relates to allowing time to review additional data that have been recently submitted, which he said "could potentially relate to the company seeking a line-agnostic label for the drug in myelofibrosis (MF)", a rare, fatal cancer that affects the bone marrow and the normal production of blood cells.
ShoreCap's 'buy' rating was reiterated and fair value for the shares was maintained at 1,850p with the GSK stock trading at 1,383p, up 0.6%.
1.30pm: A recap of some of the top junior risers and fallers
genedrive PLC (AIM:GDR) shares jumped 6% higher as the point-of-care molecular diagnostics company announced its participation in a multi-partner grant award called 'DEVOTE' from Innovate UK and the UK government Innovation Accelerator program.
Mears Group PLC (AIM:MER) added 6.5% after reported strong trading in the first five months of its financial year, with continued elevated revenues, improving operating margins and excellent cash performance.
Marlowe PLC (AIM:MRL) shares rallied 9% after a report from Sky said the firm is looking at selling its biggest division.
East Star Resources PLC (LSE:EST) plunged 28.5% to a new low of 2p after unveiling results from mineralogy and leaching studies of eight samples at the Talairyk rare earths project in Kazakhstan.
ValiRx PLC (AIM:VAL) shares fell 10% as the life science company focusing on early-stage cancer therapeutics and women's health announced the ending of the evaluation agreement with Hokkaido University.
1.00pm: US stocks seen mixed to higher
US stocks are expected to start flat to higher in early trade on Friday as investors shift their focus from the Federal Reserve policy meeting earlier in the week to the next piece of economic data for clues to the next rate move.
In pre-market trading, futures for the Dow Jones Industrial Average (DJIA) were flat, while those for the S&P 500 added 0.1%, and contracts for the Nasdaq-100 futures rose 0.3%.
All three major indexes finished strongly higher on Thursday, marking the sixth straight day of wins for the S&P 500 and Nasdaq Composite, and the S&P 500′s longest winning streak since November 2021. The DJIA ended 428 points, or 1.3% higher at 34,408, while both the S&P 500 and Nasdaq Composite added 1.2%.
With just Friday’s session left, the three indexes are also on track for weekly gains, building on a recent rally across the market. The S&P 500 is on pace to notch its best weekly performance since March, up nearly 3%, while the Nasdaq Composite has gained almost 4% since the start of the week, making it poised for its eighth straight winning week — the tech-heavy index’s longest weekly streak since a 10-week period that ended in March 2019. The DJIA has gained a relatively modest 1.6% this week.
The moves higher came as investors bet interest rate hikes were coming to an end after the Federal Reserve announced it would not increase rates at its meeting this week, even though it said two more rate increases could still come later, so the path for data will be key.
The only datapoint due on Friday will be the preliminary University of Michigan consumer sentiment report for June.
Joshua Mahony, chief market analyst at Scope Markets commented: "Wall Street futures are pointing towards a flat start to the week’s final trading session, but the wider view remains one of abundant optimism given the Fed’s hawkish undertone at its latest policy-setting meeting.
"This is leading to some concerns that the market may be moving into bubble territory where valuations on some select stocks are simply now looking to be overblown, but for now it’s the bulls who are firmly in control."
He added: "Fundamentals are thin on the ground for the remainder of the day, although eyes will be on the Michigan Consumer Sentiment readings to see how much weakening sentiment here is driving down inflation following the undershoots seen earlier in the week.
"Expectations are for a modest month-on-month improvement which would be welcomed, but anything that looks too soft here could reignite fears of the US economy facing a more pronounced slowdown."
On the corporate front, Virgin Galactic shares surged higher in extended trading Thursday after the company announced its first commercial space tourism flight is slated for the end of this month.
Adobe also rose after-hours after the technology company beat all Street estimates on top and bottom lines in its fiscal second quarter and issued upbeat expectations for current quarter and full-year performance.
Friday’s session will also likely be busy given the quarterly rebalancing of some indexes and expiration of some options expected to take place. This so-called 'quadruple witching' can result in a surge of market volatility and trading volume.
Friday also marks the final trading day before a long weekend, with the market closed Monday in observation of Juneteenth.
12.40pm: Intel to invest €4.2bn in Polish plant
Computer chip manufacturer Intel Corp announced plans on Friday to build a large factory in Poland to assemble and test microprocessors.
Intel chief executive Pat Gelsinger announced plans for the factory in Wroclaw during a visit to the city on Friday.
Gelsinger said Intel would invest around €4.2 billion to build the plant and that the plant would employ about 2,000 highly qualified workers by 2027. Intel also expects that several thousand more jobs will be created indirectly, including at suppliers in the area.
12.12pm: Tesco update well received although shares ease
Tesco PLC's (LSE:TSCO) shares eased despite a well-received trading update.
In the 13 weeks to 27 May 2023, the UK’s largest retailer said like-for-like sales rose 9% in the UK with a strong performance across all formats and channels. Total group sales rose 8.2% in the period.
Analysts at Barclays said: “We see this statement as confirming that Tesco has seen an encouraging start to the new financial year. While sales growth has been flattered by ongoing high food inflation, Tesco is holding its share in the core UK business.”
Tesco said its market share held steady at 27.1% as it benefited from consumers downtrading from “premium” retailers whilst extending its Aldi price match offers at the ‘value’ end of the market.
Tesco said it was the ninth consecutive period of switching gains from premium retailers, supported by strong Finest performance with sales up 14.9%. The 'Aldi Price Match' promotion was extended to around 700 products, and recorded a "strong response" to its latest 'Low Everyday Prices' price-lock, now applicable to over 1,000 products.
Jefferies described the update as “robust.” “At a time when investors may be a little concerned by Tesco's historical positive valuation correlation to the UK food CPI, we remain of the view that revisions risk at the group remains more pitched to the upside.”
The retailer also highlighted “encouraging” signs of easing inflationary pressures.
Russ Mould noted “news from Tesco it is seeing early signs of price rises starting to slow will be received gratefully by households feeling squeezed on all sides.”
“It may also help reduce some of the recent political pressure on the sector as the finger was pointed at the supermarkets as one of the culprits behind the soaring cost of a weekly shop.,” he felt.
Tesco’s update impressed John Moore, senior investment manager at RBC Brewin Dolphin. “Tesco is strengthening its grip on its position as the UK’s top supermarket and, with share buybacks continuing and management generally keeping the house tidy, it is in good shape – particularly with life likely getting tougher for its leveraged rivals, like Asda and Morrisons.”
UBS and Shore Capital also reiterated buy ratings.
11.36am: CMA clears Amazon's iRobot deal
The UK competition watchdog has cleared Amazon.com Inc's (NASDAQ:AMZN) planned US$1.7bn acquisition of iRobot Corp.
The Competition & Markets Authority said it had concluded that the deal would not lead to any competition concerns in the UK market.
The CMA judged iRobot's market position in the UK robot vacuum cleaner market to be "modest", and already facing "several significant rivals".
"On this basis, the CMA considered that the loss of potential competition from Amazon wouldn't have a substantial impact on market outcomes," the regulator said.
iRobot makes consumer robots, including robot vacuum devices, under the Roomba brand. Seattle, Washington-based Amazon had agreed to acquire the company in a cash offer last August.
11.10am: Insolvencies jump 40%
The number of company insolvencies in May 2023 was 2,552, 40% higher than in May 2022 in England and Wales, according to offical statistics.
Insolvencies were driven by Creditors’ Voluntary Liquidations, which were 38% higher than in May last year, figures from the Insolvency Service showed.
The rising number of insolvencies comes as energy bills remain elevated, borrowing costs jump and the labour market remains tight, pushing up wages.
Susannah Streeter at Hargreaves Lansdown said: "The jump in the number of insolvencies comes at a time when problems are piling up for businesses."
"Even though the UK appears to be swerving a recession for now, the triple whammy of the rapid hike in borrowing costs, a super-tight labour market and onerous energy bills has been too much to bear for many firms."
"Spying little light at the end of the tunnel, with interest rates expected to keep rising, they are shutting up shop in greater numbers, as their debts have mounted up."
10.35am: Consumers expectations of inflation ease
Consumers expectations for future inflation rates in the UK have eased, according to research from the Bank of England, but criticism of the central bank hit an all-time high.
The BoE's quarterly inflation attitudes survey showed expectations for inflation in the coming 12 months fell to 3.5% from 3.9% in February.
Consumers see inflation falling to 2.6% in two years time and 3% on a five-year time frame.
First bit of encouraging inflation data for the Bank of England for some time. 18-month low in inflation expectations. Wont impact the June MPC, nor I expect the August MPC for +25bp moves - but calls into question the three more +25bp moves financial markets currently see. pic.twitter.com/YDOuQd5h0m
— Simon French (@shjfrench) June 16, 2023
The survey was conducted in mid-May, before recent inflation and jobs data sent expectations in financial markets for more BoE interest rate hikes sharply higher - with a big knock-on effect in mortgage costs.
But satisfaction with the BoE's actions in dealing with inflation fell to negative 13% from negative 4% in February 2023.
9.58am: Sterling jumps as central banks diverge
Sterling has continued its recent rise against the dollar taking it close to US$1.28 as rate expectations in the UK and US diverge.
The pound is up 1.7% this week and 5.9% in the year to date.
The Bank of England is expected to increase interest rates by at least 25 basis point next week and rates are expected to peak at 5.75% as it continues to battle inflation.
Interest rates in Europe are also set to rise further after the ECB's hawkish statement yesterday.
But across the pond, investors are betting US rates are at, or close to, their peak. The Federal Reserve held rates steady this week although it did suggest two more rate hikes were likely before the end of the year.
However, equity market advanced strongly in the US on Thursday on hopes the continued falls in inflation, and a slowing economy, would prompt the Fed to leave rates unchanged.
9.37am: Mortgage rates head towards 6%, savers face wipe out claims IFS
UK mortgage rates are heading towards 6% as the squeeze on borrowers tightens, with one think tank predicting 3mln homeowners risk having their savings wiped out.
The average rate on a two-year fixed mortgage rose to 5.92% yesterday, up from 5.9% on Wednesday, and 5.26% at the start of last month.
Average five-year fixed rate mortgage rates hit 5.56%, up from 5.54% 24 hours earlier and 4.97% at the beginning of May.
Analysis from the Institute for Fiscal Studies said the higher rates would see 2.9mln middle-income mortgage holders exhaust their savings as well as borrow cash to help make ends meet.
On Monday, the Centre for Economics and Business Research estimated homeowners will have to spend nearly an extra £9bn in interest over 2023 and 2024.
High street lenders have scrambled to keep up with the rapidly changing rate landscape. Nationwide has become the latest to increase its mortgage rates, lifting its new fixed rates by up to 0.7 percentage points.
In the last week, HSBC has pulled mortgage deals twice while Santander was also forced to temporarily withdraw products while it repriced offers.
Atom Bank said today it was also raising rates by between 0.25% to 0.6% on certain products.
8.57am: Frasers picks up more shares in AO World
The FTSE 100 continues to make strong progress, up 38 points now at 7,666, taking its gains for the week to 1.4%.
Strong gains in US and Asian markets boosted sentiment while Tesco reports encouraging signs of easing inflationary pressures which could bode well for future CPI readings.
Frasers was top of the FTSE 100 risers, up 3.3%. The acquisitive retailer, owned by Mike Ashley, has picked up another chunk of online electrical retailer AO World.
Frasers now owns 21%. On Monday, the firm announced it had taken a 19% interest in AO as part of a strategic tie-up.
Shares in Travis Perkins (LSE:TPK) have rallied but remain down 5% after its profit warning.
Victoria Scholar at interactive investor pointed out: “The disappointing update has dragged housebuilders to the bottom of the FTSE 100 including Barratt Developments, Kingfisher, and Berkeley Group.”
Barratt was down 1.4% and Kingfisher down 1.1%.
8.29am: Marlowe leaps on reports it could sell biggest division
Shares in Marlowe PLC (AIM:MRL) soared 9% in early deals after a report the firm was looking at selling its biggest division.
Sky said the provider of fire safety services backed by Lord Ashcroft, the former Conservative Party treasurer, could net proceeds of about £650mln from the sale of its testing, inspection and certification division, which accounts for the lion's share of its revenue.
Sky cited City sources who said a process to hold exploratory talks with potential bidders had got underway in recent weeks.
Based on recent transactions in the sector, a sale of the unit could yield a valuation of up to 16 times its annual profit, equating to roughly £650mln, it reckoned.
Marlowe was formed as a cash shell by Lord Ashcroft and Alex Dacre, and acquired its first operating business when it bought Swift Fire & Security in 2016.
8.15am: FTSE 100 climbs, Tesco lower despite "robust" update
The FTSE 100 made a bright start trading as the UK’s largest retailer said there were “encouraging” signs inflation was easing.
At 8.15am, London’s lead index advanced 19.83 points, or 0.3%, to 7,648.09 while the FTSE 250 rose to 19,049.66, up 10.25 points.
Tesco PLC (LSE:TSCO) reported better news on pricing pressures as it revealed a 8.2% rise in group like-for-like sales led by a strong showing in the UK.
In the 13 weeks to May 27, the UK’s largest retailer said like-for-like sales rose 9% in the UK with a strong performance across all formats and channels.
Large stores sales were particularly strong, up 9.9% while online sales rose 8.2% boosting online market share to 37.5%.
Chief Executive Ken Murphy said: “We are well-positioned for the months ahead and are reiterating our guidance for the full year.”
Shore Capital’s Clive Black said it was “good update” and he was holding forecasts.
“With a good Q1 in the bank, clement weather no doubt helping mix in Q2, the basis to expect Tesco to nudge guidance higher later in the year could be rising,” he noted.
Analysts at Jefferies called the update “robust,” and think "the shares remain good value.”
Both Shore Capital and Jefferies have buy ratings on Tesco.
Food price inflation has been a huge driver to overall inflated consumer price inflation levels in the UK so any signs pressures are easing will be welcomed by consumers especially as interest rates look set to rise significantly.
The share price reaction was muted though, down 0.6%.
But Travis Perkins (LSE:TPK) fell 7.8% after the Northampton-based building materials supplier warned of continued tough trading conditions.
"In light of ongoing challenging market conditions, full year adjusted operating profit now expected to be around £240mln," the company said in a statement today. That would be below 2022's number of £295mln.
Analysts at Peel Hunt said the revised guidance was around “10% below the current consensus.”
7.50am: ITV confirms it is looking to buy All3Media
ITV PLC (LSE:ITV) has confirmed media reports that it is in talks to buy All3Media.
All3Media, one of Britain's leading independent production companies, is owned by Warner Bros Discovery Inc (NASDAQ:WBD). and Liberty Global (NASDAQ:LBTYA).
Reuters first reported the speculation on Thursday. Sources told the news agency that Warner Brothers could sell its stake in the company, while Liberty Global (NASDAQ:LBTYA) could retain a stake in a merged entity which would comprise ITV Studios and All3Media.
Another option would see ITV buy out both parties entirely, one source added.
ITV has had a troubled few weeks after the controversy embroiling Philip Schofield which saw boss Carolyn McCall hauled before MPs to explain herself.
7.41am: Travis Perkins hit by tough trading conditions
Not good news from the Northamptonshiire-based building materials firm, Travis Perkins (LSE:TPK) PLC.
"In light of ongoing challenging market conditions, full year adjusted operating profit now expected to be around £240mln," the company said in a statement today. This would be below 2022's number of £295mln.
"Volumes in both the new build housing and private domestic RMI markets continue to be impacted by higher interest rates and weaker consumer confidence driven by persistent, higher than anticipated consumer price inflation," Travis Perkins added.
The company said it hadn't seen a pick up in conditions in the second quarter that it anticipated.
There was some good news. The firm said it continues to see a more resilient performance across its other end markets - namely commercial, industrial, infrastructure and public sector housing - and Toolstation continues to perform in line with expectations both in the UK and Europe.
7.31am: Tesco sees signs inflation is easing
Tesco PLC (LSE:TSCO) said there were “encouraging early signs” that inflation is starting to ease as it reported a 8.2% rise in group like-for-like sales led by a strong showing in the UK.
In the 13 weeks to May 27, the UK’s largest retailer said like-for-like sales rose 9% in the UK with a strong performance across all formats and channels.
Large stores sales were particularly strong, up 9.9% while online sales rose 8.2% boosting online market share to 37.5%.
Tesco chief executive Ken Murphy said: “We are well-positioned for the months ahead and are reiterating our guidance for the full year.”
“We expect to be able to deliver a broadly flat level of retail adjusted operating profit in 2023/24 and retail free cash flow within our target range of £1.4bn to £1.8bn,” the firm said in a statement.
Group sales totalled £15.17bn in the period, with UK sales £10.80bn and Booker sales £2.28bn.
Like-for-like sales in the Republic of Ireland rose 7.3%, Booker sales advanced 8.4% while Central Europe sale edged up by 1.1% with volumes impacted by ongoing cost-of-living pressures, particularly on discretionary non-food items.
Tesco Bank sales rose 13.9% reflecting new customers in both lending & insurance and higher credit card spending.
7.03am: FTSE 100 called higher after US stocks soar
The FTSE 100 is expected to edge higher in early exchanges after strong gains in the US.
Spread betting companies are London’s lead index up by around 8 points.
US stocks soared and the dollar slipped on Thursday as investors took the view US interest rates may have peaked, despite the Federal Reserve's claim otherwise.
Chris Beauchamp, chief market analyst at online trading platform IG said: "The Fed might be keen to suggest it’s not on pause, but the market clearly believes otherwise."
The Dow Jones Industrial Average closed up 428.73 points, or 1.3%, at 34,408.06. The S&P rose 53.25 points, 1.2%, at 4,425.84, and the Nasdaq Composite gained 156.34 points, 1.2%, at 13,782.82.
In Asia, the Japanese yen weakened slightly, as the Bank of Japan said it would maintain its long-standing, ultra-loose monetary policy as it looks to boost economic growth.
The Nikkei 225 advanced 0.7%, while in Hong Kong, the Hang Seng jumped 1.4%.
Back in London, and the early focus will be a trading update from the UK’s largest retailer, Tesco.