- FTSE 100 finishes 17 points higher
- BT chief executive Philip Jansen to step down
- Utilities bounce after Thames Water funding boost
4.45pm: FTSE 100 ends on a high note
At the close, the FTSE 100 had added 17 points to finish at 7,234 points for a 0.2% gain on the day.
Monday was a better day for stocks around the globe after the poor finish last week, IG's Chris Beauchamp noted.
“Friday’s gloomy atmosphere has faded to an extent today and stocks have attempted to regain some lost ground," Beauchamp noted. "But it promises to be a choppy week with US CPI and then the start of earnings season on the calendar."
4.02pm: Footise to close higher
London’s blue-chip index has started the week off well and is expected to close Monday at least 0.3% higher.
Utilities put in a good showing, with Severn Trent leading the charge with a 1.6% add.
Gilts also improved slightly, with yields falling back for the second day in a row- the first time doing so in over a month.
Following HSBC’s sweeping downgrades, real estate shares caused a drag on the index.
Land Securities Group plc fell by 2.14% while Rightmove plc fell by 0.8%.
Summing up the forex market, Michael Hewson at CMC said: “The pound is also slipping back after hitting one-month highs against the greenback at the end of last week, with some labour market data showing signs that wage growth is slowing and that the pace of hiring is slowing.
“If this is replicated in the labour market data due tomorrow morning, we could start to see some of the more extreme pricing for Bank of England rate rises get priced out.”
3.50pm: Bitcoin turns green, Stand Chartered posts US$120,000 price prediction
Benchmark cryptocurrency bitcoin (BTC) has flipped its daily candlestick green following a sluggish morning.
At the time of writing, the BTC/USDT pair was trading at US$30,220, 0.2% higher on the day.
It follows a largely bearish weekend which saw red candlesticks over the Saturday and Sunday sessions.
Also on the bitcoin front, Standard Chartered has upgraded its guidance for the next two years. The bank predicts bitcoin to hit US$120,000 by the end of 2024, a 20% upgrade from its mid-April forecast of US$100,000.
Standard Chartered’s FX analyst Geoff Kendrick points to less bitcoin mining capitulation and a 50% reduction in daily supply emissions arising from next year’s halving event as the reasons for SC’s upgrade.
Back to equities, the footsie blue-chip index was seen slightly lower toward the end of Monday’s session, but is still expected to close around 0.4% in the green.
3.36pm: BT Group mounts takeover defence
As well as dealing with the departure of chief executive Philip Jansen, BT Group plc is in the midst of mounting a takeover defence against German telecoms giant Deutsche Telekom.
Tim Höttges, chief executive of Deutsche Telekom, which is a 12% shareholder in BT, has fueled speculation of a bid this year
BT has ramped up its collaboration with advisors from Robey Warshaw and Goldman Sachs as it strengthens its defence strategy, according to a Telegraph report.
Additionally, observers have pondered the possibility of a bid from telecoms billionaire Patrick Drahi, who holds a 24.5% stake in BT. Drahi, however, has ruled out a bit for the time being.
3.22pm: Severn Trent boosted by Thames Water fundraise
Waterworks blue chip Severn Trent is among the most bullish of the FTSE 100 constituents today, adding 2% to 2,441p.
The group has been boosted by news that fellow utilities group Thames Water will get a £750mln lifeline from shareholders to stop it from being taken into public ownership.
Investors are also likely to pump an extra £2.5bn in Thames Water over the 2025 to 2030 regulatory period, the company said, to further improve operational performance and financial resilience.
United Utilities Group is also looking strong, adding 1.06% to 941.6p
3pm: BT shares recover from Jansen dip
BT Group plc shares staged a recovery this afternoon after falling 0.2% in today’s trading session.
News of BT Group plc’s chief Philip Jansen’s departure in the next 12 months sent the British telecoms leader’s shares lower, but a mid-afternoon recovery sent them 0.12% higher than Friday’s closing price.
Though Jansen’s tenure has hardly been lauded (one analyst today said he failed to breathe life into “slow, creaking juggernaut”), his exit still heralds what could be an uncertain moment for the company, particularly with widespread job cuts on the horizon and an ongoing full-fibre broadband buildout.
BT shares were changing hands at 122.5% as of 3pm.
The broader FTSE 100 index has has a strong session today, adding 0.6% to 7,301.
2.45pm: GSK seen higher on vaccine approval
GSK shares were seen over 0.8% higher to 1,325p this afternoon after the British pharmaceuticals giant’s vaccine for the respiratory syncytial virus (RSV) was approved by the Medicines and Healthcare products Regulatory Agency (MHRA).
RSV commonly results in symptoms similar to a common cold, yet it poses a significant risk of pneumonia in both toddlers and the elderly.
GSK shares lost some ground as the afternoon progressed, but remain 0.25% higher at the time of writing.
The wider footsie blue-chip index remains 0.4% in the green at 7,287.
2.13pm: HSBC turns bearish on UK real estate sector
HSBC has now removed all buy recommendations for stocks in the real estate sector as the bank predicts a “precarious” situation in the near-to-medium term.
Interest rate hikes have caused a surge in borrowing costs, which have caused pain for Britain’s real estate investment trusts (REITs).
One footsie REIT tracker has underscored a 12% year-to-date decline in the sector.
British Land, a commercial property company, and Land Securities Group, a real estate investment trust, have both been double downgraded to a reduce rating.
Stephen Bramley-Jackson, HSBC’s global head of real estate research, said: “The near to medium-term looks particularly precarious.
“Real estate equity is factoring in a further 20%-plus fall in asset prices and looming refinancing risk is a major concern.”
Commercial real estate has doubly suffered due to the persistent post-Covid trend of working from home.
1.52pm: Pound dips against dollar and euro
On the forex front, the pound has fallen sharply against the dollar today, with Cable dipping 0.6% or around 80 pips since Sunday’s close.
However, this still puts Cable on a comparatively strong footing given last week’s 1.7% rally.
The euro has also rallied against the pound today by adding around half a percentage point.
This dynamic could change in the next two days, when UK unemployment rates are announced on Tuesday followed by US inflation on Wednesday.
ING analysts said: “We are still reluctant to chase the dollar lower from this point – not particularly because we expect incoming data (US CPI above all) to surprise on the upside, but because the dollar still has to catch up with some recent market dynamics.”
That said, a downside surprise on inflation could drag the greenback lower.
Cable was swapping at 1.2755 at the time of writing.
Back to the stock market, the footsie remains buoyant at 7,288, nearly half a percent higher on the day.
US equities are down across the board, with DJIA down 0.55% and Nasdaq down 0.13%.
1.27pm: Here’s a quick recap of the top risers and fallers on the junior market today
Ondo InsurTech plc, the creator of the LeakBot device, saw its shares jump nearly 20% after it penned a new five-year deal with a leading Swedish insurer.
Länsförsäkringar, Sweden’s largest non-life insurance company, will roll out Ondo’s LeakBot across the country as part of a wider package for its customers.
Western Australia-focused lithium mining group Artemis Resources Ltd saw its shares jump 10% on Monday morning after a promising update to its Osborne joint venture project.
The dual London and Australia-listed group identified lithium-bearing pegmatites in the West Pilbara region, boding well for the joint venture 49% owned by Artemis.
Knights Group Holdings plc shares rose 12% after the legal and professional services business posted full-year results showing a resilient performance against a challenging backdrop.
Petro Matad Limited shares fell 11% as it revealed that the Velociraptor-1 exploration well, in central Mongolia, drew a blank.
The exploration company, in a statement, said that the well was drilled down to a depth of 1,500 metres but all the reservoirs it encountered were water-bearing.
Totally plc, the health service provider, lost a quarter of its value after it warned revenue and underlying profits for the upcoming financial year would be lower than the previous twelve months.
1.01pm: Mixed start expected in the US
US stocks are expected to start mixed on Monday after falls on Friday after the surprisingly below-forecast US jobs report as investors refocus on a batch of inflation data due on Wednesday and Thursday and brace for the start of the second-quarter corporate earnings season.
In pre-market trading, futures for the Dow Jones Industrial Average (DJIA) were up 0.1%, while those for the S&P 500 fell 0.1%, and contracts for the Nasdaq 100 futures lost 0.2%.
All three major indexes posted losses on Friday, the DJIA losing 187 points, or 0.6%, at 33,734, while the S&P 500 index shed 0.3%, and the Nasdaq Composite eased back 0.1%. Last week overall, the DJIA fell 0.9%, the S&P 500 lost 1.2%, and the Nasdaq Composite dropped 2%.
Despite June non-farm payrolls (NFP) showing growth cooling somewhat, the economic picture still looks bad enough for the Federal Reserve to resume interest rate hikes later this month after June's pause to cool inflation.
The latest US consumer price index inflation report is due out on Wednesday morning, followed by the wholesale inflation producer price index on Thursday.
Naeem Aslam, chief investment officer at Zaye Capital Markets commented: "On Friday, the US NFP data brought less good news than many anticipated, and it was pretty clear that the US ADP continues to provide no indication about the US NFP number.
But what traders are paying attention to today is that it was the first time in a long time that the US NFP number actually missed the forecast, and the unemployment rate also ticked higher.
"So all that lag in the data that everyone has been focused on has started to show up, which means that there is weakness in the US labour market data. Nonetheless, the actual number wasn’t weak or strong enough to change the actual monetary path for the Fed, which means that traders are still apprehensive about more interest rate hikes.
He added: "The US CPI reading, which is still running twice as hot as the Fed’s target, will be the main focus among traders and investors this week, and it is possible that this week we will see the reading dropping under 4%, and we believe that market players will actually cheer that number.
The fact is that anything that makes the reading fall in the three-handle and makes inflation come closer to the Fed target is really good news."
Investors also have a slew of quarterly earnings reports to consider, with financial giants BlackRock, JPMorgan Chase, Wells Fargo and Citi all kicking off the US second-quarter earnings season this week.
12.33pm: Chancellor set to unveil pension deal at City speech
Chancellor Jeremy Hunt will use his Mansion House speech to announce reforms aimed at releasing billions of pounds from UK pensions into high-growth companies.
Hunt is expected to tell an audience of City leaders and chief executives that the government has reached a so-called “compact” deal with some of the UK’s largest investment firms that could see about 5% of pension fund investments reserved for early-stage businesses in sectors including life sciences and fintech.
Two-thirds of the defined contribution pensions market will be covered by the reforms, dubbed the "Mansion House reforms", which will be signed by names including Aviva, Legal & General, Phoenix and Scottish Widows.
“I want to lay out plans to enable our financial services sector to increase returns for pensioners, improve outcomes for investors and unlock capital for our growth businesses,” the chancellor is likely to say in his first Mansion House speech.
The reforms are also expected to include rules to simplify rules for buying and selling shares, attempt to boost the amount of stockbroker research on listed companies and ultimately aim to deliver higher returns for investors.
On top of this, the chancellor is expected to announce plans to make share certificates in public companies fully digital, with the aim of making it simpler and cheaper for companies to manage their share registers.
12.00pm:Vodafone warns investment wll suffer if Three deal blocked
The UK chief executive of Vodafone Group PLC has warned that investment in digital infrastructure will be cut and it will be unable to deliver on the government’s goals if it is prevented from merging with Three.
Ahmed Essam said the business was not making the returns needed to cover its cost of capital and without the deal “we won’t be able to invest as much and we won’t be able to deliver the 5G ambition that’s coming in the wireless infrastructure strategy from the government. It will just slow us down.”
Last month Vodafone and CK Hutchison, the owner of Three, announced plans to merge and create Britain’s biggest mobile operator,, with Vodafone owning 51 per cent of the business and Hutchison the rest. They said there would be up to a sixfold increase in average data speeds by 2034 and the combined business would invest £11 billion in the UK over ten years to build one of Europe’s best 5G networks.
Consolidation within telecoms has increased, as companies try to increase their clout and cut costs in a capital-intensive industry. The takeover would reduce the number of UK network providers from four to three.
11.26am: Mortgage rates close to mini-budget levels
The average two-year fixed-rate homeowner mortgage rate is close to surpassing the highest levels seen last autumn, during the aftermath of the mini-budget, according to Moneyfacts.
The typical two-year fixed-rate residential mortgage on the market reached 6.63% on Monday, the financial information said.
On October 20 2022, the average two-year fixed-rate mortgage hit a peak of 6.65%, amid the market volatility which followed September's botched mini-budget.
The average five-year fixed-rate homeowner mortgage also peaked at 6.51% on that date, according to Moneyfacts.
Mortgage rates have risen sharply as expectations that interest rates will have to increase sharply as the Bank of England tries to bring inflation under control.
Around 2.4mln fixed-rate mortgages are due to end between now and the end of 2024, according to figures from trade association UK Finance.
Chancellor Jeremy Hunt recently held a summit with mortgage lenders and a new mortgage charter was agreed to support those who are struggling.
11.08am: DWF soars on bid approach
On a quiet news day, investors in DWF Group PLC got a welcome boost with shares soaring 37% after it confirmed it had received a bid approach from Inflexion Private Equity Partners LLP.
The Manchester-based legal business said the potential offer would be for a total consideration of 100p per share, comprising 97p in cash and a 3p special dividend for the six months to April 30.
DWF was responding to media speculation regarding a potential offer.
Should a firm offer on such terms be made by Inflexion, DWF said it would be "minded to unanimously recommend" it to its shareholders.
Under UK takeover rules, Inflexion has until August 7 to announce a firm intention to make an offer or state that it does not intend to make a bid.
10.54am: Deflation looms in China as recovery falters
China’s consumer price inflation flatlined in June and wholesale prices tumbled adding to fears that the world’s second-largest economy is on the brink of heading into deflation.
The consumer price index was flat year on year and declined 0.2% compared with the previous month, while factory gate prices fell at the fastest pace since 2016 as demand for consumer and manufactured products softened.
China’s producer prices fell by 5.4%, the fastest decline in more than seven years and an acceleration from the 4.6% dip in May.
The figures added to calls for the Chinese authorities to launch a stronger stimulus package to sustain the country’s faltering post-Covid recovery.
Susannah Streeter at Hargreaves Lansdown said: “’The continued loss of power in the Chinese economy is concerning investors, with consumer prices flatlining.”
“While inflation shows signs of stubbornness in other economies, disinflationary forces are at work in China, which risk tipping the world’s second largest economy into a deflation scenario. “
Neil Wilson at markets.com said: “This soft data would tend to suggest the central bank will cut rates again and could see further stimulus from Beijing.”
Back in London, and the FTSE 100 is meandering along, up 11 points.
10.22am: Boohoo and Revolution Beauty row to escalate
The spat between Boohoo and Revolution Beauty, the AIM-listed retailer, is poised to intensify with a complaint to the junior stock market regulator, according to Sky.
Sky said Boohoo is drafting a letter to the AIM regulatory authorities demanding that Revolution clarifies an earlier stock exchange announcement that the online clothing retailer had obstructed efforts to finalise its accounts.
Boohoo also plans to seek assurances that voting decisions at a forthcoming Revolution Beauty EGM are upheld and not subsequently overturned, according to people close to the situation.
Insiders said Boohoo was considering requisitioning a second extraordinary general meeting in the coming days to remove additional Revolution directors and appoint more independent board members.
The battle between the two companies has been raging for weeks as Boohoo, which owns a 26.6% stake in Revolution, has sought to reshape its board.
9.58am: Thames Water finances patched up but risks remain
Susannah Streeter at Hargreaves Lansdown describes the £750mln cash injection into Thames Water as "an emergency pumping operation, rather than shoring up Thames Water’s finances for the longer-term."
"The sum agreed to be paid is less than the £1bn Thames Water said it initially needed, so there is a shortfall in financial lifeline," she pointed out.
"In addition, the investors will be staring at the huge bill for the infrastructure work needed to mend the leaks and sewage discharges which the company keeps being fined for," she noted.
She explained Thames is a casualty of the rapid escalation of interest rates but is also suffering because it was "stripped of a cash float which should have protected it when monetary tides turned."
"Its profits were siphoned off in the good times, rather than being used to build up a bulwark for when borrowing costs surged back upwards," she added.
Thames Water’s debt amounts to roughly £14bn or around 80% of the value of its business.
Streeter pointed out while publicly listed companies are not in such deep debt waters, the next regulatory timeframe is looming and there is set to be much bigger demands from regulators on infrastructure improvements to reduce sewage spills, increase capacity, and meet net zero targets.
"Capital expenditure will have to increase sharply as a result – United Utilities, Severn Trent and Pennon have already had to push up spending, but budgets will need to expand, and debt levels are set to rise," she thinks.
She reckons margins could come under pressure and cashflows squeezed.
But she also noted longer term, high levels of inflation are likely to be a net benefit for a lot of water companies.
"That's because inflation increases the amount of revenue the group's allowed to earn on its assets, which cushions the impact of rising costs."
"But, right now, it’s proving to be a big drain on resources.’’
9.33am: Rising job losses leads to jump in jobseekers
A jump in redundancies has triggered the biggest surge in jobseekers for two and a half years as the employment market, according to a closely watched industry report.
The latest KPMG and REC, UK Report on Jobs survey, shows uncertainty over the economic outlook continues to weigh on hiring decisions.
Permanent placements fell solidly, while growth of temp billings remained mild overall.
Total vacancies meanwhile expanded at the slowest pace in 28 months.
The slowdown in recruitment activity and reports of redundancies drove a steep and accelerated rise in overall candidate availability.
The supply of both permanent and temporary workers increased at the sharpest rates since December 2020.
At the same time, pay pressures remained marked but showed signs of cooling, with rates of both starting salary and temp wage inflation softening to their weakest in over two years in June.
Claire Warnes, Partner, Skills and Productivity at KPMG UK, said: “The sharp upturn in candidate availability this month – the highest for two and a half years – is a big concern for the economy reflecting the effects of a sustained slowdown in recruitment along with increasing redundancies across many sectors.”
9.11am: Jansen failed to breathe life back into BT
BT’s outgoing chief executive Philip Jansen will not be “remembered for being the person who breathed life back into BT,” according to AJ Bell’s Russ Mould.
“It’s still the slow, creaking juggernaut today that it was before he joined.”
“Earnings are forecast to go into reverse this financial year and show minimal progress over the following two years,” he pointed out.
“Shareholders have suffered big time: more than £10bn has been wiped off the value of the business under Jansen’s leadership, and BT is now nearly one-quarter owned by a French billionaire who has taken advantage of the weak share price to build a strategic stake,” he added.
Mould thinks to resign a mere four years into running one of Britain’s best-known companies would suggest Jansen “has had enough of the challenges that come with BT.”
“Most CEOs want to grow the company they are leading, but reviving BT has to be one of the least glamourous jobs going,” he reckons.
Matt Britzman at Hargreaves Lansdown said: “Whoever takes the hot seat at BT will be picking up the reins on a difficult transformation, but one that has some promise.”
“The wider strategy is unlikely to see any major changes, which involves the rapid buildout of the UK fibre and 5G networks, while significantly modernising and simplifying operations.”
“Costs will likely be one of the first things on the docket when the seat has a new occupant. One thing’s for sure, there’ll be plenty of challenges to grapple with.”
Shares fell 0.4% to 121.82p.
8.51am: Utilities bounce after Thames funding boost
The FTSE 100 continues to trade around opening levels in cautious early trading.
Utilities, Severn Trent, Pennon and United Utilities jumped 2.0%, 2.3% and 0.8% respectively after the news from Thames Water that it had secured extra funding from investors.
There had been concerns that Thames could be placed back in public ownership and that the sector could attract additional regulatory scrutiny.
Thames Water interim co-chief executive Cathryn Ross told the BBC that the company is not close to needing temporary nationalisation.
Special administration - in which the government would take temporary control of the company in order to make sure homes and businesses still received their water - would be the “nuclear option”, with a “very high bar,” she said.
The company is “absolutely not” close to that bar, Ross said.
Leading the risers is Flutter Entertainment, up 1.0%, as Jefferies reiterated a buy rating and a 18,000p share price target.
Heading the other way was Ocado Group PLC (LSE:OCDO) which slipped 2.7% as Barclays cuts its price target to 640p from 740p and kept an equal weight rating.
Asian-focused stocks were weaker following more disappointing data from China.
Susannah Streeter at Hargreaves Lansdown said: “’The continued loss of power in the Chinese economy is concerning investors, with consumer prices flatlining.”
“While inflation shows signs of stubbornness in other economies, disinflationary forces are at work in China, which risk tipping the world’s second largest economy into a deflation scenario. “
8.15am: FTSE 100 flat, BT boss to step down
London’s blue chips made a subdued start to the week as investors eye key US inflation figures later this week, with worries over rising interest rates and slowing economic growth continuing to unsettle markets.
Richard Hunter at interactive investor, said: “Markets are unable to shake of the shackles of interest rate rises which apparently have further to go, with the resilience of the US economy and persistent inflation currently confirming the trend."
At 8.15am the FTSE 100 was little changed, up 0.57 points, at 7,257.51 while the FTSE 250 fell 70.87 points, or 0.4%, at 17,933.10.
Deutsche Bank’s Jim Reid said: “The direction of travel over the next several weeks could be set by US CPI on Wednesday and will take something remarkable elsewhere for it not be the most important event this week.”
In London, BT Group PLC (LSE:BT.A) said chief executive Philip Jansen is to step down at an “appropriate moment” over the next 12 months.
BT said it expects to be able to update the market on progress of appointing a successor over the summer.
Adam Crozier, BT chairman said: "Philip has done an excellent job in his time at BT and the board is fully supportive of our long-term strategy which he and his team are pursuing.” Shares were little changed, down 0.2%.
Big Yellow dipped 1.5% in early exchanges after updating investors on trading for its first quarter ended June 30.
Total revenue rose 6.7% year-on-year to £48.1mln, with store revenue rising 5.4% on a like-for-like basis to £47.0mln.
Closing net rent achieved per square foot rose 9.2% to £32.88, though closing occupancy edged down 1.2% to 5.3 million square feet.
Future PLC (LSE:FUTR) jumped 4% after it unveiled a £45mln share buy-back.
Peel Hunt said “the macro environment has led to softness in the top line of the business this year, however the stock weakness, in our view, is overdone. “
“We believe the market will take the buyback positively today,” the broker said.
7.50am: Thames Water secures £750mln from shareholders
Thames Water has secured a further £750mln from shareholders as the debt-laden company races to avoid the possibility of being placed in temporary public ownership.
Investors are also likely to pump an extra £2.5bn pounds over the 2025 to 2030 regulatory period, the company said to further improve operational performance and financial resilience.
Thames – which is thought to have debt of around £14bn - said the further funding is subject to satisfaction of certain conditions, including the preparation of a business plan “that underpins a more focused turnaround that delivers targeted performance improvements for customers, the environment and other stakeholders over the next three years and is supported by appropriate regulatory arrangements.”
Cathryn Ross and Alastair Cochran, Interim Co-CEOs of Thames Water said: “The substantial equity support package announced today will underpin the delivery of a more focused turnaround plan.”
Thames also unveiled results for the year to March 31.
It reported revenue rose to £2.3bn from £2.2bn and a modest pre-tax profit of £1.8mln compated to a loss of £850.8mln the year prior.
Net debt climbed to £14.0bn from £12.9bn while the dividend paid to the parent company rose to £45.2mln from £37.1mln.
7.22am: BT CEO to step down
News of an upcoming management shake-up at BT where chief executive Philip Jansen said he is to step down at an “appropriate moment” over the next 12 months.
BT said it expects to be able to update the market on progress of appointing a successor over the summer.
Adam Crozier, BT chairman said: "Philip has done an excellent job in his time at BT and the board is fully supportive of our long-term strategy which he and his team are pursuing.”
Jansen said he he was “fully committed to driving the business forward until I hand over to my successor."
There has been speculation he could return to Worldpay (LSE:WPG) - the payments group he ran prior to his appointment at BT - while another report said he'd recently turned down an offer of a CEO role at a major US technology company.
7.02am: Weak start expected for Footsie
Good morning. The FTSE 100 is expected to start the week on the backfoot
Spread betting companies are calling London’s blue-chip index down by around 20 points after closing 23.56 points lower, or 0.3%, at 7,256.94 on Friday.
"With economic data continuing to look on the soft side and central banks showing little sign of easing up when it comes to interest rate rises there was little to cheer for markets in Europe, with concerns about weakness in the Chinese economy adding to the gloom," said CMC’s Michael Hewson.
Trading in Asia was mixed on Monday, as weak Chinese inflation data pointed to weak demand and a faltering economic recovery.
The consumer price index for June was down from the 0.2% seen in May, according to the National Bureau of Statistics, and was worse than expected as domestic demand slowed.
In the US on Friday, markets ended lower after strong wages date accompanied weaker than expected non-farm payrolls.
Back in London, and the early focus will BY where chief executive Philip Jansen is to step down.