- FTSE 100 drops 6 points by the close
- ITV is no longer "actively looking" at Gogglebox deal
- JPMorgan and Wells Fargo rise in pre-market after Q2 results
4.45pm: FTSE 100 closes flat
At the close, the FTSE 100 had dropped about 6 points to finish flat at 7,435 points.
Nevertheless, it was a winning week for London's blue-chip index following a dismal start to July as attention shifts to next week's inflation readout.
"Next week, we should see headline CPI dip noticeably, though this is largely because last June’s near-10% surge in fuel prices won’t be matched – and in fact, petrol/diesel pump prices were down by 2.6% last month," ING analysts noted.
"Food inflation should also decline modestly too, not least because producer price inflation has been easing for several months now. Core inflation should inch slightly lower too, though it’s the services component that matters most to the Bank of England, and we expect this to stay at 7.4% - a post-Covid high."
3.44pm: FTSE 100 set to close week in the black
The FTSE 100 hovered close to 7,440 on Friday as the market drew to a close, holding four consecutive sessions of gains to set up a 2.5% advance on the week on the back of hopes that some major central banks may pause their rate hikes soon.
It could be the London blue-chip index's best weekly performance since March.
Elevated inflation domestically pinned concerns that Bank of England hawks still have a lot of ground to cover, as elevated inflation and new data pointing to a robust labour market limited the decline in Gilt yields compared to those of other European bonds this week.
Mining shares pulled back in the session, as gold and metal prices trimmed the surge from yesterday.
In the meantime, banks traded mixed amid a flat session for Barclays and a slight retreat for Lloyds and HSBC.
3.00pm: FTSE among Europe's leaders
A look at what markets across the continent are doing.
The FTSE 100 is up around 0.28% to 7,460 points, while the CAC 40 in France has made similar gains, adding around 0.26% to 7,389.
However, it was a different story in German, with the DAX largely flat at 16,131, while the IBEX was unchanged towards the close at 9,479.
2.30pm: Gilt yields spell bad news
Higher gilt yields are spelling bad news for UK properties, with a potential further 5% fall in capital values this year, according to analysis by Capital Economics.
Despite the recent surge in gilt yields, with 10-year yields having recently topped now 4.5%, there has not been the same surge to sell property assets as was seen in the wake of the mini-budget in September, observed property economist Matthew Pointon.
Just under £80mln was withdrawn from property funds in June, less than half the £184mln taken out in October last year, according to industry data from Calastone.
In part, the increased stability in property funds more recently is because the rise in yields has been steadier and also because capital values have fallen and pension funds have altered their exposure to the liability-driven investments that caused most of the problems last autumn, he said.
2.00pm: Gold shines
Gold is shining once again as the precious metal hovered near the US$1,960 per ounce mark on Friday, close to the highest in one month and set to book its strongest week in 14 as the sharp decline in Treasury yields limited the opportunity cost of holding non-interest-bearing precious metals.
Bullion prices strengthened as evidence of slowing inflation eased concerns that the Federal Reserve will be forced to keep rates elevated for a prolonged period.
Both headline and core producer prices in the US edged 0.1% higher from the previous month in June, less than expected by markets, aligning with the softer-than-expected CPI print from the same period and raising hopes that inflation is not as sticky as feared.
Financial markets currently expect the US central bank to raise its funds rate by 25bps in its upcoming meeting and hold it unchanged for the rest of the year, before pivoting towards a more dovish stance in the first quarter of 2024.
1.30pm: London's movers
A quick look at some of today’s movers in London
Risers
McBride- up 20% to 31p
shares shot higher as the own-label cleaning products maker said it is back in profit as consumers switch to cheaper, unbranded options.
Upland Resources (LSE:UPL)- up 12% to 0.5p
Shares started Friday higher after the explorer told investors it had opened a collaboration with the national oil company in Brunei, with talks taking place this week regarding the company’s Sarawak block, which is in Malaysia.
Fallers
Liontrust- down 8.4% to 649p
Shares fell as it reported a further £1.6bn of net outflows in the first quarter of its financial year as investors continued to move money out of equity funds.
Ashmore- down 6% to 204p
Net outflows increased over the past quarter despite a positive investment performance for its emerging markets funds.
1.02pm: US stocks seen mixed but JPMorgan and Wells Fargo top forecasts
US stocks are expected to start mixed on Friday after recent strong gains following benign inflation reports, and as investors digest earnings reports from a number of big banks.
JPMorgan, Wells Fargo, Citi, BlackRock and State Street all report second-quarter earnings while UnitedHealth has also released numbers.
Ahead of the opening bell on Wall Street, JPMorgan was up 2.6% and Wells Fargo up 3.0% after well received figures.
In pre-market trading, futures for the Dow Jones Industrial Average (DJIA) were 0.5% higher, while those for S&P 500 were up 0.1% and futures for the Nasdaq 100 were flat.
On Thursday, the DJIA rose a modest 47 points, or 0.1%, to close at 34,395, while the S&P 500 climbed 0.9%, and the Nasdaq Composite jumped 1.6%, lifted by strong gains for tech giants Nvidia and Alphabet.
Thursday was the fourth consecutive day of gains for the major averages and marked the highest closes for the Nasdaq and the S&P 500 since April 2022.
On a weekly basis to Thursday, the DJIA is up 1.9%, while the S&P 500 is ahead 2.5%, and the Nasdaq Composite has notched up gains of 3.5% and is on pace for its best week since March 17 this year.
The latest producer price index report released on Thursday showed wholesale inflation rose less than anticipated and built on investor optimism from the below-forecast June consumer price index data, which came out on Wednesday.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank commented: "We are having a great week in terms of US inflation news. After Wednesday’s data showed that the US headline inflation slowed to 3%, and core inflation fell to 4.8% - both lower than what analysts had penciled in, yesterday’s producer price inflation data also came in lower than expected.
"The monthly PPI eased to 0.1%, perhaps the last positive figure we see before sinking into negative territory in the coming months, and core PPI fell to 2.6%. One more good news, some underlying details in the PPI report, including health care and hotel accommodations, are used to compute the Fed’s favourite PCE Price Index that will be released in the coming weeks – which could also benefit from softening inflation trend."
On the economic front on Friday, investors will be watching for June import prices and preliminary July results from the latest University of Michigan consumer sentiment report, both due out after the New York market open
12.50pm: Burberry faces test of its "luxury credentials"
AJ Bell’s Danni Hewson thinks Burberry is likely to face “a big test of its luxury credentials” in the coming months and questioned whether the luxury brand retailer has the necessary “cachet.”
“When economic times are tough, sales of true luxury goods are often relatively unaffected as the wealthy clientele who buy them are insulated from the worst of the impact," she said.
She thinks the reception given to the work of Burberry’s new design chief Daniel Lee – whose product is set to hit the shelves in September – will be important for the business.
The company updated investors on trading today highlighting strong sales in China but a fall in the Americas.
Much could now depend on how China’s economy stands up.
Hewson thinks expectations for a big bounce coming out of lockdown for the Chinese economy had clearly "run ahead of themselves."
But this could be a good thing for Burberry if it also means a pick-up in economic activity is more sustainable, she suggested.
“Certainly, sales have surged from a low base and this should remain a helpful tailwind for much of the rest of the year.”
Shares trod water, down 0.2% at 2,100p.
12.18pm: FTSE holds gains, JPMorgan tops forecasts
The FTSE 100 has held its early gains after the release of better-than-expected results in the US from JPMorgan Chase & Co (NYSE:JPM).
The investment banking giant kicked off the US banks reporting season with decent results before the opening bell on Wall Street.
Second quarter EPS reached US$4.37 compared to Street expectations of US$4.00 while revenue of US$42.4bn was ahead of forecasts of US$38.96bn. Net income in the quarter rose to US$14.47bn from US$8.65bn the year before.
Much of the increase in profit was driven by higher net interest income, the difference in what banks pay on deposits and what they earn from loans and other assets, which increased 44% from a year ago to US$21.9bn, topping analyst estimates for almost US$21bn.
Shares in the bank are 2.4% higher in pre-market trading.
Wells Fargo is higher after its results, up 2.8%, while CitiGroup also reports later today.
11.57am: OSB "deeply undervalued" claims Berenberg
OSB Group is still “deeply undervalued", according to Berenberg despite the broker cutting its own price target for the Kent-based mortgage specialist.
Last week OSB Group said it will take as much as a £180mln hit to first-half results, as customers were acting more quickly than expected to refinance their mortgages at favourable rates.
Berenberg said it regarded the recent fall in OSB Group's share price since last week's announcement as "too severe".
"Trading on 0.7 times tangible book value versus a [return on tangible equity of around] 20%, we believe OSB Group is deeply undervalued," said Peter Richardson, analyst at Berenberg.
As a result, Berenberg maintained its buy rating but cut its price target to 650p from 800p.
11.25am: Homes available to rent hits 14-year low
The number of UK homes available to rent has dropped to a 14-year low, piling more pressure on tenants competing to find an affordable place to live, a new report has shown.
In June, 241,000 homes were available in the private rented sector, compared with 370,000 in June 2019, that's a fall of 35%, according to consultancy TwentyCi.
The number of homes to rent in the UK has dropped to a 14-year low adding more pressure on tenants looking for affordable places to rent. Read our latest analysis covered by the @FT
— TwentyCi (@TwentyCi) July 14, 2023
Collecting UK rental data from sources including estate and lettings agents and online property portals, TwentyCi said rental availability was at its lowest level since it began recording the data in 2009.
“Availability is reduced and affordability is down,” said Colin Bradshaw, chief customer officer of TwentyCi. “There are fewer properties and they cost more. That’s not great for renters.”
10.49am: Strikes to hit Gatwick Airport in peak travel season
Nearly 1,000 workers at London’s Gatwick airport are to go on strike for eight days at the peak of the summer travel season over a pay dispute, the Unite union has said.
“Given the scale of the industrial action, disruption, delays and cancellations are inevitable across the airport,” it said on Friday.
Airlines affected include British Airways, easyJet, Ryanair, Tui, WestJet and Wizz, Unite said.
Gatwick ground-handling strike called for two peak weekends: 28 July-1 August and 4-8 August.
Unite union says walkouts “will inevitably cause severe delays, disruption and cancellations”.
But Gatwick says it will "ensure that flights operate as scheduled"https://t.co/0uO6lNBe6L
— Simon Calder (@SimonCalder) July 14, 2023
The union said the 950 workers in question were on variable pay levels, though most earn less than £12 an hour.
The first strike will take place from Friday July 28 to Tuesday August 1. A further round is planned from Friday August 4 until Tuesday August 8.
10.00am: Deustche cuts Vodafone target but shares could still double
Vodafone Group PLC (LSE:VOD)’s share price target has been slashed by Deutsche Bank as the telco wallows at new lows.
Analyst Robert Grindle has cut his share price target by 19% to 155p from 185p which means even at this lower level the shares could still double.
Shares are sitting 1.4% higher on Friday but are 15% lower year-to-date and have shed 43% in the past 12 months.
“Vodafone continues to suffer from a series of unfortunate events with newer ones arriving before older ones see their impact fully wane,” Grindle said.
He said there were pockets of supportive news but the firm has made “missteps.”
He pointed out despite achieving price rises, a top-notch multiple on the Vantage Towers deal and the Three merger, shares have hit new lows.
Grindle said a sector de-rating – pure telcos were down 8% in the second quarter - and paying a final dividend of €4.5 cents “doesn't help the optics.”
Meanwhile, the FTSE 10 is holding its early modest gains, up 8 points at 7,449.
9.40am: Spirax-Sarco tops FTSE 100 risers as UBS upgrades
Spirax-Sarco is the top performing FTSE 100 stock with shares up 2.6% to 10,400p, boosted by an upgrade by UBS.
The Swiss bank reckons the current share price offers an "attractive entry point."
Near-term risk/reward looks better balanced and UBS thinks market has priced-in the weaker outlook for its pumps busines, Watson/Marlowe for this year.
"We see a history of 2-3x IP growth outperformance stepping up to 4x, supported by decarbonisation opportunities, from 2024", UBS said.
UBS said consensus forecasts are coming down but the shares have stopped reacting to downgrades, "suggesting that the market is now pricing in prolonged destocking/lack of recovery in Watson-Marlow this year."
UBS has upgraded to buy from neutral with a 12,400p share price target, up from 11,560p.
9.12am: McBride shares soar on top-end guidance
A good morning for shareholders in McBride.
Shares have soared 22% to 31.80p after the firm said adjusted operating profit will be "materially ahead of current market expectations" and at the top end of the range indicated in April.
In April, the own-label cleaning products maker gave a range for operating profit between £8-£13mln.
Peel Hunt upgraded McBride to add from hold.
"Helpful consumer conditions and strong operational execution have supported the top line, and as cost inflation abates and self-help beds in, margins should continue to improve," it said.
It noted net debt of £167mln was £15mln better than its expectations.
8.55am: FTSE consolidates but US rate hopes may be too optimistic
The FTSE 100 edged higher in early exchanges consolidating recent gains that have seen the index jump 2.6% this week.
But Sophie Lund-Yates at Hargreaves Lansdown cautioned: “While the recent gains are welcome, ups and downs can’t be ruled out as policymakers continue to grapple with soaring inflation.”
“The UK’s inflation problem is especially stubborn, meaning the level of heat that may need to come out of the economy could send a chill through markets in the short term. “
Much of the optimism in global equities has been driven by cooling inflation figures in the US where consumer price and wholesale price inflation figures both surprised on the downside.
This has boosted hopes that the US central bank may bring an end to its rate rising spree after one last increase in July.
But Neil Wilson at markets.com wonders whether market pricing "may be over-optimistic."
"Fed funds futures indicate another 25bps hike to 5.5% – one and done, before the central bank is seen reversing course and cutting around 6 times to 3.8% by the end of 2024," he noted.
"This seems wildly optimistic – if the Fed cuts that much it would be because of a hard landing."
"For now the market is having its cake and eating it – soft landing + multiple rate cuts. Both cannot be true," he commented.
8.31am: Nokia shares falls as flags lower sales and margins
Over to Europe, and news of a profit warning from Finnish telecoms outfit, Nokia
The firm lowered its outlook for 2023 amid weaker demand and high interest rates, before releasing half-year figures next week Thursday.
Nokia now expects annual net sales between €23.2bn and €24.6bn, down from a previous expectation of €24.6bn to €26.2bn.
It also adjusted margin forecasts to between 11.5% to 13% from a previous estimate of 11.5% and 14%, and compared to the 12.5% achieved in 2022.
"The weaker demand outlook in the second half is due to both the macro-economic environment and customers' inventory digestion,” Nokia said.
Shares fell 6.3% to €3.66 in Helsinki in early exchanges.
8.15am: FTSE flat, consolidating gains
The FTSE 100 made a subdued start on Friday to what has been a largely positive week for global equities, as the market prices in a lower peak for US interest rates.
At 8.15am, London’s lead index was down 1.20 points at 7,439.01 while the FTSE 250 fell 55.99 points, or 0.3%, to 18,575.72.
Deutsche Bank’s Jim Reid commented: “The market has been partying like it's 1999 this week, with the rally showing no sign of letting up over the last 24 hours, with bonds and equities surging thanks to growing hopes of a soft landing.”
“It’s hard to stand in the way of that narrative at the moment regardless of what eventually happens.”
“Much of that was propelled by the previous day’s CPI release, but investors then got a further dose of optimism from a weaker-than-expected PPI print, as well as the weekly jobless claims that were below consensus.”
On a quiet day of corporate and economic news in the UK, investors will be eyeing half-year results from a number of leading US banks with JPMorgan Chase & Co (NYSE:JPM), CitiGroup and Wells Fargo reporting today.
In London, luxury fashion brand retailer Burberry slipped 1.7% despite reporting a 17% in like-for-like sales driven by a string recovery in China.
But the firm said sales had fallen in the Americas and also said it expects a currency headwind of c.£150mln to revenue and c.£70mln to adjusted operating profit.
7.44am: Burberry sales boosted by recovery in China
British luxury fashion brand Burberry reported an 18% rise in first-quarter comparable store sales, boosted by a continued recovery in its biggest market China.
Guidance was held of low double-digit growth in financial year 2024 but the firm expects a currency headwind of c.£150mln to revenue and c.£70mln to adjusted operating profit.
Total retail revenue climbed 17% to £589mln from £505mln led by a 46% jump in China.
Excluding China, sales rose 11% with EMEIA up 17%, South Asia Pacific up 39%, Japan up 44%; South Korea up 6% but Americas down 8%.
Burberry said its core categories of outerwear, up 36%, and leather goods, up 13%, performed well.
7.39am: Haleon plans sweeping jobs cuts in the UK and worldwide
Haleon PLC (LSE:HLN, NYSE:HLN) intends to slash hundreds of jobs in the UK and potentially thousands worldwide, according to the Guardian.
The company which makes Sensodyne toothpaste, Centrum vitamins and Panadol painkillers plans the widespread layoffs a year after being spun off from Britain’s second-biggest drugmaker GSK.
Haleon has 24,000 staff across 170 countries and employs 1,700 people in the UK, spread across its global headquarters and its research and development labs in Weybridge in Surrey, and a manufacturing site in Maidenhead.
The company is one of the world’s biggest consumer healthcare groups and sells over-the-counter drugs, vitamins and oral care products.
The Guardian said staff were briefed on the redundancies this week in a series of meetings, and a consultation process, which started on Wednesday, will close on 25 August.
The job cuts are part of a broader cost-cutting programme aimed at saving £300mln in the next three years.
7.28am: ITV no longer looking at All3Media deal
Kicking of Friday and broadcaster ITV PLC (LSE:ITV) said it is no longer “actively exploring” the possible acquisition of All3Media, owned by Warner Bros Discovery and Liberty Global (NASDAQ:LBTYA).
In a brief statement, ITV said “it continues to monitor but is no longer actively exploring the possible acquisition of All3Media.”
The firm said it “assesses all potential value-creating M&A opportunities against its strict financial criteria and disciplined capital allocation framework.”
Last month ITV, in which Liberty also has a 10% stake, said it was “actively exploring" a potential purchase of the maker of Fleabag, Gogglebox and The Traitors in a deal estimated to be worth as much as £1bn.
7.00am: FTSE 100 seen lower, US banks kick off reporting season
Good morning. The FTSE 100 is expected to ease at the open on Friday, consolidating recent gains, as the US reporting season ticks up a notch with a number of leading banks reporting results.
JPMorgan Chase & Co (NYSE:JPM), Wells Fargo and CitiGroup all report half-year numbers today.
Spread betting companies are calling London’s blue-chip index down by around 6 points after closing up 24.10 points at 7,440.21 on Thursday.
Tech stocks led Wall Street higher on Thursday, as further proof that inflation is cooling raised hopes that interest rates are close to peaking.
Easing wholesale prices followed Wednesday's better-than-expected inflation figures.
"It looks like markets are once again crossing their fingers and hoping for a soft landing," said Chris Beauchamp at IG Index
The pound continues to march higher at USD1.3126 early Friday, above the USD1.3102 level seen at the London close on Thursday.
Back in London and the early focus will be an update from luxury brand retailer, Burberry.