- FTSE 100 closes 38 points higher
- Games Workshop soars on strong trading
- Chinese economic data better than hoped
4:50pm: FTSE closes higher
At the close, the main London markets were in the green, with the FTSE100 finishing 38 points higher at 7,711.
3:55pm: JP Morgan upbeat on London Stock Exchange
A broker view as we near the close on Friday, and it's fitting after such an upbeat week for it to positive.
London Stock Exchange Group PLC (LSE:LSEG) is expected to significantly upgrade its growth targets and either use its growing cash on bolt-on-deals or extending its share buybacks when it hosts investor presentations later in the autumn.
This is the latest view from JPMorgan ahead of the 'capital markets day' presentations in November.
Analysts at the investment bank have placed the stock on 'price catalyst watch' on the back of three key points, chiefly that the CMS is expected to see "a material upgrade to revenue growth targets as part of the new strategic plan."
Second, JPM notes that LSEG shares are trading at around a 24% discount to other data companies and the third point is focused on capital generation, where bolt-on deals are seen potentially growing the top line and capacity seen for larger deals, or continuing buybacks if not.,
There is more on that one here.
3:20pm: Company insolvencies jump by almost 20%
Company insolvencies in England and Wales have jumped by almost a fifth, year-on-year.
New figures from the Insolvency Service show there were 2,308 registered company insolvencies across England and Wales in August, which is 19% more than in August 2022.
The increase was driven by a rise in creditors’ voluntary liquidations (CVLs), in which a company is voluntarily wound up either by its directors or its shareholders. There were 1,880 CVLs last month, 13% higher than in August 2022.
HMRC winding up petitions push up insolvency figures - taking a much more aggressive approach to collection processes. 2,308 insolvencies in August up from 1,365 at same time pre-pandemic - cause for concern https://t.co/AEO2KmxzIq via @accountancylive
— Accountancy Daily (@accountancylive) September 15, 2023
2:46pm: Wall Street pauses for breath after recent gains
From Moscow to New York, and US stocks have opened lower, consolidating recent gains, but remain on course for a winning week.
Shortly after the opening bell, the Dow Jones Industrial Average was down 33.48 points, 0.1%, at 34,873.63, the S&P 500 was down 18.02 points, 0.4%, at 4,487.08 and the Nasdaq Composite was down 77.68 points, 0.6%, at 13,848.37.
Industrial production rose 0.4% on the month, down from 0.7% in July but better than the 0.2% consensus, adding to a series of resilient economic releases this week.
On a year-over-year basis, production increased 0.2%
Still to come, the University of Michigan will release the preliminary reading of its September consumer sentiment index, which economists expect to edge down to 69.1 from 69.5.
Instacart has raised the estimated price range for its initial public offering, in the latest sign of a warming market for US flotations.
The online grocery delivery company has increased its range to $28 to $30 per share, after previously targeting between $26 and $28, according to a filing.
At the top end, that would raise $660 million for the San Francisco-based company, compared to an earlier target of up to $616mn.
Instacart’s move follows this week’s Arm IPO which saw shares in the chip designer fly 25% on the first day of trading on Thursday.
Shares in Arm rose a further 4.75% at the open on Friday.
2:02pm: Russia increases interest rates, more could follow
News of an interest rate increase in Moscow, where Russia’s central bank has raised interest rates for the third time in a row as it battles inflationary pressures and the weak rouble.
The Bank of Russia has lifted its key interest rate by 100 basis points, or one percentage point, to 13% from 12% today.
Bank of Russia governor Elvira Nabiullina said: "Considering the current conditions, we need to maintain tight monetary policy for a longer period to bring inflation back to the target."
Russia Extends Monetary Tightening as Expected
The Bank of Russia raised its key interest rate by 100bps to 13% in its September 2023 meeting, consistent with broad expectations from financial markets, and furthering...
More here: https://t.co/QTEGwKMIPn pic.twitter.com/U8H4rBYY6V
— TRADING ECONOMICS (@tEconomics) September 15, 2023
Capital Economics thinks further rate hikes lie in store in the coming months and forecasts an additional 150bp of tightening by year-end.
"Russia’s central bank is a hawkish institution that takes its commitment to inflation fighting seriously," it pointed out.
"With fiscal policy set to remain loose, the economy likely to continue overheating and inflation pressures to build further, there will be more pressure on the central bank to tighten monetary policy," it thinks.
1:00pm: Wages drive UK inflation in services but not in manufacturing - ONS
More on inflation, and the Office for National Statistics said the fast pace of UK wage growth could explain most of the price growth in services industries.
In new analysis, the ONS found that in several services industries, “labour costs are important and pass-through of wage rises could explain most output price growth since 2019”.
We've published an article analysing the relationship between wage increases and price increases in selected industry sectors.
— Office for National Statistics (ONS) (@ONS) September 15, 2023
It examined wage increases and price increases in a selection of industry groups between January 2019 and June 2023.
The pass-through from wages was particularly strong in law, accounting and management consultancy.
In contrast, in manufacturing, even after large wage increases in the period, “price growth was caused by other factors” such as the cost of imports, according to the analysis.
12:36pm: Rising inflation expectations of consumers will keep BoE focused
Goldman Sachs (NYSE:GS) notes data from the BoE's inflation attitudes survey shows that consumers have noticed a slowing in the rate of price increases, but think the current inflation rate is coming down more slowly than it actually is.
Short-run inflation expectations edged up slightly in the third quarter.
This development suggests that controlling inflation expectations is likely to remain a focus for Monetary Policy Committee members such as Catherine Mann, who on Monday argued that although inflation expectations have come down, they remain a concern, the US investment bank thinks.
The data comes ahead of a key week with UK inflation figures and the Bank of England's rate decision due - a preview of which you can read here.
12:05pm: Arm to fly further when US markets open
Across to the US now and markets look set to make steady progress on Friday, after strong gains on Thursday.
Investors seem to be pinning their hopes on an economic soft landing after a batch of robust data this week, while the data from China today has painted a brighter global picture.
In pre-market trading, futures for the Dow Jones Industrial Average were 0.3% higher, while those for the S&P 500 rose 0.1%, while contracts for the Nasdaq 100 futures were down 0.1%.
But it could be a volatile session with the expiry of around $3.4 trillion in stock options - so-called triple witching.
According to data from Nomura, 10 of the past 11 expiration days in September saw the S&P 500 finish lower.
Arm looks to remain in the headlines with the stock up a further 7% in pre-market trading after rising 25% on its first day of trading following its IPO.
11:25am: Tata Steel gets £500 million from government
Confirmation that Tata Steel is to receive up to £500 million from the government for investment plans at its Port Talbot steelworks.
Tata Steel will add £700 million of its own money but the package is likely to mean as many as 3,000 job losses across the UK.
The site in south Wales is home to Britain's biggest steelworks.
The steelworks features two blast furnaces working around the clock to produce steel used in everything from tin cans to submarines.
10:36am: Public satisfaction with Bank of England at all-time low
The public seems to be taking issue with the Bank of England with its strategy to tackle inflation.
New data from the BoE shows public satisfaction over how it is “doing its job to set interest rates to control inflation” has fallen to a record low.
Just 19% of those surveyed were satisfied with the BoE’s performance, while 40% were dissatisfied, giving a net satisfaction reading of -21.
Public satisfaction with Bank of England falls to lowest on record https://t.co/HX7PPZLd4B
— FT Economics (@fteconomics) June 10, 2022
That’s the worst on record, going back to 1999, beating the previous low of -13% set three months ago when the Bank last released this data.
Another 33% of people were ‘neither satisfied nor dissatisfied’ with the Bank, which has raised interest rates 14 times in a row since December 2021, to a 15-year high, while 9% didn’t know.
10:03am: Burberry in fashion ahead of Daniel Lee launch
Burberry Group PLC (LSE:BRBY) shares are up 2.6% at 2,167p supported by the better economic news from China - which is a big buyer of luxury goods - and ahead of Daniel Lee Spring-Summer show on September 18.
Broker Stifel notes the "long-awaited" new collections and products from new designer Daniel Lee arrived in stores earlier this month, backed by increasing marketing intensity with the new show coming on Monday.
The broker thinks Burberry's marketing is more on point "in communicating its new brand aesthetics."
This includes new brand signifiers across products, the launch of its Burberry Streets initiative in London this week (soon to be followed by Seoul and Shanghai), a revamped website and a recently reopened Bond Street flagship store.
It reckons Burberry seems well-placed to narrow the sales momentum gap with sector leaders.
"Price architecture now appears to be in line with its targeted peers," ir said, adding "and the brand fundamentals look more solid than they did five years ago."
It has a buy rating and 2,500p price target.
9:45am: Goldman holds Chinese GDP forecast after robust data
Goldman Sachs (NYSE:GS) has left its economic growth forecast for China unchanged after today’s economic data.
“Taking into consideration the stronger-than-expected August activity data….we maintain our Q3 GDP growth forecast at 4.9% yoy, despite elevated uncertainties around the property sector,” the US investment bank said.
The bank pointed out August activity data mostly improved from July and beat market expectations.
Industrial production growth rose in August amid improved export growth, driven mainly by faster output growth in computers, chemicals and automobiles.
Year-on-year growth in retail sales and the services industry output Index both rose in August, thanks mainly to stronger auto and gasoline sales, although Covid-sensitive restaurant sales growth slowed.
Fixed asset investment growth increased in August, led by manufacturing and infrastructure investment, but the magnitude of improvement was slightly smaller than expected, due partly to the prolonged drag from depressed property investment.
Property-related activity remained sluggish in August despite the ongoing piecemeal housing easing, it pointed out.
9:14am: Whitbread lifted by upbeat analyst comments
Whitbread is the subject of some positive broker commentary today and the shares have joined in the market rally, rising 0.9% to 3,673p, taking the increase year-to-date to 37%.
Citi has increased its price target to 4,500p from 4,000p after hosting Whitbread's head of investor relations at its growth conference.
Citi noted even though September's RevPAR has started sequentially weaker for most regions, UK economic trends remain the strongest.
As a result, it has taken a more optimistic view for the rest of the financial year 2024 and raised finan cial year 24/25/26 adjusted Ebit estimates by 10%/8%/4%, which drives the new 4,500p price target.
Whitbread sees demand outlook in the UK remaining robust, despite the weak macro economic environment, while revPAR strength is seen a consequence of structural supply dynamics as independents have exited the market, Citi said.
The owner of Premier Inn pointed to supply constraints continuing given rising interest rates.
Barclays was also upbeat on Whitbread which is its preferred pick in leisure.
“We believe UK RevPAR strength is more sustainable than the market expects when we reflect on: 1) optimistic spend intentions from our latest consumer survey, 2) constrained supply, 3) UK pricing still 13% below 2007 peak in real terms and 4) PI's own pricing opportunity,” it said.
The bank rates Whitbread ‘overweight.’
8:45am: FTSE continues to make headway
The FTSE 100 continues to make headway now up 53 points at 7.726 taking its five-day gains to 3.3%.
Burberry is sitting top of the pile, boosted by the better news out of China and as broker Stifel issues an upbeat assessment of the luxury retailer, setting a 2,500p price target.
Shares are up 3% at 2..172.50p.
London Stock Exchange PLC shares are 1.5% higher as JP Morgan placed the stock on positive catalyst watch ahead of the firm's capital markets day in November.
It rates LSE overweight with a 9,920p price target.
Over in the FTSE 250 and Spire Healthcare was lifted by positive words from Barclays which reiterated an overweight rating and edged its price target up to 305p from 300p.
8:15am: FTSE 100 boosted by miners and housebuilders
The FTSE 100 flew higher on Friday as the bullish week continues boosted by rising commodity prices after encouraging economic data from China.
At 8:15am London’s blue-chip index was up 61.77 points, 0.8% at 7,734.85 while the FTSE 250 rose 62.10 points, 0.3%, to 18,961.80.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown noted: “China’s industrial output growth has beaten estimates, with production rising 4.5% in August – up from 3.7% in July.”
“The flurry of activity has been triggered by higher manufacturing and mining activity, after support and stimulus from Beijing appear to be having the desired effect.”
“A short, sharp economic recovery in China would help underpin confidence globally,” she added.
The news gave a further lift to mining stocks which rose strongly on Thursday.
Rio Tinto rose 1.2%, Anglo American rose 0.6% and Glencore rose 0.7%.
Housebuilders are also giving the premier index a boost as hopes rise that interest rates are close to peaking after the weak GDP figures earlier this week.
Persimmon rose 2.7%, Barratt Developments rose 2.4% and Taylor Wimpey was 1.8% to the good.
Whitbread was another early riser, up 1.4%, after positive comments from Citi, Barclays and Shore Capital.
Barclays said the owner of Premier Inn was its “preferred pick in leisure.”
Games Workshop stormed 8.3% higher after rewarding investors with a 50p dividend after better-than-expected trading.
Peel Hunt called it a “steallar” first quarter and is increasing its forecasts by 6%, which leaves room for upside if trends continue.
7:44am: Oil price continues march towards $100/barrel
One factor likely to give the FTSE 100 a boost today is another rise in the oil price which continues to head towards $100/barrel.
US oil prices have risen above $90 for the first time this year, up a further 0.9% at $90/97/barrel while Brent crude is now above $94/barrel, up 0.73% at $94.38/barrel.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown explains the triggers behind the increase stem from "fears that global consumption will outweigh production, with the International Energy Agency predicting a significant supply shortfall in the coming months."
"OPEC+ leaders Saudi Arabia and Russia are squeezing supply at a time when top consumers the US and China are seeing robust consumer demand," she pointed out.
"The higher oil price is helping to prop up the FTSE 100, with the index relying heavily on commodities and the black stuff," she added.
It's not all good news though, as we have seen this rising fuel prices make the job harder for central bankers when tackling inflation while companies face rising bills as well.
A number of US airlines have already highlighted the impact of the rising price.
7:30am: Games Workshop trading better-than-expected
It's a quiet start to the day for company news but one stock to keep an eye on is Games Workshop.
The firm has just announced it is paying out a 50p dividend after reporting trading over the summer was better-than-expected.
Updating investors ahead of today’s AGM, the Warhammer gaming miniatures group said trading for the three months to August 27 was ahead of the board's expectations.
Core revenue in the quarter totalled £121 million, up from £106 million last year, and licensing revenue doubled to around £6 million from £3 million.
Pre-tax profit is estimated at £57 million, up from £39 million, driven by healthy growth across all channels.
As a result, a 50p payout was declared taking dividends declared so far in the current financial year to £1.95 per share, up from £1.20 – in line with the company's policy to distribute truly surplus cash.
7:00am: FTSE set to extend gains driven by encouraging Chinese data
Good morning and blue-chips in London are expected to open higher after strong gains in the US on Thursday and better-than-expected economic data in China.
Spread betting companies are calling the FTSE 100 up by around 46 points after closing up 147.09 points at 7,673.08 on Thursday.
So far this week, it has added 2.6%.
China’s retail sales and industrial production grew faster than expected in August, data showed on Friday, in a boost after policymakers stepped up stimulus measures to support the world’s second-biggest economy.
Industrial production rose 4.5% cent year on year in August, while retail sales, increased 4.6%. – above analyst forecasts and rates in July of 3.7% and 2.5% respectively.
However, it was not all good news. New home prices in 70 major cities fell 0.3% month on month and property investment is down 8.8% over the January-August period.
ING said: “While the overall economic background remains a very challenged one, there were some more positive signs in the latest data deluge, though all things related to the property market continue to struggle.”
In the US on Thursday, Wall Street ended in the green, with the Dow Jones Industrial Average up 1.0%, while the S&P 500 and the Nasdaq Composite both rose 0.8%.
Back in London, and the corporate diary is looking quiet.