- FTSE 100 closes up 7 points at 7,660
- Kingfisher slips on profit warning
- Lloyds too cheap, says Barclays
4:40pm: FTSE holds in positive territory ahead of CPI
The FTSE 100 clung onto modset gains at the close as investors look ahead to inflation figures tomorrow and interest rate decisions either side of the pond later this week.
At the close, London's lead index was up 7.26 points at 7,660.20 while the FTSE 250 fell 22.57 points, 0.1% at 18,426.70.
UK inflation is expected to have accelerated in August for the first time in six months in an unwelcome reversal of the recent slowdown in the cost-of-living crisis.
Official figures are predicted to show an increase in Consumer Prices Index (CPI) inflation to 7.1% in August, up from 6.8% in July, economists believe.
A higher-than-expected increase could present a headache for Bank of England policymakers who are due to meet this week to decide whether to push through another interest rate hike. The announcement is due on Thursday.
A sharp rise in petrol prices is expected to fuel inflation last month, driven by a rebound in oil prices amid cuts in production in Russia and Saudi Arabia.
4:05pm: Bank of America lifts Phoenix Group's price target
Phoenix Group Holdings PLC (LSE:PHNX) has enjoyed another strong day rising 2.2% after strong gains yesterday after results.
Bank of America has increased its share price target to 640p from 620p and reiterated a buy recommendation on a strengthened new business outlook and clarity on debt issuance capacity
New business in the first half has already more than offset the full year run-off of the back book and will support an organic dividend increase, BofA said.
The bank pointed out Phoenix is organically growing, while it also has around £1 billion of debt issuance capacity to help fund M&A.
“We expect more deals to come,” the bank said.
3:35pm: Rotala jumps on management-led bid approach
A bid could be heading the way of Rotala PLC (AIM:ROL) after it said a management-led team has made an approach which would value the company at around £19.4 million.
The bus, coach and transport firm said the 63.5p per share cash proposal has been made by directors, Simon Dunn, Bob Dunn and John Gunn, its chief executive, managing director - North West, and non-executive chair respectively.
The bidding parties hold around 37.5% of Rotala stock.
The company said a committee of independent directors has been formed to consider the possible offer.
Shares jumped 36% to 57.25p each on Tuesday afternoon.
3:10pm: Hargreaves Lansdown results beat consensus
More reflection on some of today’s results and over to online trading platform Hargreaves Lansdown which is up 6.6%.
Broker Jefferies noted underlying pre-tax profit for financial year came in 5.5% ahead of consensus at £439 million alongside guidance is in line with expectations.
Although net new business and assets under management were in line with expectations, revenues of £735 million were ahead (consensus: £716 million), driven mainly by net interest income.
“The new CEO has identified four areas of focus initially, but we expect a more detailed update at the interim results.” The broker said.
Jefferies said importantly, the margin on cash outlook remains positive, with expectations of 150-190 basis points while the base rate remains over 2%.
The bank retains a buy rating on the stock.
2:45pm: US stocks fall as two-day Fed meeting kicks off
It's been a weak start in the US with investors preferring to stay sidelined ahead of the interest rate decision by the Federal Reserve on Wednesday.
Shortly after the opening bell, the Dow Jones Industrial Average was down 66.02 points, 0.2% at 34,558.28, the S&P 500 was down 9.34 points, 0.2%, at 4,444.19 and the Nasdaq Composite was down 46.62 points, 0.3%, at 13,663.62.
The two-day Fed meeting starts later in the day, with the central bank expected to hold benchmark interest rate at the current 5.25%-5.50% range on Wednesday.
Fawad Razaqzada, market analyst at City Index and Forex.com said: "Although no policy changes are anticipated at this FOMC meeting, traders will closely examine hints regarding the next meeting."
He suggested paying close attention to the policy statement, the latest dot plots, and Fed Chair Jerome Powell's remarks during the FOMC press conference.
"The Fed might signal the likelihood of an additional hike this year, thanks to a slower disinflation process bolstered by a robust US consumer and increased inflation expectations. The FOMC may also revise the 2024 median plot to indicate fewer rate cuts than previously projected," he said.
Despite the drab start in the US, the FTSE 100 is holding in the green, up 13 points at 7,666.
2:15pm: Shell opens largest global EV in China
Shell PLC (LSE:SHEL, NYSE:SHEL) has opened its largest electric vehicle charging station globally in Shenzhen, China.
The charging station is located about 2.5 kilometres from the Shenzhen Airport Terminal and features 258 public fast-charging points, the oil major said.
The station is operated as a joint venture between Shell and Chinese EV giant BYD it added in a statement.
The Shell recharge Shenzhen Airport EV station served more than 3,300 EVs every day during its trial operation, the statement said.
In addition to EV charging, the station offers Shell Select convenience retailing, Shell Café, vending machines, and a drivers lounge. The rooftop solar panels installed at the station could generate about 300,000 kilowatt-hour of renewable electricity per year, which will be used to charge customers' vehicles.
1.35pm: Here's a recap of the top risers and fallers on the junior market today
Shares of Scancell Holdings PLC (AIM:SCLP, OTC:SCNLF) jumped 23% following the announcement that the initial stage of its phase II SCOPE trial in advanced melanoma has outperformed expectations.
Avacta Group PLC (AIM:AVCT)'s share price has jumped 10% following positive updates on its cancer drug trial.
Shares in Billington Holdings Plc (AIM:BILN) jumped 13% in early trading after the steel manufacturer reported record interim results.
Cizzle Biotechnology Holdings PLC (LSE:CIZ)'s share price jumped 12% following the successful completion of an evaluation of the programme that could eventually lead to the early detection of lung cancer.
Safestyle UK PLC (AIM:SFE) shares crashed 43% to an all-time low after the double glazing company issued its third profit warning this year and its fifth in 12 months.
Northcoders Group PLC (AIM:CODE), which trains aspiring coders, saw its stock plummet 38% after it sounded the earnings alarm.
Quiz PLC (AIM:QUIZ) shares tumbled almost 40% as the fashion retailer warned that revenues are worse than expected and unlikely to meet full-year expectations.
1:00pm: Lloyds "simply too cheap" says Barclays
Lloyds Banking Group PLC (LSE:LLOY) remains Barclays favoured UK banking play describing it as “simply too cheap”.
The broker was commenting after hosting leading executives from Lloyds, Standard Chartered, HSBC, Virgin Money UK and NatWest.
Barclays said the Lloyds CFO William Chalmers discussed his confidence in the operating outlook, despite a subdued outlook for the UK economy, including prospects of a stabilising net interest margin (NIM) given a sizable building hedge tailwind, alongside a strong outlook for book value growth.
The broker says rising deposit costs and mix shift continue to cloud the outlook for near-term NIM in the sector but this is likely to be a period of peak pain, with the outlook boosted by falling UK rate expectations.
A sizable building tailwind from the structural hedge means UK banks can ultimately sustain their rates tailwind, Barclays estimates.
“And with provisions set to stay low, and earnings strong, we see compelling value for a patient investor,” it added.
It rates Lloyds overweight with a 70p price target and shares rose 0.8% to 42.48p each in London on Tuesday.
HSBC is rated overweight while Standard Chartered, NatWest and Virgin Money UK are kept at equal weight.
12:35pm: Aldermore (AIM:ALD) plots takeover of Co-Op Bank
Aldermore (AIM:ALD) Group, the mid-sized consumer and business lender, has hired advisers to plot a takeover of the Co-operative Bank, according to reports.
Sky News has learnt that Aldermore (AIM:ALD), which is itself owned by South Africa's FirstRand Group, is working with investment bankers on BNP Paribas on the size and structure of an offer.
Exclusive: Aldermore (AIM:ALD) Group, the South African-owned bank, has hired advisers from BNP Paribas to help it plot a bid for the Co-operative Bank, the high street lender; its interest pits it against Shawbrook, which has tabled a £3.5bn merger proposal. https://t.co/IN9FQnjIlK
— Mark Kleinman (@MarkKleinmanSky) September 19, 2023
Sky cited City sources as saying that Aldermore (AIM:ALD) intended to table a bid ahead of a deadline set by the Co-operative Bank's advisers early next month.
Its interest will see it competing against Shawbrook, another medium-sized British bank, which Sky News revealed last month had approached the Co-operative Bank's advisers with a £3.5 billion merger proposal.
Other lenders cited as potential bidders, including Paragon Banking Group and OneSavings Bank - are now regarded by industry insiders as being unlikely to participate in the auction, Sky said.
12:10pm: Futures point to a firm start in New York
US futures pushed higher ahead of the open on Wall Street, after a sluggish session on Monday, as investors await the Federal Reserve’s interest rate decision and guidance on the future path of monetary policy.
In pre-market trading, futures for the Dow Jones Industrial Average were 0.2% higher, while those for the S&P 500 rose 0.2%, and contracts for the Nasdaq 100 futures were up 0.2%.
Kit Juckes at Societe Generale said: “The market doesn’t expect a Fed hike but the dot-plot, which currently suggests there will be one more this year before a steady fall, thereafter, could see cuts pushed further out, while the tone of the statement is certain to be hawkish, as the FOMC reinforces the ‘higher for longer’ message.”
Shares of online grocery delivery company Instacart will begin trading, five days after Arm’s blockbuster debut signalled a warming market for new US listings.
The shares will list at $30, the top end of the range it gave investors last week.
Back in London, and at midday the FTSE 100 is holding in positive territory, but it's marginal, now up 7 points at 7,660.
11:46am: UK set to see highest inflation in G7 - OECD
The UK economy is set to witness the highest inflation rate of the world's G7 advanced economies this year, according to new forecasts.
The Organisation for Economic Co-operation & Development also increased its predicted average UK inflation rate for 2023 compared with its previous estimate.
Economists at the globally recognised organisation also reduced their UK growth forecast slightly for next year amid pressure from higher interest rates.
The OECD expects UK inflation of 7.2% for 2023, increasing its previous forecast of 6.9% from June, this would be the fastest rate across the G7 and third fastest across the G20.
New OECD interim forecasts out this morning…
All economies hit by rising rates, Germany into reverse this year, UK slow growth this year (0.3%) & next (0.8%)
UK - highest G7 inflation this year (7.2%) & highest core inflation in G7 for both 23 & 24https://t.co/AJjQuBYWrm
— Faisal Islam (@faisalislam) September 19, 2023
The OECD said inflation across the G20 is expected to be 6% for 2023, down 0.1 percentage point on its previous forecast, and 4.8% in 2024, up 0.1 percentage point.
It said there is a risk inflation could reduce quicker than expected, with the body highlighting the impact of interest rate hikes on consumer spending and slower activity in China.
Meanwhile, the report held its forecast of UK growth in 2023 at 0.3% for the year. This is predicted to be the second weakest among the G7 and third weakest among the G20.
The OECD also predicted that UK GDP will grow by 0.8% next year.
11:15am: Time to check-in to IHG says Bank of America
Bank of America has given Intercontinental Hotels Group PLC (LSE:IHG) a boost reinstating coverage with a buy rating and 7,200p price target, implying 18% potential return.
It describes IHG as a quality business (asset-light, geographically diversified), but notes its EV/Ebitda multiple discount to US peers has expanded to 14% - wider than historically.
BofA finds this unjustified given its high returns (>30% ROIC), earnings growth (11% 2023-27E) and cash return potential.
“We think system growth concerns are overblown and strong RevPAR should be sustainable amid resilient travel demand,” it said in a research note.
It also believes around 26% of market cap could be returned over the next three years in dividends and share buybacks, given the strong free cash flow.
BofA is bullish on the European hotels sector, rating Accor buy with Whitbread given a neutral rating.
“We believe now is a good time to gain exposure to companies with geographically diversified hotel portfolios, strong balance sheets and cash generative asset-light models, with attractive and improving cash return to shareholders,” the bank said.
Shares in IHG are up 1% at 6,286p while Whitbread is 0.4% higher at 3.642p.
In Paris, shares in Accor rose 1.1% to €34.36.
10:44am: Eurozone inflation falls faster than expected
Inflation in the eurozone fell faster than expected last month.
Consumer prices across the single currency area rose by 5.2% in the year to August, down from 5.3% in July, and lower than the 5.3% initially estimated for August.
The highest annual rates were recorded in Hungary (14.2%), Czechia (10.1%) and Slovakia (9.6%), while the lowest annual rates were registered in Denmark (2.3%), Spain and Belgium (both 2.4%).
Euro area annual #inflation at 5.2% in August 2023, down from 5.3% in July https://t.co/Zk9TgHmKhd pic.twitter.com/k06nSdcWVL
— EU_Eurostat (@EU_Eurostat) September 19, 2023
Compared with July, annual inflation fell in fifteen member states, remained stable in one and rose in eleven.
But this still leaves inflation well over the European Central Bank’s inflation target of 2%.
Food, alcohol & tobacco prices were 9.7% higher than a year ago, down from 10.8% in the year to July.
Services inflation dipped to 5.5% from 5.6%, while industrial goods inflation dropped to 4.7% from 5%
Energy prices continued to pull inflation lower; they were 3.3% lower than a year ago.
10:17am: Berenberg puts faith in TrustPilot
Shares in Trustpilot Group PLC (LSE:TRST) is another winner today with shares soaring 15% after first-half results.
Analysts at Berenberg have increased financial year 2023 adjusted Ebitda forecasts by a whopping 34% after management said this figure would exceed market expectations.
“We think that this upgrade is impressive considering the tough macro backdrop, and it highlights Trustpilot’s resilience and the operational leverage inherent in its business model as it continues to scale,” the broker said.
Berenberg highlighted an acceleration in North American bookings and progress on pricing initiatives.
The broker has a buy rating on the firm with a 160p price target.
It thinks one of Trustpilot’s key competitive advantages is the consumer engagement in the platform, noting total cumulative reviews were up 25% year-on-year, while claimed domains were up 23% and TrustBox impressions were up 15%.
9:51am: BP’s promotes Kate Thomson to interim CFO
BP has named Kate Thomson as interim chief financial officer following the appointment of Murray Auchincloss as interim chief executive officer last week following the resignation of Bernard Looney.
Thomson is currently BP's senior vice president, finance for Production & Operations, responsible for the financial stewardship of and commercial partnering with the business globally.
She has been with bp for 19 years, previously holding a number of senior financial roles, including group treasurer and head of group tax.
Auchincloss said: "Kate's experience and skills make her ideally suited to take on the role of interim CFO. She brings deep technical knowledge together with a detailed understanding of bp, and has a first-class track record of leadership across our finance function.”
The move comes as BP seeks to stabilise its management team in the wake of Looney’s departure after he failed to fully disclose previous relationships with colleagues.
9:28am: Oil prices keeps on rising
The oil price remains on an upward path closing in on the $100/barrel milestone with Brent crude trading around $94.95/barrel.
Deutsche Bank’s Jim Reid said it was showing signs of stopping yet.
He pointed out the recent rises are already filtering through into retail gasoline prices, with the US daily average from the AAA at an 11-month high of $3.88/gallon on Sunday.
“Given those fresh signs of inflationary pressures, investors moved to price in that interest rates would remain higher for longer into 2024,” he noted.
“For instance, the rate priced in for the Fed’s June 2024 meeting hit a new high for this cycle at 5.16%, suggesting that investors don’t expect much in the way of cuts anytime soon. It was the same story for other central banks, with the June 2024 rate for the ECB (+7.9bps) and the BoE (+2.2bps) also moving higher,” he added.
Neil Wilson at markets.com said the “Saudis say production cuts are not about artificially inflating prices but bringing stability...but the extreme backwardation points to a very tight physical market that could push near month contracts to $100 and beyond even if it cannot be sustained due to looser conditions expected next year.”
9:10am: Forecasts cut after Kingfisher warning
Analysts are getting the red ink out after Kingfisher’s profit warning.
Jefferies said it was a mixed set of results with a slightly improving top-line trend, but a 5% downgrade to full-year pre-tax profit consensus expectations.
The broker noted first half pre-tax profit came in at £336 million, missing consensus by 6%.
As a result, full-year guidance has moved to £590 million from £634 million, which implies a 5% downgrade, given consensus had moved to £622 million.
The broker pointed this was driven primarily by a weaker first-half profit performance in Poland - £35 million against the cons at £65 million.
Shares remain on the back foot, down 6.4% at 220.60p.
8:48am: FTSE 100 perks up, Hargreaves Lansdown climbs
The FTSE 100 has perked up and now trades 14 points higher at 7,667 with Hargreaves Lansdown the top riser, up 5.2%, after a solid looking set of full-year results.
James Fox, equity research analyst at InvestingReviews.co.uk said shareholders "will likely be impressed by the company’s beat on revenue and earnings."
He highlighted good news in that assets under administration grew from £123.8 billion to £134 billion although he noted net new client growth slowed again, at 67,000 for the year.
Ocado Group and Marks & Spencer are also higher after the positve update from their Ocado Retail joint venture but Kingfisher remains out of favour, down 4.5% after its profit warning.
Richard Hunter, head of markets at interactive investor said the scale of the challenges at Kingfisher is clear.
"Lower gross profit in France and Poland, coupled with additional operating costs in the UK and Ireland caused by higher pay and energy rates left their stain on trading, with seasonal sales also impacted by the weather and dropping by 5.9%," he noted.
Over in the FTSE 250, TUI gets the gold star, with shares up 4.6% after strong summer bookings led it to hold guidance.
The tour operator said booking levels are close to pre-Covid levels.
8:16am: Sluggish start in London, Ocado up, Kingfisher down
The FTSE 100 has made a sluggish start as investors digest a hefty batch of company updates and look ahead to interest rate decisions either side of the pond this week.
At 8:15am, London's lead index was up 2.69 points at 7,655.63 while the FTSE 250 rose 7.15 points to 18,456.42.
Ocado PLC was quick out of the blocks with shares up 2.9% after it reported growth at its retail joint venture Ocado retail.
Retail revenue in the 13 weeks to August 27, grew 7.2% to £569.6 million from the year before, an accelerating trend against the plus 5% reported in the first half, with a return to positive volume growth (total items) in the last month of the quarter.
Hannah Gibson, Ocado Retail's chief executive officer, said we “have great momentum in the business.”
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown said: “A tentative return to volume growth suggests consumers are showing resilience.”
“Ocado isn’t the cheapest offering around, despite big investments in dropping prices.”
“This shows the power of getting the proposition right, which has included ironing out concerns about the placement and promotion of M&S products,” she added.
Kingfisher PLC (LSE:KGF) 5.5% after it lowered profit guidance as it reported a drop in half-year profit alongside flat sales.
The owner of Screwfix and Tradepoint now expects financial year 2023/24 adjusted pre-tax profit of around £590 million, down from previous forecasts of £634 million.
Josh Warner, market analyst, City Index said: “Analysts already had doubts over its annual goal but the cut today was much sharper than hoped thanks to tepid sales and because the inflationary environment is weighing on margins.”
Good news for shareholders in AIM-listed Scancell Holdings PLC (AIM:SCLP, OTC:SCNLF) which soared 26% after reporting the results from the initial stage of its phase II SCOPE trial in advanced melanoma surpassed expectations.
7:57am: Ocado holds guidance as sales growth accelerates
Ocado Group PLC (LSE:OCDO)’s retail joint venture reported growth in revenue and customers and said it has “great momentum in the business.”
Ocado Retail Ltd, a joint venture between Ocado Group and Marks & Spencer Group PLC was updating investors on trading for the 13 weeks to August 27 2023 and said retail revenue grew 7.2% to £569.6 million from the year before.
The online grocer said this was an accelerating trend against the +5% reported in the first half, with a return to positive volume growth (total items) in the last month of the quarter.
Hannah Gibson, Ocado Retail's chief executive officer, said we “ have great momentum in the business, with revenue growing faster in Q3 than in H1 and a return to positive volume growth in the last month of the quarter.
Average orders per week at Ocado.com of 381,000 grew 1.9% year-on-year, while active customers reached 961,000 at the end of the third quarter, up 1.5% year-on-year.
Average basket value was up 4.2% while the basket size remained broadly stable quarter-on-quarter at 44 items per order.
Average selling prices increased 8.4% year-on-year, lower than market inflation.
The firm said the positive momentum had continued into the fourth quarter with full-year guidance unchanged.
7:49am: Kingfisher cuts guidance as profit slumps
Not such good news at Kingfisher PLC (LSE:KGF) which lowered profit guidance as it reported a drop in half-year profit alongside flat sales.
The owner of Screwfix and Tradepoint now expects financial year 2023/24 adjusted pre-tax profit of around £590 million, down from previous forecasts of £634 million.
The firm said sales in the third quarter were down 2.4% on a like-for-like basis but still intends to launch a £300 million share buyback.
For the six months to July 31, sales rose 1.1% to £6.88 billion from £6.81 billion the year before but pre-tax profit fell 33% to £317 million from £474 million with operating margins down 40 basis points to 36.3% from 36.7%.
Kingfisher said UK & Ireland and France were slightly ahead of expectations but this was more than offset by lower than expected Poland performance.
UK & Ireland like-for-like sales rose 1.7% with strong market share gains at Screwfix while in France sales fell 3.8% with a resilient performance at Castorama and a weaker at Brico Dépôt.
But sales in Poland fell 10.9% impacted by strong comparatives and weaker than expected second quarter.
The dividend was left unchanged at 3.80p.
7:29am: TUI reports good summer as bookings rise 5%
There are a lot of results out this morning and we'll start with TUI AG which backed guidance after a strong summer which saw bookings return close to pre-Covid levels.
The holiday operator expects to increase underlying Ebit significantly for both the fourth quarter and also for the full-year against the previous year.
Hotels & Resorts are anticipated to be close to an already strong prior year while both cruises and markets & airlines are set to achieve a significantly improved result with a strong increase in results expected for TUI Musement.
The firm reported a strong pipeline of 13.7 million bookings for the Summer 2023 season, a 5% increase against the prior season and close to pre-pandemic levels at 96%.
TUI said it had received 1.1 million additional bookings since its third quarter update with demand in the final month of season well ahead of Summer 2022 at plus 8% with Greece and Turkey popular destinations.
This positive momentum has continued into Winter 2023/24 with an expanded programme and overall bookings up 15% against the previous year..
The rise in bookings across all key markets was supported by higher prices, up 4% versus the prior season.
TUI reiterated its mid-term 2025/26 ambitions for underlying Ebit to significantly build on €1.2 billion.
7:02am: Subdued start expected in London
Good morning, and the FTSE 100 is expected to open little changed as investors remain wary ahead of a week dominated by central bank announcements.
Spread betting companies are calling the FTSE 100 up by 2 points after closing down by 58.44 points at 7,652.94 on Monday.
In the US on Monday, markets closed little changed, with rising oil prices sparking worries of inflationary concerns.
On Wednesday, the Federal Reserve is expected to leave interest rates unchanged whle on Thursday the Bank of England is likely to raise rates by 25 basis points.
"This week, the US policymakers will certainly opt for a 'hawkish pause'. The Fed will likely revise its growth expectations significantly higher on the back of resilient consumer spending and solid growth," said Swissquote Bank's Ipek Ozkardeskaya.
Ahead of the interest calls there is a busy day of company news in London.
Updates are due from Hargreaves Lansdown, Kingfisher, Ocado, C&C, Moonpig and Xaar amongst others.