- FTSE 100 closed up 15 points at 7,440
- UK wage growth eases in October
- US inflation falls more than expected
4:40pm: Mid-caps outpeform on peak interest rate hopes
The FTSE 100 shrugged aside early weakness to close higher, while the FTSE 250 soared, as weaker-than-expected US inflation figures boosted hopes that interest rates have peaked.
At the close, London's blue-chip index was up 14.64 points, 0.2%, at 7,440.47 while the FTSE 250 leapt 622.48 points, 3.5%, at 18,536.13.
The easing US pricing pressures have also lifted hopes that UK inflation will similarly ease when figures are revealed tomorrow.
The headline figure is forecast to drop below 5%, a boost for Prime Minister Rishi Sunak, who made this one of his five priorities.
In company news, a strong trading update boosted Informa, up 6.0%, while results and an acquisition lifted DCC, up 11.4%.
But Vodafone missed out on the rally, down 5.3%, after its results.
Berenberg said the results got "progressively worse as we worked our way down the income statement and cash flow."
" While questions continue to linger about longer-term German capex and dividend sustainability, it is hard to see Vodafone’s shares materially outperforming", the bank said.
3:52pm: Bank of America lifts BAE Systems price target
Bank of America has increased its price target for BAE Systems following yesterday’s trading update.
The bank said it showed the defence manufacturer was “on track” to achieve the upgraded 2023 guidance.
Ball Aero integration is progressing well and order intake remains strong, with £10 billion orders booked since the end of the first half, and more than £30 billion booked year-to-date.
The bank has raised 2024-25 profit estimates by around 2% and lifted its price target to 1,245p from 1,175p.
3:15pm: BoE's Pill warns of difficulty in reigning in inflation
A Bank of England rate-setters have warned of the difficulty of reining in inflation, following higher-than-expected wage growth in this morning’s jobs report.
Speaking at an event in Bristol, the BOE’s Chief Economist Huw Pill said the UK still has work to do to curb inflation and stressed that the tight labour market remains an source of concern, with current levels of pay growth not consistent with the central bank’s 2% goal for price gains.
Pill said that inflation is likely to fall but still remains too high. He said interest rates in the UK will need to remain in “restrictive” territory to choke off the risk that inflation persists.
2:45pm: US stocks power ahead after CPI data
US stocks motored and the dollar slumped after US inflation fell by more than expected in October.
Shortly after the opening bell, the Dow Jones Industrial Average was up 307.21 points, 0.9%, at 34,645.08, the S&P 500 was 64.24 points, 1.5%, at up 4,475.79 and the Nasdaq Composite was up 257.16 points. 1.9%, at 14,024.90.
Andrew Hunter at Capital Economics said: “The softer 0.2% m/m rise in core consumer prices in October kills off any remaining chance of a December rate hike from the Fed, and we continue to expect a further decline in inflation over the coming months, which will bring interest rate cuts onto the agenda before long.”
Daniele Antonucci, chief investment officer at Quintet agreed: “Today’s inflation numbers support the notion that the Fed is done with its rate hiking cycle.”
“We expect the Fed to hold interest rates in the 5.25-5.50% range, before cutting them slowly over the course of 2024.”
The dollar lost ground against the pound, euro and the yen with sterling trading 1.2% higher at $1.2426.
Bond yields also fell, with the yield on rate-sensitive two-year Treasuries down 0.13 percentage points to 4.9%, while yields on benchmark 10-year Treasuries fell 0.14 percentage points to 4.48%.
2:14pm: FTSE extends gains on weak US CPI
The FTSE 100 has extended its rally, now up 12 points, at 7,438 while the FTSE 250 has lit up and is now more than 2.0%, 368 points, at 18,282.
Top of the FTSE 100 risers is Ocado, up by 14%, as its track record of extreme movements continues while DCC is up 11.(% after its results and acquisition.
Informa is next in line, up 5.4%, after raising guidance which was well received by analysts and investors alike.
The weak US CPI data has lifted property stocks on the hopes that interest rates have peaked - UK CPI tomorrow - with Segro, Land Securities and Unite all more than 3% to the good.
But Vodafone remains in the doldrums, down 2.7%, after questions about the sustanability of the dividend followed lacklustre results while oil majors BP and Shell are also weaker.
1:52pm: Stocks rally, pound leaps after weaker than expected US CPI
The FTSE 100 has jumped into positive territory - just - after US inflation eased by more than expected in October.
The consumer price index was unchanged in October on a seasonally adjusted basis, after increasing 0.4% in September, the US Bureau of Labor Statistics reported, taking annual growth to 3.2%, down 3.7% in September.
Both figures were below forecasts of 0.1% and 3.3% respectively.
Core CPI, which strips out food and energy, rose 0.2% in October from September, less than the 0.3% forecast, taking annual growth to 4.0%, down from 4.1% in September. It was expected to remain unchanged.
Richard Garland, Chief Investment Strategist, Omnis Investments said: “This should reaffirm the Fed's view that interest rates are restrictive enough to bring inflation back to target, albeit they will keep rate hikes on the table until a low 2% inflation handle heaves into view.”
The pound jumped following the news, trading 1.0% higher at $1.2398 while the FTSE 100 is up 1 point at 7,427.
Remember, UK inflation figures are due tomorrow and are expected to show a drop in headline inflation to be below 5%.
1.31pm: Here’s a quick recap of the top risers and fallers on the market today
Billington Holdings Plc (AIM:BILN) said trading has continued to be healthy following its record first-half revenues, sending its shares up 9.5%.
Shares of Ondo InsurTech PLC (LSE:ONDO) jumped by 40% following the announcement of its partnership with Nationwide, a leading US insurance and financial services company, that will see the integration of Ondo's LeakBot technology into Nationwide's Smart Home Program.
Allergy Therapeutics PLC (AIM:AGY, OTC:AGYTF) shares gesundheited 17% higher after the company reported success from a pivotal phase III trial to test its grass allergy vaccine, Grass MATA MPL.
DCC PLC (LSE:DCC) shares leapt 8.5% to a 15-month high of 5,062p after its Energy arm bought one of Germany's largest liquefied petroleum gas (LPG) distributors for a value of €160 million (£140 million) and the group announced 12% profit growth in the first half of the year.
Zegona Communications (LSE:ZEG) shares quadrupled in value after being readmitted to the standard list of the London Stock Exchange on Tuesday.
The readmission follows the successful completion of a 150p-per-share placing that raised €300 million (£262 million) for Zegona’s takeover of Vodafone Spain.
1:00pm: Upgrades follow strong Informa trading
Bank of America has increased its price target for Informa PL following today's trading update which has sent shares up 5.4%.
It noted another upgrade to fullyear guidance, implying 5%+ upgrades to consensus, strong underlying sales growth in events, with Informa Markets up 65% and a £150 million increase to the buyback.
It has raised 2023/24 EPS estimates by 5% and 3% respectively and increased its price objective by 5% to 1,020p.
The bank believes the valuation looks highly attractive in the context of accelerated underlying growth, a strong balance sheet and good forward visibility over c.£1bn revenue in 2024.
Together with improving product quality this supports the underlying growth outlook despite arguably heightened macro concerns., the broker added.
Additionally, BofA sees scope for further buybacks in 2024.
"Informa is on our “What’s big in SMID” list of top ideas," it added.
12:21pm: UK business confidence at lowest in a year - S&P
UK business confidence fell to its lowest level this year in October, according to the latest Accenture (NYSE:ACN)/S&P Global UK Business Outlook.
The net balance of firms expecting activity to increase over the next 12 months slid to +37% in October, down from +40% in June and +43% in February.
Although UK companies maintain a positive outlook for the upcoming year, the research suggests that concerns about the cost of living and elevated interest rates have tempered the positive effects of milder inflation.
???????? #UK business #confidence dropped to its lowest level in a year in October, driven by weaker optimism among service sector companies as #interestrate hikes are expected to hit consumer spending. (1/4) https://t.co/0YDAJvPA2E pic.twitter.com/DMeVIEiSCK
— S&P Global PMI™ (@SPGlobalPMI) November 14, 2023
UK business optimism still remained relatively high compared to global (+25%) and European (+16%) averages, which fell by 3% and 8% respectively.
Ewan Mackay, Strategy and Consulting lead at Accenture (NYSE:ACN) in the UK & Ireland said: “While projections for the next 12 months remain positive, it's important that businesses take action now to turn expectations into reality even if the economic picture remains uncertain.”
12:07pm: US markets await inflation print
US stocks futures are pointing to a positive start on Wall Street, although much will depend on consumer price index data released before the opening bell.
In pre-market trading, futures for the Dow Jones Industrial Average were flat, while those for the S&P 500 were 0.1% higher, and contracts for the Nasdaq 100 futures were up 0.2%.
Pricing pressures in the US are expected to have eased in October, with the year-on-year rise in the headline consumer price index forecast to have cooled to 3.3% in October from 3.7% in September.
Core inflation is seen unchanged at 4.1%.
Ipek Ozkardeskaya, at Swissquote Bank said: “Investors are on the edge of their seats, waiting for the latest scoop on US inflation data to take a fresh direction in both stock and bond markets.”
“The dollar index remains offered, the US political risks are casting shadows, and there's a rising chorus of opinions playing the guessing game on when and how much the Fed might trim the rates next year,” she added.
In company news, Home Depot reported better-than-expected third quarter earnings despite a drop in sales.
The home improvement outfit also narrowed guidance for revenue and earnings for the full-year.
11:35am: Imperal Brands boosted by strong pricing
There has been a muted reaction to results from Imperial Brands with shares down 1.1% reflecting the downbeat overall market.
However, Derren Nathan, head of equity research at Hargreaves Lansdown pointed out despite tobacco volumes being down 7.1%, strong pricing kept revenue steady.
He also highlighted strong growth in Next Generation Products (NGP) like vapes, heated and oral tobacco, where Imperial grew revenue by 26.4% with an especially impressive showing in Europe.
For now though it’s still a small part of the picture, he accepted.
“The five year plan seems very much on track and Imperial are expecting another year of modest growth,” Nathan said.
“As long as its not derailed by a downward lurch in the economy, that should allow free cash flows to remain sufficient to fund investment in the NGP portfolio, generous returns to shareholders and opportunistic M&A activity.”
11:11am: IMI up, and M&G down as brokers have their say
Two stocks on the move today have attracted differing comments from two investment banks today.
IMI PLC (LSE:IMI) is up 1.2%, boosted by an upgrade by UBS to neutral from sell.
The Swiss bank said: “While we continue to see shortcycle risk to earnings in Industrial Automation, this has pushed into 2024, where strength from the capex cycle in energy markets is driving upgrades in Process Automation.”
At 10x EV/Ebit next year, the valuation appears attractive versus history but “we would look to our Short Cycle Indicator and signs of Life Science inflecting before turning more positive.”
The bank has raised its 12-month price target to 1,555p from 1,350p.
But M&G PLC (LSE:MNG) has slipped 1.7% after RBC Capital Markets downgraded the stock to sector perform from outperform.
It thinks headwinds for Asset Management now appear more acute and persistent than expected.
“While acknowledging positive impacts of the higher rate environment on M&G’s Life insurance earnings and capital generation, which supports upgrades to Group adjusted operating profit, our cautious outlook for AM means we are below consensus for 2024/25,” it said.
It has a 200p price target, down from 220p.
10:41am: Insolvencies jump in October
The number of companies falling into insolvency in England and Wales has jumped, according to figures out today.
There were 2,315 registered company insolvencies in October, 18% higher than in October 2022, and 18% higher than September’s figure, according to data from The Insolvency Service.
The increase in company insolvencies was driven mostly by Creditors’ Voluntary Liquidations (CVLs) in which company directors opt to wind up an insolvent company which has no prospect of recovery.
There were 256 compulsory liquidations, 1,889 creditors’ voluntary liquidations (CVLs), 146 administrations, 23 company voluntary arrangements (CVAs) and one receivership appointment, the Insolvency Service said.
10:08am: Glencore's Teck deal a "striking move"
Glencore PLC (LSE:GLEN) is up 3.0% after sealing a deal for a majority stake in Canadian rival Teck Resources’ coal business.
“This is a striking move on the part of the diversified miner and commodities trader,” said Russ Mould at AJ Bell.
He explained there is more to this move than meets the eye as Glencore plans to spin-off the assets acquired from Teck, which are steelmaking coal rather than thermal coal, and its own coal portfolio into a separate business.
The aim is to list this entity separately on the stock market in a couple of years’ time when the two businesses have been successfully integrated, he noted.
“The company has a reputation for ruthlessness and, while this deal will do little for its public reputation, it clearly feels the move makes business sense,” he added.
“If it is successful in executing its spin-off plans then the remaining Glencore businesses would be free of the stink of coal and would likely attract a higher valuation as well as having scope to pursue the acquisition of new metals assets to help position it for the energy transition.”
9:45am: Informa’s diversified portfolio offers attractions
Shore Capital was pleased to note the positive tone of this morning’s update from Informa PLC (LSE:INF) which contrasts with the performance of advertising sensitive media companies and “adds confidence to our expectation of a period of strong medium-term adjusted EPS growth.
More broadly, the broker continues to view Informa’s extensive and diversified portfolio of leading B2B exhibitions, commitment to adding value and driving organic growth through digital innovation, and the long-term growth dynamics of the exhibitions industry as key attractions.
It reiterated its buy rating and its discounted cash flow derived fair value estimate of 864p.
The stock remains in demand, up 6.0%, with only DCC PLC (LSE:DCC), performing better in the FTSE 100, up 6.6%.
DCC reported froup adjusted operating profit rose 12.0% in the six months to September 30, plus the acquisition of Progas, a leading distributor of LPG in Germany for £140 million.
Donal Murphy, chief executive, said: "We delivered strong profit growth in the first half of our financial year. Although the macro environment remains volatile, DCC continued to perform thanks to our resilient and diverse business."
9:24am: Wage growth eases but challenges remain
More reaction to the news that wage growth has eased although it remains inflated.
Neil Wilson at markets.com said the data shows wages outstripping inflation by the biggest margin in two years.
“On the face of things it’s hard to see the BoE taming inflation whilst pay growth is this strong,” he said, although the direction of travel is “the right one.”
“Wage growth has cooled and there are signs of softness in the labour market that means this data does not change the sense that the BoE could be cutting next summer,” he added.
Danni Hewson at AJ Bell said: “When adjusted for inflation it means people are finally feeling the benefit in their pay packets and with inflation expected to have cooled significantly last month it is an indication that the worst of the cost-of-living squeeze might be over.”
“But there lies the rub. If households are feeling more confident and have a bit more room in the budget they are likely to spend that cash, which could prove inflationary,” she suggested.
“There’s also the continued tightness in the labour market that could force employers’ hands and push them to keep offering bigger pay packets to attract the staff they need to thrive.”
9:09am: Vodafone fails to excite, dividend at risk?
Aarin Chiekrie, equity analyst at Hargreaves Lansdown thinks today’s results from Vodafone Group PLC (LSE:VOD) will leave many questions ringing in investors’ ears.
“Revenue and operating profits are heading in the wrong direction for Vodafone, reflecting recent disposals and the structural challenges at hand,” he pointed out.
He thinks with the dividend yield currently sitting above 10%, a review of the group’s capital allocation policy is likely on the cards and future yields could get cut back to more modest levels.
Typically, when companies in this industry have dividend yields above 7%, there is downward pressure on the dividend, he pointed out, meaning funds from the Zegona deal in Spain are likely to get ploughed back into paying down the group’s hefty debt pile, rather than supporting unsustainable dividend payments.
He also highlighted whispers that Vodafone is looking at strategic options for its Italian unit, which could include the sale of the business or finding a partner.
While it is one of Vodafone’s better-run assets it has struggled in recent times as competitors, so don’t be surprised to hear further developments on this front in the near future, he said.
Shares are down 2.2% at 75.69p.
8:44am: FTSE 100 eases but Informa jumps on strong trading
The FTSE 100 remains in negative territory but is off earlieir lows, now down 8 points at 7,418.
Informa PLC (LSE:INF) sits top of the FTSE 100 risers, up 4.2%, after raising guidance on the back of strong trading.
The firm said the increase reflects “strength and momentum across the portfolio” with 10-month group underlying revenue growth of 31.7%.
It now expects 2023 full year revenues of £3.15 billion, up from guidance of £3.05 billion before, and adjusted operating profit of £840 million, up from £790 million.
The firm is also extending the share buyback programme to £1.15 billion, an increase of up to £150 million.
ConvaTec Group PLC (LSE:CTEC) is also higher, up 2.5%, after tightening revenue guidance to the upper end of the previous range.
It now expects organic revenue growth for 2023 to be between 6.75% and 7.5% (previously 6.0%-7.5% with an adjusted operating profit margin expected to expand to at least 20.5%, on a constant currency basis.
Karim Bitar, chief executive said: “We are on track to deliver a mid-20s adjusted operating margin in 2026 or 2027, and double-digit compound growth in EPS and free cash flow, from 2024 onwards."
8:15am: FTSE 100 opens lower but wage growth cools
The FTSE 100 opened lower, ahead of US inflation data, and despite figures showing wage growth cooled.
At 8:15am, London’s blue chips index was down 18.89 points, 0.3%, at 7,406.94 while the FTSE 250 eased 15.87 points, 0.1%, at 17,897.78.
James Smith at ING Economics said the latest UK wage figures are generally good news from the perspective of the Bank of England.
Private sector regular pay growth, which strips out volatile bonus payments, inched lower to 7.8% from 8.1% on a year-on-year basis which is one of the three key metrics the Bank has said it’s looking at as a guide for policy, Smith pointed out.
Smith noted while “we can’t reliably look at the new ‘experimental’ unemployment figures,” due “to well-publicised issues with survey sample sizes.”
But vacancies have been consistently falling and multiple surveys suggest that firms are finding it easier to find staff than a year ago when skill shortages were at their most acute, he pointed out.
All of that suggests the Bank’s forecast for private sector wage growth to hit 6.6% in March appears to be on track, and if anything, might be beaten on the downside, he said.
Samuel Tombs at Pantheon Macroeconomics thinks the wage growth is slowing sufficiently quickly for the MPC to conclude that Bank Rate already is high enough at 5.25%.
In company news, results saw little change at Vodafone, down 1.1%, and Land Securities, down 0.4%, but Glencore jumped 3.2% after it agreed to buy a majority stake in the coal arm of Canada’s Teck Resources for $6.9 billion.
Elsewhere, IMI is up 0.8% after UBS upgraded to neutral from sell.
7:59am: Wage growth cools but remains robust
Wage growth eased in the three months to September but remained close to record levels, while job vacancy numbers fell once more, figures showed today.
The Office for National Statistics said annual growth in regular pay (excluding bonuses) cooled to 7.7% in July to September, from 7.9% last month, in line with expectations.
But including bonuses, annual growth in employees' average total pay was 7.9%, down from 8.2%, but well ahead of hopes for a fall to 7.3%.
Today we’ve published the latest UK labour market figures.
— Office for National Statistics (ONS) (@ONS) November 14, 2023
The data showed the estimated number of vacancies in the UK fell by 58,000 in the three months to October to 957,000, slipping for a 16th consecutive period.
Vacancies declined in 16 of the 18 industry sectors.
In the three months to September, the unemployment rate held at 4.2%, according to experimental figures the ONS is using to offset a drop in response rates to its usual Labour Force Survey of households which seeks to measure changes in employment and unemployment.
7:46am: Imperial Brands profit jumps on flat revenue
Imperial Brands PLC (LSE:IMB) reported strong growth in profits, on broadly unchanged revenue, with growth in traditional cigarette products and next generation products (NGP).
The owner of Golden Virginia and Richmond said in the year to September 30, revenue fell 0.2% to £32.48 billion from £32.55 billion the year before, while operating profit jumped 27% to £3.40 billion from £2.68 billion.
EPS climbed 52% to 252.4p from 165.9p while the dividend was increased 4% to 146.82p from 141.17p.
"Three years into Imperial's transformation, our investments in consumer capabilities, changes to the way we work, and a new performance culture are translating into stronger, more sustainable operational and financial outcomes,” the firm said in a statement.
The company reported an improved combustible tobacco performance with 10 basis points aggregate market share growth in top-five priority markets and strong, broad-based pricing gains.
It also said next generation product net revenue climbed 26% as momentum grows in all categories.
Looking ahead, Imperial said in the coming year, it expects to deliver low-single-digit constant currency revenue growth and to grow constant currency adjusted operating profit close to the middle of its mid-single digit range.
Performance will be weighted to the second half of the year driven by the phasing of pricing in the prior year and investments in NGP, it said.
As a result, first-half operating profit is expected to grow at low single digits. at constant currency.
7:28am: Vodafone returns to growth in Germany but revenue falls
Vodafone Group PLC (LSE:VOD) reported an improved performance in Germany and in its Business arm although group revenue declined.
The FTSE 100-listed telco said group revenue in the first half fell 4.3% to €21.94 billion from €22.93 billion due to adverse foreign exchange rate movements and the disposal of Vantage Towers, Vodafone Hungary and Vodafone Ghana.
Group service revenue increased 4.2% to €18.62 billion, or 2.3% excluding Turkey, with both Europe, up 1.5%, and Africa, up 9%, growing.
Vodafone reported a sequential improvement in Germany with growth of 1.1% in the second quarter compared to a fall of 1.3% in the first quarter and continued acceleration in Vodafone Business with 4.4% growth in the first half.
Margherita Della Valle, chief executive, said: “During the first half of the year, we have delivered improved revenue growth in nearly all of our markets and have returned to growth in Germany in the second quarter.”
“Vodafone's transformation is progressing,” but “much more needs to be done,” she added.
Adjusted Ebitda was flat at €6.38 billion and the firm reiterated full-year guidance with adjusted EBITDAaL expected to be 'broadly flat' at around €13.3 billion and adjusted free cash flow to be 'around' €3.3 billion.
Net debt down fell 20% to €36.24 billion from €45.52 the year before but was higher than the €33.4 billion figure reported as at March 31.
The dividend was unchanged at 4.50 cents.
7:00am: FTSE 100 called lower ahead of US inflation figures
The FTSE 100 is expected to edge lower at the open as investors look ahead to important economic data in the UK and the US today.
Spread betting companies are calling London’s lead index down by around 13 points after closing up 65.28 points, 0.9%, at 7,425.83 on Monday.
UK unemployment figures and average earnings figures will provide the early focus in London, before attention switches to the US this afternoon for October’s inflation data.
Craig Erlam at Oanda said: "Inflation in the US is expected to have fallen to 3.3% last month which is within touching distance of the Fed's 2% target. While the final push is expected to be the hardest, it will give the central bank some comfort that, despite the economy and labor market displaying remarkable resilience, a soft landing may still be possible."
Ahead of the data, US markets were mixed with the Dow higher, but S&P 500 and Nasdaq lower.
Back to London, and there will be another hefty batch of corporate news with Vodafone, Imperial Brands, Wise and Land Securities to release updates.