- FTSE 100 closes down 36 points at 7,631
- House prices rise 0.7% in January
- US interest rate decision after London close
4:40pm: FTSE slides into the close on fresh US banking worries
The FTSE 100 closed down 0.5% at 7,630.57 as banking nerves resurfaced in the US.
Shares in New York Community Bancorp, the regional lender that purchased deposits from Signature Bank last year, fell a record 45% after reporting a fourth-quarter loss and dividend cut.
The KBW Regional Banking Index tumbled as much as 4.8%, the most in a day since May, bringing back memories of the banking turmoil that followed the collapse of the Silicon Valley Bank in March.
On Wall Street, the Dow gave up early gains while the S&P and Nasdaq remain firmly in the red with the Fed rate decision due later.
3:45pm: Novo Nordisk (NYSE:NVO) (Novo Nordisk (NYSE:NVO)) cements number one spot in Europe
Over to Europe, and ovo Nordisk shares rose 4.3% to hit a record high after its reported soaring sales of its obesity and diabetes drugs and higher profits.
This pushed the Danish company’s market value through $500 billion, cementing its position as Europe’s most valuable company, ahead of France’s luxury goods group LVMH.
"The weight-loss drug industry has become one of the hottest areas in business. Consumers are eager to use the products amid signs they have positive effects, and drug companies are seeing dollar signs in their eyes as they rush to launch new treatments," said AJ Bell's Russ Mould.
"Novo Nordisk has been at the heart of the weight-loss boom and its latest results show a business doing incredibly well. Sales across obesity care and diabetes treatments are growing fast and more than offset weakness in rare disease drugs."
On Wednesday, the Copenhagen-based pharmaceutical firm reported net profit of DKK83.68 billion, in 2023, up 51% from DKK55.53 billion.
This was on net sales of DKK232.26 billion, up 31% from DKK176.95 billion.
2:46pm: Nasdaq slips; Boeing up on earnings beat but pulls guidance
The Nasdaq has fallen sharply weighed by falls in Alphabet and AMD, although Microsoft has climbed after well received results.
Shortly after the opening bell, the Dow Jones Industrial Average was up 0.3% at 38,581.41, the S&P 500 was down 0.5% at 4,900.61 and the Nasdaq Composite was down 1.1% at 15,333.83.
Alphabet was down 4.8% after revenue at its core Google arm fell short, while AMD's weak outlook saw shares decline 4.2%.
Boeing rose 2.8% after better-than-expected earnings although it declined to offer gudance as its chief executive believes "now is not the time" to set out forecasts.
Boeing is dealing with another wave of safety issues, in the wake of a mid-air incident on an Alaska Air Group flight earlier in January, which saw the blowout of a door plug on a 737 MAX 9 jet.
Calhoun said that Boeing would usually lay out forecasts for the year ahead at this point. However, "now is not the time for that".
Elsewhere, Mastercard jumped 2.9% after reporting a jump in quarterly and yearly revenue and income.
The financial services company reported that revenue in the fourth quarter rose 13% to $6.55 billion from $5.82 billion a year earlier.
The increase was attributable to growth in our payment network and our value-added services and solutions, MasterCard said.
In economic news, the US private sector added fewer jobs than expected at the start of the year, numbers from payroll processor ADP showed.
Private sector employment increased by 107,000 jobs in January, easing from a downwardly revised 158,000 increase in December, and falling short of the consensus of 145,000.
1.37pm: Here’s a recap of the major moves on the market today
H&M, the Swedish clothing retailer, unexpectedly saw its boss quit as the company continued to suffer a slowdown in sales.
Shares in the group dropped close to 10% to 151.74 Swedish krona (SEK) on the back of the news.
BSF Enterprise PLC (LSE:BSFA)’s shares were knocked 18% lower following publication of the London-listed biotechnology company’s full-year financial results.
The group, which is developing lab-grown meat alternatives, posted net losses of £1.5 million due to increased corporate, legal and advisory costs following the acquisition of tissue engineering company 3D Bio-Tissues (3DBT).
Ingenta PLC (AIM:ING) shares were off 11% following the AIM-listed software group’s latest trading update.
Unaudited revenues increased 3% year on year to £10.8 million, with adjusted earnings adding 10% to £2.2 million.
NWF Group PLC (AIM:NWF), the food, fuel and feeds distributor, sank more than 6% after its profit and sales dropped and a new site investment dampened forecasts.
12:26pm: Nasdaq set to open sharply lower
The Nasdaq is expected to open sharply lower after several tech giants failed to live up to much-hyped expectations when reporting earnings.
In pre-market trading, futures for the Dow Jones Industrial Average were up 0.1%, while those for the S&P 500 were down 0.5% and contracts for the Nasdaq 100 futures declined 1.2%.
Alphabet fell 5.6% after revenue at its core Google business disappointed despite an overall earnings beat, while AMD slid 6.0% on a weak outlook.
Microsoft held up better with shares down 0.7% after sold looking earnings while Tesla is down 3.0% after Elon Musk’s $55 billion pay package from Tesla was voided by a Delaware judge
Later in the session, the US Federal Reserve’s monetary policy committee will conclude its two-day meeting and release a statement on monetary policy.
Economists widely expect the central bank to hold interest rates steady at a target range of 5.25 to 5.5%.
Elsewhere, ADP payrolls data, plus earnings from Boeing, Mastercard and Qualcomm will hit the wires.
11:54am: House prices likely to flatline
Martin Beck, chief economic advisor to the EY ITEM Club, thinks while a relatively shallow house price cycle is “good news in terms of maintaining financial stability and avoiding the experience of previous price corrections where large numbers of borrowers fell into negative equity, it's likely to limit the scope for house price growth in the near-term.”
Even if the interest rates fall in line with his expectation of a total of 125 basis points of cuts this year, mortgage rates will still be significantly higher than for much of the last decade or so.
As a result, he thinks this year will likely see house prices broadly flatline, rather than stage a significant rebound.
11:05am: UK business confidence at two-year high, Lloyds
UK businesses started 2024 with their confidence at the highest level in nearly two years boosted by cooling inflation and hopes for interest rates cuts, according to a survey published on Wednesday.
The Lloyds Bank Business Barometer jumped by nine points to 44% this month, its strongest since February 2022.
Hann-Ju Ho, senior economist Lloyds Bank Commercial Banking, said weaker inflation and hopes of interest rate cuts pushed the index to its highest level for the month of January since 2016.
"With ongoing geopolitical issues and a general election on the horizon, businesses will have factored these into their risk radars and will be working to prepare for any potential impacts on their trading prospects," he said.
"Also, half of all companies say they’re planning to increase headcount in the coming year. Despite that and the changes to minimum wage that will come into force in April, expectations for staff pay fell back following last month’s increase."
Companies also scaled back plans for increasing the prices they charge for a second month in a row, the first back-to-back decrease since June 2022, Lloyds said.
10:41am: GSK targets £3billion sales for RSV vaccine
Sticking with GSK, boss Emma Walmsley said the company expects its new RSV vaccine to bring in annual sales of “at least £3 billion” in future.
Speaking to journalists after the company released better-than-expected 2023 results, she said: "We’re absolutely delighted with the RSV launch, in four months reaching blockbuster status."
She explained: "We’re only 11% penetration so far in the US. We do expect ‘24 to be a year of good growth as we continue to drive penetration. We’re excited about being able to hopefully add a further cohort of the 50 to 59 year olds."
The RSV vaccine is currently approved for people aged over 60, but GSK is seeking regulatory consent for those aged over 50.
10:22am: GSK marked down despite beating forecasts
GSK’s share price has been marked down 1.0% despite fourth quarter results beating expectations.
Richard Hunter, head of markets at interactive investor, commented “GSK has delivered a reminder that it remains a serious player on the global stage, with successful product launches being followed by a strong pipeline of potential new drugs.”
Broker Jefferies said fourth quarter sales were 5% ahead of forecasts, with Specialty 9% ahead, Vaccines 6% above as both Arexvy & Shingrix beat, and General Medicines 1% above.
Jefferies said its 2024 outlook suggests potential 1% to 2% sales and 2% to 3% EPS consensus upgrades.
The broker said the upgraded 2026 aims are broadly in-line with consensus, but the hiked 2031 sales & margin vision is much more bullish than consensus.
Jefferies was forecasting £36.2 billion, with the consensus just £30.9 billion, compared to GSK’s new prediction of £38 billion.
9:25am: Retail stocks slip on weak H&M sales
Retailers are on the back foot after H&M missed profit forecasts for the fourth quarter.
Shares in the Swedish fashion retailer fell 7.9% after it said the late arrival of more normal winter weather “left a relatively brief window of time in which to sell the autumn assortment.”
The group also expects the cost of markdowns in the first quarter to be slightly higher compared to the year before.
The company also announced a new CEO, Daniel Ervér, who will take over with immediate effect.
Outgoing CEO Helena Helmersson said she had decided to leave the company after four years in the top job, adding the role has been "very demanding at times for me personally".
H&M said sales for December and January fell by 4% compared to the previous year.
Primark owner, AB Foods fell 1.2%, M&S dipped 1.1%, B&M and JD Sports eased 1.0% and Next by 0.7%.
8:53am: Harbour Energy knocked by Goldman double-downgrade
The FTSE 100 has recouped its early losses to trade little changed now.
Stocks on the move include Aviva, up 0.5%, after Jefferies reiterated a ‘buy’ rating and lifted its buyback forecasts to £350 million for 2023 ahead of results.
Antofagasta is up 0.6% after Citi raised its price target to 2,100p and reiterated a ‘buy’ rating.
In the FTSE 250, Harbour Energy is down 4.9% after a double-downgrade to ‘sell’ from ‘buy’ with a price target of 260p, down from 300p.
8:30am: Vodafone falls after rejecting Iliad's Italian plan
Vodafone Group PLC (LSE:VOD) tops the FTSE 100 fallers after Iliad Group said the UK-listed telco had rejected a further proposal to merge the two group’s Italian businesses.
Iliad said the plan to merge iliad Italia and Vodafone Italia would have created the most innovative telecom challenger for Italy but Vodafone had failed to accept the offer.
Iliad’s revised proposal for a 50/50 merger would included Vodafone getting €6.6 billion of cash and a €2.0 billion shareholder loan.
That bid would’ve given Vodafone an extra €100 million in cash compared to Iliad’s initial proposal last month.
Iliad also offered to give up the call options that would’ve allowed it to gain greater control over the venture over time.
Adding to the downbeat sentiment on the stock price, Deutsche Bank lowered its price target to 145p from 165p, although it has kept a 'buy' rating on the firm.
8:15am: Stocks slip in London as tech earnings underwhelm
The FTSE 100 fell as trading began on Wednesday ahead of interest rate decisions in the US and UK and after tech earnings in the US failed to live up to inflated hopes.
At 8:15am, London’s blue-chip index was down 0.2% at 7,648.15 while the FTSE 250 fell 0.3% at 19,299.15.
Jim Reid at deutsche Bank noted the main event over the last 24 hours occurred after the US closing bell as results from Microsoft and Alphabet last night soured risk sentiment.
“Both of the tech giants narrowly beat revenue and earnings estimates, but saw an underwhelming reaction in after-hours trading.”
“Alphabet slid more than 5% amid lower-than-anticipated advertising revenues for Google.” “Microsoft declined by as much as 3% initially, arguably signalling some overextension of the recent strong rally,” he noted.
The US Federal Reserve and the Bank of England are both expected to leave interest rates unchanged in the next two days with markets focused on comments regarding the timing of any future rate cuts.
Back in London, and GSK eased slightly, down 0.5%, despite raising its sales outlook out to 2031.
Sean Conroy at Shore Capital said fourth quarter results were ahead consensus expectations with the recently launched RSV vaccine, Arexvy, again surpassing the street’s expectations.
7:36am: GSK raises sales outlook ahead of 'major' prodyct launches
GSK PLC (LSE:GSK, NYSE:GSK) on Wednesday increased its outlook for sales out to 2031 driven by a raft of major product launches from 2025.
Chief Executive Emma Walmsley said: “We are now planning for at least 12 major launches from 2025, with new Vaccines and Specialty Medicines for infectious diseases, HIV, respiratory and oncology.”
“As a result of this progress and momentum, we expect to deliver another year of meaningful sales and earnings growth in 2024, and we are upgrading our growth outlooks for 2026 and 2031.”
The FTSE 100-listed pharmaceutical company raised its 2021-2026 outlook for the compound annual growth rate (CAGR) of sales to more than 7% and for adjusted operating profit to more than 11% CAGR.
The 2031 sales outlook is increased to more than £38 billion with adjusted operating margin seen broadly stable through dolutegravir patent loss of exclusivity.
GSK’s improved outlook came as it unveiled 2023 sales of £30.3 billion, up 5% on 2022, and up 14% ex COVID.
Vaccines sales rose 25%, Shingrix sales reached £3.4 billion, up 17%, and Arexvy sales totalled £1.2 billion.
7:17am: UK house prices rise in January
UK house prices rose 0.7% month on month in January, according to latest figures.
The data from Nationwide showed prices are now down just 0.2% when compared to last year.
The average house now costs £257,656 compared to ££257,443 last year.
Robert Gardner, Nationwide's chief economist, said it was the strongest outturn since January 2023.
“There have been some encouraging signs for potential buyers recently with mortgage rates continuing to trend down.”
“This follows a shift in view amongst investors around the future path of Bank Rate, with investors becoming more optimistic that the Bank of England will lower rates in the years ahead.”
“While a rapid rebound in activity or house prices in 2024 appears unlikely, the outlook is looking a little more positive
“How mortgage rates evolve will be crucial, as affordability pressures were the key factor holding back housing market activity in 2023.”
7:00am: FTSE 100 seen little changed after mixed tech earnings, ahead of US rate call
The FTSE 100 is expected to open marginally higher on Wednesday as the market awaits the interest rate decision and commentary from the US Federal Reserve.
Spread betting companies are calling London's blue-chip index up by around 3 points after closing up 0.4% at 7,666.31 on Tuesday.
In the US, markets closed mixed with losses for the Nasdaq and S&P 500 but a gain for the Dow Jones.
After London's close today, the US central bank is widely expected to leave interest rates unchanged with the focus squarely on comments by Fed chair Jerome Powell on the timing of any future rate cuts.
Roman Ziruk at global financial services firm Ebury thinks the Fed will use Wednesday’s policy meeting to "strike a slightly less dovish tone."
"The Fed will likely make a hawkish comment on the excessiveness of market expectations for rate cuts in March, especially in the context of recent economic data which points to rather strong US consumer demand and a tight labour market," he said.
"We have seen an upwards surprise in both US retail sales and GDP growth recently, so I would not be surprised if the Fed incorporated this into their communications," he added.
After Tuesday's close in New York earnings from Alphabet, Microsoft and AMD failed to spark further gains in share prices with Alphabet down 5.2% and AMD losing 6.5%. Microsoft fared better, down 0.3%.
Ipek Ozkardeskaya at Swissquote Bank said: "Anything less than mind-blowing is weak at the current valuations. Therefore, profit taking in Microsoft and elsewhere is perhaps on today’s menu."
Back in London, and an update from GSK will be the main early focus.