- FTSE 100 to close 25 points higher
- Standard Chartered leads risers, up 6.5%
- Energy price cap to drop 12%
15:59pm: FTSE 100 to close higher but Nvidia steals the spotlight
The FTSE 100 is set to see out a slow Friday by closing 22 points higher, with a 7% jump in Standard Chartered shares helping lead the pack.
Confirming a 50% hike to the annual dividend and a US$1 billion share buyback, the lender's boss Bill Winters wasn't completely satisfied with the shares.
"The share price is crap. I know that's going to be a quote," Winters said in response to a question on the bank’s valuation. Right he was.
Not so "crap" is Winters’ £7.8 million remuneration package for 2023, which was more than 40% higher year on year.
There were few other UK movers on Friday, but households will have initially welcomed Ofgem's 12% cut to the price cap.
Yet, some could find themselves seeing little in the way of savings.
This is because daily standing charges are set to increase to a combined 91.35p per day for standard variable tariff holders, compared to around 50p at the start of the energy crisis in early 2019, as Ofgem’s new price cap allows energy suppliers to recoup debt
In the US, Wall Street continued its record week with another piece of history as Nvidia became the first chip maker to reach a US$2 trillion valuation.
When dealing in the trillions, monetary values become somewhat abstract, but to put things into context, Nvidia shares are currently worth more than Brazil’s annual GDP and around the same as Italy’s.
Only Saudi Aramco, Apple Inc and Microsoft have higher market caps than the chipmaker.
15:39pm: Nvidia clears US$2 trillion but analysts have questions
Nvidia jumped around 1.5% to reach a US$2 trillion valuation, the first chip maker to ever achieve the feat.
The gains are helping propel the Dow Jones around 200 points higher, while the S&P 500 and the Nasdaq are up 15 and 2 points, respectively.
Kathleen Brooks, research director at XTB, said: "The record stock market rally for Nvidia stocks makes us shudder to think what would have happened if the chip maker had delivered weak earnings or weaker forecasts.
"However, while we doubt that Nvidia is going to continue adding $200bn + to its market cap in a single day, AI is a key theme for markets right now.
"We don’t know if Nvidia is in a bubble or not, and anyone who says they know the answer – don’t believe them. But when one stock dominates, questions should be asked.
"For example, is it justified that Nvidia’s market cap is many times that of Exxon Mobil, even though hydrocarbons are still essential to everyday life, and AI requires a huge amount of power at this stage of its evolution?
"And is the AI trade a bet on the speed of Big oil’s demise or is it merely collateral damage as investors pile in to get a slice of the AI pie?"
15:01pm: House buyers warned as sub-1% mortgages roll out
First-time buyers are being warned that the newly launched sub-1% mortgage could come with some hidden surprises.
Lenders will roll out the new rates from the start of next week for buyers of newly built properties.
The scheme, which has been dubbed "the biggest innovation in the mortgage market since Help to Buy", will see the housebuilders pay a portion of the interest rate bill for up to the first five years of the loan.
However, experts have warned that once this period comes to an end homeowners could be faced with a steep spike in their bills.
With the current average interest rate sitting at around 5.75%, according to Moneyfacts, it means those using the scheme could see their repayments surge fourfold within as little as two years after receiving the loan.
14:40pm: Wall Street rally continues as Nvidia targets US$2 trillion
Wall Street has opened higher on Friday, keeping going the good fortunes brought along by Nvidia's record gains.
The Dow Jones is trading around 90 points higher at around 39,100, while the S&P 500 is up 20 points to 5,100.
The Nasdaq Composite lifted around 85 points higher to over 16,100.
Nvidia is still defying expectations as its shares opened 4% higher, building on the US$270 billion added on Thursday.
The gains mean it's on track to become the first chip maker to have a US$2 trillion valuation.
This week’s #chartoftheweek looks at Nvidia’s performance relative to the S&P and the Magnificent 7 this year, after their knockout earnings release this week.
NVDA reported record revenue growth after the bell on Wednesday – with FY24 revenue coming in up 126% Y/Y. The stock… pic.twitter.com/jbHiAbO6ZD
— FactSet (@FactSet) February 23, 2024
$NVDA shareholders celebrating as they cross $2T in market cap pic.twitter.com/VKHSI8TBXX
— Ticker History ???? (@TickerHistory) February 23, 2024
14:25pm: China real estate crisis worsens with Moody's rating withdrawals
China's property crisis has suffered another blow after Moody's, the credit rating firm, withdrew a horde of its scores from key industry players.
Immediate removals have been issued to 11 Chinese firms including Logan Group, Ronshine China and Zhenro Properties Group.
Moody's said the decision to rubbish the companies' rankings was down to "business reasons".
The decision comes after the group removed its Baa3 rating from China Great Wall Asset Management, a leading bad-debt manager, and reduced its outlook for Chinese sovereign bonds.
14:12pm: Standard Chartered's medium-term targets impress analysts
Stocks are struggling to get going on Friday, with the FTSE 100 up around 6 points after it attempted to edge higher during lunch.
Standard Chartered continued to be the key standout mover on Friday, with its shares up around 10% on the back of a well-received set of results.
Investors would have been pleased to see that the lender is predicting net interest income of between US$10 billion and US$10.25 billion in 2024, with RoTE holding steady at 10%.
However, exposure to China’s real estate market is a “thorn in the side of the business”, said AJ Bell’s investment director Russ Mould, while an $850 million write-down on its investment in Chinese bank Bohai added a bit of a sting to the earnings.
Yet “medium-term returns targets are ahead of where the consensus is sitting so if these can be delivered they could help lift the company’s valuation”.
Emerging-market exposure, however, will remain a source of unpredictability “which may get in the way of these aspirations”.
13:52pm: FTSE 250 drops as Domino's Pizza suffers broker downgrade
As the FTSE 100 struggles ever so slightly to shift higher, its erratic little brother, the FTSE 250, has sunk around 60 points, undoing a portion of the gains achieved on Thursday.
Leading the fall is Domino's Pizza Group, the master franchise of the takeaway, after its shares sunk around 5% on the back of a Barclays downgrade.
Analysts at the bank lowered their price target for the stock from 460p to 400p and dropped its rating from 'overweight' to 'equal weight'.
Other fallers include TUI (-4%), Diversified Energy (-3%) and ME Group (-3%).
Attempting to push the index the other way are Puretech Health (+8%), TBC Bank (LSE:TBCG) (+3%) and Dunelm (+2%).
13:35pm: CAB Payments boss steps down after messy IPO
CAB Payments boss Bhairav Trivedi will step down next month, less than a year after the fintech company listed on the London Stock Exchange.
Last July, CAB became one of the UK's largest IPOs of 2023 when it floated at around £800 million.
However, in the following three months shares tanked 80% as its profits appeared to be falling below initial guidance.
Trivedi will be replaced by outsider Neeraj Kapur and will work as a strategic advisor to help smooth the transition in leadership.
Shares remain unaffected by the news, trading flat on Friday, but still down around 70% since listing.
12:53pm: Wall Street to feel hangover after Nvidia's historic session
Wall Street is set to open around slightly higher on Friday, building on Thursday's record gains from Nvidia, which saw all US indices close at record highs.
The Dow Jones is set to open around 60 points higher at around 39,100, while the S&P 500 is looking to begin trading 4 points higher at around 5,100.
The Nasdaq is expected to slide around 3 points at around 18,000 when markets open.
Nvidia added US$270 billion on Thursday, the largest single-session value gain in market history and Friday is expected to see the rally continue with pre-market trading pushing the AI chipmaker up around 2%.
Over in the UK, Polar Capital Technology Trust hit a new all-time high and other investment trusts including Scottish Mortgage Investment Trust PLC and Manchester & London Investment Trust plc enjoyed strong gains on Thursday after Nvidia's blowout results overnight.
The pair are two of the 13 London-listed investment trusts that have large holdings in the US semiconductor giant.
12:37pm: Serco ordered to stop using biometric data to monitor staff
Shares in outsourcing firm Serco slipped 1.5% after a UK watchdog ordered the FTSE 250 company to axe the use of its facial recognition technology (FRT) and fingerprint scanning to monitor staff.
Some 2,000 workers at Serco's leisure businesses have had their biometric data unlawfully processed, Britain's data protection watchdog, the Information Commissioner's Office, revealed.
The data was being used to monitor attendance and subsequently decide pay for staff members at 38 leisure centres owned by or associated with Serco.
"They failed to show why it is necessary or proportionate to use FRT and fingerprint scanning for this purpose when there are less intrusive means available such as ID cards or fobs," the ICO said.
"Employees have not been proactively offered an alternative to having their faces and fingers scanned to clock in and out of their place of work, and it has been presented as a requirement in order to get paid."
Serco has been ordered to delete all biometric data that it doesn't legally need to hold.
12:02pm: Standard Chartered boss calls bank's share price 'crap'
Standard Chartered boss Bill Winters said he thinks the bank's share price is "crap" after he revealed a major overhaul to streamline the company.
“You might be thinking [the stock prices is crap] and you’d be right, the stock price is crap [but] we’re completely focused on addressing the shareholder concerns. We are completely optimistic about our ability to continue to deliver on this plan,” he said.
Winters enjoyed a 22% bump in his pay package to $9.9 million, according to additional Bloomberg analysis.
Shares in the bank are up 9.5% on Friday after the lender said it would be hiking its dividend by 50% and launched another US$1 billion buyback.
11:40am: Gas prices sink to lowest levels in three years
Wholesale gas prices have dropped to the lowest levels since the energy crisis began, providing both households and businesses with confidence that prices may begin to fall.
Dutch front-month futures, the benchmark European contract, dropped under €23 per megawatt hour.
It marks the lowest price since May 2021, with gas prices down more than 90% since they peaked at €339 per megawatt hour following Russia's invasion of Ukraine.
UK prices have experienced a similar percentage drop as they fell to 57p per therm from peaks of 640p back in August 2022.
Earlier today, Ofgem announced that energy bills will fall to a two-year low in April as the price cap is lowered to £1,690 from £1,928 on an annualised basis.
Per kilowatt hour, electricity will cost 24.50p and gas will cost 6.04p for those on standard variable tariffs, down from 28.62p and 7.42p respectively previously.
11:10am: London's woes continue as US, Japanese, German and French markets reach record highs
Yesterday, all three of New York's indices reached record highs after Nvidia's 16% jump added US$270 billion to the market, marking the largest single-session gain in the history of markets.
However, it wasn't just the US soaring. Tokyo, Frankfurt and Paris all saw their markets reach record highs on Thursday.
London was the only outlier, having lifted around 22 points.
"No bubbles please, we’re British... We don't like all this froth," Neil Wilson, chief market analyst at Finalto said.
Jokes aside, prospects for the UK market appear to be growing cloudier every day.
While Nvidia was soaring in the US, over in the FTSE 250, similar-sounding Indivior led the risers after it announced plans to shift its primary listing to the US.
If it makes the move, the drugmaker will join a growing exodus from the London market, which has been hit by a post-Brexit downturn in liquidity and lacklustre valuations for those businesses quoted on the LSE.
Shareholders of TUI, the travel group, last week voted to cancel its London listing in favour of Frankfurt, while Flutter, the company behind Paddy Power, recently pressed 'go' on a New York quote.
Before that, mining giant BHP, building materials group CRH, packaging group Smurfit Kappa and builders' merchant Ferguson turned their back on the FTSE 100 for primary listings in Australia or the US.
And there was resignation rather than shock when Cambridge-based chip designer ARM Holdings opted to IPO on Nasdaq, a move vindicated a more than doubling of the share price post floatation.
Meanwhile, in the US, more cash continues to be pumped into Wall Street every day, with it only a few weeks ago that Meta Platforms achieved Nvidia's same mileston with a US$200 billion gain in a single session.
10:54am: FTSE 100 slips as IAG set to see Air Europa deal scrutinised
The FTSE 100 has slipped 5 points despite Standard Chartered rallying 8% after it ramped up bonuses and shareholder returns due to operating income jumping by 10%.
Leading the fallers with 2% drops are St James's Place, WPP and British Airways owner IAG.
International Consolidated Airlines Group saw shares dip after it was revealed Brussels was preparing to reveal its objections to the company's second attempt to purchase Air Europa, the Spanish airline.
The European Commission opened a probe into the deal last month, aimed at deciding whether the purchase would negatively affect consumers through the reduction of competition.
Advertising agency WPP also continued to shed its value, having led the FTSE 100 fallers on Thursday.
Mark Crouch, market analyst at eToro, said: “Advertising is typically first on the chopping block in times of economic uncertainty and with inflationary pressures hampering businesses across the globe in recent times, this has translated into an underwhelming set of results for WPP."
10:08am: Forget the consumer confidence drop, says economist
Despite consumer confidence worsening in February, analysts at Pantheon Macroeconomics believe it shouldn't be something to worry too much about.
Samuel Tombs, chief economist at Pantheon said: "Don’t worry about the small drop in GfK’s composite index in February, which is either just volatility or a seasonal drop, or both.
"The composite index is not seasonally adjusted, but consumers' confidence takes a knock every February, perhaps because the post-Christmas sales end.
Tombs expects that the index will continue to improve as soon as there is more data released indicating inflation is falling, with more spending power set to increase when a likely string of tax cuts comes through in April.
"All told, then, we expect households' real expenditure also to grow at an average quarter-to-quarter rate of 0.5% in 2024, broadly in line with disposable incomes," he concluded.
GfK Consumer Confidence fell to -21 in February from -19 in January, defying forecasts for a slight improvement to -18.
This marked the first fall in four months for the indicator.
9:50am: Energy price cap's hidden fee leaves households 7.5% worse off
While households across Britain will be rejoicing at headlines that energy bills will fall to two-year lows in April, experts have been quick to notice a small print in the price cap which could leave people 7.5% worse off.
Ofgem is allowing providers to charge a temporary price above the price cap to allow them to recoup some of the £3.1 billion energy debt built up by struggling customers.
Suppliers can therefore charge an extra £28 a year on top of the new £1,690 price cap to customers on direct debit and standing credit contracts (prepayment meters will be unaffected).
However, the energy regulator did cancel the £11 annual fee to help support COVID debts, meaning the total increase on top of the cap will be £17.
In real terms, households with therefore be saving on average £221 instead of £238, representing a difference of 7.1%
9:37am: FTSE 100 flat as energy cap and consumer confidence revealed
The FTSE 100 is holding flat early on, as an albeit quiet day for the City got underway.
The big news though was that energy prices will fall to a two-year low in April, thanks to a recent drop in wholesale costs, according to Ofgem.
This offers a positive prospect after consumer confidence was revealed by GfK on Friday to have taken a hit between January and February.
9.15am: Hornby rides higher after Mike Ashley ups stake
In small caps, AIM-listed train set maker Hornby saw its shares chug close to 40% higher after Mike Ashley's Frasers revealed it had upped its shareholding.
Retail group Frasers purchased 11,107,575 issued shares in the company, Hornby said on Friday, taking its total number owned to 15,179,424, or 8.9%.
Hornby’s products are already stocked in Frasers-owned GAME stores, with the latter’s increased ownership set to precede other partnerships between the two.
Other small cap movers on Friday include Coro Energy (+40%), Empyrean Energy (+30%), Active Energy (-13%) and Esken (-12%).
8.50am: The morning so far
The FTSE 100 was looking buoyant in the first few minutes of exchanges, having added 20 points to 7,705 despite flat pre-market expectations.
The lead index has since fallen back, but remains in the green at 7,695.
Standard Chartered did much of the heavy lifting, with the banking big cap surging nearly 7% to 646p following an impressive annual earnings call.
Total operating income for the bank was up 10% to $17.4 billion in 2023, with net interest income (NII) adding 23% to $9.6 billion on a 1.67% net interest margin.
Buyback, dividends and executive pay featured prominently in the results.
Macroeconomic news was less bullish, with the GfK Consumer Confidence indicator falling to -21 in February from -19 in January, defying forecasts for a slight improvement to -18.
This marked the first fall in four months for the indicator, suggesting weaker confidence in personal finances and the broader economic outlook.
On the bright side, households’ expectations for their personal finances over the coming year were unchanged at zero, a result analysts called “encouraging”.
Evergy customers received some good news, with Ofgem cutting the price cap down to £1,690, representing a 12.3% fall on the previous quarter for an average household paying by direct debit for dual fuel, making for a drop of £238 year-on-year.
Households should save around £20 a month under the price cap.
8.13am: Standard Chartered lifts FTSE 100 higher
The FTSE 100 lead index added 20 points to 7,705 in opening exchanges, beating flat pre-market expectations.
Standard Chartered led the blue chips by adding over 5% following the publication of its annual financials.
Operating income was up 10% to $17.4 billion in 2023, with net interest income (NII) adding 23% to $9.6 billion on a 1.67% net interest margin.
Return on Tangible Equity (RoTE) added two percentage points to 10.1%.
Credit impairment charges fell $308 million to of $528 million for the year for a 1.7% annual loss rate.
NII for 2024 is expected to come in between $10 billion and $10.25 billion, with RoTE holding steady at 10%.
7.57am: UK consumer confidence slips
The GfK Consumer Confidence indicator in the UK fell to -21 in February from -19 in January, defying forecasts for a slight improvement to -18.
It marks the first time the GfK indicator fell in four months, suggesting weaker confidence in personal finances and the broader economic outlook.
Meanwhile, households’ expectations for their personal finances over the coming year were unchanged at zero, making it the only component not to decline.
GfK called this “encouraging”.
Joe Staton, client strategy director at GfK, said: “This metric is key to understanding the financial mood of the nation because confident householders are more likely to spend despite the cost-of-living crisis.”
The spectre of a high-for-longer interest rate climate was a primary reason for the slip in confidence, said analysts.
7.35am: Energy price cap to fall to £1,690
The price cap, which sets a maximum rate per unit that can be charged to customers for their energy use, will fall by 12.3% on the previous quarter from 1 April until 30 June 2024.
This equates to £1,690 per year for an average household paying by direct debit for dual fuel, a drop of £238 year on year.
Households should save around £20 a month under the price cap.
Jonathan Brearley, chief executive of Ofgem, warned there was more to do to ensure fair rates for customers.
“This is good news to see the price cap drop to its lowest level in more than two years – and to see energy bills for the average household drop by £690 since the peak of the crisis – but there are still big issues that we must tackle head-on to ensure we build a system that’s more resilient for the long term and fairer to customers.
Ofgem will allow suppliers a temporary additional payment of £28 per year “to make sure suppliers have sufficient funds to support customers who are struggling”,
The energy price cap was introduced by the government and has been in place since January 2019
7.15am: Quiet start for Ftse 100
FTSE 100 is set for a quiet start according to the spread bet firms despite another bonanza day for tech stocks on Wall Street.
Early forecasts were for London’s blue-chip index to open more or less unchanged after yesterday’s 22-point gain.
Footsie though is being overshadowed again by the US, where the S&P 500 hit another record and also Japan where stocks too are hitting new highs.
The US was all about Nvidia yesterday with the chipmaker rocketing 16% and adding US$277 billion to its market value after more blockbuster results.
Nvidia is now within a whisker of being worth US$2 trillion.
In the UK, bank Standard Chartered has posted underlying annual profits of US$5.7 billion while Ofgem has cut the energy price cap by 12%.