- FTSE 100 gains 5 points
- Ocado posts rare profit, but M&S dispute emerges
- British Airways owner IAG profits double
The FTSE 100 has finished up just 5.04 points higher at 7,630.02, having topped 7,678 in mid-afternoon.
Kitchen designer Howden Joinery and toothpaste and painkiller maker Haleon were the top risers, up 7.5% and 6% respectively.
Ocado could not hold onto its best gains, but also finished above its lowest levels in the end, up 3.2% as the gloss of a rare profit was taken off by its spat with JV partner Marks and Spencer.
Croda and Taylor Wimpey are also on the leaderboard after results-inspired falls earlier in the week, while Rentokil, Ashtead, Admiral and Melrose are up ahead of results due next week.
British Airways owner IAG's big improvement in profits last year was not big enough, thanks to a slight miss on fourth-quarter, meaning it was one of the biggest blue-chip fallers, down 3%.
Either side were hotel groups Whitbread and IHG, down 4.8% and 2.3% respectively. There may have been read-across from smaller sector peers PPHE Hotel Group Limited (LSE:PPH) and Dalata, which both posted results today.
The FTSE 250 finished up 42.3 points at 19,054.87, led by engineer Hunting and power generator Drax, with Serco a little behind.
Plus500 and Aston Martin Lagonda were bottom of the fallers.
4.02pm: Equity markets lose puff, gold sparkles
The post-prandial puff has certainly gone out of London's blue chips, while Wall Street's main indices have also not be able to hold onto their initial exuberance.
Market analyst Chris Beauchamp at IG says: “The morning session saw the FTSE 100 surge from a two-week low, but signs of weakness are returning in the afternoon session.
"The contrast with the Dax could not be more stark – UK data hasn’t been great, but German data has been dire, and yet the latter index has touched a new record high.
"Flows it seems trump valuation, leaving the FTSE 100 left out once more."
Gold hit a three-week high in the wake of the US inflation report, with silver also getting a boost.
April gold was last up $13.00 at $2,056.00. March silver was last up $0.275 at $22.70.
Nice $20 pop for gold after the US core PCE readout. Could this mark the beginning of the next bullish breakout? A move through $2065 would heighten the chance of that next leg higher coming to fruition.#XAUUSD pic.twitter.com/Md5qpjJ8fh
— Joshua Mahony (@JoshuaMahony) February 29, 2024
Analyst David Morrison at Trade Nation noted that two weeks ago, gold fell sharply and broke below $2,000 to sink to its lowest level in two months before bouncing back and then been mostly flat this week.
"It certainly feels that precious metals are off the radar as far as investors are concerned, if not completely out of favour. Perhaps we can blame cryptos for pulling the focus. That’s certainly where the action is at the moment."
Bitcoin continues to buzzsaw sideways today, hovering around the $63,000 mark after a 21% gain in the past week.
Jason Hollands, managing director at Evelyn Partners, says the recent rally might have something to do with the ‘halving’ event which is imminent, which he calls a notional restriction in supply and notes that it comes against a background of growing demand.
Bitcoin was trading at around $45,000 before the SEC approval for the first spot bitcoin ETFs.
"This might be setting crypto-enthusiasts’ world alight, but it would be wise to sound a note of caution before ‘fear of missing out’ might prompt novice investors to start piling their hard-earned cash into Bitcoin," Hollands said.
“It is hugely volatile, more so than any of the world’s established fiat currencies, and given that forex speculation has always been regarded as a risky game for retail investors, the same caveats must apply here.
"If you want to look at it as an investment asset rather than a currency – which many do, as it rarely functions as a currency – then unlike equities or bonds, there are no objective methods to assess value, even basic ones like a price/earnings ratio or yield."
3.44pm: Sainsbury's job cuts
J Sainsbury PLC (LSE:SBRY) plans to axe around 1,500 roles as it starts to unroll its plan to save around £1 billion of costs.
The grocer flagged its cost savings target in a strategy update earlier this month without giving any details, but today said the cuts would be at its customer contact centre in Widnes, in-store bakeries and local fulfilment centres.
“As we move into the next phase of our strategy, we are making some difficult, but necessary decisions,” chief executive Simon Roberts said.
3.20pm: Direct Line 'should expect better offer', plus other broker comments
Direct Line’s rejection yesterday of a 233p per share offer from Belgian group Ageas is a surprise, suggest analysts at Deutsche Bank, though they suspect a better offer is currently being drawn up.
“We are not surprised that there could be interest - it has been mulled as a target, notwithstanding wider consolidation in the UK P&C space,” said the German bank.
Looking around the other notable broker comment today, Liberum reiterated its 'buy' stance on Drax Group (LSE:DRX) after it posted a 66% jump in annual profit and hiked its dividend 10%.
The performance was underpinned by Drax's renewable energy generation, if that's what you call cutting down and burning rare forests.
Barclays commented on reports that Primark, part of Associated British Foods PLC (LSE:ABF), is in talks with Indian giant Reliance to start operations in the subcontinent on a joint venture or licensing agreement.
If this deal were to go through it would put them directly in competition with Zara and H&M in a fast growing apparel retail market, says the bank.
"We would see Reliance as a good partner for its expansion in India given its experience in the Indian retail space with brands like Trends and Yousta; they operate over 18,000 stores across the country and compete directly with Zara and H&M in India.
"Reliance, as India's largest retailer with multiple international brand partnerships, could provide a substantial advantage to Primark with its real estate and operational synergies."
3.01pm: Wall Street opens higher, FTSE dips
The FTSE 100 has dipped from recent intraday highs, but Wall Street stocks have opened higher after the news on inflation earlier, which was in line with expectations, or in others words for equity markets, was not as bad as some were fearing.
The tech-powered Nasdaq rose 0.5% and S&P 500 opened 0.3% higher, but the Dow Jones has dipped into the red.
Inflation, as shown by the core PCE deflator, increased by 0.4% on the month and the annual rate decelerated to 2.8% down from 2.9%.
"US stock indices have reacted positively to this news, and 2-year Treasury yields are lower by 6 basis points," said market analyst Kathleen Brooks at XTB.
"However, there collective sigh of relief from financial markets that the PCE data did not come in stronger than expected, is masking the evidence that shows the disinflation trend is slowing down, which could keep the Fed on pause for some time."
Ian Shepherdson at Pantheon Macroeconomics said he sees no reason to change his big picture view "that core inflation is falling and will continue to slide, thanks to the pass-through from slowing wage gains, improving supply chains, and margin re-compression.
"But the Fed is hyper-cautious after the “transitory” fiasco and a sustained run of relatively elevated core CPI/PCE prints, even due to a temporary surge in an imputed component which is incomprehensible to 99.9% of the population, increases the chance that the first easing is delayed beyond our May forecast."
12pm: US inflation measure cools
A key measure of US inflation rose by the slowest rate in nearly three years last month, which is likely to boost shares as it keep odds roughly unchanged on the first interest rate cut from the Federal Reserve.
The personal consumption expenditures (PCE) price index rose by 2.4% in January, the Bureau of Economic Analysis said, in the smallest year-on-year increase since early 2021. This followed a 2.6% rise in December.
January's core PCE deflator rose 0.42%, in line with the consensus, which was the largest increase in a year.
The core PCT inflation rate edged down to 2.8% in January 2024 from 2.9% in December.
1.35pm: Wall Street heading lower, London perking up
US stocks are expected to extend their decline on Thursday, ahead of key inflation data later, while the FTSE 100 is getting ever stronger as Wall Street wakes up.
In futures trading, the Dow Jones is seen leading the decline, with a 0.28% fall, followed by the S&P 500 down 0.21% and Nasdaq losing 0.16%.
Yesterday, the Nasdaq was the main faller, dropping by 0.55%, with the S&P down 0.17% and Dow down less than 0.1%.
The important macroeconomic release that investors will be watching closely is the core PCE reading of US inflation, which is the Federal Reserve’s preferred measure of prices.
"A higher-than-anticipated reading could put the final nail in the coffin of the idea of a pivot to rate cuts before the summer," said analyst Russ Mould at AJ Bell.
The last update on the PCE deflator for the fourth quarter saw it revised higher from 2.0% to 2.1% and we’ll see January numbers today.
Economists at ING said their expectations are for a 0.4% core month-on-month increase, "which in our view will endorse the recent hawkish repricing of Fed rate expectations. At the moment the Fed Funds future curve prices in 80bp of easing."
This "should be enough to deter another round of Fed dovish repricing for a bit longer".
12.57pm: Wincanton bid shows UK 'investment problems'
The knock-out bid for Wincanton earlier, illustrates some of the problems the UK stock market is facing.
Coming at a huge 103% premium to pre-bid share price, it is "a further illustration of public equity discount in UK markets", says Panmure Gordon's Simon French, as well as reflecting the higher cost of equity capital.
This is due to the UK pensions industry "being only one in the world underweight its own market".
To illustrate this in a tweet, French said that every major pension industry in the developed world is hugely overweight its domestic equity market, in other words pension funds invest much more in domestic companies than overseas ones.
The average overweight of developed countries is 2,089%.
The UK is 41% underweight its own companies, French says.
Every major pension industry in develop world is hugely overweight its domestic equity market - by an average of 2089%. The UK is 41% underweight its own. Even eliminating the anti-home bias would be constructive. And we wonder why we have an investment & productivity problem https://t.co/C2ke3KXriV pic.twitter.com/0tSmwZvKwC
— Simon French (@Frencheconomics) February 29, 2024
The FTSE 100 and FTSE 250 are both enjoying only a slightly higher bias so far today.
Howden Joinery and Haleon are topping the blue-chip leaderboard, up 7.4% and 5% respectively, with Ocado up 1% and IAG down 1%.
Premier Inn owner Whitbread is the biggest FTSE faller, down 5.6%. A note from UBS on the hotels sector noting that the UK competitive position for Premier Inn is "slightly" tougher than pre-Covid, though it "continues to be well positioned".
On the FTSE 250, Drax is the top riser, up 9% on the back of this morning's results.
Energy engineer Hunting is up 8.5% as its results showed earnings ahead of previous guidance, a bigger dividend and a record order book boosting confidence about the year ahead.
12.12pm: Bitcoin takes a breather
Bitcoin neared $64,000 overnight but the world’s largest cryptocurrency has flattened off today, with the market possibly pausing for breath as it approaches an all-time high against the US dollar of $69,000.
Bitcoin is moving sideways at either side of $63,000 in the European session.
Yesterday it closed below $62,500 after some selling pressure, daily gains for Wednesday exceeded 9%.
Yesterday was the strongest one-day session in over four months, and up 21% week on week and nearly 50% year to date, thanks to a combination of exchange-traded fund inflows and FOMO, according to our daily crypto report.
BlackRock’s iShares Bitcoin ETF (IBIT) took in a record $612 million in cash on Wednesday, with total net inflows across all 10 ETFs totalling $673 million, also a record, according to Bloomberg data.
11.35am: Wincanton's knock-out bid
US-listed GXO Logistics has priced its cash offer for logistics peer Wincanton PLC (LSE:WIN, OTC:WNCNF) at £762 million, representing a 104% premium to the London company's share price before a rival offer emerged last month.
The 605p per share offer from the Connecticut companby trounces a previous £605 million bid on 26 February from French group CEVA by 26%, and by 34% compared to CEVA’s original offer of £567 million.
GXO boss Malcom Wilson, who is a Brit (and a Notherner by the sound of his accent on videos), said: "Wincanton is a world-class business, and we have long been impressed by their high-quality people and diverse customer relationships across key industries."
He said the superior offer to that from CEVA "reflects our conviction in the value of this business and the opportunities the combined company will realise.”
GXO’s offer implies an enterprise value multiple of approximately seven times Wincanton's underlying EBITDA for the twelve-month period ended on 30 September 2023, GXO noted.
11.22am: An M&S spokesperson speaks
On the Ocado Retail bust-up, where Ocado Group PLC (LSE:OCDO) suggested in its results this morning that might need to take recourse to legal action to get a payment from joint venture partner Marks and Spencer Group PLC (LSE:MKS), we have a comment from M&S.
An M&S spokesman said: "M&S remains committed to the turnaround strategy for Ocado Retail and our focus is on working with them and Ocado Group to deliver it.
"On the specific issue of the contractual contingency payment, our advice is that the financial performance of Ocado Retail means the criteria for the performance payment was not met."
10.58am: FTSE 'wallflower' creeping sideways
The FTSE 100 is striding mostly sideways, if not quite getting into the leap-day spirit.
It is one of the European indices in positive territory, but as has been typical of late not the best performer, which today is Germany's DAX, up 75 points or 0.43%.
Italy's MIB is up 0.3%, France's CAC 40 is just above flat, while Spain's IBEX is down 0.1%
London's index is the "wallflower of the global equity market", so poetically expressed by analyst Kathleen Brooks at XTB.
Looking across Europe, she notes that the prospect of a delay to interest rate cuts has not tempered stock market performance this month, with the Eurostoxx index up 5.6% and has outperformed the S&P 500's' 4.6% gain and the Nasdaq's 5.17%.
"The FTSE 100 is virtually flat, as it becomes a wallflower in the global equity market, even BOE governor Andrew Bailey has been notably more dovish than some of his central banker peers."
Chinese shares have also been a big outperformer in February, she observes, with the CSI 300 rising nearly 9% this month, and the Hang Seng up 6.51%.
"China’s stock market recovery has been a reaction to some policy responses from Beijing in an effort to shore up the stock market as the economy continues to underperform."
Looking ahead, the National People’s Congress on March 5th "could keep upward pressure on Chinese equities, as analysts expect some economic measures to be announced that will hopefully boost China’s sluggish economy", Brooks concludes.
10.25am: Bank of England appoints new rate setter
The government has appointed has appointed a replacement for Bank of England deputy governor Ben Broadbent, with Clare Lombardelli to be the new deputy governor for monetary policy.
Lombardelli, currently chief economist of the OECD, will start in the role and as a member of the rate-setting Monetary Policy Committee on 1 July, after the appointment was approved by the King.
At her first meeting, on 1 August, women will make up the majority of the MPC for the first time.
10.15am: Small cap movers
Wincanton PLC (LSE:WIN, OTC:WNCNF) is up 20% after the expected bid from US peer GXO Logistics came in at a premium.
GSTechnologies Ltd (LSE:GST) rose almost 7% after completing the $1.8mln acquisition of Singapore-based cybersecurity company Semnet.
GCM Resources (AIM:GCM) is up 50% after little more than an AGM announcement today, having said yesterday that after its chairman's recent resignation, it has "identified candidates for a replacement" and a further non-executive director.
10.02am: Mortgages data 'suggests UK recession over soon'
Commenting on the BoE mortgage approvals data, Alice Haine, analyst at Bestinvest, noted that the rise in UK mortgage approvals – an indicator of future borrowing – was the fourth consecutive month.
January saw declining mortgage rates lure more buyers back to the market as affordability levels improved, though net mortgage lending dropped as repayments are generally bigger than for new mortgages issued as people strived to pay back their debt amid high borrowing costs, Haine said.
"While borrowing costs remain high, with interest rates still on pause at a 16-year peak of 5.25%, signs of a slightly improving outlook for borrowers can be found in the effective rate on newly drawn mortgages, which dropped for the second consecutive month, falling 9 basis points to 5.19%," she said.
Emma Cox, managing director of real estate at lender Shawbrook, said January’s rise approvals "reflects the increasing confidence returning to the market", but she noted that after drops last month mortgage rates "are beginning to creep back up and cuts to interest rates may not materialise as soon as previously predicted".
Ashley Webb at Capital Economics said the increase in consumer credit was stronger than expected, at £1.9 billion versus consensus at £1.6 billion, "but that probably reflects the recent volatility in real retail sales, which rebounded by 3.4% m/m in January, rather than an improvement in underlying demand for unsecured borrowing".
He said the rise in cash deposits in households bank accounts of £6.8 billion in January was the largest monthly increase since September 2022, up for a second month in a row.
It may reflect the fact the rise in mortgage interest costs is slowing, he said, with the average rate on all mortgages only increasing by 5 basis points, from 3.36% to 3.41%.
"Overall, real GDP may still contract in Q1 but the signs of life in the housing market suggest that the 'recession' will be over soon, if it’s not already," said Webb.
9.40am: Mortgage approvals on the up
Bank of England statistics this morning show net mortgage approvals for house purchases rose to 55,200 in January from 51,500 in December.
Net approvals for remortgaging remained stable at 30,900 in January.
Individuals repaid a net £1.1 billion of mortgage debt in January, compared to £0.9 billion in December.
The ‘effective’ interest rate, meaning the actual interest paid by homeowners, on newly drawn mortgages fell by 9 basis points, to 5.19% in January. The rate on the outstanding stock of mortgages increased by 5 basis points, from 3.36% in December to 3.41% in January.
Net consumer credit borrowing rose to £1.9 billion in January, from £1.3 billion in December, mainly driven by higher borrowing through credit cards, which rose to £0.9 billion in January from £0.3 billion in December.
Net borrowing through other forms of consumer credit (such as car dealership finance and personal loans) also increased slightly, from £0.9 billion in December to £1.0 billion in January.
9.28am: Ocado sheen taken off by M&S dispute
Ocado shares have given up most of their gains, with the sheen taken off the profit result as investors and analysts delve deeper.
The results reveal the company suggests it may need to sue partner Marks & Spencer over a disputed payment for their Ocado.com joint venture after it failed to meet performance targets.
Ocado said that either "formal litigation" or an out-of-court settlement may be needed to get M&S to make the disputed payment.
The shares, having been up 8% in initial trades, are now showing less than a 2% gain.
Looking at the FTSE it's a similar story, with the initial leap-day positivity dissipating, and the index is now only 8 points higher.
Another shift is that IAG shares have climbed out of the clouds and are now in positive territory.
Support is also being provided by Howden Joinery Group (LSE:HWDN), which is now up 8% after reporting flat sales but saying they should grow in all its regions this year, with profitability improving.
Several stocks, including Barclays, are down as they trade ex-dividend.
Strength in Glencore PLC (LSE:GLEN) and other miners is on the back of the Chinese market's continued to rebound.
A key piece of macroeconomic data out later is the core PCE reading of US inflation.
8.59am: Leap day gain for markets?
Today is 'leap day', the 29th of February, though the FTSE is not exactly leaping higher, but marching in a general upward direction.
Leap years are good for investors, generally, reckons Ben Laidler, analyst at eToro.
“An extra day in the year has a number of small impacts for companies and markets, some of which can be positive," he explains.
For example, adding an extra day to first quarter company earnings will result in an extra sales day, boosting revenues by around 1%.
"These reports start on April 12th and some such as Walmart have already incorporated the extra day into their projected sales growth," he says.
“Since the S&P 500 index was created in the 1950’s we have seen 13 leap days with the market open. It has only risen on five of those, or a lower than average 38% the time.
“The better news is that leap years have much better performance, maybe because they coincide with the US election cycle. In the past century, US stocks have risen 88% of the time in a leap year, only falling in three: in 1940, the 2000 tech bust and the 2008 global financial crisis.”
8.40am: Mid-caps march higher
It's a similar story with the FTSE 250, which is also up 0.3%, adding 59 points to top 19,072.
Drax Group (LSE:DRX) is the top riser on the mid-cap index, up over 7% as full-year results come in broadly as analyst forecast, with a 1% beat on revenues reflecting strong power generation and system support performance.
"A solid set of financial results, with little by way of surprises," said analyst Sam Wahab at Liberum.
"2023 was not without its challenges in terms of Drax’s share price performance, largely due to policy uncertainty, however we expect many underlying questions to be answered for the company this year."
Serco Group PLC (LSE:SRP) is up just over 5% on the back of its annual results, which show earnings slightly ahead of estimates as revenues growth on the strength of Home Office contracts.
8.23am: FTSE starts higher
The FTSE 100 has started to climb out of yesterday's hole with a positive start in early trading, led by gains for Ocado and Haleon.
London's blue-chip index has added 25 points or 0.3% to reach 7,649.77, though it still has some way to go to regain losses earlier in the week.
Ocado is up almost 7% after it posted a rare profit, although the shares had been testing six-month lows in the past week.
Analyst Adam Vettese at eToro says: “After a strong Christmas update last month there is an upbeat tone to Ocado's full year results, with a growth of market share in the UK for the retail arm and new partnerships on the tech side."
“There are some punchy growth targets for 2024 and with the firm noting profits in these three key business areas, shareholders will be hoping this can propel the price back up to 2023 highs, which is a little shy of double your money from here.
Haleon is also up around 7% after the maker of Panadol and Advil as it offset worries about a mild cold and flu season by offering a guardedly optimistic assessment of prospects and a planned £500 million share buyback.
Analysts at Stifel said the results were "solid" and in line with market expectations, noting that the 2024 organic growth outlook of 4-6% growth was in-line with previous medium-term guidance.
Elsewhere, IAG is down 1% after its fourth-quarter profit disappointed, offsetting its strong full-year profit gains.
London Stock Exchange Group PLC (LSE:LSEG) shares are down 2.2% after it confirmed plans for a £1 billion share buyback and insisted it was seeing signs of an uptick in listings in London.
7.59am: IAG doubles profits, demand remains robust
Results from British Airways owner International Consolidated Airlines Group (LSE:IAG) show profits for 2023 were more than double the previous year, but the fourth quarter was just short of City analyst estimates.
For the full 2023 calendar year, operating profit before exceptional items came in at €3.5 billion versus €1.3 billion in 2022, and beating the €3.25 billion made in pre-pandemic 2019.
Fourth-quarter operating profit of €502 million were up from €477 million a year ago, but slightly short of the €504 million that analysts forecast.
A positive outlook for 2024 was declared, with the group expecting to deliver “significant” free cash flow generation.
While dividends remain off the tray-table for now, IAG directors said they are “committed to sustainable shareholder value creation and cash returns”.
7.39am: Ocado in the black
Ocado Group PLC (LSE:OCDO) posted a lesser-spotted profit for the past year, if various exceptional items are ignored.
All main parts of the grocery delivery group made positive contributions at the underlying level, meaning the FTSE 100-listed group was able to report adjusted EBITDA of £51.6 million for the 53 weeks ended 3 December 2023, compared to a £74.1 million loss a year earlier.
Its Technology Solutions delivered a maiden £15.4 million underlying profit as did Ocado Logistics, the division that provides deliveries for Morrisons and the Ocado.com joint venture with Marks & Spencer, of £30.1 million.
The M&S JV, Ocado Retail, also returned to a positive adjusted EBITDA of £10.4 million.
However, at the bottom line, the group’s numbers remain in the red, with loss before tax of £393.6 million down from £0.5 billion last time.
7.17am: FTSE 100 rebound anticipated
The FTSE 100 is anticipated to bounce back from yesterday’s fall, though a host of blue-chip results could upset the apple cart again.
A 17 point gain is currently predicted on IG’s spread-betting platform, which would recoup a small portion of 58 points lost by the index the day before, closing down 0.8% at 7,624.98.
Overnight, US stock indices finished lower, led by the tech-heavy Nasdaq, which dropped 0.55%. The S&P% 500 fell 0.17% and the Dow Jones dipped less than 0.1%.
Housing stocks could get a boost from Zoopla data showing all measures of activity have been higher this month than a year ago, with agreed sales up by 15% and buyer demand up by 11%.
Zoopla said the upturn had been supported by the falls in mortgage deals since the Bank of England pressed pause on interest rate increases, after reaching 5.25% in August.
However, the trend has been less clear in recent weeks, with several lenders withdrawing their cheapest deals.
This morning’s corporate results in London include British Airways owner IAG, GSK spin-out Haleon and Ocado.
A quick scan of results sees IAG profits might be just shy of consensus forecasts, while Ocado has posted a rare annual profit.