- FTSE 100 up 12 points at 7,692.
- Nationwide to buy Virgin Money.
- British ISA to deal £1.5 billion boost.
4.02pm: FTSE 100 higher in late trading
The FTSE 100 entered the late stages of the trading day in the green, having gained 12 points to reach 7,692.
Rentokil, with gains of 18.7%, held firm as the index’s biggest riser of the day, after the pest control firm reassured in results that its US wing would fare better than hoped this year.
Ocado also soared, adding 7.2% toward the end of the day, with the grocery delivery firm having faced downward pressure recently due to a legal spat with joint venture partner M&S.
Spirex-Sarco held gains of 6.4%, after firming up guidance that profits would grow over the coming year, with Anglo-American also having climbed over 5%.
Entain continued on as the days greatest faller, down 4.4% following a warning it would be hit by tougher gambling rules in the UK and the Netherlands.
Intercontinental Hotels and Admiral were also among the day’s fallers, losing 2% and 1.4% respectively, with the latter having unveiled a lower full-year dividend earlier on.
3.34pm: FTSE 250 rallies as British ISAs to offer £1.5 billion boost
The FTSE 250 rallied on Thursday, following Jeremy Hunt’s announcement in the Spring Budget that a British ISA would be introduced.
The midcap index, which is worth around £350 billion, gained 136 points - or 0.7% - to reach 19,609.
This was after Hunt unveiled the UK-stock focussed individual savings account plans on Wednesday, which Citi analysts then estimated could offer London-listed firms a £1.5 billion boost.
The FTSE 100, which is valued far higher at around £2 trillion, was up 15 points at 7,694 in the meantime.
3.08pm: June rate cut likely from ECB - analyst
The European Central Bank’s decision to leave interest rates unchanged is unsurprising, commentators have said, with a June cut now looking ever more likely.
Though the central bank opted to leave the likes of its main rate at 4%, a reduction in core average inflation forecasts for the year by 0.1% to 2.6% was key, XTB’s Kathleen Brooks said.
“This meeting was always going to be about what comes next from the ECB,” she noted.
“The path for future rate cuts could be in place, after a symbolic cut to both the headline and core inflation forecasts for this year.”
That said, rising wages still pose an issue, with Fidelity International’s Anna Stupnytska equating such pressures as the “remaining piece of the inflation puzzle” for the ECB.
“The main message from the ECB is unchanged, they want to cut rates, but wages remain a roadblock,” Brooks added.
2.45pm: Nationwide takeover of Virgin Money ‘makes sense’ - analysts
Though surprising the markets this morning, Nationwide’s £2.9 billion bid for Virgin Money would fit into the lender’s growth plans nicely, analysts say.
“Given the building society’s strategic aim, it makes sense,” Hargreaves Lansdown analyst Susannah Streeter commented after news broke of the bid on Thursday morning.
“It wants to bolster and diversify streams of funding, tap into business deposits, and give a rocket boost to the development of its services.”
She added the move would help prevent Nationwide from getting “stuck in the past,” offering the know-how to roll out a more modern service.
Such a takeover would indeed boost its credit card and business banking departments, AJ Bell’s Russ Mould continued, but could also bolster Nationwide’s mortgage division.
“We’ve seen tentative signs that the property market is regaining strength after a difficult few years,” he said.
"Nationwide is effectively pouncing on Virgin Money at a time when prospects are improving for its industry. Albeit we’re still in a volatile period until the base rate starts to come down."
2.17pm: FTSE 100 regains ground, Rentokil soars
The FTSE 100 recovered from earlier losses to sit 17 points higher at 7,696 as of Thursday afternoon.
Leading gains was pest control group Rentokil, which climbed almost 19% to 508.6p after reassuring its US operation would fare better than expected in full-year results.
These also showed a 45% jump in revenue to £5.38 billion, pushing underlying profits up 44% to £766 million.
Engineering firm Spirax-Sarco also gained ground, adding over 6% to reach 10,905p following news that 2024 would bring a return to profit growth, after a tough 2023, and that it was hiking its dividend.
Ocado and Anglo-American also jumped, climbing 4.7% and 4.2% respectively, while Aviva gained 1.6% after unveiling a 9% increase in full-year pre-tax profit to £1.47 billion and hiking its dividend by 8% to 33.4p earlier in the day.
Among the day’s fallers were Entain and Melrose, while HSBC and Standard Chartered slipped after going ex-dividend.
Entain shares were trading 4.6% lower after the betting firm warned of a £40 million hit from tougher rules in the UK and the Netherlands.
Melrose slipped 3% following its warning of headwinds over the year ahead relating to supply chain issues within the aviation industry, meanwhile.
1.59pm: ECB also lowers GDP forecast
Central bankers in Europe also lowered forecasts for gross domestic product (GDP) growth on Thursday.
The Eurozone will now likely grow by 0.6% this year, compared to previous forecasts for 0.8%.
Stronger growth will return in 2025 and 2026 though, the ECB said, as GDP climbs 1.5% and 1.6% respectively, “supported initially by consumption and later also by investment”.
1.42pm: ECB leaves interest rates unchanged
The European Central Bank has left its main interest rate unchanged at 4%, as anticipated by the markets.
Inflation forecasts were revised downward though, setting the stage for future rate cuts.
A fall in energy prices in particular means the bank anticipated average inflation to sit at 2.3% for 2024, 2.0% in 2025 and 1.9% in 2026, a Thursday statement read.
“Although most measures of underlying inflation have eased further, domestic price pressures remain high, in part owing to strong growth in wages,” the ECB said.
“Financing conditions are restrictive and the past interest rate increases continue to weigh on demand, which is helping push down inflation.”
12.49pm: Gold hits another record
Gold hit yet another high on Thursday morning, climbing to US$2,161.48 after assurances that US base rates could come down this year from Federal Reserve chair Jerome Powell.
“If the economy evolves broadly as expected, it will likely be appropriate to begin dialling back policy restraint at some point this year,” he told lawmakers on Wednesday.
“But the economic outlook is uncertain, and ongoing progress toward our 2% inflation objective is not assured.”
The yellow metal’s most recent climb takes gains to around 9% since mid-February, with Finalto’s Neil Wilson noting a weaker dollar and demand from central banks were buoying the price.
A “primary driver [...] is a continued decline in real yields” as inflation expectations cool, SP Angel analysts added, “pushing buyers into gold from money market accounts and Treasuries”.
12.29pm: US stocks called higher at the open
The Nasdaq is expected to lead gains as US markets open higher on Thursday following reassurances that rate cuts are likely to take place this year.
Futures had the Nasdaq adding 67 points to hit 18,111 on Thursday’s opening bell, while the Dow Jones and S&P 500 were expected to tick up by 37 and 10 points respectively to 38,743 and 5,122.
This follows gains seen on Wednesday, after Federal Reserve chair Jerome Powell told lawmakers that rate cuts were still likely this year.
That said, jobs data is a “concern” for the wider economy, as per Finalto’s Neil Wilson, with Friday set to bring the week’s key non-farm payroll report.
“Falling real income, weaker disposable spend, high borrowing costs and depletion of savings generated during the pandemic is going to weigh later this year,” he said.
Among equities, New York Bancorp grabbed headlines on Thursday morning with news the troubled bank was set to receive US$1 billion through a capital raise.
Victoria’s Secret plummeted nearly 30% in pre-market trading meanwhile, after the chain unveiled weak first-quarter sales guidance on Wednesday evening.
And finally, Tesla shares continued a week-long losing streak ahead of the market’s opening, after Elon Musk’s firm was dealt a downgrade by Morgan Stanley (NYSE:MS).
11.26am: Hunt’s tax-cutting Budget slammed as burden set to soar
Chancellor Jeremy Hunt’s supposed ‘tax-cutting’ budget has been hammered by analysts, with the true burden on households and Hunt’s ability to stick to fiscal rules in question.
Though Hunt cut national insurance by a further 2p to 6% for many and extended freezes on the likes of alcohol and fuel duty, hikes elsewhere are set to shadow the effects of these, commentators said after Wednesday’s statement.
“Taxes are going up not down,” Resolution Foundation warned on Thursday, “this will be the greatest tax-raising Parliament since the Second World War”.
Tax relative to gross domestic product (GDP) will rise from 33.1% in 2019, to 36.5% by 2024, before then climbing then to 37.1% in 2028, as per the group.
Think tank IFS echoed the view, noting that by 2028, tax as a share of national income would be close to a “record level”.
Even so, according to IFS forecasts Hunt is “barely” set to keep within OBR fiscal rules, whereby debt must fall as a percentage of GDP in the final year of five-year forecasts.
The Chancellor is barely meeting his target to have debt falling in the fifth year of the forecast.
It is set to fall by the tiniest of margins between 2027/28 and 2028/29. pic.twitter.com/iMJ0t6uWut
— Institute for Fiscal Studies (@TheIFS) March 7, 2024
“The combination of elevated debt and low nominal GDP growth makes it extremely difficult to get debt falling,” the think tank said, with this set to meet the five-year target “set to fall by the tiniest of margins”.
To make matters worse for Hunt, Citi analysts said OBR forecasts for GDP to rise 8% this year may be way off, leaving the UK with as much as a £60 billion fiscal black hole.
“We think post-Covid fiscal headwinds are only just beginning,” the bank said in a note, as it warned further “supply shocks” were likely in the future.
Hunt had described the statement, which is expected to be the government’s last before the next general election, as a “tax-cutting budget,” with handouts likely key in securing votes.
10.55am: UK housing market ‘coming back to life’ - analyst
A fifth consecutive month of rising house prices in the UK demonstrates that the market “is coming back to life,” commentators have said.
“Buyers that were put off by higher rates are slowly returning in light of lower fixed rate offerings and easing inflation,” as per Aaron Milburn, director at credit firm Pepper Advantage.
His comments come after Halifax reported a 0.4% rise in house prices between January and February on Thursday.
This represented a £1,091 jump to £291,699, with prices increasing by 1.7% on an annual basis.
However, prices had climbed to 2.3% in the year to January, meaning the rate of increase had slowed.
“The drop in growth reflects the tenuous nature of this recovery,” Milburn said, “much depends on the Bank of England's decision later this month”.
10.18am: Here's a recap of today's big stories
The FTSE 100 dipped early on after a bullish post-budget performance on Wednesday.
Grabbing headlines was Nationwide, which unveiled a deal to take over Virgin Money in a move which would create a group with combined assets of £366.3 billion.
Elsewhere, Aviva shares jumped in early trading after the insurer unveiled a 9% increase in full-year pre-tax profit to £1.47 billion and hiked its dividend by 8% to 33.4p.
ITV also enjoyed a strong start, after announcing solid growth in its production and streaming wings had largely offset a wider downturn in advertising spend last year.
And finally, Halifax said 2024 had so far brought relative stability for the housing market, as the lender reported prices had climbed by 1.7% in February.
10.00am: UK could face £60 billion fiscal black hole, Citi analysts warn
Britain’s growth projections could be overly optimistic for the year ahead as the likes of supply shocks are left unaccounted for, analysts have said.
Though the Office for Budget Responsibility forecast UK gross domestic product (GDP) to climb by 0.8% for the year, Citi analysts said on Tuesday that a more realistic figure would be around 5%.
Indeed, Citi noted the 8% forecast would see UK GDP grow far quicker than has been seen so far since the pandemic.
“We think post-Covid fiscal headwinds are only just beginning,” the bank said in a note, as it warned further “supply shocks” were likely in the future.
According to the bank, the OBR’s fiscal spending forecast is short by about £30 billion to £35 billion, while cuts unveiled in Wednesday’s budget are also likely “undeliverable”.
The government will have to spend in the region of £20 billion to £25 billion extra than is planned therefore, the bank said, taking the UK’s so-called fiscal black hole to between £50 billion and £60 billion.
9.44am: Harbour Energy results muted as windfall tax, lower prices weigh
Harbour Energy PLC (LSE:HBR) has unveiled a 76% drop in full-year pre-tax profit, as the effects of lower oil and gas prices weighed on the company.
Pre-tax profit fell to US$0.6 billion (£0.47 billion) from US$2.5 billion over the year, Harbour said on Thursday, on the back of a 31% drop in revenue to US$3.7 billion.
This reflected lower wholesale gas prices and a decrease in production, according to the company.
After-tax, profit sat at US$32 million, compared to US$8 million last year, largely as a result of the company paying an effective tax rate of 95%, in part driven by the UK’s windfall tax on oil and gas firms.
Harbour also updated on its planned US$11.2 billion acquisition of Wintershall Dea's upstream assets in the likes of Norway, Germany, Argentina and Mexico.
“Significant progress has been made on the various approvals and workstreams required for completion” since the proposal was announced in December, Harbour said.
“We remain focused on the successful completion of the Wintershall Dea [..] are excited about our future,” chief executive Linda Z Cook commented.
9.18am: Admiral sees return of motor insurance customers
Admiral has revealed a resurgence in motor insurance customers over the second half of the year, helping to bump up group profits.
Some 180,000 signed up for motor insurance with Admiral over the latter part of the year, taking such customers to a flat 4.94 million year on year, after higher prices drove people away earlier on.
Motor insurance profit jumped by 13% to £593 million as a result, with Hargreaves Lansdown analysts saying Admiral was now “starting to reap the rewards” of hiking prices before rivals as inflation soared.
Total group profit climbed 23% to £442.8 million, as overall customer numbers jumped 6% to 9.73 million.
This was on the back of a 31% increase in revenue to £4.81 billion, with Admiral suggesting significant price increases over the last year would feed through in 2024.
“Despite global uncertainties, our outlook is positive, benefitting from improved market conditions and a strengthened position, thanks to the discipline we maintained in the last year,” chief executive Milena Mondini de Focatiis commented.
Admiral declared a final dividend of 52p, taking the total 103p for the year, down on the 112p set in 2022.
8.51am: The morning so far
Thursday took off with a bang when Nationwide and Virgin Money dropped a joint announcement of a surprise merger.
Britain’s largest mutual Nationwide will pay 220p per share comprising 218p per share cash plus a 2p dividend in a deal that values Virgin at £2.9 billion at a 37% premium to yesterday’s close.
Analysts at Shore Cap were fairly critical of the deal, saying it undervalues Virgin Money.
Insurer Aviva plc upped its divi guidance after exceeding operating profit targets in 2023 with a 9% increase to £1.47 billion, up from £1.35 billion in 2022. Shares rallied 5%.
ITV PLC (LSE:ITV) shares shot up over 6% following the publication of its annual results.
The broadcaster penned record revenues and profits in the Studios segment, although group-wide revenues were down 2% overall, while adjusted earnings fell 32% to £489 million.
Ladbrokes owner Entain PLC (LSE:ENT) warned of regulatory headwinds in the UK following the implementation of stake caps on online slot games and a broader industry review.
Nonetheless, the betting big cap’s full-year earnings were “in line with expectations”, with total net gaming revenues including its 50% share in BetMGM adding 14%. Shares dipped 4.2%.
On the macroeconomic calendar, The Halifax House Price Index showed a 1.7% year-on-year rise in February, slowing from 2.3% in January.
Month on month, the index added 0.4% compared to 1.2% the previous month.
Kim Kinnaird, director of Halifax Mortgages, commented: “These figures continue to suggest a relatively stable start to 2024 and align with other promising signs of increased housing activity, such as mortgage approvals.
The FTSE 100 blue-chip index was last seen 24 points lower at 7,654.
8.37am: Nationwide bid ‘undervalues’ Virgin Money
Here is what Gary Greenwood at Shore Capital Markets said on the Nationwide-Virgin Money surprise merger.
“We had speculated for a while that VMUK was a potential bid target given its persistently low valuation, but wondered whether a trade purchase would be difficult given potential fair value adjustments and the poison pill associated with the Virgin brand agreement.
“In addition, there is significant integration risk for a trade buyer such as Nationwide.
“In our opinion, long-suffering shareholders are likely to welcome this offer, especially given its cash nature, but we feel it undervalues the group and that management could have perhaps driven a harder bargain.
“What it does imply to us, is that management had little faith around successful execution of an organic strategy, which could have potentially yielded a much higher valuation if targets were met.”
8.30am: Entain warns of regulatory impact
Ladbrokes owner Entain PLC (LSE:ENT) said full-year earnings were “in line with expectations” in today’s results, with total net gaming revenues including its 50% share in BetMGM adding 14%.
On a constant currency basis, revenues were closer to 2%.
Entain warned of regulatory headwinds in the UK following the implementation of stake caps on online slot games and a broader industry review
Richard Hunter, head of markets at interactive investor, commented: “Regulation remains an inevitable thorn in the side for gambling companies, and Entain is certainly no exception.
The spectre of regulation is a constant threat, with problem gambling being an easy political target in any of the jurisdictions in which the group operates.
Increased regulatory headwinds in the likes of the UK and Germany have been joined by higher deposit limits in the Netherlands, all of which inject shorter term changes to consumer behaviour as the changes are absorbed.
Shares fell 3.5% to 801p in opening exchanges.
8.15am: ITV shares sent higher
ITV PLC (LSE:ITV) shares flew 6% higher in opening exchanges following the publication of its annual results.
The broadcaster penned record revenues and profits in the Studios segment, although group-wide revenues were down 2% overall, while adjusted earnings fell 32% to £489 million.
"We remain firmly committed to creating shareholder value and applying a disciplined approach to capital allocation. As announced on 1 March 2024, we will return the entire net proceeds of the sale of BritBox International through a share buyback of £235 million,” stated chief executive Carolyn McCall.
ITV announced a final dividend of 3.3p for a full-year dividend of 5p, matching 2022 returns.
7.55am: Aviva ups dividend guidance
Aviva plc exceeded its operating profit target in 2023 with a 9% increase to £1.47 billion, up from £1.35 billion in 2022.
The FTSE 100-listed insurance multinational announced a £300 million share buyback in today’s annual results, and raised the total dividend by 8% to 33.4p per share with a Solvency II shareholder cover ratio of 207%.
"We are building a clear track record of strong and consistent performance,” said chief executive Amanda Blanc. “In each of the last three years we have grown sales, operating profit and our dividend.
The company increased its dividends guidance following this morning’s results and is expected to grow the cash cost of the dividend by mid-single digits.
Aviva has set an operating profit target of £2 billion by 2026.
FTSE futures has blue chips opening slightly lower when markets open today.
7.35am: Nationwide buying Virgin Money
Virgin Money has agreed to be taken over by Nationwide Building Society at 218p per share, representing a 37% premium to yesterday's closing price.
In a joint statement, the companies said the deal “would combine two complementary businesses”.
The potential acquisition would create a combined group with total assets of approximately £366.3 billion and total lending and advances of approximately £283.5 billion, making it the second-largest provider of mortgages and savings in the UK, according to the joint statement.
Chairman of Nationwide Building Society Kevin Parry commented: “The combination would increase Nationwide's scale and financial strength, put us in a stronger position to continue to provide Fairer Share Payments to eligible Nationwide members, and offer rates for mortgages and savings that are, on average, better than the market average."
Chief executive of Virgin Money UK David Duffy added: "This potential transaction with Nationwide represents an exciting opportunity to build on the significant progress we have made in becoming the only new Tier 1 bank in recent history.
“The combined scale and strength would expand our customer offering and complete our journey in the banking sector as a national competitor."
7.18am: House prices remain ‘stable’
The Halifax House Price Index showed a 1.7% year-on-year rise in February, slowing from 2.3% in January.
Month on month, the index added 0.4% compared to 1.2% the previous month.
Kim Kinnaird, director of Halifax Mortgages, commented: “These figures continue to suggest a relatively stable start to 2024 and align with other promising signs of increased housing activity, such as mortgage approvals.
“In fact, the average price tag of a home is now only around £1,800 off the peak seen in June 2022.
“While it is encouraging that we’ve seen growth in recent months, what happens next remains uncertain. Although lower mortgage rates, alongside expectations of Bank of England interest rate cuts this year, should help buyer confidence in the short term, the downward trend on rates is showing signs of fading.”
7.10am: FTSE to open flat
The blue-chip index will open flat at 7,651 today following a bullish post-Budget performance on Wednesday.
Stocks gained ground in the wake of Jeremy Hunt’s Spring Budget, with energy firms being boosted late on in the day.
On today’s economic calendar, the Halifax House Price Index showed house prices rising 1.7% in February, a slowdown from 2.3% in January.
Month on month, prices added 0.4%.
In company news, insurer Aviva plc will soon provide its financial results, with adverse weather conditions the main topic of interest.
It is a packed earnings day all around, with ITV PLC (LSE:ITV), Admiral Group, Entertain, Melrose and recruiters PageGroup and Robert Walters also releasing their financials.