- FTSE 100 adds 78 points at 7,747
- UK wage growth easing raises BoE cut hopes
- Persimmon profits more than halved
4:55pm: FTSE closes 78 points higher
London's FTSE 100 has closed 78 points higher at 7,747 after Entain (+4%) Beazley (+3.5%) and JD Sports (+3%) offset a 4% dip from Permisimmon.
Persimmon shares dropped after reporting on a halving of profits in the 2023 financial year.
However, analysts pointed to some positives in the result.
"Persimmon’s full-year results for 2023 offer no additional bad news and the guidance for 2024 even offers a glimmer of hope, as chief executive Dean Finch points toward a modest increase in completions, but the share price is not taking much notice,” said those at AJ Bell.
Also boosting the index was news that the UK unemployment rate unexpectedly rose to 3.9% in the three months to January, but pay growth eased, which economists said would encourage the Bank of England that inflationary pressures are fading.
Chris Beauchamp, chief market analyst at IG, said: "The odds of an earlier Bank of England rate cut have risen, which should at least mean UK-focused stocks might see further inflows to help bolster their disappointing performance so far this year.”
3:50pm: Wall Street lifts higher
Stock markets are on the up on both sides of the Atlantic now, with the FTSE 100 pushing back towards nine-month highs and US stock indices climbing out of the red and moving up a gear.
The FTSE is up 1.1% today, with financial sector and retailers topping the leaderboard.
On Wall Street, the Nasdaq Composite is top dog again, up 1.2% as tech stocks resume their rally, led by a resurgent Nvidia.
3.15pm: Starling Bank poaches CEO from Ovo
It was May last year when Starling Bank announced that founder Anne Boden was stepping down as chief executive, with an initial public offer (IPO) mooted as one of the tasks the new boss would be likely to shoulder.
Today the challenger bank said Raman Bhatia, boss of energy firm Ovo Energy would be taking up the role.
The announcement comes on the same day that Ovo has been threatened with legal action by television presenter Victoria Coren Mitchell after withdrawing thousands of pounds from her account.
While that is certain not to have been company policy, Ovo's record under Bhatia is hardly flawless, as the firm was also among those ordered by Ofgem last August to improve its service and handling of complaints in particular.
Bhatia has banking sector experience as head of various HSBC's digital teams over five years up until 2019, including First Direct.
Before he takes over, chief operating officer John Mountain will take over as interim CEO.
Starling chair David Sproul said in a statement: "We see significant opportunities for Starling under Raman’s leadership as the economy stabilises, as our truly differentiated offering for personal and small business customers wins market share in the UK, and as our Engine by Starling software-as-a-service business secures further international contracts."
3pm: UK ponzi victims make Google claim
Victims of the collapse of mini-bonds seller London Capital and Finance (LCF) have demanded Google pay back the £20 million-plus that was spent on misleading digital ads to promote the scheme.
The High Court case being brought by administrators of the now-insolvent firm, claim it was a “Ponzi scheme” where much of the £237 million raised from over 11,000 UK retail investors was frittered away by the owners on their glitzy lifestyles.
Many LCF investors discovered the scheme via Google before the firm collapsed in 2019.
Along with several individuals and two corporate defendants being sued, the Telegraph is reporting that administrators are also demanding Google pay back the money.
2.47pm: Persimmon remains in the red
Persimmon PLC (LSE:PSN) remained in the doldrums in afternoon trades, an inevitable result after reporting on a halving of profits in the 2023 financial year.
The housebuilder’s share price has duly dropped over 2%, though it could have been worse save for dividends remaining intact.
However, analysts pointed to some positives in the result.
"Persimmon’s full-year results for 2023 offer no additional bad news and the guidance for 2024 even offers a glimmer of hope, as chief executive Dean Finch points toward a modest increase in completions, but the share price is not taking much notice,” said those at AJ Bell.
Analysts at Peel Hunt said: "The group has flagged the lower margins in the forward order book (and is still seeing a bit of a squeeze on build costs vs selling prices), but overall it expects FY24 margins to be flat on FY23."
The results come ahead of
2.35pm: Bitcoin remains bullish
Bitcoin (BTC) remained close to its all-time high in afternoon UK trades, with the BTC/USD pair touching $72,100 at the time of writing.
The benchmark cryptocurrency hit an ATH of $73,000 on Monday and exchange-traded fund inflows continue to ramp up.
Bloomberg data shared on Monday shows that over $55 billion of bitcoin’s total circulation is now held in exchange-traded funds managed by financial services giants including BlackRock, Fidelity, VanEck and Grayscale.
“The massive inflows that have been allowed by the introduction of spot exchange-traded funds (ETFs) and the upcoming halving are fueling the actual rally in bitcoin,” Swissquote Bank analyst Ipek Ozkardeskaya commented earlier today.
“The bulls are eyeing the US$100,000 mark, I believe we will get there.”
Back to London, the FTSE 100 is slightly off intraday highs, but remains in a solid position having gained 80 points from yesterday’s close. It is currently trading at 7,749.
1.52pm: Wall Street wobbles
Wall Street stocks have opened mixed, no wait, they're still moving lower. Let's try that again.
Wall Street stocks opened higher but then quickly slid in the red.
At pixel-time the Dow Jones is down 0.1% at 38,736.85, the S&P 500 is just a couple of points below flat at 5,115.9 and the Nasdaq Composite is down 0.1% at 15,997.6.
Most of the Magnificent Seven tech giants are up, apart from Tesla, which is down 1.2%, and Apple, which is just below flat.
On the Dow, fallers are led by Boeing, down 2.9% with others including Chevron, Intel and Nike.
In Europe, the Footsie continues to lead the way, up 1%, while the Europe-wide STOXX 600 up 0.46%.
1.30pm: FTSE notches 9-month high
The FTSE 100 has recorded an intraday high of 7,764.90 since midday, above this year's previous high water mark and the highest since mid-May last year.
It has retreated a little to 7759, but if it closes around that level it will be the highest finish since 23 May 2023.
1.16pm: US inflation muddies Fed picture
The US CPI data had muddied the picture for when the first potential Federal Reserve rate cut will come, but only a bit, say economists.
What was the second-consecutive 0.4% monthly increase in US core CPI in February "leaves Fed officials some way from attaining the 'greater confidence' needed to begin cutting interest rates," says Paul Ashworth at Capital Economic.
While the core CPI inflation edged down to a still-elevated 3.8%, Ashworth said "we still believe there is plenty of disinflationary pressure to feed through, particularly with unit labour cost growth back down to its pre-pandemic rate.
"On balance, we expect the Fed to begin cutting interest rates in June, by which time there will be more evidence of core PCE inflation moving close to the 2% target. But that will now require a shift in tone in the March CPI data."
Ian Shepherdson at Pantheon Macroeconomics points out that there will be another CPI report published before the May FOMC meeting, as well as two full rounds of PPI and PCE inflation data, "so Fed officials don’t need to rush to a snap judgement on the back of these data".
"We remain of the view that the upcoming inflation data, alongside a soft March payroll report and further evidence of slowing wage growth in the Q1 ECI, will give the Fed room to ease in May.
"But it’s a close call right now, and a delay until June would be no surprise."
February inflation comes in hot
3.2% vs 3.1% expected
35th month in a row inflation above 3%
Rate cuts suddenly looking dicey
— Morning Brew ☕️ (@MorningBrew) March 12, 2024
In recent months, by remaining sticky at a level above 3%, US #inflation has behaved very much as signalled in advance by the @SPGlobalPMI. Encouragingly, the #PMI sends signals that #CPI will cool to around 2% in the coming months. Watch out for the next PMI data due 21 March. pic.twitter.com/cFJOIibJ3w
— Chris Williamson (@WilliamsonChris) March 12, 2024
12.44pm: US CPI comes in hot
US inflation has come in hotter than expected, which sent Wall Street stock futures down and then up. The FTSE, meanwhile, is up 1.2% at just below 7764.
Traders are not sure what to make of it, but a sooner rate cut from the Fed seems unlikely.
The US consumer price index was 3.2% higher than a year ago, up from 3.1% and higher than the 3.1% consensus forecast.
Month-on-month CPI was up 0.4%, up from 0.3% as expected.
Core CPI, which excludes fuel and food prices, was up 0.4%, the same as a month earlier but higher than the 0.3% expected.
Year on year, core CPI was up 3.8%, easing from 3.9% but not as much as the 3.7% expected.
Futures markets see the Dow Jones starting just below flat, down 0.02%, but Nasdaq 100 futures are up 0.4% and the S&P 500 is up 0.2%.
All the tech megcaps - Apple, Microsoft, Nvidia and Tesla etc - are heading higher in pre-market trading.
12.12pm: BAT bump on buyback
A late riser to help lift the FTSE 100 is British American Tobacco PLC (LSE:BATS), which has moved to near the top of the leaderboard after saying it will launch a £700 million share buyback.
This will be funded by selling down part of its long-held investment in Indian consumer goods conglomerate ITC.
BAT will sell around a 3.5% stake in ITC, which was originally called Imperial Tobacco India when it was founded in the early 1900s, but will retain around a 25.5% stake.
It said the plan is to use the net proceeds on a buyback between now and December 2025, "starting with £700 million in 2024".
"We will continue to allocate operating cashflow to fund investment in our transformation and to further deleverage," the tobacco group said.
Of the back of this, the FTSE 100 has topped 7760. It needs to go above 7764 to set a new year-to-date high.
If it does that would be a nine-month high.
Midday: Banks given extra time
UK banks are to be given an extra three days to investigate potentially fraudulent transfers under new proposals put forward by the government.
In an attempt to reduce incidences of fraud, the current power to delay a transaction by 24 hours is being quadrupled to give banks more time to check into suspicious money movements.
To minimise the impact on legitimate one-off purchases or movements such as house sales, a “two-stage test” is being introduced to delay a payment, the Telegraph is reporting.
Initially, this will involve having reasonable grounds to believe a payment is fraudulent and secondly if it will take more than 24 hours to contact a customer about a suspicious payment.
11.38am: Grim mortgage data
The mortgage data from the BoE earlier is "makes for grim reading but is sadly not unexpected", says mortgage broker Michelle Lawson at Lawson Financial.
"Household finances are set to spontaneously combust if the current level of pressure on them continues."
Craig Fish at Lodestone Mortgages & Protection said: "This report clearly demonstrates the real struggles being faced in the mortgage market right now.
"The total amount of arrears is not at all surprising given that we are in a significantly higher interest rate environment. People are genuinely struggling to afford their significantly increased mortgage payments."
He told Newspage it is "encouraging" to see the number of new arrears cases decrease slightly, "but it's likely that this could change during the course of 2024."
11.05: FTSE at 3-month high
The FTSE is continuing to charge higher, though the assistance from the pound is fading away, with the index up above 7750 for the first time since the 2nd of January.
Financials are prominent in the top risers, with banks Barclays, Lloyds and NatWest in among them, but Prudential is top of the list, up 4%.
“Interestingly, nearly all sectors were in positive territory, implying that investors were feeling upbeat across the board which is a healthy situation to have in markets," says Russ Mould, investment director at AJ Bell.
He adds that investor sentiment is being boosted by the UK wage data, "which raises the chances of the Bank of England cutting interest rates sooner rather than later".
"However, imminent US inflation data could easily turn markets on their head if it looks like the cost-of-living pressures are here to stay for a while longer, and that the Fed won’t be cutting rates in the near term."
Casting a glance at bitcoin, the rally seems to have lost steam, pulling back to $71,700 this morning, but we will see what happens when America wakes up.
Mould says "perhaps indicating that some investors are banking profits while the going is good".
10.22am: BoE says mortgage lending down, arrears jump
Mortgage arrears jumped by 50.3% in the final quarter of 2023 compared with a year earlier, according to new Bank of England figures.
The BoE said the £20.3 billion value of outstanding mortgage balances with arrears was up 9.2% compared to the prior quarter.
The proportion of the total loan balances with arrears, relative to all outstanding mortgage balances, increased to 1.23% from 1.12% at the end of the third quarter.
New arrears cases decreased by 2.6 percentage points from the previous quarter, to 13.2% of the total outstanding balances with arrears, but remained 0.2 points higher than a year earlier.
The mortgage lenders and administrators statistics showed the value of new mortgage commitments for the coming months decreased 6.6% from the preceding quarter to £46.0 billion, and was 21.2% lower than a year earlier.
9.50am: FTSE leads European charge as pound slips
The FTSE 100's 68-point rise to 7737 so far this morning means it is leading the European charge.
London's index is up 0.89%, while Germany's DAX has risen 0.33%, France's CAC 0.14% and Spain's IBEX 0.53%
China-sensitive stocks like Prudential, Standard Chartered and HSBC are leading the FTSE amid reports that Beijing is under pressure to provide some extra economic stimulus.
Market analyst Victoria Scholar at Interactive Investor says the big focus for markets today is the US CPI inflation reading later, which is expected to remain at 3.1% for February, while the monthly figure is seen ticking up to 0.4% versus 0.3% in January.
Francesco Pesole at ING said: "The dollar has found a bit of support into today’s US CPI data, which we expect to show a still too-hot 0.3% MoM core rate for February.
"If we are right with our 0.3% call, we may not see a big market impact already today, but it could definitely set the tone for a more defensive stance on FX – i.e., a gradual rotation back to the dollar – ahead of next week’s FOMC meeting."
9.14am: Pet medicines probe hits vet group
Vet group CVS Group (AIM:CVSG) and pet store chain Pets at Home Group PLC (LSE:PETS) are both down, 17.5% and 2.5% respective, after the Competition and Markets Authority warned that pet owners may be paying too much for their animals' drugs.
The CMA said it is launching a formal market investigation as pet owners are not being given enough information on pricing for both medicines and treatment, meaning they are often left overpaying for medicines.
“We have heard concerns from those working in the sector about the pressures they face, including acute staff shortages, and the impact this has on individuals,” CMA boss Sarah Cardell said. “But, our review has identified multiple concerns with the market that we think should be investigated further.”
Domino's Pizza Group PLC is another faller, down 8.5% after reporting that first-quarter sales would likely be lower than a year ago.
The update came alongside full-year numbers for last year that were largely in line with expectations, as well as news of a £62 million acquisition in Ireland.
Top of the FTSE 250 leaderboard is TP ICAP PLC (LSE:TCAP), up 10.7% after it announced its highest-ever profits and launched a new share buyback programme, starting today, of £30 million.
It also said it is mulling a separate listing for its data arm, Parameta Solutions.
8.53am: Earlier rate cut being priced in
Financial markets are now repricing expectations of when the Bank of England will make its first rate cut, after the ONS labour market report earlier showed softening in several areas, including weaker wage growth.
"This has caused traders to reassess their bet that the Bank of England will delay cutting rates until August, and there are growing expectations that the first BOE rate cut will come in June, and that there will be three cuts from the Bank this year," says market analyst Kathleen Brooks at XTB.
"As the market recalibrates its expectation for the first BOE rate cut from August to June, sterling is coming under downward pressure," she added.
The pound, which has been the best performing currency in the G10 so far in 2024, has slipped from $1.282 before the ONS report down to $1.278 on the back of the data.
"The dollar is staging a comeback this week, which is also weighing on the pound. Gilt yields are also lower, which may add pressure on sterling in the short to medium term," Brooks added.
UK rate expectations are moving this morning, after the labour market data was softer than expected and wage growth was weaker. The market is almost pricing in a June rate cut, previously this was August. pic.twitter.com/Ycticpsq9o
— kathleen brooks (@KATHLEENBROOKS) March 12, 2024
8.43am: Bitcoin to the moon?
UK blue-chip shares are up and bitcoin (which was the talk of the pub after football last night) is maintaining the record highs reached yesterday.
Against the dollar, bitcoin is up just under 4% over the past 24 hours to $72,430.12.
Some financial market analysts are saying it could go much higher too.
“The massive inflows that have been allowed by the introduction of spot exchange-traded funds (ETFs) and the upcoming halving are fueling the actual rally in bitcoin,” says analyst Ipek Ozkardeskaya at Swissquote Bank in our daily crypto report.
“The bulls are eyeing the US$100,000 mark, I believe we will get there.”
It would appear that there were 500M of inflows yesterday. I checked before all numbers were updated.
Also, funding resets for 11bps to 5bps on bitcoin.
It would seem the market might not give dips before higher. Unless you consider 1-2k dip sufficient, might not give more. pic.twitter.com/0PXk6qT77v
— SalsaTekila (@SalsaTekila) March 12, 2024
7.21am: FTSE off to a flyer
The FTSE 100 has got off to a good start, rising 54 points or 0.7% to 7723 in early trading after the softer UK wage figures raised hopes of interest rate cuts.
Sterling fell 0.23% against the dollar after the ONS report showed wage growth eased in the three months to January and employment levels fell.
Only three blue chips are in the red, led by Persimmon PLC (LSE:PSN), down 3.5% on the back of its results, where profits fell 52% but the dividend was maintained.
The housebuilder said it expects market conditions to “remain subdued throughout 2024”, with interest rates seen remaining around current levels and with a general election looming.
British Gas owner Centrica is down 0.65% and National Grid just 0.05% lower, which seems to be linked to the announcements from the government about new gas power stations.
Top of the leaderboard were financial sector names, though all with a large Chinese focus, Prudential, Standard Chartered and HSBC.
7.59am: Government backs gas power
Downing Street says Britain needs to build new gas-fired power stations to ensure the country's energy security.
Prime Minister Rishi Sunak said new stations will replace aging current plants in a newspaper column ahead of an announcement from energy secretary Claire Coutinho later.
Sunak said the CO2 produced will not be captured, which climate groups said could threaten the government's legally binding net zero commitments.
Coutinho is expected to set out her gas strategy at a speech at the thinktank Chatham House later.
“Without gas backing up renewables, we face the genuine prospect of blackouts. Other countries in recent years have been so threatened by supply constraints that they have been forced back to coal,” she will say, according to copies of the speech leaked to newspapers.
Sunak's column in the Daily Telegraph said gas power was needed to provide power for days when wind and solar did not deliver enough.
"It is the insurance policy Britain needs to protect our energy security, while we deliver our net zero transition," he said.
7.53am: Persimmon profits plunge, divi maintained
Results from FTSE 100 housebuilder Persimmon PLC (LSE:PSN) could be read different ways, with profits for last year more than halving to £351.8 million and the company expecting another tough year in 2024.
But for income investors, the company maintained its dividend at 60p and committed to keeping it at least at this level.
This is despite cash more than halving to £420.1 million and the balance sheet expected to transition from an average net cash to an average net debt position by the end of the year.
Chief executive Dean Finch said: “Although the near-term outlook remains uncertain, the significant pent-up demand for homes remains unchanged.”
He said the company is “well placed” to meet demand with houses offering different price ranges below the market average, with completions expected to increase to between 10,000 and 10,500 for 2024.
7.42am: Jobs analysis
In one line, Pantheon Macroeconomics's new signing Rob Wood says the ONS report adds to interest rate cut hopes as the "downside wage growth surprise will raise MPC confidence that inflation pressures are fading".
"Official labour market data suggest a loosening labour market and continued weaker wage momentum," said Wood, adding that "all parts of the employment report today surprised on the downside".
However, he said the dip in the unemployment rate from its post-Covid peak of 4.3% in July to 3.8% in December "looks particularly suspect, so we would take today’s uptick in the unemployment rate to 3.9% as some correction of that odd previous trend".
Paul Dales at Capital Economics said: "The easing in wage growth in January is probably still a bit too slow for the Bank of England’s liking. But there are encouraging signs that a more marked slowdown is just around the corner and that an interest rate cut in June is possible."
The fall in the number of job vacancies from 928,000 in the three months to January to a 32-month low of 908,000 in the three months to February "suggests the labour market continues to loosen more than the unemployment rate is letting on", Dales said, adding that this was consistent with wage growth slowing to 4-5% and February’s REC survey points to wage growth of 3% in 6-9 months’ time.
"And as long as the average 0.3% m/m rise in earnings in the past six months, (down from 0.7% m/m in the previous six months) continues, actual wage growth will fall more markedly in the coming months. That, alongside a fall in CPI inflation below the 2% target in April, could be enough to prompt a rate cut in the summer."
7.19am: Strong FTSE start anticipated, UK wage growth eases
The FTSE 100 is anticipated to get off to a strong start on Tuesday after official UK job numbers came in softer than expected.
London's blue-chip equity benchmark is seen rising just over 70 points on spread-betting platforms, having scraped a positive result the previous day, up 9.49 points at the close to reach 7,669.23.
The UK unemployment rate unexpectedly rose to 3.9% in the three months to January, according to new figures from the Office for National Statistics, from 3.8% before, where economists had expected it to remain.
Average weekly earnings in the period were up 5.6% on the same period a year ago, down more than expected from the 5.8% a month ago, with the consensus forecast pointing to 5.7%.
Excluding bonuses, pay was up 6.1%, down from 6.2% as expected.
Employment levels in the three month period were down 21,000 on the preceding three months, while forecasts had expected a small increase.
More timely figures from February showed the job claimant count rate remained at 4.0%, with a 16,800 increase in jobless claims and payrolled employees up 20,000 on the prior month, compared to a consensus forecast of 25,000.
⚠️ Softer-than-expected UK jobs report in line with some of the alt labor market data (pay growth missed, weak jobs growth, higher u/e & jobless claims). But key is there's pipeline wage disinflation coming with PAYE data showing weaker Feb pay growth + falling vacancies $GBP pic.twitter.com/YgYQzYUtEe
— Viraj Patel (@VPatelFX) March 12, 2024
ONS director of economic statistics Liz McKeown said: “Recent trends in the jobs market are continuing with earnings, in cash terms, growing more slowly than recently but, thanks to lower inflation, real terms pay continues to increase."
She noted that the number of job vacancies has also been falling for coming up to two years, though the total remains more than 100,000 above its pre-pandemic level.
“Over the last year, there was little change in the proportions of people who are employed, unemployed or neither working nor looking for work, though the overall number of people in work is still rising.”