- Blue-chip index closes at 7,961
- Tesco leads risers after impressive results
- US inflation hotter-than-expected
16.45pm: FTSE 100 closes higher
London's blue-chip index gained 26 points over the day to close at 7,961.
16.01pm: FTSE 100 to close higher after late flurry
London's blue-chip index is on track to close around 23 points at 7,957 after a day of ups and downs, most of which was at the hands of US inflation data.
The FTSE 100 got off to a strong start this morning after consumer-facing stocks rallied on the back of a strong set of Tesco PLC (LSE:TSCO) results which indicated inflationary pressures were easing.
Heading into lunch, the index was on track to breach the 8,000 mark and could have even reached all-time highs if inflation data came in positive.
Unfortunately, it came in hotter than expected and as a result the index fell as much as 75 points as a result.
Despite the FTSE 100 flip-flopping, most risers have kept their position, with Tesco leading the charge, jumping 5%.
The falling pound provided a late boost to multinational blue chips as markets edge towards the London close.
Other risers included HSBC, up 3%, and Airtel Africa and RS Group, both of which rose 2%.
One stock which experienced similar swings to the FTSE 100 was Ocado, with the stock having been one of the top risers throughout the day.
However, the online grocery group slipped 3% and is now the largest faller today.
Other fallers included Experian (LSE:EXPN), down 2%, and Unite, Hikma, Barrat and Convatec, all of which dropped by 1.5%.
15.39pm: Markets switch focus to ECB rate decision
As macroeconomic events and data continue to be placed under the microscope by markets, tomorrow will see the European Central Bank's turn to make its interest rate decision.
Rates are expected to be held at their 22-year-highs of 4.5%.
Despite the likely lack of cuts tomorrow, any dovish statements from members of the Frankfurt-based ECB will be welcomed and could put it in pole position to be the first major insititution to lower rates.
Jan Felix Gloeckner, senior investment specialist at asset manager Insight Investment, said: "The growing economic divergence between the US and Europe is starting to impact expectations for central bank policy, with a building consensus that the European Central Bank will cut in June, even as Fed cuts are pushed later into the year.
"Given that backdrop, this week’s meeting could well prove an important milestone in setting expectations – as the ECB is preparing the ground for a June rate cut, markets will be looking for any hints on the pace of cuts and the potential landing zone."
15.16pm: Key Thames Water creditor warns on government intervention
One of the key creditors to Thames Water has warned that if the UK government rescues the company it could deter investors from buying into other infrastructure assets.
Shalin Shah, a senior fund manager at Royal London Asset Management, said government intervention "could unfortunately risk contagion to other infrastructure assets that are funded against similar regulation."
He added that this could lead to prices going up for consumers.
Royal London is a top bondholder of Thames Water's parent company Kemble Water, with the embattled group having defaulted on around £1.4 billion of debt last week.
14.33pm: US stocks open lower
Wall Street opened lower as all of the main indexes plunged on the back of hotter-than-expected inflation data.
The Dow Jones began trading 431 points lower at 38,452, while the S&P 500 dropped 59 points to 5,150.
The Nasdaq slipped 191 points to 16,119.
Stocks had been holding flat for much of the week in the build-up to the report, but now that it seems dates for interest rate cuts will likely be pushed back, they have made moves - albeit in the wrong direction.
Industrial companies such as Deere, Caterpillar and Eaton all dropped around 2% at the open, highlighting concerns that higher interest rates for longer could constrict the economy.
Another mover was Nvidia, which opened around 2% lower as analysts believe the AI chipmaker has entered correction territory, having dropped 10% from its March 25 all-time highs.
Alibaba jumped around 2% after it was revealed its co-founder Jack Ma had returned from the shadows to back the group's current restructuring plans.
14.07pm: US markets price out June rate cut
US markets have now priced out a June rate cut, with swaps indicating just 50bps of rate cuts will take place this year.
Neil Wilson at Finalto said: "Treasury yields spiked sharply, and the dollar rallied whilst gold and stocks declined.
"The 2yr Treasury yield jumped around 20bps to 4.950% and the 10yr was up 13bps to 4.50% (indicating) markets pricing in the Fed staying higher for longer.
"The fact the move in the short-term rate is more than the longer suggests this is chiefly about what the market thinks the Fed will do next."
13:45pm: FTSE 100 tumbles on US inflation
The FTSE 100 has plummeted following US inflation data coming in hotter than expected.
Before the release, the blue-chip index was trading at close to the 8,000 mark and was enjoying a daily gain of around 60 points.
However, as soon as the data dropped, the index shed around 46 points to around 7,949.
Much of the disappointment is attached to concerns that US, and likely UK, interest rate cuts will come later in the year rather than in summer.
Richard Flynn, managing director at Charles Schwab UK said: "In recent months it has become clear that the journey to the Fed’s target of 2% inflation will be bumpy and Central Bankers are proceeding with caution when it comes to rate changes.
"It’s often said that the Fed takes the escalator up and the elevator down when setting rates, but for the path downwards in this cycle, it looks like they will opt for the stairs.”
13.35pm: US inflation rises more than expected
US inflation came in slightly higher than market consensus, prompting concerns that interest rate cuts may be delayed further.
Inflation in March sped up to 3.5% from 3.2% the month prior and came in hotter than forecasts of 3.4%.
Similarly, core inflation, which excludes food and energy prices, reached 3.8%, the same as in February, but up on estimates of 3.7%.
American stocks are readying to open marginally higher despite the data.
The Dow Jones is up around 61 points at 39,252 in premarket trading, while the S&P 500 lifted 8 points to 5,267.
Meanwhile, the Nasdaq is set to open around 28 points to 18,382.
13.16pm: FTSE 100 moving towards all-time highs
The FTSE 100 has surged to be within touching distance of the 8,000 mark, placing it on course to breach its record high of 8,012.53 from last February.
Last week, the index found itself lifting slightly higher than the all-time closing high, but only for a brief moment before falling back below the 8,000 point.
London's blue-chip index has an intraday ATM of 8,047.06, and will therefore require a strong rally if it is to reach that level.
Nevertheless, with US inflation figures due in the next fifteen minutes, any data which comes in better than expected could leave the index in contention with its peaks.
Helping the index has been Tesco, up 5.5%, after its stellar results which indicated a subsidence in inflation and other consumer-facing stocks such as Burberry and Ocado, both of which are up 4%.
12.57pm: BYD receives £2.9 billion in state subsidies
BYD, the world's best-selling EV manufacturer, recieved £2.9 billion in state subsidies to help it dominate the industry, a European study found.
The findings were part of a study by the Kiel Insititute for the World Economy and allege the Chinese government provided the subsidies in a push to dominate the EV car market.
Tesla was overtaken by BYD as the top-selling electric vehicle at the start of 2023 after the Chinese company was able to undercut prices and grow its offering to Europe.
The European Commission launched an anti-subsidy investigation last September into the exports of Chinese vehicles.
Depending on the findings, the investigation could result in tariffs on Chinese vehicles as a punishment.
12.34pm: Not all doom and gloom for UK stocks, says Barclays
British stocks will pick up momentum and see share prices improve as oil prices tick higher and the overhang from Brexit disperses, Barclays believes.
The UK has missed out on the AI-led rally which began late last year, Barclays' boss of European equity strategy Emmanuel Cau noted.
However, he now reckons the market is beginning to catch up as the "steady rise of oil/commodities" means company earnings are improving.
Cau also believes this will provide "some backstop to depressed valuations".
He said: "UK co-ordination with the EU appears to be improving across both major parties, with elections looming, which could unwind some of the risk premium placed on UK markets.
"With multiples looking depressed, inbound M&A, and buybacks are seeing a pick-up, which could help valuations."
12.15pm: Marks & Spencer calls on HSBC to improve financial offerings
Marks & Spencer is partnering with HSBC UK to help improve its financial services, including its credit offerings and loyalty schemes.
As part of a seven-year deal, the lender will focus on developing new payment solutions, merging digital payments with loyalty rewards and bolstering the retailer's in-app experience.
Credit card users have already been targetted for rewards after M&S launched a membership service which provides those signed up with vouchers and extra loyalty points.
"The new agreement will enable us to build on the work already done by bringing together loyalty and digital payments, and more seamlessly rewarding our M&S Financial Services customers," Katherine Carlson, director of financial services at M&S said.
11.53am: THG shares fall despite optimism from boss Moulding
THG boss Matthew Moulding took to Linkedin today to say that despite the last two years being the hardest in the company's history it was showing signs of recovery.
However, with shares sinking close to 7.5% on the back of its full-year results, it is likely investors don't agree with Moulding.
Revenues dropped by 3.2% in 2023, at a time when analysts predicted the global health and beauty market would grow by 5%.
THG's beauty division, which suffered an overall drop of 4.4%, has become a particular area of concern as it struggles internationally.
50% of sales generated came from the UK, while US operations only contributed to 20% of total sales in the division.
Sophie Mitchell at GlobalData said: "THG may need to look to consolidate its efforts to Europe if US sales decline further."
11.31am: Speedy Hire issues warning as demand dries up
Speedy Hire, the construction equipment provider, saw its shares slip 3% after it warned weak demand had hampered its earnings.
Total group revenues for its 2023 financial year came in 5% lower than 2022 at £420 million, with the group blaming soft demand in the construction sector, cost inflation and warmer weather.
While an exact explanation of how this will affect profits was missing from the update, the group said it would lead to results at the lower end of the board's expectations.
Looking forward, Speedy Hire said it had secured an additional annual turnover of £40 million from new contracts and renewals.
However, this uptick is only expected to provide a "marginal benefit" for 2024 but should give the business confidence moving into 2025 and beyond.
11.11am: FTSE 100 stutters ahead of US inflation
London's lead index is holding onto its early morning gains, trading around 49 points higher at 7,984.
A sense of stillness has fallen over the market as we head towards lunch, with investors most likely bracing for the US's inflation report at 1.30 pm.
Some analysts believe today's inflation data will only add to the growing realisation that interest rate cuts will come in autumn not summer.
Joshua Mahony at Scope Markets said: "Between a strong US economy, strong jobs, and elevated inflation rate, there is little surprise that we are seeing markets gradually temper their expectations for a June rate cut from the Fed."
In equities, Tesco is leading the charge after its profits surged on the back of easing inflation.
Its shares jumped more than 3% and have helped push other consumer-facing stocks higher including Ocado, up 3%, and Burberry, up 2.5%.
Other risers include Airtel Africa, up 3%, and Croda, up 2.5%.
Fallers have been slightly quieter, with Rolls-Royce suffering a 1.5% drop after the defence sector was downgraded by Goldman Sachs earlier this week.
Other fallers are Convatec, Relx and Auto Trader, all of which are down 1%.
10.48am: UK government bond demand surges
An auction for three-year government bonds attracted the greatest demand from investors since April 2020.
Britain's debt management office flogged £4 billion of 4.204% gilts due in 2027, having recieved orders of around £14.7 billion.
It means the sale was more than three and a half times oversubscribed.
????Stonking demand for gilts due in 2027 at today's auction.
£14.7 billion of offers for the £4 billion sold.
That's a bid-cover ratio of 3.68 - the highest in 4 years.
In fact, only five auctions since 1991 have produced a higher ratio.
— Andy Bruce (@BruceReuters) April 10, 2024
10.16am: BMW sees EV sales soar
BMW, which also owns Mini and Rolls-Royce, saw sales of its electric vehicles jump by close to a third in the first three months of 2024.
The German group's trading contrasts that of traditional EV manufacturers, many of which are having to grapple with dampened demand.
Some 82,700 fully electric cars were delivered during the first quarter, helping the group reach a total of one million EV deliveries.
BMW also thanked its own EV models such as i4, iX1 and i7 after deliveries of its models jumped 41%.
9.52am: Analysts can't understate importance of US inflation data
Analysts "cannot understate the importance of today's US inflation" reading as it's expected to affect markets on both sides of the Atlantic.
Kathleen Brooks at XTB noted that European stocks were trading higher ahead of the inflation data, lifted by company earnings and treasury yields falling.
Nevertheless, the broker's research director reckons investors are already "positioned for bad news", building on the negativity of having to wait until September for an interest rate cut.
Inflation data will be released at 1.30 pm GMT and is predicted to have sped up to 3.4% in March, with core inflation slowing to 3.7%.
9.31am: Former Rolls-Royce boss appointed chair of air traffic control
Warren East, the former Roll-Royce chief executive, will take over as non-executive chair at the UK air traffic provider NATS, an announcement revealed today.
East, who spent seven years in the top job at the aerospace group, joins after British airports suffered a chaotic summer, with thousand of flights having been cancelled.
Chief executive Martin Rolfe says when East joins in September he will be able to bring "enormously valuable" insight into the aviation industry and how technology can transform operations.
The former Rolls-Royce chief left the FTSE 100 company in December 2022 and has experience at the helm of Arm, the Cambridge-based but US-listed chipmaker.
NATS is currently undergoing an overhaul of its IT systems, upgrading the technology used by controllers to manage air traffic.
9.07am: China downgraded by Fitch
Concerns over the health of China's economy have been revived after the nation had its outlooked downgraded to negative by credit rating firm Fitch.
It comes as a result of China's rising debt pile, with Fitch warning that it is likely to continue borrowing as part of plans to breathe life back into its real estate industry.
“Fiscal policy is increasingly likely to play an important role in supporting growth in the coming years which could keep debt on a steady upward trend," Fitch said.
Public debt in China has surged in recent times as part of government plans to pour money into the economy.
In recent times, the government has offered financial support to families and businesses, promising that there is more to come.
8.50am: The morning so far
Tesco PLC (LSE:TSCO) was the star of the show this morning, with the supermarket giant attributing sales volume growth across the UK and Ireland to an easing off of inflationary pressure in today’s preliminary results.
Group sales (excluding VAT and fuel) increased to £61.5 billion, marking a year-on-year growth rate of 7.4%, or 7.2% at constant currency rates.
These strong results were largely expected, but the stock managed to add 0.9% nonetheless.
Elsewhere in company news, Direct Line Group has appointed Jane Poole as the insurance firm’s new chief financial officer, replacing Neil Manser, who has been in the role for three years.
The lossmaking FTSE 250-listed insurance firm’s chief executive Danuta Gray said: “The board conducted an extensive search to secure such a high calibre appointee and I am confident that Jane Poole will be a great asset to our organisation.”
Advertising giant WPP shares were at the top of the movers list, following last night’s news of a “groundbreaking new collaboration” that uses Google’s Gemini large-language artificial intelligence model to produce advertisements for its blue-chip clients.
WPP shares added 2.5% to 770p.
Other top morning risers include Ocado Group PLC (LSE:OCDO) (up 4.6%), Croda (up 4% and Burberry Group (up 3.2%).
There’s little to watch out for on the UK macroeconomic calendar today, but US consumer prices will be closely watched later on.
“There will be growing hope that the numbers are heading south, to help guide the Federal Reserve to cut interest rates this summer,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
At the time of writing, the FTSE 100 was trading 44 points higher at 7,979.
8.40am: Bitcoin lower, gold remains near ATH
Bitcoin (BTC) is down today, having been slapped 3.5% lower on Tuesday.
The world’s largest cryptocurrency was approaching all-time highs on Monday, but the bulls were unable to push it over the line. At the time of writing, the BTC/USD pair was swapping for $69,425.
Meanwhile, gold remains at around its ATH amid its stellar run on precious metals prices, which is helping to keep the mining stocks-heavy FTSE 100 in a strong position.
The blue-chip index is currently 46 points higher at 7,981.
8.26am: WPP shares on the move
Advertising giant WPP PLC (LSE:WPP)’s shares are in the driving seat today, adding 2.4% in opening exchanges.
Last night, the firm announced a “groundbreaking new collaboration” that uses Google’s Gemini large-language artificial intelligence model to produce advertisements for its blue-chip clients.
Integrating Google’s Gemini 1.5 Pro technology will allow teams to generate headlines, turn sketches into images and create AI-generated video, including voice narration.
The latter will be handled by WPP partner ElevenLabs. Shares were last seen at 768.6p
The FTSE 100 remains bullish this morning, adding 40 points to 7,975.
7.48am: Direct Line appoints new CFO
Direct Line Group has appointed Jane Poole as the insurance firm’s new chief financial officer, replacing Neil Manser, who has been in the role for three years.
Since 2021, Poole has been CFO for Aviva's UK and Ireland general insurance business; prior to Aviva, she held the same role at Royal & Sun Alliance’s UK & International businesses.
"The Board conducted an extensive search to secure such a high calibre appointee and I am confident that Jane Poole will be a great asset to our organisation,” Danuta Gray, chair of Direct Line Group, said of the appointment.
“At the same time, I would like to thank Neil Manser for steering the Group through what has been a challenging time and the part he has played in stabilising the business for the future."
The FTSE 250-listed company chalked up significant operating losses in the past year, forcing management to implement a £100 million cost-saving programme.
"I am delighted to be joining Direct Line Group as CFO at this important time and motivated to drive business performance to realise the significant potential ahead for the Group,” said Poole.
7.34am: Tesco reports strong sales growth
Tesco PLC (LSE:TSCO) attributed sales volume growth across the UK and Ireland to an easing off of inflationary pressure in today’s preliminary results.
Group sales (excluding VAT and fuel) increased to £61.5 billion, marking a year-on-year growth rate of 7.4%, or 7.2% at constant currency rates.
Operating profit was up 18.8% to £2.8 billion, while the dividend per share was up 11% to 12.1p.
"Inflationary pressures have lessened substantially, however we are conscious that things are still difficult for many customers, so we have worked hard to reduce prices and have now been the cheapest full-line grocer for well over a year," said chief executive Ken Murphy.
For the 2024/25 financial year, Tesco expects retail adjusted operating profit of at least £2.8 billion and total adjusted operating profit from the retained Tesco Bank business of around £80 million.
A further £1 billion share buyback programme was announced, partially funded by a special dividend from the Tesco Bank disposal.
7.07am: Blue chips to open 50 points higher
The FTSE 100 index is set to open up to 50 points higher this Wednesday, having closed eight points lower at 7,934 yesterday.
Mining stocks helped to keep the index afloat throughout the session, with Fresnillo, Rio Tinto and Anglo American reacting well to surging commodities prices (chiefly gold’s continued rally to all-time highs.
Commodity prices will be closely tracked again today, while Tesco PLC (LSE:TSCO)’s finals will be the point of focus on the company news front.
There are no major announcements on the UK macroeconomic calendar today, though the release of the latest FOMC interest rate minutes in the US will surely garner some attention.