- Blue chips down 53 points at 7,907
- Centrica rallies on STMicro deal
- IMF warns banks on early rate cuts
16.51pm: FTSE 100 closes in red
London's blue-chip index closed 37 points lower at 7,923.
16.02pm: FTSE to close lower after afternoon drop
The FTSE 100 is on track to close 53 points lower at 7,907 after taking a late whacking on the back of comments made by the IMF on early rate cuts.
"Where necessary, policymakers must resist calls for early interest rate cuts," IMF boss Kristalina Georgieva said.
With markets scrutinising every piece of macroeconomic data for clues on when rate cuts will come, attention will likely turn to the UK's gross domestic product figure tomorrow.
GDP is expected to show that the UK economy grew in February, having slipped into a minor recession at the end of 2023 after two consecutive quarters of contraction.
City economists predict GDP will reach 0.1% for February, marking the first consecutive months of growth since August to September, a survey by Refinitiv found.
In equities today, British Gas owner Centrica topped the risers after jumping around 3% on the back of signing a contract to supply solar-generated electricity to STMicro.
Other risers included Kingfisher, Smiths and AstraZeneca, all up over 2%, with the latter currently undertaking its AGM which will see shareholders vote on its boss's controversial pay package.
Leading the fallers were pension group Phoenix and Aviva, both of which dropped around 6%.
Tesco also fell, down by a little under 6%, meaning much of its gains yesterday have been reversed.
15.32pm: FTSE 100 falls as IMF warns against early rate cuts
The FSTE 100 experienced a sharp drop in the last hour after the International Monetary Fund warned central banks against cutting interest rates early,
Kristalina Georgieva, the IMF chair and managing director, said tight monetary policy may be required to stay in place for longer as she warned inflation in the world's top economies was "not fully defeated".
With elections taking place in the UK, the US and the EU, the IMF boss warned that central bank chiefs should avoid submitting to pressure from politicians.
She said: "On this final stretch, it is doubly important that central banks uphold their independence. As we know, policy credibility is vital in the fight to restore price stability.
“Where necessary, policymakers must resist calls for early interest rate cuts. Premature easing could see new inflation surprises that may even necessitate a further bout of monetary tightening.”
15.12pm: Global credit conditions to worsen in 2024
Global credit conditions are expected to worsen, according to asset and portfolio managers at some of the world's largest financial institutions.
In a survey of more than 135 financial institutions from more than 30 countries, it was found that more participants than expected are bracing for corporate credit defaults to rise in the upcoming months.
51% of respondents said it expected the rate of defaults in North America to pick up, while 57% believe similar will happen in Europe, the International Association of Credit Portfolio Managers survey (IACPM) revealed.
"Defaults have increased somewhat but, at the same time, consumers are nevertheless showing surprising resilience, perhaps because of continuing low unemployment or because they have affordable home mortgages with very low interest rates," the IACPM explained.
14.31pm: US stocks open slightly higher
Wall Street opened a tad higher on Wednesday after mixed reaction from the market in response to wholesale inflation data.
The Dow Jones lifted 65 points to 38,527, while the Nasdaq jumped 66 points to 16,229.
Meanwhile, the S&P 500 rose 10 points to 5,170.
Goldman Sachs chief economist Jan Hatzius says the firm is now prepping for two rate cuts instead of three in 2024 after core wholesale inflation came in ahead of estimates.
Predicting a first rate cut in July, he said: "I am optimistic that we are rebalancing the labour market, and we will bring down inflation over time – for me none of those things have changed.
"However, what has changed is the timing of the Fed adjusting because that’s going to depend a lot more on the month-on-month inflation news, which has clearly been disappointing."
In equities, Carmax, the use vehicle retailer, sunk around 8.5% after it reported a mix of weak revenues and profits.
Company news remained quiet during the weeks surrounding Easter, however, starting tomorrow earnings releases will become more frequent.
On Friday, JPMorgan, Wells Fargo and Citigroup are all due to report.
14.08pm: AI era to be built on AWS, says Amazon boss
Amazon boss Andy Jassy believes much of the AI revolution will be built upon the company's cloud infrastructure.
He said: "While we’re building a substantial number of GenAI applications ourselves, the vast majority will ultimately be built by other companies.
“We’re optimistic that much of this world-changing AI will be built on top of AWS.”
Amazon Web Services, the group's cloud offering, will be at the core of AI models and applications as it helps widen the accessibility of the technology, Jassy added.
The e-commerce giant revealed it was cutting hundreds of jobs in its AWS division earlier this month.
13.51pm: ECB opens door to June rate cut, interest rates held
Europe's central bank left interest rates on hold in its latest policy meeting, but economists believe today's announcement indicates that policymakers are open to a cut in June.
Interest rates were kept at 4.5% after the ECB said "domestic price pressures are strong and are keeping services price inflation high" despite borrowing costs continuing "to weigh on demand" and help "push down inflation".
Economists at ING Economics now reckon the door is "officially opened" to a June rate cut.
ING’s Carsten Brzeski said: "Even if the policy announcement does not explicitly mention June as the moment for a first rate cut, we think that today’s meeting should mark the final stop before the cut.
"In fact, the ECB has gone through a very gradual transition of its communication since December, turning from hawkish to dovish.
"The faster-than-expected drop in headline inflation, as well as anaemic growth, have opened the door for some rate cuts. Not a full reversal of the rate hikes since July 2022, but rather a soft loosening of a still restrictive stance."
13.36pm: Wall Street to open lower after wholesale inflation comes in hot
US markets are on track to open lower as the markets react to another set of inflation data that shows inflation is still persisting.
The producer price index came in at 2.1%, ten basis points lower than the markets had forecast but up against last month's 2.1%.
However, core PPI, which strips out volatile energy and food prices, came in above the 2.3% consensus at 2.4%, up from February's 2%.
The Dow Jones is set to open around 181 points lower at 38,586, while the S&P 500 is positioned 25 points down at 5,183.
The Nasdaq is looking likely to open around 65 points lower at 18,131.
Investors have been reacting to the fallout of a hotter-than-expected inflation report on Wednesday after all three indexes tumbled towards the close.
13.14pm: Majestic Wines owner buys Poundstretcher
Majestic Wines' owner Fortress Investment Group, the private equity firm, has purchased discount chain Poundstretcher for an undisclosed sum.
Poundstretcher owner Aziz Tayub sold the Leicester-based business to US-based Fortress despite previously indicating that he wanted to float the company on the London Stock Exchange.
Poundstretcher booked £245.5 million in revenues in 2023, a 10% year-on-year decrease, while gross profit fell by 3%, per the latest accounts filed with Companies House.
The discounter had 324 stores across the UK as of March 2023, plus an 800,000-square-foot distribution centre in Leicester. It employs around 4,000 people.
Last week, Majestic Wine saved bar chain Vagabond from administration, purchasing the company saving nine sites and the jobs of 171 workers.
12.51pm: British Gas owner jumps on solar deal with STMicro
Centrica shares are leading the table of FTSE 100 risers, up 3.5%, after penning a new deal to supply Swiss microchip maker STMicroelectronics (NYSE:STM) with electricity from a proposed solar farm in Italy.
The British gas owner will provide STMicro with 61 GWh of electricity every year through generation from the Italian solar farm as part of a 10-year deal which will begin at the start of next year.
Electricity from Centrica will be used to power its Italian manufacturing plants in Agrate and Catania, as well as sites for R&D, designs, sales and marketing.
Last week, the energy giant revealed it acquired two solar projects in England’s West Country as part of plans to invest £4 billion in renewables over the coming years.
Combined, the sites in Dorset and Wiltshire will have a capacity of 29 megawatts (MW) and be able to power around 7,800 homes.
12.30pm: London stocks making the biggest moves
Here are some London stocks which are making the biggest moves as we head into lunch.
Storage space provider Lok'nStore saw shares trade around 16.5% higher in Thursday’s early deals, to 1,115p, on the news it has agreed to be bought by Shurgard, Europe's largest developer and operator of self-storage facilities, in a £378 million cash deal.
Cybersecurity firm Darktrace PLC (LSE:DARK) also moved strongly, up around 7.5% to 467p, as a trading update revealed it had returned to revenue growth in its past quarter, with underlying profit margins above previous guidance.
Shares in Mast Energy Developments PLC leapt around 116% to 0.65p after a project update revealed its ahead-of-schedule rolling out reserve power generation in the UK.
Drinks firm Distil plummeted, presently down 6 at 0.59p, slid after a profit warning revealed sales volumes and profits plunged in the past quarter as consumer spending remained weak.
Longboat Energy PLC (AIM:LBE) shares were on the back foot, down 20% to 18p, as investors were left unimpressed by its full-year results.
12.10pm: FTSE 100 holding lower
The FSTE 100 is holding lower as we head into lunch, down around 17 points at 7,943.
Today's session has been a lot calmer than Wednesday when the index was on track to breach the 8,000 mark before sticky US inflation data sent the index tumbling.
Much of today's falls have been led by drops in pension giant Phoenix Group, down 6%, insurer Aviva, down 5.5%, and Lloyds, down 4.5%.
Tesco also slid around 4.5%, reversing much of yesterday's gains after it posted a strong jump in profits and said price inflation was easing.
Attempting to push the index higher was British Gas owner Centrica, up 4%, after it signed a new deal with STMicroelectronics (NYSE:STM), the Geneva-based chipmaker, to procure electricity from a new solar farm in Italy.
Other risers include Kingfisher and AstraZeneca, both up 2%.
11.50am: Banks prepare for uptick in loan defaults, says BoE
British banks are bracing for a greater number of small businesses and households defaulting on debts.
Today's survey by the Bank of England into money and credit found the rate of defaults on secured loans increased quarter-on-quarter and is expected to suffer another rise in the three months to June.
Similarly, default rates on unsecured lending, which includes credit cards and other loans, also lifted in the first three months of 2024 and are expected to continue rising into the second quarter.
It comes as high-interest rates continue to sting small businesses and homeowners as more are unable to meet interest payments on loans.
Small and medium businesses are set to experience a similar trend, with the rate of its defaulting ticking higher throughout the first six months of the year.
11.29am: Foreign investors buy Japanese stocks as natives sell
International investors have been snapping up Japanese stocks following its fall back from record highs last month.
The Nikkei 225, Japan's lead index, slipped around 3.5% since it hit an all-time high last month, driven by domestic investors crystalising their earnings.
A net inflow of 829 billion yen, or US$5.4 billion, was pumped into the Tokyo Stock Exchange during the week to April 5, marking its highest inflow from foreign investors since the start of January.
A week prior, global investors had taken more than 1.18 trillion yen out of the market.
While foreign investors looked to pump more cash into the exchange last week, domestic investors did the opposite, pulling out a net 334.8 billion yen in the same period.
11.12am: Net zero ban on petrol cars too early, says Lawrence Stroll
Aston Martin's boss said a net zero ban on petrol cars would be "premature" due to the current weakened demand for electric vehicles.
Lawrence Stroll, the Canadian billionaire and owner of Aston Martin, believes any push towards EVs will be based on "hype" rather than real demand.
He reckons most consumers don't want electric vehicles no matter the incentives offered by governments.
A lack of electric vehicle charging points is partly to blame, Stroll argued.
The UK has begun upping the number of EV charging points it has after reports earlier this year revealed drivers don't believe the network is fit for purpose.
10.38am: Jobs adverts dry up in sign of cooling labour market
The number of jobs being advertised online in the UK fell at the start of April, indicating the labour market may be cooling.
Online job ads dropped by 1% week-on-week and fell by 19% compared with the same week a year ago.
Meanwhile, credit and debit card spending was found to have dropped by 1% last week and by 4% year-on-year.
Figures from @Adzuna show the total number of online job adverts on 5 April 2024 decreased by 1% when compared with the previous week ????
This was 19% below the level seen in the equivalent period of 2023.
— Office for National Statistics (ONS) (@ONS) April 11, 2024
New economic activity and social change data shows mixed activity in the latest week:
???? UK spending on credit and debit cards decreased 1% compared with the previous week
????️ UK retail footfall increased to 103% of the level seen in the previous week
— Office for National Statistics (ONS) (@ONS) April 11, 2024
10.14am: UK rate cut to come in September not August, says analysts
UK markets are predicting the first rate cut will come in September rather than August, but will still be 0.25%, analysts said.
Neil Wilson, chief market analyst at Finalto, said the changes in expectations came after the release of a hotter-than-expected US inflation reading, which sent the treasury market into a tizzy.
He said: The Treasury market had its worst day since the Kamikwaze Budget sparked turmoil in gilts.
"The 2yr jumped about 20bps, the most since the regional banking crisis a year ago. The 10yr yield has also risen more than 20bps since the data was released and traders have now priced out a June rate cut.
"That is a big shift from the start of the year – the last mile is proving the hardest. The boulder in the pond is creating ripples elsewhere."
9.55am: Heathrow Aiport warns of transit passenger surcharge
Heathrow Airport believes British airports are being put at a "competitive disadvantage" to European rivals due to transit passengers being forced to pay a £10 fee.
Britain's electronic travel authorisation (ETA) scheme requires transit passengers without legal residence or a visa to pay the surcharge.
Heathrow says it understands the "overall rationale" but believes the fee "will put UK airports at a competitive disadvantage compared to EU hubs”.
Currently, only travellers from a string of Middle Eastern nations are part of the scheme, but the EU and the rest of the world are expected to be added soon.
Heathrow Airport said: "“We are already seeing an impact. In the first four months of ETAs being in place, 19,000 fewer transit passengers travelled from Qatar, with the transfer route recording its lowest monthly proportions for over 10 years each month since the implementation of ETAs.
“This is a huge blow to UK competitiveness as many long-haul routes, which are highly important to the UK’s economy, exports and wider connectivity, rely on transit passengers."
9.30am: BoE can cut rates by 0.5% in 2024, says economist
Britain can cut interest rates by half a percentage point in 2024, the chief economist at Panmure Gordon believes.
Simon French warned that the date of the first cut "remains deeply uncertain" as he noted the fragility of the situation.
He said: "The recent upswing in economic momentum across all major geographies and a recovery in core price growth means the balance of risks is shifting fast for central banks.
"For the Bank of England there is a narrow policy and rhetorical path for it to tread in the coming months that can deliver some easing of domestic interest rates.
"But the path is narrow because divergences are everywhere. Between US and European growth; between goods and services inflation; between absolute levels of consumer confidence and recent economic momentum."
The challenge for market participants trying to price June/August/rest of H2 24 is that internal members (more dovish recent comments) can outvote the generally more hawkish (ex Dhingra) externals. But will they? Feels like this schism will need careful messaging on 9 May (2/3)
— Simon French (@Frencheconomics) April 11, 2024
9.08am: Poundland owner still affected by Red Sea disruption
Poundland owner Pepco Group warned the disruption in the Red Sea is still causing higher freight costs and delays to delivery times.
Products should remain available across the company and gross margins aren't expected to be affected in the current financial year. However, the company is still suffering from the disruption, months after ships were forced to reroute.
It comes after Houthi rebels began attacking vessels travelling through the Red Sea earlier this year, with the group initially claiming the disruption was in connection with the conflict in Israel and Palestine.
Several shipping companies said they would be avoiding the routes indefinitely despite the sea remaining a crucial path for linking the Europe with Asia.
8.50am: The morning so far
Thursday started off with a sweetener in the form of a 7% annual dividend hike from British biotech giant AstraZeneca PLC (LSE:AZN).
The $3.10 (£2.5) per share shareholder reward was a considerable leap above previous dividends, having only shifted from $2.8 to $2.9 between 2019 and 2023.
The increase comes on the day of the biotech giant’s AGM, when shareholders will vote on a controversial increase to the executives’ annual remuneration.
Elsewhere in company news, Darktrace PLC (LSE:DARK) returned to year-on-year recurring revenue growth in its past quarter, with underlying profit margins exceeding previous guidance of 21%.
Darktrace also upped its full-year guidance of revenues and margins, causing shares to rally more than 6%.
On the junior market, Lok’n Store Group plc is set to be taken off the London Stock Exchange through a 1,110p per share offer from Shurgard.
It values the AIM-listed self-storage group at around £378 million, representing a 15.9% premium to yesterday’s closing price. Shares duly rallied to match the premium offer amount.
Shifting to the macroeconomic calendar, The RICS House Price Survey, which measures the gap between the number of respondents seeing rises and falls in house prices, improved for the seventh consecutive month.
This adjustment marks the most positive outlook on house prices since October 2022, surpassing the anticipated -6%.
It wasn’t enough to budge housebuilding shares, although home improvement retailer B&Q’s owner Kingfisher plc surged to the top of the movers list with a 3.7% gain.
Other top movers include Marks & Spencer Group plc at 2.6%, Smiths Group (LSE:SMIN) plc at 2.4% and Croda International PLC (LSE:CRDA) at 1.9%.
The FTSE 100 was just seen flat at 7,959, having retracted from morning highs of 7,969.
8.35am: Rate cuts should be ‘a way off’ says BoE policymaker
"In my view, rate cuts in the UK should still be a way off as well," Bank of England policymaker Megan Greene wrote in the Financial Times today.
Her comments offered a rebuff to the market, which, said Greene, “now expect the Bank of England will cut rates earlier and by more than the Federal Reserve this year”.
A strong US March CPI inflation print yesterday took the US market by surprise, making the prospect of higher-for-longer rates across the Atlantic more likely.
Green’s comments differ from BoE governor Andrew Bailey’s, who recently said the prospect of beginning to lower interest rates this year is “not unreasonable”.
Back to the FTSE 100, blue-chip stocks remain off their morning highs, adding five points to 7,965 at the time of writing.
8.25am: Bitcoin recovers from US inflation dip
Bitcoin (BTC) recovered from Wednesday’s intraday dip to $67,500 to end the session above $70,000.
The benchmark cryptocurrency initially plummeted following a hotter-than-expected inflation print in the US, but the market clearly saw this as a buy opportunity.
Bitcoin added another 0.8% this morning, bringing the BTC/USD pair to $71,200 at the time of writing.
Back to stocks, the FTSE 100 remains relatively flat at 7,954, having retracted from morning highs of 7,969.
8.19am: Darktrace ups guidance
Darktrace PLC (LSE:DARK) returned to year-on-year recurring revenue growth in its past quarter, with underlying profit margins above previous guidance of at least 21%.
As a result, the cybersecurity AI group improved its full-year guidance for recurring revenue, raised expectations for total revenue and margins, and maintained cash flow guidance.
Total third-quarter revenue was $176.1 million, a 26.5% year-over-year increase, while maintaining a steady gross margin and reporting a slight improvement in ARR churn and retention rates.
Shares rallied more than 8% in opening exchanges.
As for the wider markets, the FTSE 100 is currently flat at 7,960, having come off morning highs.
8am: UK housing market in recovery mode
The RICS House Price Survey, which measures the gap between the number of respondents seeing rises and falls in house prices, has improved for the seventh consecutive month.
March 2024 saw the house price balance, a metric contrasting the percentage of respondents reporting price rises versus falls, jump to -4% from February's -10%.
This adjustment marks the most positive outlook on house prices since October 2022, surpassing the anticipated -6%.
Respondents to the survey said they expected prices returning to growth over the next twelve months.
But Sarah Coles, head of personal finance at Hargreaves Lansdown, warned that “the housing market right now is as reliable as the spring weather… You might set out with expectations of sunny skies, and walk straight into a rain storm”.
“It’s so patchy right now that estate agents in the same regions are reporting wildly different experiences. However, on the plus side, they’re forecasting clearer skies as we move into the summer.”
Coles noted that more upbeat sentiment and expectations of rate cuts are persuading buyers and sellers back to the market in increasing numbers. “They're not yet rushing to agree sales or push prices up, but agents are confident that this is on the way once the weather cheers up and mortgage rates fall.”
7.38am: Lok’n Store accepts takeover bid
Lok’n Store Group plc will be taken off the London Stock Exchange through a 1,110p per share offer from Shurgard.
It values the AIM-listed self-storage group at around £378 million, representing a 15.9% premium to yesterday’s closing price.
“The acquisition represents an attractive opportunity for Shurgard to accelerate its growth strategy and create value for its shareholders,” read the statement.
Shares are likely to rally to match the premium offer when markets open today.
7.18am: AstraZeneca ups dividend
AstraZeneca has increased its annual dividend by 7%, bringing it up to $3.10 (£2.5) per share.
Chairman Michel Demaré said: "The board is delighted to announce a 7% increase to the dividend… This uplift is in line with our progressive dividend policy, which remains unchanged, and reflects the continuing strength of AstraZeneca's investment proposition for shareholders."
The increase comes on the day of the biotech giant’s AGM, when shareholders will vote on an increase to the executives’ annual remuneration; opinion is sharply divided on the matter.
7.12am: Blue chips to surge
The FTSE 100 is tipped to surge again today, having closed 26 points higher at 7,961 on Wednesday.
Though it was a volatile trading session, particularly after a hotter-than-expected CPI print in the US, stocks were ultimately supported by strong performances from Tesco (which delivered a top set of preliminaries), HSBC and commodities plays.
FTSE 100 bulls will be eyeing up a move to all-time highs, with only 30 or so points needed to close the gap.
On today's macroeconomic calendar, the RICS House Price Balance, which measures the gap between the number of respondents seeing rises and falls in house prices, rose to -4% in March 2024 from -10 in February.
This was the least negative reading since October 2022; respondents to the survey said they expected prices returning to growth over the next twelve months.
AstraZeneca PLC (LSE:AZN) is the big story on the company news front; an impending AGM will determine the controversial issue of executive remuneration.