- Blue-chip index down 4 points to 8,040
- Lloyds’ profits down
- Red Sea traffic slumps
4.47pm: FTSE 100 closes flat
London's blue-chip index closed 4.43 points lower at 8,040.38.
3.59pm: FTSE 100 dips into red late on
The FTSE 100 looked to miss out on a third consecutive record close on Wednesday after falling into the red late on.
Come late trading, the blue-chip index was down 5 points at 8,039, having climbed as high as 8,091 and setting a new intraday record in the process.
IG Group analysts said the eventual fall in stocks had come after hawkish comments on inflation by Bank of England chief economist Huw Pill on Tuesday.
Pill had said base rate cuts were still some way off during a speech, which IG noted encouraged the pound higher but ate into stocks’ momentum in the meantime.
Croda International PLC (LSE:CRDA) headed the FTSE 100’s biggest losers into late trading, down 3.6% after unveiling a 10% drop in sales for the first three months of the year earlier on.
Ocado Group PLC’s 3% fall saw it sit second on the list, with the hit coming after Shore Cap analysts batted off speculation of the online grocer moving its listing to the US.
Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB) remained the day’s biggest riser on gains of 3.5% in the meantime, after pleasing with results in the morning.
BAE Systems PLC (LSE:BA.) followed behind, having climbed 2.3% in the wake of the government’s Tuesday announcement that defence spending would be increased over the coming years.
3.30pm: Ocado falls as broker downplays US-listing talk
Ocado Group PLC (LSE:OCDO) emerged as one of the FTSE 100’s biggest losers on Wednesday, as analysts batted off speculation of the firm rehousing its stock market listing to New York.
Citing speculation last year that Amazon.com Inc (NASDAQ:AMZN, ETR:AMZ) was mulling a bid for Ocado, Shore Cap said in a note the unsourced talk “clearly proved to be groundless”.
Analysts went as far as suggesting the move was a “stunt from wherever to boost the heavily loss-making British ‘tech’ company’s share price”.
“Amazon has had every chance to acquire its smaller British competitor to no avail, probably because its economic model just does not work, which US investors will no doubt suss out,” Shore Cap added... Read more
Shares fell 3.4%.
3.00pm: Wall Street mixed at open
The Nasdaq and S&P 500 enjoyed gains on a busy Wednesday of earnings, opening 126 and 13 points higher respectively.
This came as Tesla Inc (NASDAQ:TSLA) soared after seemingly reassuring investors in the face of muted demand in Tuesday evening's earnings, while Boeing Co also climbed despite unveiling a first-quarter loss.
According to eToro analysts, Boeing’s US$1.13 loss per share was not as bad as feared, after the manufacturer has faced intense pressure following January’s door panel blowout.
“It reflects the company taking the only really sensible route,” eToro’s Mark Crouch said, “namely, to slow down production in order to prioritise quality over quantity”.
The Dow Jones faced a negative start in the meantime, falling 34 points to 38,469, as the likes of Verizon, McDonald's, Johnson & Johnson and Proctor & Gamble fell.
Facebook owner Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB) was among other big names due to report on Wednesday, alongside Ford Motor Co... Read more
2.39pm: Jet2 rivals don’t appear to face pricing pressure - analyst
Jet2 PLC (AIM:JET2)’s warning over price competition is likely to concern investors, especially given rival easyJet PLC did not mention such pressures, analysts have said.
According to Jet2’s update on Wednesday, demand has improved year on year heading into the busier summer period.
However, pricing has become more competitive in recent months, the airline said, translating to just “modest” increases in rates.
Peel Hunt analysts noted the warning was likely to fuel investors’ fears, partially due to the fact rivals have not raised such concerns.
“This appears to be less positive than easyJet's statement a week ago,” Peel Hunt said.
This had pointed to an increase in revenue per seat over the April to June quarter, followed by the figure being well ahead year on year for July to September.
Shares fell 5.6% to 1,404p on Wednesday... Read more
1.45pm: Red Sea traffic slump 'likely' to knock prices
A slump in shipping traffic passing through the Red Sea will likely feed through to inflation, chief executive of supply chain firm Vinturas Ronald Kleijwegt, has said.
“Smart businesses pre-empt and anticipate potential issues so they can reroute and minimise the impact of disruptions to ensure business continuity,” he commented.
“Let’s hope this is what we’re seeing with the slow down of traffic in the Suez Canal, where alternative transportation routes have been found so supply chains continue to flow and consumer pricing won’t be impacted.
“But sadly, if recent events are anything to go by, I doubt this will be the case - and the longer the crisis goes on for, the more likely it is to have an impact on inflation and consumer pockets.”
ONS data on Wednesday showed traffic through the Suez Canal had fallen by two-thirds year on year by the first week of April, having declined since December.
This comes after the outbreak of conflict between Israel and Hamas in October, which was followed by attacks on shipping in the region by Iranian-backed Houthi rebels.
1.32pm: Lloyds rebounds as investors digest results
Lloyds Banking Group PLC (LSE:LLOY) shares rebounded into Wednesday afternoon, climbing 3.3% as investors appeared to come to terms with a fall in profit from £1.6 billion to £1.2 billion.
An influx of homeowners refinancing their mortgages over the first quarter was among key factors eating into the figure, as people looked to take advantage of better rates.
Net interest margins fell to 2.95% from 3.22% last year as a result, with Lloyds’ mortgage book also falling by £1.6 billion.
“The lower margin reflects expected headwinds due to deposit churn and asset margin compression, particularly in the mortgage book,” Lloyds said.
Interest had soared last year, prompting mortgage rates to climb, though the latter have fluctuated in recent months over speculation of cuts to base rates this year.
“A year-on-year drop in profits of more than a quarter in the first three months of the year at Lloyds looks dramatic,” AJ Bell analyst Russ Mould said.
“But, it is no worse than expected and there is no change to chief executive Charlie Nunn’s earnings outlook for 2024 as a whole.”
12.55pm: Pret turns to former bosses
Pret A Manger has reappointed former board members as the coffee chain eyes up a rapid expansion overseas.
Co-founder Sinclair Beecham is set to return to the business, having helped set up Pret almost 40 years ago.
Former chairman Larry Billett will also return as a non-executive director, after having held the role at Pret between 2003 and 2011.
Current chair Olivier Goudet will be succeeded by Konrad Meyer in the meantime.
The changes come as Pret looks to open 150 new stores overseas this year, under plans to reach up to 1,500 locations in the coming year, including 500 in the UK by late 2024.
They also come after Pret has faced backlash over attempts to clamp down on subscription-sharing which have left customers facing the likes of technical difficulties.
“I am [...] delighted to be welcoming Sinclair and Larry back to the business,” Meyer commented.
“With Larry’s return to the board, and Sinclair’s continued support, we are bringing together the brilliance of Pret’s past with the promise of Pret’s future.”
12.34pm: CMA asks for input on Amazon, Microsoft AI deals
Britain’s Competition and Markets Authority has asked for comments on deals relating to artificial intelligence (AI) between the likes of Amazon.com Inc and Microsoft Corp (NASDAQ:MSFT).
This is in a bid to determine whether such partnerships fall under UK merger rules, the CMA said on Wednesday.
“Today we’re inviting comments into the partnerships between Microsoft and Mistral AI, Amazon and Anthropic, and Microsoft’s hiring of former employees and related arrangements with Inflection AI,” CMA merger executive Joel Bamford said.
“We will assess, objectively and impartially, whether each of these 3 deals fall within UK merger rules and, if they do, whether they have any impact on competition in the UK.”
The CMA previously warned it had “real concerns” around the development and adoption of AI in UK markets, given just a handful of companies work on such foundation models.
“Foundation models have the potential to fundamentally impact the way we all live and work, including products and services across so many UK sectors,” Bamford added.
“So open, fair, and effective competition in Foundation Model markets is critical to making sure the full benefits of this transformation are realised by people and businesses.”
12.13pm: Wall Street poised for mixed start
Futures trading had the Nasdaq and S&P 500 up 95 and 5 points respectively ahead of Wednesday’s opening bell, but the Dow Jones down 11 points as a busy week of earnings goes on.
Eyes were on Boeing Co as the embattled aircraft manufacturing giant readied to report on its first quarter trading on Wednesday, following January’s door panel blowout and intense pressure subsequently.
Shares in Boeing were up 1.3% ahead of the market’s open, on news of a US$425 million deal with supplier Spirit AeroSystems to address ongoing issues.
Facebook owner Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB) was also among the big names set to report on Wednesday, alongside Ford Motor Co, with shares in the former down 0.4% and up 0.5% in the latter ahead of these.
Tesla Inc (NASDAQ:TSLA) emerged as one of Wednesday’s big risers in the meantime, up 12.1% in pre-market trading after Tuesday’s earnings... Read more
“Tesla had flagged the expected lower growth rate in 2024, thus, the focus for this earnings report was margins and plans for the future,” XTB analyst Kathleen Brooks said.
“Musk delivered both of these,” she added, pointing to a better-than-expected margin of 17.4% and plans to accelerate the rollout of affordable electric vehicles... Read more
11.47am: Suez Canal traffic plunges by two-thirds
Traffic through the Red Sea has dropped dramatically since mid-December, as tensions boil in the Middle East.
Official figures showed on Wednesday that traffic through the Suez Canal began to decline from December, and had fallen by two-thirds year on year by the first week of April.
The number of ships passing through the Bab-Al Mandab Strait, at the opposite end of the Red Sea, was down by 59% over the first week of April, the figures from the ONS showed.
This comes after the outbreak of conflict between Israel and Hamas in October, which was followed by attacks on shipping in the region by Iranian-backed Houthi rebels.
“The Suez Canal and the Bab-Al Mandab Strait serve as gateways to and from the Red Sea, allowing the transportation of goods such as oil and natural gas, which underlines their strategic importance,” the ONS pointed out.
According to the ONS, the reduction in shipping traffic was attributed to both cargo and tanker vessels.
“This aligns with the widely reported maritime disruption in the Middle East,” it added.
Analysts have previously warned of the potential inflationary effects of Red Sea shipping disruption, which has threatened to hit businesses with higher supply costs.
11.28am: BAE, defence firms boosted after government spending pledge
BAE Systems PLC (LSE:BA.) was among the FTSE 100’s big risers on Wednesday after the government vowed to hike military spending over the coming years.
Shares in the firm climbed 2.7%, with peers Babcock International Group PLC, QinetiQ Group PLC (LSE:QQ.) and Rolls-Royce Holdings PLC (LSE:RR.) up 1.7%, 1.2% and 0.7% respectively.
Prime minister Rishi Sunak had pledged to increase defence spending to 2.5% of national income by 2030 on Tuesday, a promise echoed by the Labour politicians.
This is set to take the annual figure to around £87.1 billion by 2030, representing £7 billion more than if spending stayed at 2.3% of gross domestic product.
JPMorgan dubbed the news as “positive” and reiterated ‘overweight’ ratings for BAE, Babcock and QinetiQ.
“Babcock and QinetiQ look extremely undervalued to us,” the bank added, pointing out the former was on its positive catalyst watchlist ahead of results in June.
10.47am: Burberry slips on Gucci profit warning
Burberry Group PLC (LSE:BRBY) was among the FTSE 100’s biggest fallers on Wednesday, after rival Kering warned on profits following a slump in Gucci-branded sales over the first quarter.
Burberry fell 3% on the news, with sluggish Chinese demand said to be among the reasons for the 21% dip in Gucci sales, according to owner Kering.
Croda International PLC (LSE:CRDA) led the fallers in the meantime, down 3.2% after the speciality chemicals company unveiled a 10% drop in sales for the first three months of the year.
Among risers, Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB) led the way with gains of 5.3% following expectation-beating revenues for the first quarter.
Miners also gained, following falls earlier in the week, led by Rio Tinto PLC, which climbed 3.3%.
Overall, the FTSE 100 remained in record-breaking territory, up 38 points at 8,082, having hit a new all-time high of 8,088 earlier on.
9.49am: Jet2 descends on fears over pricing
Jet2 PLC (AIM:JET2) shares descended over 5% after the airline seemingly reported on positive trading for both last year and the summer months ahead on Wednesday morning.
Though summer demand looks to be outdoing last year, Jet2 said, pricing had become more competitive in recent months.
“While Jet2 looks well positioned ahead of its key summer trading period, the travel operator spooked investors as it warned of more competitive pricing,” AJ Bell’s Russ Mould noted.
“This could be a sign that the pricing power enjoyed by the sector, with people prepared to pay whatever it takes to get their week in the sun, is starting to ease.”
Jet2 had highlighted more “competitive pricing” recently, “particularly for April and May departures”.
Shares fell 5.1% to 1,412.50p.
9.39am: Oil surges as US stockpiles drop
Oil prices have gained ground on Wednesday following a surprise drop in US stockpiles.
Benchmark Brent Crude climbed as high as US$88.69 a barrel on Wednesday morning, up 1.8% on a day earlier.
This came as US inventories fell by 3.237 million barrels over the week to April 19, with analysts having expected an increase of 800,000 barrels.
Official data is due later on Wednesday, with a drop signalling positive news for demand.
According to Hargreaves Lansdown analyst Sophie Lund-Yates, “lack of movement on OPEC+’s production mandates” has also helped pushed prices up.
“There’s also growing hope that interest rate cuts could be on the agenda in the near-term, which would boost demand for the black stuff,” she said.
9.22am: Heineken revenue misses expectations
Heineken has reported below-expected revenue despite an improvement in sales over the first quarter, led by premium beer volumes.
Revenue came in at €8.18 billion over the first three months of the year, up 7.2%, the brewer said on Wednesday.
On an adjusted basis, revenue came in at €6.85 billion, below the Heineken-provided market consensus estimate for €6.94 billion.
Beer volumes grew by 4.7% over the period, however, above expectations for a 2.5% increase.
"This quarter was boosted by an earlier Easter and cycling negative one-off effects from last year," executive chairman Dolf Van Brink said.
"Top-line delivery was well-balanced between volume and value as more markets returned to volume growth."
Despite the revenue miss, Hargreaves Lansdown analyst Aarin Chiekrie said the "results finally gave the group something to raise a glass to".
He said: "Total beer volumes were much better than the market expected, meaning that growth on the top line came from a much healthier mix of both price and volume this quarter."
Heineken reiterated guidance for low to high-single-digit operating profit growth, with shares up 0.4% on Wednesday morning.
8.49am: The morning so far
The FTSE 100 continued its record-smashing week this morning by hitting the third all-time high in as many days.
Stocks are enjoying a combination on tailwinds, including an optimistic start to the UK earnings season (exemplified by Primark owner AB Foods’ start turn yesterday), cooling Middle East tensions and elevated hopes of a near-term interest rate cut.
But it wasn’t all glamorous on the company news front this morning.
Lloyds Banking Group PLC (LSE:LLOY) saw net interest margins fall to 2.95% from 3.22% in the first quarter of 2023, with statutory profit after tax down from £1.6 billion to £1.2 billion.
Lloyds mentioned “elevated severance charges” of £100 million that contributed to an 11% surge in operating costs.
A “sector-wide change in the charging approach for the Bank of England levy” contributed to 500 basis points of this 11% increase. The bank’s shares fell 1.7% in opening exchanges.
Dettol maker Reckitt Benckiser revenues fell 4.6% year on year in the first quarter, though this was broadly in line with expectations.
Hygiene comprising Finish, Lysol, Harpic and Vanish was the one segment to pen revenue growth, while nutrition was the worst performer. The market semed buoyed by these results; Reckitt flew to the top of the FTSE 100 risers list with a 4.5% share price gain.
Miners also put in a good display in the first hour of trades, with Glencore, Antofagasta, Rio Tinto and Anglo American all up more than 1%
BAE Systems, BP and Scottish Mortgage are also top of the table.
At the time of writing, the FTSE 100 index was up 35 points to 8,080.
8.32am: Gucci parent Kering delivers profit warning
Across the Channel, Gucci-owner Kering has delivered a profit warning due to slumping sales of its premier luxury handbag.
Revenue for the first quarter of 2024 was down 11% as reported and down 10% on a comparable basis to €4.5 billion.
Guuci sales plummeted 21%, Yves Saint Laurent was down 8% and Bottega Veneta fell just 2%.
Chief executive François-Henri Pinault did not beat around the bush.
“Kering’s performance worsened considerably in the first quarter. While we had anticipated a challenging start to the year, sluggish market conditions, notably in China, and the strategic repositioning of certain of our Houses, starting with Gucci, exacerbated downward pressures on our topline.
“In view of this revenue decline, together with our firm determination to continue investing selectively in the long-term appeal and distinctiveness of our brands, we now expect to deliver sharply lower operating profit in the first half of this year.
“All of us are working tirelessly to see Kering through the current challenges and rebuild a solid platform for enduring growth.”
Kering shares were kicked 9.5% lower.
8.25am: FTSE 100 touches all-time high again
The blue-chip index touched another all-time high again this morning, marking the third straight day of records.
Reckitt Benckiser plc is top of the leagues after posting its first-quarter trading update, with the big-cap miners offering a substantial lift.
Glencore, Antofagasta, Rio Tinto and Anglo American are all up more than 1%, as are BAE Systems, BP and Scottish Mortgage.
After the first 30 minutes of trades, the footsie was trading 35 points higher at 8,079.
8.14am: Tesla to rally when US trading starts
Tesla Inc (NASDAQ:TSLA) shares look set to bounce 13% higher when US markets open later.
Shares surged after hours as it told investors it plans to fast-track the launch of new affordable EVs, despite its first-quarter earnings missing Wall Street estimates.
Elon Musk’s EV giant has modified its strategy, opting to introduce "new models" by early 2025 using its existing production capabilities, diverging from its previous plans to develop an entirely new car range priced at $25,000.
For the first quarter, Tesla posted a 9% year-over-year drop in sales to $21.3 billion, attributed to a reduced vehicle average selling price and a decline in vehicle deliveries.
“This update may result in achieving less cost reduction than previously expected but enables us to prudently grow our vehicle volumes in a more capex-efficient manner during uncertain times,” said the group.
7.59am: Jet2 expecting stronger summer ahead
One of the junior market’s largest members Jet2 said demand for the summer is stronger than last year, signalling a continuation of the post-Covid travel boom.
Bookings for package holidays are up by 13%, Jet2 said in a statement, while flight-only passengers have increased by 18%.
This is as the airline’s capacity is 12.3% higher than a year ago at 17.1 million seats, with the summer season 55% sold so far, leaving load factors 1% ahead of this time last year.
Alongside this, Jet2 said pricing had seen a “modest increase”, easing cost pressures, while over 80% of fuel was already bought for the year, shielding against price shocks from the likes of tensions in the Middle East.
7.45am: Reckitt revenues lower, but premiumisation evident
FTSE 100 consumer goods group Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB)’s revenues fell 4.6% year on year in the first quarter, though this was broadly in line with expectations.
Hygiene comprising Finish, Lysol, Harpic and Vanish was the one segment to pen revenue growth, while nutrition was the worst performer.
On a like-for-like basis (excluding currency volatility, acquisitions and disposals), group revenues ticked 1.5% higher despite sales volumes falling 0.5% thanks to a favourable price mix.
“We continue to benefit from carryover pricing and consumers trading up to our premium innovations,” as chief executive Kris Licht put it.
Licht added: "We have delivered a good first quarter. Following a period of price-led growth, we are now returning to a more balanced contribution from price, mix and volume.
“We grew volumes in many of our powerbrands in the quarter, including Lysol, Dettol, Durex and Finish, as well as our non-seasonal OTC portfolio. In addition, we continue to benefit from carryover pricing and consumers trading up to our premium innovations.”
Management reiterated its full-year guidance of like-for-like revenue growth between 2% and 4%, with adjusted operating profit “to grow ahead of net revenue growth”.
7.27am: Lloyds’ margins lower, layoffs charges increase operating costs
Lloyds mentioned “elevated severance charges” of £100 million that contributed to an 11% surge in operating costs.
A “sector-wide change in the charging approach for the Bank of England levy” contributed to 500 basis points of this 11% increase.
In January, Lloyds said it would be cutting up to 1,600 jobs as part of a major branch overhaul.
Net interest margins fell to 2.95% from 3.22% in the first quarter of 2023, with statutory profit after tax down from £1.6 billion to £1.2 billion.
This lower NIM caused net interest income to fall 10% year on year to £3.18 billion.
Lloyds reaffirmed its full-year guidance with expectations including a NIM of greater than 290 basis points and operating costs of about £9.4 billion.
A CET1 ratio of 13.9% – an important metric of bank liquidity – was ahead of the ongoing target of 13%.
Chief executive Charlie Nunn stated: "The group is continuing to deliver in line with expectations in the first quarter of 2024, with solid net income, cost discipline and strong asset quality.
“Our performance provides us with further confidence around our strategic ambitions and 2024 and 2026 guidance."
7.06am: Blue chips to hit another ATH
FTSE 100 futures have the blue-chip index hitting another all-time high when markets open today, after smashing records on Tuesday.
The index has closed at record highs for two days running, as a combination of interest rate optimism and a pause in Middle East tensions set the stock market alight.
Markets today will be looking at the CBI Business Optimism Index for an update on manufacturing optimism in the UK.
This quarterly gauge deteriorated to -15 in the fourth quarter of 2023, the lowest in one year, but forecasts expect a recovery in the first-quarter print.
Lloyds Banking Group PLC (LSE:LLOY) kicks off the quarterly banking earnings season amid share price upgrades across the sector.
Futures contracts have the footsie opening 46 points higher at 8,093.