- FTSE 100 bags more records
- Interest rates kept at 5.25%
- BoE rate cut expected in June or August
16.59: New record close
The Footsie finished at another record altitude, after it added 27.3 points today to close at 8,381.35.
It was the index's fifth record close in a row and the session also included another intraday record high of 8,396.25.
16.03: FTSE 100 to close at record high... again
The FTSE 100 is set to close at another record high after the prospects of a summer interest rate cut grew larger.
London's blue chips are positioned to close around 36 points higher at 8,390.
While the Bank of England's dovish undertones from its latest monetary policy meeting left markets pricing in a rate cut in either June or August, there was also a string of company news pushing the index higher.
BAE Sytems reached record highs as it continued to benefit from growing global conflicts and Rishi Sunak's promise to increase defence spending to 2% of GDP by the end of the decade.
The group also reiterated 2024 guidance for sales to climb as much as 12% to £25.3 billion and profit to increase by up to 13% to £2.7 billion.
Other risers included Anglo-American, Prudential and Phoneix Group.
Leading the FTSE 100 fallers was the index's largest private equity firm 3i, which sunk 4% as analysts believe shareholders have started to crystalise their gains.
"Overall, its a mixed set of results... but the company generally experiencing a sharper slowdown in growth and profits than expected," Joachim Klement at Liberum said.
"We wouldn’t be surprised to see some profit taking in the shares in coming weeks as analysts may revise their expectations a tad lower."
15.48pm: Frasers closes in on Ted Baker UK
Shares in Mike Ashley's Frasers Group ticked close to 1.5% higher after reports revealed it was nearing the purchase of Ted Baker's British operations after its UK owner collapsed earlier this year.
The Sports Direct owner is believed to be the preferred partner for Ted Baker, replacing its current British licensing partner No Ordinary Designer Label (NODL).
An agreement between Frasers and NODL's administrators is expected to be made within the next few days.
Next and OSL, Ted Baker's US licensing partner, also expressed interest in a purchase of the fashion brand.
15.34pm: Lord's to undergo £62 million renovation
Lord's Cricket Ground is set to undergo a £61.8 million redevelopment of two of its stands, increasing the London venue's capacity by 1,100 seats.
Members of the Marylebone Cricket Club (MCC), which owns the ground, voted in favour of demolishing the existing Allen Stand and rebuilding it with an extra tier.
Source: Lords
An additional tier on the Tavern Stand will also be added.
Construction will begin in September and is expected to be completed by 2027, with John Graham Construction Ltd the preferred bidder for the main contract.
15.10pm: Roblox shares plummet on weak guidance
Roblox, the US-listed online game, saw its shares collapse after it cut its forecasts for the year as demand weakened.
Shares in the video game company sunk close to 23% after it scaled back 2024 bookings forecasts.
Full-year bookings are now expected to be between US$4 billion and US$4.1 billion, having been reduced from forecasts of between US$4.14 billion and US$4.28 billion.
Video game companies have been experiencing poorer sales since the pandemic caused the industry to boom.
Roblox like others has been forced to undergo cost-cutting strategies to deal with the woes, having laid off hundreds of workers and shut some of its studios.
14.34pm: US stocks boosted by strong unemployment data
Wall Street has begun trading relatively flat after new jobs data gave investors confidence that the Federal Reserve will cut interest rates later this year.
All three of the main indexes remained flat, with the Nasdaq at 16,310, the S&P 500 at 5,189 and the Dow Jones at 39,022.
Weekly jobless claims rose to their highest level in nearly a year, pushing bond yields higher, indicating that the US may cut borrowing rates in 2024.
Initial claims rose by 22,000 to 231,000 in the week to May 4, representing the highest level since August last year.
Analysts had initially forecast a small jump to around 210,000.
Initial #unemployment claims jump to 8-month high this past week
???? 231K new jobless claims
???? 212K forecasted claims
⏮️ 209K previous claims (revised up)https://t.co/rf1oXRzA4B pic.twitter.com/M7XDdB7E54
— Jennifer Nash (@jennifer_nash12) May 9, 2024
US jobless claims grew 22k to 231k last week. The inured unemployment rate was unchanged at 1.2%. Continued claims grew 17k to 1.785 mil.
Last week's initial claims total is up 2.7% YoY and the highest since Aug 2023.#ui #unemployment (US Dept of Labor) https://t.co/eT6a6xoJwA pic.twitter.com/OxuNerGF2H
— MTS Insights (@MTSInsights) May 9, 2024
14.16pm: FTSE 100 maintains impressive performance
The FTSE 100 is holding marginally higher at around 8,375 after a dovish Bank of England interest rate sent shares higher.
It means the blue-chip index is now up around 8.5% in 2024, leaving analysts confident about its prospects.
Victoria Scholar at Interactive Investor said: “After a period of underperformance for UK markets, the FTSE 100 could be back in vogue as it continues to scale fresh record highs. However the index is not a barometer for the strength of the UK economy, rather it is an outward-looking index comprising largely of multinational conglomerates."
One constituent which caught Scholar's eye was BAE Sytems after it soared to a record high today on the back of improved defence spending and management maintaining guidance.
“BAE Systems’ market cap has jumped by around a quarter since the start of 2024 and has rallied more than 40% over a one-year period supported by geopolitical instability in the Middle East as well as the war in Ukraine."
Scholar added: “There’s no denying that the UK economy is still grappling with issues from sluggish growth, above-target inflation, longstanding low investment, weak productivity, and struggling public finances.
"Nonetheless, optically, all-time highs for the FTSE 100 is extremely encouraging from a confidence perspective and may help change the narrative away from one focused on the exodus of big business from London’s public market
13.49pm: Rate cuts could be more than markets think, says Bailey
Bank of England governor Andrew Bailey said interest rates will need to be cut in the coming months at a faster rate than the money markets have forecast.
Speaking after today's meeting, he said: "With the progress we’ve made, to make sure that inflation stays around the 2pc target, that inflation will neither be too high nor too low, it is likely that we will need to cut Bank Rate over the coming quarters."
Bailey said the Monetary Policy Committee will now begin making policy " less restrictive... possibly more so than currently priced into the markets."
As of today, money markets expect two rate cuts to take place in 2024, the first of which is either in June or August.
13.33pm: Wall Street to open lower
US stocks are scheduled to open lower after a batch of companies reported disappointing earnings.
Dow Jones futures dropped around 92 points, implying an open of around 39,095, while the S&P 500 is expected to drop around 10 points to 5,202.
Meanwhile, the tech-heavy Nasdaq is positioned to open 32 points lower at 18,150.
Pushing Wall Street lower was Warner Bros Discovery as it dropped 4% in premarket trading after it reported both profit and revenue misses in its first quarter.
British semiconductor group Arm dropped over 6% after investors were left underwhelmed by forward guidance.
Arm expects earnings to stay flat in the current quarter, with a full-year forecast set between $1.45 and $1.65.
Weak guidance also sent Airbnb shares 8% after disappointing second-quarter guidance overshadowed a strong first-quarter report.
For Q2, the alternative accommodation provider projected revenue in the range of $2.68 billion to $2.74 billion, below the $2.76 billion expected by Wall Street analysts.
13.00pm: High interest rates threaten small businesses
British business organisations have expressed concerns about today's decision to keep interest rates at 5.25%, warning that it could cause problems for small and medium-sized companies.
David Bharrier, head of research at the British Chambers of Commerce, said: "Businesses will be hopeful that tentative signals from the Bank translates into a rate cut later this year.
"However, for many SMEs borrowing costs remain very high – and today’s hold means another month of hesitation on investment and growth.
"Our research shows that business concern about interest rates is easing, in part due to the period of stability since last August.
"Our latest survey showed 35pc of firms worried about the cost of borrowing, down from 39pc at the end of last year. But these remain high levels of concern, compared to pre-pandemic.
"Business confidence has been gently ticking up as they see a way out of the inflation and interest rate double whammy, but policymakers need to support this with a clear plan for growth and stability."
12.43pm: BoE adds details to forecasts
More details on the Bank of England's forecasts
Source: BoE
The Monetary Policy Committee voted by a majority of 7-2 to maintain #BankRate at 5.25%. Find out more in our #MonetaryPolicyReport: https://t.co/2lnXthHbMt pic.twitter.com/HXZdRjxPnl
— Bank of England (@bankofengland) May 9, 2024
12.28pm: Inflation to hit 1.5% in 2026, says Bank of England
Britain's inflation rate is expected to drop by more than the Bank of England had previously expected in the coming years.
Economists at the central bank are predicting inflation will drop to 1.5% in 2026, down from the BoE's current 2% target.
In the next month, the consumer price index, which is the UK's key measurement of inflation, is forecast to drop below the 2% mark, opening up the chance for a first-rate cut in more than six meetings.
However, the bank warned inflation could rise to 2.6% by the end of the year as the benefits from the recent drop in energy prices begin to fade.
Looking further forward, inflation is expected to slip to 2.25% in 2025 before reaching 1.5% in 2026.
12.16pm: Markets begin to price in June cut
Investors now believe the first interest rate cut will come in June, with money markets indicating there is a 50% chance of a drop in borrowing costs next month.
Should this fail to happen, the markets are pricing in an August rate cut.
Jeremy Batstone-Carr at Raymond James Investment Services, said: "Since the Monetary Policy Committee’s (MPC) last meeting, headline and core inflation have dipped, with the descending trend expected to continue.
"Ahead of June 20th, April’s CPI data on May 22nd is expected to show that price increases have fallen sharply, laying the ground for rate cuts the following month.
"Although the labour market has shown signs of loosening, providing additional encouragement to the MPC, the possible inflationary consequences of a rate cut remain concerning to some the rate-setters.
"The Committee thus remains divided on the road ahead, with some finding that the pace of deflation is still too slow for comfort.”
12.09pm: "Moving in right direction," says Bailey
Governor Andrew Bailey offered an optimistic comment alongside the announcement, likely contributing to the FTSE 100's sharp jump.
He said: "We’ve had encouraging news on inflation and we think it will fall close to our 2pc target in the next couple of months.
"We need to see more evidence that inflation will stay low before we can cut interest rates."
"I’m optimistic that things are moving in the right direction."
12.04pm: BoE maintains rates; two members vote to cut
The Bank of England has voted to keep interest rates at 16-year highs, keeping in line with market expectations.
BoE's Monetary Policy Committee voted seven to two in favour of keeping borrowing rates at 5.25%, marking the sixth consecutive meeting in which it has been maintained.
Two members voted in favour of lowering rates, meaning one person joined the committee's most dovish member Swati Dhingra in a postivie sign for the market.
In response to the decision, the FTSE 100 is now up 30 points for the day at around 8,384.
11.49am: 3i shares slip as investors crystalise gains
Britain's largest listed private equity firm dropped 4.5% today despite it reporting healthy growth for its investors as it benefited from the success of Dutch discount retailer Action.
3i said it yielded £3.8 billion, the equivalent of 23% of opening stakeholders' funds, in the year to March, as its net asset value lifted from £17.45 per share to £20.85.
Action was said to be the firm's "major driver" throughout the year after the retailer's sales soared by 28% to £9.72 billion while underlying earnings lifted 34% to £1.38 billion.
Liberum analyst Joachim Klement believes that the stock may start to see some profit-taking soon, and that may be the reason why the shares have slid today.
Klement said: "We keep warning about the large concentration risk in the portfolio, the high valuation of the shares, and the difficult market environment for consumer companies like Action.
"But Action remains remarkably resilient... margin expansion has helped limit the drop in EBITDA growth which is a highly respectable result given the difficult market environment.
"Having said that, the results generally miss by some margin and come in barely above the lowest forecast of analysts covering the company."
"Overall, this is a mixed set of results, in our view, with Action’s performance holding up very well given the circumstances, but the company generally experiencing a sharper slowdown in growth and profits than expected."
11.24am: Mortgage arrears and property repossessions rise
Over 95,000 homeowners fell into arrears with their mortgage payments in the first three months of 2024, leading to 870 of the properties being repossessed, UK Finance data revealed.
As the cost of borrowing continues to hold at 16-year highs an increasing amount of homeowners have been unable to keep up with their mortgage payments.
An extra 26% of homeowners fell into arrears in the first quarter of 2024 compared to the last year, while an additional 9% saw their properties taken into the possession of lenders.
Additionally, 600 buy-to-let properties were repossessed, marking a 20% jump compared to the last quarter of 2023.
Charles Roe, director of mortgages at UK Finance, says:“The number of mortgages in arrears, while still low, continues to rise as households remain under pressure from the cost of living and higher interest rates."
Source: UK Finance
11.04am: TSB owner faces hostile takeover from BBVA
BBVA, Spain's second-largest bank, is attempting to launch a hostile takeover of TSB owner Banco Sabadell in the hopes of making a new European banking heavyweight.
A new bid was tabled by the Bilbao-based lender three days after its initial proposal was rejected by Sbadell's board, which claimed it was "not in the best interest" of the bank.
Spain's government condemned the offer, which values the fourth-largest Spanish bank at around £9.9 billion.
“The operation will create one of the best banks in Europe," BBVA said.
Under the proposal, the company would exchange one BBVA share for 4.83 Sabadell shares, representing a 30% premium to the April 29 closing price.
Chair Carlos Torres Vila added: “We are presenting to Banco Sabadell’s shareholders an extraordinarily attractive offer to create a bank with greater scale in one of our most important markets."
10.09am: BAE Systems hits record high
BAE Systems shares reached a record high this morning after it was revealed the British government is planning to increase its spending on defence.
Shares in the FTSE 100 group lifted more than 0.8% to around 1,392p.
It comes ahead of the defence giant's AGM later today and follows management reiterating its guidance for the year, having said trading has been in line with expectations for 2024 so far.
Last month, Rishi Sunak promised to increase defence spending to 2.5% of GDP by the end of the decade, warning that additional conflicts could arise and soothing concerns over a lack of spending on the armed forces.
"Operational performance continues to be strong and our backlog and programme incumbencies underscore our confidence in our long-term value-creating model," Charles Woodburn, BAE's boss, said.
"Our global presence and diverse portfolio of products and services provide high visibility for top-line growth, margin expansion and cash generation in the coming years."
9.49am: Wood Group sales slide despite takeover interest
A day after rejecting a takeover bid which sent shares 17% higher, John Wood Group has reported a decline in its revenues.
The engineering and consultancy group reported a 7.3% sales slide in the first three months of the year, coming in at a total of £1.1 billion.
Despite the drop in demand, the FTSE 250 firm said its order book rose 9% in March.
Shares held flat this morning at 193p, with the group having rejected an offer of 205p per share from Dubai-based rival Sidara as it believes it undervalues the company and its prospects.
Chief executive Ken Gilmartin said: "We are now in the second year of our growth strategy and are making good progress, with ebitda growth, margin expansion and an order book 9pc higher than a year ago.
"We continue to win exciting and complex work across energy and materials, with sustainable solutions representing 40pc of our pipeline."
9.33am: BoE to turn dovish in today's meeting, says economist
Bank of England's Monetary Policy Committee are expected to be split on their voting for rate cuts later today compare to back in March.
Two months ago, only member Swati Dhingra, one of the committee's most dovish, voted for rates to be cut by 0.25%.
All of the other eight members voted to maintain rates at 5.25%, with two having switched from voting to raise rates at the meeting prior.
Now, economists think the decision will be slightly tighter.
Philip Shaw, chief economist at Investec, said: "This broad direction illustrates that collectively the committee is moving gradually towards a rate cut.
"It seems unlikely though to be ready to bite the bullet just yet and the Bank rate looks set to remain on hold at 5.25pc for the sixth consecutive meeting."
He believes a second member may join Dhingra in voting to cut rates today.
8.52am: The morning so far
The FTSE 100 initially surged to another record high of 8,362 when markets opened this morning.
Blue chips have come off slightly since then, with the index currently swapping at 8,352, a few points lower from yesterday’s close.
All eyes are on the Bank of England’s interest rate decision due at midday. The Monetary Policy Committee is widely expected to hold rates at 5.25%, though the messaging and vote split will be thoroughly pored over.
Expect any dovish messaging to move stocks higher.
On the company news front, ITV’s posted total revenues for the first quarter of £887 million, a decrease of 7% compared to the same period last year.
This decline was attributed to a 16% drop in ITV Studios’ advertising revenue, which stood at £382 million, reflecting the phasing of deliveries and the impact of the US film industry strikes.
Shares added around 2% though, suggesting optimism that the advertising slump may be nearly an inflection point.
The Hipgnosis bidding war appears to be coming to an end with Blackstone emerging as the winner after rival bidder, the Nashville-based record company Concord, said it would not match the $1.30-per-share offer.
On the US markets, British microchip designer Arm Holdings failed to excite investors with its fourth-quarter results and forecast. Nasdaq-listed stocks slipped 9% in after-hours trades.
8.36am: Arm fails to impress
British microchip designer Arm Holdings PLC (NASDAQ:ARM) failed to impress with its fourth-quarter results.
The US-listed technology giant posted record revenues of $928 million for the quarter, up 47% year on year, with full-year revenues increasing 21% to $3.23 billion.
Earnings per share (EPS) came to $0.36 for the quarter and $1.27 for the year.
These results topped previously set guidance, but investors may have been underwhelmed by forward guidance.
Arm expects earnings to stay flat in the current quarter, with a full-year forecast set between $1.45 and $1.65.
Nasdaq-listed Arm shares slipped 9% in after-hours US trades.
8.28am: FTSE 100 straddles all-time high
The blue-chip index initially surged to another all-time high of 8,362 when markets opened on Thursday.
It has since retreated back a few points to 8,356, slightly above yesterday’s record.
Top morning risers include Barclays, Centrica, Whitbread and NatWest Group.
8.09am: Blackstone to snap up Hipgnosis after Concord refuses to budge
Concord will not increase its $1.25-per-share offer for Hipgnosis Song Fund Limited, the Nashville-based record company today confirmed.
It leaves the door open to Blackstone taking over Hipgnosis’ collection of music royalties after the asset manager upped its bid to $1.30 on 29 April.
Hipgnosis Song Fund includes the rights to songs from the likes of Ed Sheeran, Lady Gaga and Fleetwood Mac.
The Hipgnosis saga has been marred by slashed portfolio valuations, legal wrangles with its founder and a recent bidding war between Concord and Blackstone.
7.45am: Watches of Switzerland makes strategic jewellery acquisition
FTSE 250-listed Rolex merchant Watches of Switzerland Group PLC (LSE:WOSG) has acquired Roberto Coin Inc for $130 million (£104 million), marking a strategic move into the luxury jewellery sector.
“The acquisition builds on the group's proven capabilities in showcasing luxury brands across both watches and jewellery and will significantly enhance our strategic positioning in the luxury branded jewellery category in the US,” said the group in a statement.
Roberto Coin Inc, which holds exclusive rights to import and distribute Roberto Coin jewellery across the US, Canada, Caribbean, and Central America, achieved annual revenue of $146.2 million and a profit before tax of $30.1 million for the financial year ending December 31, 2022.
"We look forward to benefiting from their wealth of luxury retail and digital experience to unleash the growth potential of the Roberto Coin brand across our chosen markets," said founder and chief executive Roberto Coin.
Roberto Coin jewellery is currently available in 16 WOSG showrooms in the US.
7.32am: ITV advertising slump persists, but streaming hours surge
ITV’s total revenue for the first quarter was £887 million, a decrease of 7% compared to the same period last year.
This decline was attributed to a 16% drop in ITV Studios’ advertising revenue, which stood at £382 million, reflecting the phasing of deliveries and the impact of the US film industry strikes.
Digital advertising revenues offset some of these losses by growing by 14%, contributing to a 3% rise in total advertising revenue.
This is expected to increase by a further 12% in the second quarter, benefiting from events like the Euros in June.
ITVX, ITV's streaming platform, demonstrated strong growth with a 16% increase in streaming hours and a 14% rise in digital advertising revenue.
Chief executive Carolyn McCall said the company is on track to deliver £40 million in cost savings in the year “as part of our strategic restructuring and efficiency programme”.
“We have a strong pipeline of programmes, good demand for our quality content as we increasingly diversify our customer base towards streamers and the phasing of deliveries is heavily weighted to the second half of the year, including Hells Kitchen US, The Better Sister, A.C.A.B, Showtrial and Ludwig."
7.08am: Stocks seen higher in pre-market trades
Blue-chip stocks are expected to climb higher again today after hitting a fresh record on Wednesday.
The FTSE 100 closed at 8,354, marking the fourth straight day of record highs as the market starts to anticipate interest rate cuts.
Speaking of which, the Bank of England convenes today to announce the latest rates decision. Although a hold of 5.25% is widely expected, the messaging and vote split will be closely watched.
Elsewhere on the macro calendar, the RICS House Price Balance, which measures the gap between the percentage of respondents seeing rises and falls in house prices, remained unchanged at -5%.in April.
On the company news front, 3i and Harbour Energy will soon have their trading updates out alongside a raft of AGMs including BAE Systems, Balfour Beatty, Barclays and Jupiter Fund Management.