- FTSE 100 down 14 points at 8,258
- Service sector at seven-month low
- Brtivic rejects Carlsberg bid
4pm: FTSE to close lower
London stocks are on track to close out the week higher despite having dropped around 15 points on Friday.
Shares experienced a strong week, up around 1.5%, after they were boosted by inflation reaching its 2% target and the Bank of England leaving the door open for an August rate cut.
This morning, blue chips looked as if they were going tumble significantly after higher-than-expected government borrowing figures and data indicating a slowing service sector painted a grey picture of the economy.
However, some rosy retail sales and rallies from Phoenix Group, United Utilities and Ocado helped offset a large portion of the falls.
Top fallers include Antofagasta, Land Sec and Smurfit Kappa.
3.39pm: Bank of England choice to hold rates a "political decision", claims Tories
The Bank of England's choice to keep interest rates at 5.25% has been labelled a "political decision", by Conservative MPs.
After interest rates were held at a 16-year high despite inflation having dropped to the BoE's target of 2%, Tories said the Monetary Policy Committee had acted unfairly and was swayed by the election.
Should the central bank have cut rates yesterday it would have marked an important achievement for the Conservatives, who are expected to lose power to Labour come July 4.
Jacob Rees-Mogg, the former business secretary, said: “It is a political decision by the Bank of England. Inflation is now on target and rates need to be cut.
“That we are in an election period ought to make no difference but the Bank has made a decision based on short-term politics rather than economics.”
In the MPC's minutes from the meeting, it said: "The timing of the general election on 4 July was not relevant to its decision at this meeting, which would as usual be made on the basis of what was judged necessary to achieve the 2pc inflation target sustainably in the medium term."
Bob Blackman, a senior Tory seeking re-election, added: "“You’ve got to ask the question why they are not cutting. They have got to justify the decision not to cut interest rates.”
3.20pm: Tata Steel workers to go on strike
Tata Steel workers in Britain will begin an indefinite strike on July 8, Unite union revealed.
The strike involves around 1,500 workers and is a response to the company’s plans to close two blast furnaces and cut up to 2,800 jobs.
The first strike by British steel workers in 40 years will take place at the Port Talbot and Llanwern sites in Wales.
Back in January, the closures were confirmed as part of Tata Steel's plan to turn around its loss-making UK business by switching to lower-carbon electric arc furnaces.
This proposal was supported by £500 million of government funding.
"Tata’s workers are not just fighting for their jobs - they are fighting for the future of their communities and the future of steel in Wales," said Sharon Graham, Unite General Secretary.
2.54pm: Kaspersky banned in US on national security concerns
Kaspersky, the cybersecurity firm, has denied being a security threat after the US Commerce Department banned its software due to alleged links to Russia.
Based in Moscow and with a Russian founder, Eugene Kaspersky, the US agency said: “Kaspersky will generally no longer be able to, among other activities, sell its software within the United States or provide updates to software already in use,” said a commerce department statement.
The statement said the decision followed a lengthy investigation that found Kaspersky’s “continued operations in the United States presented a national security risk due to the Russian government’s offensive cyber capabilities and capacity to influence or direct Kaspersky’s operations”.
Kaspersky replied that the move was based on “geopolitical climate and theoretical concerns” rather than independently verifying if there was a risk.
2.34pm: Wall Street off to mixed start
US stocks were mixed at the open today as all three indexes look to close out Friday having registered weekly gains.
The S&P 500 and Nasdaq dropped by 0.16% and 0.2% respectively, while the Dow Jones pushed 0.18% higher.
Nike started the day close to 1% higher after it was upgraded from outperform to market perform by broker Oppenheimer.
Gilead Sciences, the pharma stock, rose around 3.5%, continuing a rally which started on Thursday after a study revealed its HIV drug was more effective than the existing daily pill Truvada.
Sarepta Therapeutics soared 33% after the U.S. Food and Drug Administration approved it's Elevidys gene therapy, aimed at treating patients with Duchenne muscular dystrophy.
1.52pm: Bitcoin tumbles to close out poor week
Bitcoin slumped by another 2% today as it continues a poor week which has seen it push more than 4%, placing it on track for a monthly drop of 10%.
Despite the slump, the world's largest cryptocurrency is still up around 40% in 2024, having hit a record high back in March.
Neil Roarty, analyst at Stocklytics, said: “Investors appear genuinely split on where the leading cryptocurrency goes next.
“Perhaps the most bearish indicator is the on-chain analysis which suggests that some of Bitcoin’s biggest whales are cashing in.
By some measures, the largest BTC holders have together sold more than $1 billion worth of the coin over the last couple of weeks.
"If they know something the rest of the market doesn’t, it won’t be long until others follow the example.”
Bitcoin traded at around US$63,616 compared to the US dollar on Friday.
1.35pm: Wall Street to open lower
US stocks are on track to open slightly lower this morning, with Nvidia, "the market's major bellwether", having dropped another 2% ahead of the opening bell.
The S&P 500 is forecast to open around 8 points lower at 5,534, while the Dow Jones is predicted to start trading 53 points down at 39,513.
Meanwhile, the tech-heavy Nasdaq is set to fall 40 points to 19,992.
Concerns have risen that the artificial intelligence-driven rally could be reaching its peak, with indications of an overextended market starting to show.
Jamie Cox at Harris Financial Group said: “The good news is, reality does not mean markets crashing or having these big, massive drawdowns.
“It’s more of a rebalancing of the field a little bit, because the valuations of those companies have just gotten so far afield from the average stock that you probably would see some broadening, which has been long talked about.”
1.14pm: Asda sunscreen fails Which? protection test
Asda has been called out by consumer group Which? after it claimed one of the supermarket's sunscreen lotions offers less protection than it claims.
In a spot check of 26 sunscreens Asda's own-branded sun lotion with an SPF of 30 was found to have failed both the initial test and a retest, Which? said.
An Asda spokesperson said: “We recently had our Asda Protect Moisturising Sun Lotion SPF 30 High retested by a leading external provider using internationally recognised testing methods.
"These test results confirmed that this product has a sun-protection factor of 31.5 - and therefore, we do not recognise the test results Which? has published."
Which? representative Natalie Hitchins claimed the findings were "incredibly concerning" that some sunscreens failed but claimed it was "great to see cheaper top-quality sunscreen options available on the High Street ."
Lidl, Boots and Aldi's products all passed the tests.
12.51pm: Standard Chartered to launch cryptocurrency trading desk
Standard Chartered is launching a cryptocurrency trading desk, making it one of the first global lenders to offer spot trading of digital currencies.
Both Bitcoin and Ether will be available for trade and will be part of the London-listed bank's foreign exchange trading division, reports on Friday from the Evening Standard revealed.
Goldman Sachs and other major banks have offered trading for crypto derivatives, but lenders have found difficulty in offering to deal in the underlying asset due to regulations.
“We have been working closely with our regulators to support demand from our institutional clients to trade Bitcoin and Ethereum, in line with our strategy to support clients across the wider digital asset ecosystem, from access and custody to tokenization and interoperability," Standard Chartered said.
The London bank has previously invested in crypto companies such as Zodia Custody and Zodia Markets, which offer services such as safeguarding and trading assets.
Back in November, it launched a blockchain arm called Libeara to help organisations tokenize more common assets.
12.27pm: Microsoft regains spot as world's largest company
Microsoft has reclaimed its position as the world's most valuable listed company after Nvidia's share price fell by more than 3.5% on Thursday.
Nvidia briefly held the top spot with a market valuation of $3.34 trillion, but this was short-lived.
David Morrison at Trade Nation claimed the dip for Nvidia came as a result of investors crystalising their gains, with the AI chipmaker having reached a fresh record high of US$140.
"As NVIDIA is undoubtedly the market’s major bellwether, what happens next should determine where equities go from here, at least in the short term," he added.
The competition between Microsoft, Nvidia, and Apple to be the world's most valuable company remains intense, with all three companies currently valued at over $3 trillion.
Analysts at Wedbush Securities predict that the race to a $4 trillion market cap will be front and centre among these technology giants over the next year.
12.05pm: Octopus Energy to repay £3 billion to government for Bulb rescue
Octopus Energy said it would prematurely repay the £3 billion in state support it received for its acquisition of the collapsed energy supplier Bulb.
Set to be paid by September, the move from the energy firm will provide an early windfall for the next UK government.
Octopus became the largest electricity supplier in the UK following its state-backed takeover of Bulb, increasing its customer base to 6.9 million.
In November 2021, Bulb it was placed into special administration, with Octopus purchasing it in October 2022, helped by government funding.
The initial bailout cost, estimated to be as high as £6 billion, has been significantly reduced due to falling energy prices. The final bill is now projected at £3.02 billion.
Greg Jackson, chief executive of Octopus, said: "This outcome is a great result for taxpayers. Octopus worked hard in the darkest depths of the energy crisis to create a fair deal, meaning that although Bulb went bust with billions of liabilities, it has cost the government almost nothing."
11.36am: China warns of "trade war" with EU
China has ramped up its pressure on the European Union after its commerce ministry claimed the bloc's actions "may trigger a trade war" in reference to Brussels's decision to raise tariffs for EVs made in the Asian country.
A spokesman for the Chinese ministry claimed the “responsibility lies entirely with the EU side” after duties of as much as 38% were placed upon vehicle imports.
The decision to ramp up duties came after the European Commission concluded that Chinese EV manufacturers had benefitted from massive subsidies at home.
However, it has led to Chinese businesses urging Beijing to retaliate with tariffs on imported European cars, which could particularly hurt German companies.
Robert Habeck, the German vice chancellor and economy minister who is about to visit China, has insisted he cannot mediate between Brussels and Beijing.
“There is no chance of the conflict being resolved in China... I can’t negotiate for the EU,” he reporters.
11.12am: FTSE 100 tumbles as European economies struggle
The FSTE 100 is continuing to tumble, having dropped more than 50 points in the last hour as investors digest weaker service output, sky-high government borrowing, rosy retail sales and consumer confidence being at an all-time high.
The latter two could both provide evidence for the Bank of England that the economy is faring better than expected and may quell some of the calls for a rate cut in August.
Meanwhile, in Europe, the forecast is growing greyer as industry output in both Germany and France, the eurozone's two largest economies, showed signs of weakness.
In France, the ongoing uncertainty caused by Macron's snap election has been amplified by evidence the economy is "stalling".
Both service and manufacturing activity fell in June, according to flash PMI data from S&P Global.
Norman Liebke, economist at Hamburg Commercial Bank, said: “The uncertainty of the upcoming elections has French businesses stalling and fearing tougher times.”
The PMI index dropped to 48.8 in June, down from 49.3 in May below the all-important 50 mark, which marks the difference between contraction and growth.
In Germany, while output remained in growth territory it slowed to "a marginal pace" as manufacturing slowed.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said: "After showing some promising signs of bouncing back, the manufacturing sector hit a wall and started moving in the opposite direction in June.
"The production slump is pretty sobering, but what’s even more concerning is that new orders are plummeting at a much faster rate."
10.49am: Election worries see service sector slump as manufacturing output rockets
Britain’s service sector growth slowed to a seven-month low in June, impacting overall private sector growth, according to data provider S&P Global.
The slowdown was influenced by election-related uncertainties following Sunak’s general election call, causing a pause in client spending decisions.
Flash UK PMI composite figures fell to 51.7 in June from 53.0 in May, marking the lowest level since last November.
Overall, UK flash PMI a bit on the weak side. Manufacturing actually beat expectations and is now firmly in expansion territory, services still expanding but a good bit weaker than forecast
— John Stepek (@John_Stepek) June 21, 2024
Despite the slowdown in the service sector, the manufacturing industry recorded the sharpest rise in production levels in over two years.
Flash UK manufacturing PMI increased to 51.4 from 51.2 in May, a 23-month high.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “Flash PMI survey data for June signal a slowing in the pace of economic growth, indicating that GDP is now growing at a sluggish quarterly rate of just over 0.1%.
“The slowdown in part reflects uncertainty around the business environment in the lead up to the general election, with many firms seeing a hiatus in decision making pending clarity on various policies.”
10.12am: Informa sales up 10%
Informa PLC (LSE:INF), the global exhibition group, saw its shares hold flat this morning despite delivering a bullish message ahead of its AGM.
Reiterating full-year guidance and double-digit sales growth, chief Stephen Carter, chief executive, said: “The Informa Group has changed gears.”
“Our strategy to focus on specialist markets, unique content and internationalisation is delivering double-digit underlying revenue growth, margin expansion and increasing profits and cash flows.”
Underlying revenue growth in the first five months of the current year was 10.1%, he added, reflecting strong operational performances across all businesses.
Russ Mould said the company has benefited from the move away from Zoom meetings and virtual confences.
He said: "The company is seeing strong events rebooking into 2025 as the corporate world moves away from all meetings being on a screen and settles into a hybrid pattern where the networking benefits of in-person get-togethers are appreciated.
9.48am: GSK 100% backs London listing, says boss
GSK has issued its support to the flagging London market, stating that it is “unequivocally, 100 per cent committed” to keeping its listing in the UK.
Speaking at the Time CEO Summit, boss Emma Walmsley said that even though only 3 per cent of its business is in Britain, GSK switching its listing was "not a debate for us."
"We have nine sites. We’ve got factories from Montrose to Worthing. We have 11,000 people and we have 300 apprentices every single year," she said.
Despite having referred to herself as a "globalist" who has experience working across the planet, the pharma giant boss has turned her attention to the capital.
"We’re just about to open, next month, our new global headquarters in central London because this can be a great magnet and attraction for talent,” Walmsley added.
9.27am: Government borrowing highest since pandemic
Government borrowing reached £15 billion last month, almost £800 million higher than May last year but £600 million less than the Office for Budget Responsibility (OBR) had forecast.
This level of borrowing is the highest since the Covid crisis, and puts government debt at an "extraordinary level", according to HSBC chief European economist Simon Wells.
With borrowing at its highest since the 1960s, Wells said the rise was a result of firstly the global financial crisis and then through Covid.
Michal Stelmach, senior economist at KPMG UK, said: “Government borrowing holds steady but the fiscal Pandora’s box awaits for the next chancellor. Interest rates are set to remain higher, debt more difficult to bring down and spending pressures continue to mount."
Government debt is now at £2.7 trillion and as a percentage of economic output (gross domestic product) it has reached 99.8%.
Public sector net borrowing excluding public sector banks was £15.0 billion in May 2024, £0.8 billion more than in May last year and the third highest May borrowing on record.
Read more ➡️ https://t.co/RTJpz3obQg pic.twitter.com/xr30AUygzC
— Office for National Statistics (ONS) (@ONS) June 21, 2024
9.07am: Retail outlook grows rosier
Retailers are facing rosier prospects moving forward after sales in the industry came in stronger than expected for May, analysts believe.
Peter Arnold, chief economist at EY UK, said: “The effect of tighter fiscal policy and rising debt service payments for some mortgage holders will continue to weigh on household finances. But with inflation now back at the Bank of England's 2% target, wages are growing strongly in real terms.
"Moreover, as consumer confidence gradually improves... stronger real incomes, together with some support from dissaving and rising demand for credit, will drive a solid consumer-led recovery."
Tom Youldon at consulting firm McKinsey added that he believes hopes will begin to grow that a bounceback can continue and shoppers don't shift “from saving to splurging”:
He said: "As we head into warmer months, retailers will be hopeful that falling inflation and rising wages will act as a further boost to GfK’s measure of consumer confidence.
"And that a combination of drier, sunnier weather, big sporting events like UEFA Euro 2024 and summer holiday purchases encourage greater spending at the tills."
8.45am: Consumer confidence at its best since November 2021
Consumer confidence has improved to its best level since November 2021 in June as the impact of easing inflation and less pressure on household spending begins to be felt.
GfK’s consumer confidence index increased by three points in June, reaching -14 from -17 in May and beating consensus which predicted it to fall to -15.
The rise is attributed to an improvement in confidence regarding the general economic situation over the past 12 months and an increase in expectations for the economy over the coming year.
Joe Staton at GfK, said: "While June's reading of -14 is the third month in a row that confidence has increased, the headline score remains negative owing to the difficulties so many have experienced as the unrelenting cost-of-living crisis batters household budgets.
“Nevertheless, consumer confidence continues its robust long-term upward trend this month, and has recovered significantly since the record low of minus 49 reached in September 2022.
“Consumers like financial certainty, and this has to be the cornerstone if we are to see confidence break out into positive territory.”
8.25am: A bid for Britivic, probably
Britvic PLC (LSE:BVIC) shares popped 21% after it was revealed it rejected a fresh takeover offer from Danish brewer Carlsberg worth around 1,250p per share, representing around a 20% premium to the drink maker's close on Thursday.
This offer follows an earlier proposal from Carlsberg 06 June 2024, which offered 1,200p per share, which the board claimed significantly undervalued the company and its prospects.
Similar feelings were held about the second offer and therefore both bids were unanimously rejected by the board.
Carlsberg now has until July 19 to make a firm offer for the tonic maker or walk away from the deal completley.
Richard Hunter at Interactive Investor said: "While there is no guarantee that any takeover will happen, the news is the latest confirmation that there are many overseas companies running the slide rule over UK PLC
"On the one hand, it recognises that there are many well-run businesses who are trading at a discount to their true value and are therefore attractive bid targets.
"On the other hand, it also reduces the number of companies listed which is a real current concern for policymakers and which has yet to be addressed.”
8.02am: Retail sales grow at fastest pace since January
UK retail sales volumes jumped by 2.9% in May 2024, recovering from a 1.8% fall in April, the Office for National Statistics (ONS) reported.
This increase surpassed the 1.5% rise forecast by City economists and represents the fastest growth since Jananuary.
It was helped by a 5.4% rally in clothing sales and significant growth was recorded among non-store retailers, such as online shops, where volumes surged by 5.9%.
Department stores, clothing outlets, household goods sellers, and other non-food stores saw a 3.5% rise in sales volumes.
The ONS said: "Sales volumes rose across most sectors, with clothing retailers and furniture stores rebounding following poor weather in April."
Oliver Vernon-Harcourt, head of retail at Deloitte, said: “The tide could be finally turning for retailers, with more consumers releasing their purse strings and spending on discretionary items such as clothing and furniture.
“The summer of sport has kicked off, and with warmer days upon us, the retail sector will be hoping to see spending momentum continue."
7.42am: Royal Mail faces class action claim for abusing dominance
Royal Mail owner International Distribution Services (IDS) is facing a £878 million class action claim over allegations of abusing its dominant position in the bulk mail market.
The claim, initiated by Bulk Mail Claim Limited, represents approximately 290,000 customers who assert they were overcharged due to IDS's anti-competitive behaviour.
Bulk mail, commonly used by businesses and organizations, includes items like bank statements, weekly magazines, and energy bills.
The lawsuit alleges that since 2014, Royal Mail's actions have stifled competition and increased prices for bulk mail services.
This class action follows a £50 million fine imposed on Royal Mail by Ofcom in 2018 for similar conduct.
Ofcom found that Royal Mail's actions denied postal users the benefits of effective competition.
Royal Mail responded: "We confirm that we have received an application for a collective proceedings order from an entity called Bulk Mail Claim Ltd which we consider to be without merit and we will defend it robustly."
7.21am: FTSE 100 on track for quiet close
FTSE 100 was heading for a quiet end to the week with spread bet firms suggesting London’s blue-chip index will consolidate after yesterday's strong surge near the close.
A weak day on Asian markets after a bout of profit-taking will add to the consolidation mood.
Interest rates remain the main talking point with Swiss National Bank announcing its second rate cut, while the Bank of England is by commentators to be itching to cut by September even though it held them yesterday.
Economic news is the main item scheduled with consumer confidence and government borrowing the standouts with very little company news.
Footsie is expected to open down four points.