- FTSE 100 up 29.8 points to 8,223
- Thames Water bills to rise
- UK economy grows more than expected
4.51pm: Water companies and housebuilders lead gains
London's FTSE 100 closed up almost 30 points higher, up 0.36% at 8,223.34.
Water companies (Severn Trent, United Utilities), housing-related companies (Rightmove, Persimmon, Barratt) and retailers (Sainsbury's , Kingfisher, JD Sports, M&S) were the biggest risers.
But many of the index's largest names ended in the red, with only three of the top 10 ending in the green.
4.05pm: FTSE to close higher
The FTSE 100 remained well bid in end-of-day exchanges, with the blue-chip index trading 27 points higher at 8,220 in the final 30 minutes.
Utilities stocks have kept the footsie afloat, with Severn Trent PLC (LSE:SVT) and United Utilities Group PLC (LSE:UU.) bounding higher following Ofwat’s latest draft declaration on water prices and investment.
Other top late-day movers include Kingfisher plc, easyJet plc and Fresnillo PLC (LSE:FRES).
British Airways owner International Consolidated Airlines Group SA (LSE:IAG) fell in afternoon trades in conjunction with a US counterpart Delta Airlines Inc.
Vodafone Group PLC (LSE:VOD), DCC PLC (LSE:DCC) and Anglo American PLC (LSE:AAL) were also off.
3.50pm: Volatile bitcoin passes on disinflation rally
The world’s largest cryptocurrency bitcoin has shrugged off the latest US inflation report showing that consumer prices fell more than expected in June.
Yearly inflation fell to a flat 3%, undershooting the 3.1% forecast. While this would typically be a boon to risk assets like bitcoin, a rally has yet managed to materialise, with the BTC/USD pair effectively flat at $57,780.
Back to stocks and the FTSE 100 is up 30 points to 8,224 and trading enters the final stretch.
3.16pm: British Airways owner IAG falls on US counterpart's earnings slip
Shares in British Airways owner International Consolidated Airlines Group SA (LSE:IAG) fell sharply immediately following a second-quarter update from US contemporary Delta Airlines Inc.
Although Delta reported record revenues, adjusted earnings per share were down 12% year on year.
Delta shares flew 7.7% lower as a result.
This caused some turbulence for other major international carriers, with domestic rival American Airlines falling over 6% and London-listed IAG shifting 1% lower.
This aside, the FTSE 100 blue-chip index remains buoyant, adding 32 points to 8,226 at the time of writing.
2.30pm: US inflation undershoots, sparking bond price recovery
US consumers were given a shot of good news today as the annual inflation rate cooled to a flat 3% in June, marking the lowest point in a year and undershooting forecasts of 3.1%.
According to the Bureau of National Statistics, energy costs rose at a slower pace than anticipated, driven by declines in gasoline and fuel oil, although utility gas service costs did accelerate.
Inflation eased for shelter and transportation and stayed flat for apparel, while prices continued to decline for new vehicles and used cars.
Food prices, on the other hand, edged up 2.2%.
Traders are likely to fully price in a near-term 25-basis-point interest rate cut following this data print, if not on 31 July than at the September Federal Reserve meeting.
“The Fed will cut soon,” Pantheon Macroeconomics’ chairman and chief economist Ian Shepherdson said plainly, adding: “June’s CPI data bring more evidence of broad-based disinflation, giving the Fed the green light to ease multiple times this year.”
Bond prices improved immediately following the data price, with yields on the US 10-year Treasury note approaching four-month lows.
1.58pm: FTSE 100 holds steady, buoyed by Severn Trent
Blue chips remained steady in mid-afternoon trades, with the FTSE 100 last seen eight points higher at 8,202, having briefly touched an intraday high of 8,230.
Water companies are keeping the FTSE afloat, with Severn Trent PLC (LSE:SVT) shooting to the top of the movers list on a 5.3% gain.
It comes as the Midlands water supplier got the nod from Ofwat (unlike many of its contemporaries) to execute its five-year spending and pricing plan.
United Utilities Group PLC (LSE:UU.) was also bid higher to the tune of 4.7%.
1.30pm: Nasdaq to open lower
US stocks are expected to come off from yesterday’s record highs when markets open today.
The Nasdaq 100 flew to an all-time high following Federal Reserve chair Jerome Powell's optimistic comments about near-term interest rate cuts. Major tech companies like Nvidia, Apple, Microsoft, and Google leading the way.
Pre-market data implies around 20 points of losses on the Nasdaq when trading commences, bringing the tech-heavy index down to 20,646.
It is a big day for macroeconomic data, with inflation and employment data on the agenda.
On the company news front, PepsiCo is set to fall after noting "subdued" North American snack demand in the second quarter.
Delta Air Lines Inc (NYSE:DAL), meanwhile, flew to record revenues, but its shares are set to fall 9% as earnings touched down 12% lower year on year.
Back in London and the FTSE 100 blue-chip index is currently up 23 points to 8,216.
12.53pm: Water bill price hikes a ‘bitter pill’ says Labour
Labour chancellor Rachel Reeves has called the planned 21% increase in water bills by 2030 a “bitter pill” for Brits to swallow.
Under draft proposals released today by regulator Ofwat, water firms will be allowed to hike bills by an average of £19 per year, or £94 over five years to 2030.
“It’s clearly a bitter pill for people who are seeing today’s announcements about higher water bills,” said Reeves.
“This reflects 14 years of failure from the Conservatives to drive investment to reduce pollution, and to ensure that families are not struggling the way that they have been with the cost-of-living crisis.”
While it comes at a time of public outrage over escalating sewage spills and water contamination incidents, the price hikes fall significantly short of what the water companies wanted.
Thames Water, for instance, will only be allowed to raise water prices by £99 over the next five years, barely half of the £191 it was seeking.
In a sign that this compromise will satisfy no one, campaigners and the Liberal Democrats have robustly rubbished the price hikes as unfair, disgraceful and insulting.
Industry group Water UK was equally outraged for the opposite reason, calling the decision to not meet water companies’ demands “an unrealistic and unfair decision from Ofwat, and our economy and environment will pay the price”.
12.25pm: Ofwat in water firm face-off
Water regulator Ofwat is preparing for a confrontation with Britain’s water executives over the austere draft determination proposals released today.
In its five-year review of consumer bill prices and investment spending, Ofwat has allowed UK water companies to increase bills by only 21% by 2030.
While this is positive news for consumers, it significantly falls short of the water firms' expectations, raising concerns about a potential shortfall in essential infrastructure investment.
David Henderson, chief executive of industry group Water UK, told the BBC that Ofwat has “got this wrong.”
"This is an unrealistic and unfair decision from Ofwat, and our economy and environment will pay the price," he added.
Another spokesperson for Water UK described it as "the biggest ever cut in investment," contrasting sharply with Ofwat boss David Black’s assertion that the plans represent the “biggest ever” investment in the water sector.
11.41am: Pound at four-month high
A spate of bullish economic figures has pushed the pound to a four-month high.
Gross domestic product figures show that Labour has inherited an economy growing faster than expected, while construction output also surprised to the upside.
The pound rallied in response, as the markets began to wonder if the Bank of England intends to delay anticipated interest rate cuts.
“After all, cutting rates is something a central bank does to stimulate a lackluster economy, not grease the wheels for one already moving ahead,” stated Russ Mould, investment director at AJ Bell.
Mould added: “That said, momentum could easily lose pace, particularly if the jobs market weakens and sticky inflation causes consumers to stay cautious on spending.”
IG data shows that rate cut expectations have been trimmed slightly, although a 25-basis-point move lower is still widely favoured in September.
10.53am: Hargreaves warns of diluted investor rights under new listing regime
The Financial Conduct Authority today announced an overhaul of the UK listing regime, aimed at making London’s struggling capital markets a more attractive place for global businesses.
But Tom Lee, head of trading proposition at Hargreaves Lansdown, warned that certain measures being implemented by the FCA could harm shareholders.
While “a successful listings regime which supports our home market is essential,” Lee said that “making the UK an attractive place to list has to be balanced with rights for shareholders and ensuring that the quality of the market is not diluted.”
Under the new listing rules coming into effect at the end of the month, listed companies will not require shareholder approval on significant or related-party transactions. They will also have more flexibility around enhanced voting rights.
“We have been concerned that the plan to remove shareholder votes on significant and related-party transactions would dilute investors’ rights,” said Lee. “We will watch closely as these new rules embed.”
On the bright side, Lee noted that retail access to primary and secondary listings will be enhanced under the new rules.
“The demand from retail investors to buy into the equities market is there, and regulatory change should support this demand.
“Boosting retail investment on the stock exchange will have wider market benefits, providing depth and liquidity, as well as boosting interest in investment with the wider public, unlocking further capital for UK-listed companies.”
10.01am: FCA overhauls UK listing standards
The Financial Conduct Authority has unveiled the biggest overhaul of UK listing requirements in decades, aimed at rejuvenating London’s flailing capital markets.
The primary goal of the overhaul is to make it easier and more attractive for companies to list their shares in the UK, with the biggest change being the scrapping of Britain’s two-tier listing structure.
Historically, Listings have been divided into primary and secondary segments, with the latter having stricter reporting standards.
A single category called ‘commercial companies’ will replace this structure when the rules into into effect at the end of this month.
Key changes include removing the need for shareholder votes on significant or related party transactions and allowing flexibility around enhanced voting rights.
A more detailed breakdown of the changes is available here.
9.30am: Water companies buoy market after Ofwat review
More on the water sector where share price reactions suggest a bullet had been dodged especially by SouthWest Water owner Pennon.
Its share price is up by a thumping 6.3% to 658p.with Severn Trent up 2.7% at 2,687p, and United Utilities 2.3% higher at 1,090p
Indeed, Severn Trent and United Utilities are Footsie's biggest gainers after Ofwat’s latest decision on price rises between 2025 and 2030.
Midlands-focused Severn Tent had asked for a £144 rise over the five years, but got £93 (23%). United Utilities gets a £94 rise (21%) while Pennon’s South West Water arm gets a £64 (13%) rise. All exclude inflation.
Ofwat said in total, an average bill will rise by £19 a year and pay for £88 billion of spending by the sector of which £35 billion will be directed towards fewer sewage spills and better water quality, including £10 billion for storm overflows.
Footsie up 18 at 8,211.
8.55am: The morning so far
The FTSE 100 shifted to and fro when trading commenced this Thursday, but it ultimately looks to be heading in the right direction.
As of 8.55am, the blue-chip index was trading 15 points higher at 8,208, supported by a raft of bullish economic announcements.
GDP figures show that the economy grew by 1.4% year on year in May, outstripping the expected growth rate of 1.2% and doubling April’s 0.7% gain.
Month on month, gross domestic product grew by 0.4%, an upside surprise following a zero-growth period in April, though the data still shows “significant room for improvement under the incoming Labour government”, according to Rob Morgan, chief investment analyst at Charles Stanley (LSE:CAY).
Construction output, meanwhile, advanced by 0.8% year-on-year in May, marking a strong rebound from a 2.1% drop in the prior month and exceeding market expectations of a 1.9% decline.
Water firms Severn Trent PLC (LSE:SVT) and United Utilities Group PLC (LSE:UU.) were the two biggest FTSE 100 risers of the morning.
This follows regulator Ofwat’s latest draft determination, which sets the pricing and investment agenda for British water firms.
On average, water bills are set to rise 21% by 2030, Ofwat declared.
Though this is less than what the water firms wanted, Severn Trent is higher following a decent first-quarter financial update.
Elsewhere in company news, Dr Martens has published a bare trading update prior to its AGM meeting this morning.
The classic British footwear company said that “trading since the start of this financial year has been in line with expectations and our guidance for (financial 2025) remains unchanged”.
8.43am: Construction output grows
Construction output in the UK advanced by 0.8% year-on-year in May 2024, according to the Office for National Statistics.
This marks a significant rebound from a 2.1% drop in the prior month and exceeded market expectations of a 1.9% decline.
It was the first expansion in construction output since January.
The increase was driven by a 7.7% rise in repair and maintenance activity, up from 6.4% in April, while new work saw a smaller decline of 4% compared to 9.4% previously.
8.30am: Dr Martens targets growth in US direct-to-customer market
Dr Martens has published a bare trading update prior to its AGM meeting this morning.
The classic British footwear company said that “trading since the start of this financial year has been in line with expectations and our guidance for (financial 2025) remains unchanged”.
The first quarter is typically “the smallest period of our financial year, representing the end of the Spring/Summer season”, said the group, adding that the current financial year will be weighted to the second half.
“The upcoming Autumn/Winter 24 season remains a key focus,” said Dr Martens, with detailed trading plans currently being implemented.
Dr Martens is targeting target positive direct-to-customer growth in the US in the second half of the current financial year.
“Work on our cost action plan is ongoing and we will provide a detailed update at our first half results in November.”
Shares were up 1.6% in opening exchanges.
8.25am: Blue chips wobble
Markets dipped their toes into the red in opening trades despite pre-market data pointing to a strong start.
The FTSE 100 is currently a handful of points lower at 8,191, with Rolls-Royce Group plc, BAE Systems PLC (LSE:BA.) and Antofagasta plc among the worst performers.
8.10am: Labour has inherited improving economy, GDP data shows
Britain’s economy grew by 1.4% year on year in May, outstripping the expected growth rate of 1.2% and doubling April’s 0.7% gain.
Month on month, gross domestic product grew by 0.4%, an upside surprise following a zero-growth period in April.
“This should be a boon for the new Labour government with growth now likely to outstrip the OBR’s 2024 GDP forecasts, partially offsetting some of the projected increase in interest rate costs,” said Deutsche Bank’s chief UK economist Sanjay Raja.
According to Rob Morgan, chief investment analyst at Charles Stanley (LSE:CAY): “The UK’s economic scorecard shows significant room for improvement under the incoming Labour government.
“The UK economy has been subdued coming out of the pandemic, an energy crisis, and a cost-of-living crisis which has been very difficult for UK consumers.
“However, tepid growth now looks to be warming up heading into the second half of the year.”
Morgan said today’s GDP data “illustrates we are in the midst of a very gentle upswing in activity following a slowdown in 2023”
7.59am: Thames Water bills to rise by £99, barely half of what it sought
Ofwat will allow Thames Water to raise its annual bills by £99 over the next five years, falling significantly below what the London and south east England water supplier wanted.
Ofwat made the announcement in its latest draft determination, which sets investment and pricing targets for Britain’s water suppliers.
Thames Water was seeking a £191 bill rise to support investment in creaking infrastructure.
Despite slashing Thames Water’s pricing wishes, Ofwat has outlined some strict expectations of the water supplier.
Ofwats expects Thames Water to deliver a 19% reduction in leakage, and 18% reduction in phosphorus and a full 50% reduction in pollution incidents from average 2020-23 levels.
Over 2025-30, Thames Water should deliver a 66% reduction in water supply interruptions and a 55% reduction in internal sewer flooding events from 2020-23 levels.
Thames Water is expected to deliver £16.9 billion worth in total infrastructure improvements.
7.35am: Annual water bills to rise 21% by 2030
Water bills are expected to rise by £19 per year to fund investment into Britain’s ageing infrastructure, Ofwat has declared.
It means the average household water bill across the UK will increase from £441 to £535 by 2030, an increase of 21%.
This is below the average asked of Ofwat by Thames Water, United Utilities and other major water firms.
Ofwat laid out the plans in the regulator’s draft determination, which sets the agenda for all UK water firms over the next five years.
It has proposed total investment spending to increase to £88 billion between 2025 and 2030, a 50% increase from the previous draft determination.
Ofwat expects water companies to triple investment in new infrastructure and resources “to improve the environment, resilience and service”.
“We expect increased investment to be reflected in better performance,” said Ofwat.
“We set each company targets for up to 23 areas of performance which are important to customers.
“If companies do not meet their targets each year, they will face automatic penalties, reflected in reduced bills. But there are incentives to beat the targets, and good performance will be rewarded.”
South West Water owner Pennon and United Utilities said they will review Ofwat’s draft determination and will respond by 28 August.
7.10am: Markets to bounce higher
The FTSE 100 looks set to move high when trading commences today following a bullish session on Wednesday, when the blue-chip index finished 53 points higher at 8,193.
Markets were buoyed by a strong performance from airline and utilities stocks, as well an afternoon rally from Ladbrokes-owner Entain PLC (LSE:ENT) in the run up to England’s victory over Netherlands in the Euro semi-finals.
Better-than-expected GDP figures released this morning should offer some support.
The economy expanded 1.4% year on year in May, beating expectations of a 1.2% expansion. Month on month, the economy rose 0.4% after not moving a blip in April.
On the company news front, recruiter Hays PLC (LSE:HAS) reports its full-year earnings amid a lukewarm time for City recruiters.
Water firms are on tenterhooks as Ofwat prepares to rule on their five-year investment and pricing plans in the latest draft determination.