- FTSE 100 climbs 26 points to 8191
- HSBC promotes CEO from within
- US semiconductor stocks hit by Biden and Trump stories
- King's speech main takeaways
4.14pm: London and US stocks mixed
With the London session almost at an end, the FTSE 100 is poised to snap what looked earlier like being a three-day losing streak.
The pound has given up some of its gains to the US dollar, now up 0.25% at 1.3006, having hit a year's high of 1.304 earlier.
The FTSE is up 26 points or 0.3%, though the FTSE 250 is down 123 or 0.6%.
Helping the blue-chip index higher are gains for oil majors and miners, along with utilities and other traditional defensive stocks like drug companies and big tobacco.
Top of the leaderboard is Burberry, up 5.7% on no official news, with only speculation on social media suggesting something was behind the recent buying spree by the chairman and directors earlier in the week.
There was one more director purchase of under £28,000 reported on the RNS service today.
US markets remain mostly in the red, with the Nasdaq having plunged 2.4% and the S&P 500 sliding 1.2%
The Dow Jones is up 0.2%, thanks mainly to gains for Johnson & Johnson (NYSE:JNJ) on the back of earnings, while the small caps of the Russell 2000 have not been able to keep up their winning run, down 0.5% now.
3.45pm: Day ahead
Looking ahead to tomorrow, we are due to get jobs market data from the ONS, plus corporate updates from investment platform AJ Bell, defence contractor Qinetiq and renewable power provider SSE, retailer Dunelm Group and engineer Diploma (which hit a new all-time high yesterday but is down today) - read more in the Day Ahead report here.
US earnings include Netflix, while there will also be a keen interest in Taiwan Semiconductor Manufacturing Co after today's chip sector sell-off.
For Netflix, which reports after the market close, strong subscriber growth is expected in its second quarter earnings report.
3.24pm: US tech sell-off deepens
US big tech are falling further, with the Nasdaq Composite index down over 400 points or 2.25%.
Among the biggest corporations, Apple is now down almost 3%, Microsoft 2.1%, Amazon 3%, while the chip firms are worst hit, with Nvidia falling 6%, AMD 7.4% and ASML plunging 11.4%.
Earlier, there were reports that president Joe Biden is considering ramping up existing microchip export restrictions to China.
While Donald Trump also told Bloomberg that the key chipmaking market of Taiwan should pay for its own defences.
New York-listed shares of Taiwan Semiconductor Manufacturing Co (NYSE:TSM) fell over 5%.
3.10pm: More from the king's speech: water watchdog gets more teeth, digital identity
Prime Minister Kier Starmer's government have introduced the Water (Special Measures) Bill as part of the King’s speech, aimed at enhancing water quality by strengthening the powers of the water regulator Ofwat, including being able to ban bonus payments and impose automatic and severe fines for violations.
It comes amid ongoing public outrage at the level of sewage and wastewater being dumped into British rivers and coastlines by major water firms.
Shares in FTSE 100 members United Utilities PLC and Severn Trent PLC are up 2.2% and 1.6% respectively.
Also, there will be a new bill that aims to establish a ‘digital verification services’ platform that will allow for the creation and adoption of “secure and trusted digital identity products and services from certified providers”.
According to a published overview of the bill, it intends to “help with things like moving house, pre-employment checks, and buying age-restricted goods and services”.
Prior to the general election, industry body techUK wrote to party leaders calling on them to commit to digital verification.
2.59pm: Body is not dead?
Body Shop might soon be up and running again with a rescue deal said to be potentially just "weeks" away.
A consortium led by Mike Jatania’s investment firm Aurea is in exclusive talks with administrators at FRP Advisory.
Aurea's portfolio of cosmetics and personal care brands includes Harmony, Finesse and Vosene hair care products, Lipsyl lip salve and Yardley perfumes bought from the likes of Unilever and P&G. Former Molton Brown chief Charles Denton is set to be in charge.
Meanwhile, the FTSE 100 is back above the 8200 mark, last seen on Monday morning.
2.44pm: US big tech-driven slide
US stocks have started mainly lower, led by the tech megacaps.
The S&P 500 has fallen 0.93% and the Nasdaq has plunged 1.7% in early trading, while the Dow Jones initially slipped lower, it quickly rebounded up 0.10%.
Among the big techs, Nvidia is down 1.6%, Microsoft down 1%, Alphabet down 1.4%, Meta down 1.3%, AMD down 1.3%.
1.52pm: Oil helping the FTSE
Shell and BP are both in the green, which is helping the FTSE inch higher.
This is on the back of oil prices climbing, with Brent crude rebounding from recent month lows, up 0.66% today to $84.28, while WTI is up 0.9% at $81.48.
JPMorgan has just put out a note on oil prices.
"We estimate the equilibrium price of WTI oil at around $70/bbl," the investment bank's energy analysts say.
According to a Reuters report, JPMorgan believes that even at $60 a barrel, WTI prices are too low to incentivize production, potentially leading to a spike to $100 per barrel next year.
1.40pm: We are so back
The FTSE 100 is back in the black, perhaps picking up some of that money flowing out of the US techs.
London's blue-chip index is up just six points but it's a start.
Water and other utility companies and precious metals miners are topping the leaders, the latter helped by gold hitting new highs around $2,480 per oz.
Cigarette maker Imperial Brands is up 1% despite the King's speech bringing back Rishi Sunak's progressive ban on smoking.
The FTSE 250 is still chugging lower, down 117 points or 0.55% at 21,096.
1.24pm: Red tape haters hate red tape shocker
After what the King's speech, which led to many political commentators noting that this is set to be the most interventionist government in a long time, it's not a surprising turn of events that the free market think tank the Institute of Economic Affairs (IEA) has criticised the Labour proposals for more regulation, though the IEA do like the idea of looser planning laws.
"The King’s Speech promises several welcome measures to get Britain building and growing again, particularly measures to enable more infrastructure and housing. The biggest handbrake on growth is undoubtedly our broken planning system," said Tom Clougherty, IEA executive director.
He questioned the government's rhetoric on growth as "much of the agenda pushes in the opposite direction" as "pro-growth measures risk being held back by new red tape and risky ‘mission-led’ central planning".
He reckons the ban on new North Sea oil and gas will "hamstring Britain’s recovery from the energy crisis" and new regulations on the labour market "will reduce flexibility and increase structural unemployment", while the smoking ban "takes away freedom from future adults while risking the creation of a mass criminal black market".
Tobacco group Imperial Brands' shares are up 1% though.
1.10pm: AI bill
The King's speech shows sends a clear message from new PM Keir Starmer: "no more light-touch regulation on AI", says Michal Szymczak, head of AI strategy at IT consultancy Zartis.
"But are we throwing the baby out with the bathwater here? The new government’s approach to AI regulation is going to be a heavier hand – maybe too heavy," he says.
"It appears intent on aligning the UK’s approach on AI intervention more closely with the EU’s AI Act.
"Given how rushed this bill was, the wisdom behind any attempts at this parity is questionable at best."
Szymczak says his research has shown there's "considerable appetite" from UK tech leaders for greater regulatory intervention on AI, but he cautions that "any such policies could smother AI innovation in the crib with red tape", especially for startups.
1.06pm: Retailers response to speech
Responding to the King’s speech, British Retail Consortium CEO Helen Dickinson says the industry welcomes bills to reform the Apprenticeship Levy and planning laws; to tackle retail crime and antisocial behaviour; and to accelerate the country’s clean energy transition.
The employment rights bill has been a clear area of concern for some companies, with its proposal to introduce day-one rights for unfair dismissal, ban zero-hours contracts, enhance redundancy protections, ban ‘firing and rehiring’ staff under less favourable terms and conditions, improve statutory sick pay and the minimum wage, and repeal the Strikes Act, which allows some employers to compel employees to work during a strike.
On the employment rights bill, Dickinson says: "The retail industry supports the goal of the Eployment Rights Bill, including making work pay, enhancing employment rights, and banning exploitative practices.
"There are three million retail workers in the UK, and a further 2.7 million in the supply chain, and we look forward to engaging with the government as it carries out its consultation on the Bill to ensure the plans are practical and workable for businesses and employees."
12.45pm: London shares falling as US futures point lower
The FTSE 100 is skedaddling lower again, as US futures point to sizeable falls, led by tech worries over new China sanctions.
A broad sell-off is expected on Wall Street, with futures for the tech-heavy Nasdaq down 1.6%, with S&P 500 futures down 1.05% and for the Dow Jones down 0.3%, while the Russell 2000 is seen falling 0.8%.
In London, AstraZeneca, Rolls-Royce and Experian (LSE:EXPN) among the larger blue-chip fallers, all down more than 1%, with Antofagasta the biggest faller, down 4.6% after the copper giant trimmed its guidance.
Life insurers and other financials are also among the fallers, including L&G and Intermediate Capital.
The FTSE 250 is also on the slide, down 0.7% to the Footsie's 0.3%.
Genus, the sexed bull and pig semen provider, is down 8% now after its trading update warned of persistently soft demand in China and Brazil.
Polar Capital Technology Trust PLC (LSE:PCT) is another faller in the mid-cap index, after reporting good final results, boosted by the 'Magnificent Seven', with the trust returning 40.8% and beating the benchmark return.
However, several big trusts with big tech holdings are down, including Scottish Mortgage Investment Trust PLC (LSE:SMT) and Allianz Technology Trust PLC (LSE:ATT).
12.07pm: Pensions issue?
There was a notable absence of a pensions bill in the King's speech, says Myron Jobson, personal finance analyst at Interactive Investor.
The full text of the King's speech does mention a "pension investment" bill, which is thought to mean the draft audit reform and corporate governance bill, and pension schemes bill.
Jobson says there was a notable omission of detail "especially concerning the Labour government’s manifesto pledge to conduct a pensions review to improve outcomes for savers and increase investment in the UK market" but it "could mean that more time can be allocated to ensure that any reforms are well thought out and pass the sniff test with key stakeholders in the pension sectors".
He notes that the speech sets out the government’s broad legislative agenda, but doesn’t include every policy, with more detailed financial measures and announcements to be unveiled in the next fiscal event, though Chancellor Rachel Reeves has promised to provide an update before the autumn.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, says the King’s speech did allude to an aim to tackle the ‘lost pots’ problem by automatically bringing together individual’s deferred small pots into one place.
She says the news "heralds positive news for people’s pensions, with simplicity and greater flexibility".
She adds: "Government estimates that the introduction of these measures could boost the average person’s pension pot by 9% over the course of their career."
11.58am: King's speech headlines
The King's speech is over, with King Charles having read out the main plans of the new Labour government.
He said that the government intends to be "mission-led and based upon the principles of security, fairness and opportunity for all".
A bill will be introduced to set up Great British Energy to accelerate investment in renewable energy, a "new deal for working people" ending zero-hours contracts, and ending the exemption from VAT for private school fees to fund more new teachers.
The new Labour government will legislate to bring rail services into public ownership, and introduce an English devolution bill, giving powers to local councils to take control of their bus services.
"Legislation will be introduced to give greater rights and protections to people renting their homes, including ending no fault evictions and reforming grounds for possession" the King also said.
An AI regulation bill was also announced, while Starmer's party is also reviving the crackdown on smokers and vapers, alongside a potential ban on energy drink sales.
“A Bill will be introduced to progressively increase the age at which people can buy cigarettes and impose limits on the sale and marketing of vapes,” the King said.
11.38am: FTSE in the green
The FTSE 100 has turned positive, just. The index is up just over one point at a little above 8166.
Only two of the top 10 blue chips are in the red, while top of the leaderboard are Barclays PLC, up 2%, Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF), up 1.7%, and BT Group PLC, up 1.6%.
London's mid caps are still in the red though, with the FTSE 250 index down 89 points or 0.4% at 21,125.
11.21am: European inflation still 'relatively benign'
Eurozone inflation came in at 2.5% for June, a dip from 2.6% the month before, matching the consensus and first estimate.
The core rate was stable, at 2.9%, also matching the consensus.
"All eyes are on persistently sticky services," says Claus Vistesen, economist at Pantheon Macroeconomics, as still-high inflation remains in insurance, package holidays, hotels & accommodation, social protection, refuse collection and repair services adding up to inflation around 4%.
"Looking ahead, a number of near-term upside risks loom," he says, with France's energy inflation to be lifted in July by a hike in the distribution costs of gas, the summer Olympics likely to lift inflation in French services, and Taylor Swift’s July tour across European major cities looms as "further upside risk to inflation in hotels and other accommodation".
But even when we add these to our forecasts, however, we still see a relatively benign next few months. We think headline inflation will be unchanged in July, before falling to around 2% in August, as base effects in energy shift. This should help get a September rate cut over the line. In the core, we think services inflation will dip by 0.2pp in July, to 3.9%—with prices rising by 1.2% m/m—before advancing to 4.1% in August as the boost from the summer Olympics kick in. Risks to the July number are tilted to the upside mainly due to hospitality. In non-energy goods, meanwhile, we look for further disinflation in coming months, with inflation dropping to 0.4% in July and further to just above zero in August. As a result, our preliminary forecasts suggest that core inflation will dip to 2.7% in July, and further in August, to 2.6%, again supporting a second rate cut in September.
The first chart shows that still-hot services inflation remain the key driver of overall inflation in the Eurozone. This will remain the case for the foreseeable future. The second and third chart plots two of the key components in services, helping to keep inflation elevated. Insurance inflation ticked lower in June, but the trend is still shooting higher. In hotels and restaurants, inflation has come down significantly from a peak, but it remains elevated and near-term risks are tilted to the upside.
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11.08am: Fashion deal
VF Corp (NYSE:VFC, ETR:VFP) has sold its streetwear band Supreme to Italo-French sunglasses maker EssilorLuxottica for $1.5 billion.
Vans and Timberland owner VF, which bought Supreme for $2.1 billion in 2020, decided to offload the brand following a review of its portfolio that found "limited synergies.
EssilorLuxottica chief executive Francesco Milleri and deputy Paul du Saillant said they saw an "incredible opportunity to bring an iconic brand" into the company, saying it offers "a direct connection to new audiences, languages and creativity,".
Supreme used to be a supercool skating brand when launched in the 1990s, but has lost its edge as it expanded into a global 'urban' brand.
10.42am: Amazon wins UK union battle, but faces legal challenge
Amazon has won its UK unionisation battle by a tiny margin, with the GMB union saying the tech giant "fought dirty" with a "culture of fear" and the battle "is not over".
Out of the 2,600 workers who voted at the Coventry warehouse site, 49.5% backed union recognition.
The US corporation said: "Across Amazon, we place enormous value on engaging directly with our employees and having daily conversations with them. We value that direct relationship and so do our employees."
This is a big contrast from the statements from GMB, which says Amazon now faces a legal challenge over its union-busting tactics, with reports that workers had been bombarded with what the union called an "unrelenting campaign of anti-union messages by company bosses, including multiple anti-union seminars and threats to terms and conditions" to pressure workers into cancelling their union membership.
Stuart Richards, a GMB senior organiser, said: "We’ve seen workers pressured into attending six hours of anti-union seminars on top of the fortune spent by Amazon bosses to scare workers.
"Workers have been told they will get no pay rise this year and will have to lose even more benefits if they vote for union recognition."
10.10am: Trump lays out Fed plans
Donald Trump has stated he will not seek to remove Federal Reserve chair Jerome Powell before his term ends and would consider JPMorgan boss Jamie Dimon for Treasury Secretary if he wins the November 5 election, according to a Bloomberg interview.
Powell's term expires in 2026, and his Fed Board seat in 2028. The interview was conducted in late June.
Powell confirmed on Monday he plans to stay until his term concludes, having been chosen by Trump to lead the central bank in 2018.
Trump later criticised Powell over interest rate hikes and apparently contemplated firing him, though aides advised he lacked the authority.
9.57am: Adidas, Tiktok, Github and SpaceX
Here's a few stories from some well-followed overseas companies.
As its collaboration with controversial musician Kanye West comes to an end, Adidas AG has raised its full-year sales guidance after posting its first annual loss since 1992 earlier this year.
The German sportswear giant had a long-running sneaker collaboration with the rapper known as Yeezy, terminated in the wake of a raft of antisemitic statements, with the last remaining Yeezy stock sold at cost and contributing to around €50 million in profits in the second quarter.
GitLab, the software developer part-owned by Google, is exploring a sale and has reportedly attracted interest from potential buyers.
The company is working with investment bankers on the process.
Potentially good news for TikTok, as Donald Trump expressed support amid potential bans if its Chinese parent company ByteDance does not divest its US assets.
In a TV interview, Trump emphasised the need for competition, contrasting TikTok with Facebook and Instagram. Despite previously labelling TikTok a threat, Trump joined the platform recently.
And last and by many means least, Elon Musk has confirmed the for-some-time-expected relocation of his X/Twitter and SpaceX businesses to Texas – with a dig aimed at California’s Democrat state governor Gavin Newsom.
Commenting on California’s new rules relating to the disclosure of child gender identity in schools, Musk posted on his X platform “this is the last straw”.
9.40am: Pound hits year's high
The only major currency to rise against the US dollar this year is the pound, analysts have noted.
Last week, on the back of a better-than-expected GDP update the sterling hit a four-month high after the inflation numbers.
Today, GBP/USD is up 0.35% at 1.3019, up 2.5% over the past six months, and also up 0.2% versus the euro today at 0.8388.
"Not bad for the emerging market North Atlantic peso eh?" exclaims market analyst Neil Wilson at Finalto, who called the CPI data "slightly warmer than expected".
He notes that traders say this is not enough for an August cut, with bets pared on an August cut down to 25%, in line with the comments from BoE rate-setters Jonathan Haskel and Huw Pill, who both recently indicated the MPC would hold fire for now.
"Gilt yields rose, with the 2yr rising 4bps to above 4%, which has helped put a bit of a bid into sterling.
"The inflation data definitely supports a stronger pound narrative at this stage," adds Wilson, adding that a breach at $1.30 this morning "could then see the stage set for a run to the July ‘23 highs at 1.31" and if we this occurs "we should consider a new trading range for the pound between $1.30 and $1.40".
He adds: "We should not discount the effects of the politics on this – as discussed before the new govt introduces – for now, in the eyes of investors at least – a degree more clarity and consistency in terms of policymaking.
"There is clearly a reset and people are looking at the UK with fresh eyes."
9.20: Mid-morning update
London’s blue-chip index was down 23 as UK inflation remained in line with the Bank of England's 2% year-on-year target last month.
The consumer price index rose 0.1% over the month of June, as expected, which meant the annual rise in CPI remained at 2.0% for the second month running. That might postpone an interest rate cut until September, economists suggested
HSBC has gone in-house for its new chief executive with finance chief Georges Elhedery appointed to the role of group chief executive. Shares in the Asia-focused bank barely moved on the announcement.
All eyes now will be on Keir Starmer’s plans as his first King’s speech is read out with housing, labour laws, railways and his predecessor’s smoking ban set to feature.
The speech is due to begin around 11.25am, with the House of Commons reconvening at 2.30pm for a debate on what was confirmed - read what to expect here.
8.40am: H&W creaking
Belfast shipbuilder Harland & Wolff Group Holdings PLC is apparently teetering on the verge of collapse as Labour prepares to reject a £200 million government loan request.
According to a Financial Times report, Labour will refuse to act as guarantor to the critical funding, with one Whitehall figure calling it a “deeply irresponsible” use of the public purse.
The company is seeking a £200 million facility from UK Export Finance to keep the business afloat.
Earlier this month, the group warned that its “ability to execute new and large contracts would be adversely affected” should it fail to secure the lifeline.
8.26am: London stocks battling for position
Both the FTSE 100 and FTSE 250 have started on the back foot, but have bounced slightly from their initial lurches lower, down 0.1% and 0.2% respectively.
Miners and financials are weighing on the blue-chip index, with Legal & General, Intermediate Capital, Aviva and some investment trusts mingling with the likes of Antofagasta, which is bottom of the list, down 2.9%, and Glencore, down 0.8%.
Antofagasta said its full year production will be at the lower end of our guidance range of 670-710,000 tonnes, with cash cost guidance adjusted, with lower grades at its Los Pelambres and Centinela copper mines.
HSBC shares are down slightly, 0.16%, on the back of the internal promotion as its new CEO.
Babcock is down 1.6% after cutting its profit guidance due to a £90 million loss on a Royal Navy contract.
Genus, the animal genetics company, is the biggest faller on the mid-cap index, down 4.5% despite reporting underlying profit slightly ahead of previous guidance in February.
Analysts at Peel Hunt note that volumes at its ABS bovine genetics arn have continued to be weak, while currency headwinds are likely to result in a £5 million impact.
After the UK inflation reading earlier, the market is now pricing a 33% probability of an August rate cut, and a 74% September probability.
8.05am: FTSE opens lower
The FTSE 100 has defied predictions and opened in the red after an inflation reading that was not as good as expected.
London's blue-chip index started 17 points lower at just under 8148.
Miners Antofagasta, Glencore and Rio Tinto are among the bigger fallers.
7.59am: Babcock cuts profit guidance
Babcock International PLC (LSE:BAB) has cut its profit guidance for the past year after taking a £90 million loss on the deterioration of the Type 31 warship contract.
Based on draft preliminary accounts, the defence contractor said it now expects to report an underlying operating profit of roughly £238 million for the year to end-March 2024, up 34% on the prior year.
This includes a £90 million loss on the Type 31 contract and a £17 million profit on disposal of a property, while overall group revenue was up 11% to £4.4 billion.
Babcock said underlying free cash flow of £160 million was significantly ahead of expectations.
7.41am: Inflation views
Views from the City seem to be that the Bank of England's monetary policy committee (MPC) is still far from definitely cutting rates next month, but confidence is growing for a September cut after this morning’s UK inflation data for June came in with headline CPI at 2.0% year on year, core CPI at 3.5% and services CPI at 5.7%.
"More tellingly the month-on-month CPI data was up just +0.1% (headline) and +0.2% (core) suggesting that the earlier Q2 price increases due to big indexation events - including a 9.8% rise in the National Living Wage - are beginning to dissipate," said Panmure Liberum economist Simon French.
"Recent MPC commentary has shifted the likelihood of an August rate cut down from 65% to 50%. That feels about right on a reading of MPC members - if not necessarily our reading of the data."
Andrew Summers, chief investment officer at Omnis Investments, said there is "no smoking gun for an August move", even though speeches from the MPC’s Haskell and Pill last week reduced the odds of a move from the BoE in August somewhat.
"This dataset is unlikely to turn that around, with the market continuing to focus on the meeting after, in September which is pretty much priced for a 25bps cut," he says.
Monica George Michail, economist at the National Institute of Economic and Social Research, said CPI inflation remaining unchanged at 2% is "good news" but the elevated rates of core and services inflation are "possibly prompting the Bank of England to remain cautious with regards to interest rate cuts".
NIESR expects inflation to creep up throughout the rest of the year, before falling back towards the BoE target in early 2025.
7.26am: HSBC appoints new CEO
HSBC Holdings PLC (LSE:HSBA) has promoted finance chief Georges Elhedery to the role of group chief executive, after Noel Quinn's surprise retirement announcement in April.
Elhedery joined the Asia-focused lender in 2005 and after roles including co-CEO of the Global Banking & Markets division, became group chief financial officer in 2023. He will take on the CEO mantle at the start of September.
Chairman Mark Tucker said the CEO elect is "an exceptional leader and banker", who has "a track record of leading through change, driving growth, delivering simplification, containing costs and brings a strong focus on execution".
7.17am: FTSE 100 to open higher
The FTSE 100 is expected to snap out of its two-day losing streak on Wednesday after inflation numbers looked to put pressure on the Bank of England to cut rates sooner than later.
UK inflation, as measured by the consumer price index, rose 0.1% over the month of June, as expected, which meant the annual rise in CPI remained at 2.0% for the second month running, though the forecast was for 1.9%.
Core CPI, which excludes more volatile prices such as food and fuel, also remained at 3.5% in June.
Services sector CPI, a key measure watched by the BoE’s monetary policy committee as an indicator of persistent inflation, stayed at 5.7%.
Spread-betters tipped the London benchmark for a 20-point gain, after the index lost over 80 points over past two days to close at 8,164.9.
Overnight, Wall Street indices reached new highs, led by the small-cap Russell 2000, up 3.5%, while the Dow Jones advanced 1.85%, the S&P 500 0.6% and the Nasdaq just 0.2% as several tech giants, such as Microsoft, Nvidia, Alphabet and Meta Platforms fell more than 1%.
Asian markets are mixed this morning, with Japan’s Nikkei and the Shanghi Composite down slightly, but the Hang Seng up and India’s Sensex flat.