- FTSE 100 advances 20 points to 8207
- UK unemployment rate remains at 4.4%, wage growth 5.7%
- Frasers tops blue chips as profits impress
4.06pm: Dollar up, US stocks down, London shares hold gains
The dollar has perked up too, with the euro and pound both down 0.24%. The DXY dollar index is up 0.2% to just under 104.
All three of the big Wall Street indices are in the red, S&P 500 down 0.2%, Nasdaq down 0.4% and Dow down 0.05%, though the Russell 2000 is up 0.1% as it continues its rollercoaster morning so far.
But in London, the FTSE 100 and FTSE 250 have perked back up, with rises of 0.4% and 0.9% for the day so far.
Market analyst Chris Beauchamp at IG says pockets of strength on Wall Street "are being eroded as the risk-off move gathers pace once again".
"European markets managed to move higher this morning but the gains are slipping away as the session heads to a close. Christine Lagarde’s acknowledgement of growth risks tilted to the downside has put investors in a firmly risk off mood."
Later on Netflix earnings take centre stage, kicking off big tech earnings season.
"It doesn’t look like investors are yet tempted to go bargain hunting in the sector. The summer lull will soon be upon markets as well, leaving markets at risk of sudden moves in periods of thinner liquidity," says Beauchamp.
3.52pm: Stocks fall on Biden drop-out report
UK shares and those in Europe and the US have taken a bit of a dive in the past half hour.
The FTSE 100 is still up 0.3%, but that compares to 0.8% just over an hour and a half ago, while the FTSE 250 is up 0.76% now compared to 1.1%.
In the US, the Nasdaq has dropped into the red, with gains pared for the S&P 500 and Dow Jones.
Looking back to half a hour ago - this could be the trigger: an Axios story that "several top Democrats" say there is rising pressure from party congressional leaders and close friends that "will persuade President Biden to decide to drop out of the presidential race, as soon as this weekend".
3.38pm: Saxo Bank could be up for sale
The owners of Denmark's Saxo Bank have hired Goldman Sachs as they mull a potential sale or other options for the online trading and investing platform.
Owners Zhejiang Geely, the parent of Chinese carmaker Geely, founder Kim Fournais and Finland's Mandatum Group said they are carrying out a "review of strategic opportunities".
Saxo, which was founded by Fournais in 1992, has grown fast in the past five years, climbing from less than 200,000 clients to more than 1.2 million, of which it had over 120,000 in the UK, and over DKK 800 billion (£90 billion) in client assets.
Goldman Sachs has been appointed as financial advisor to assist with the strategic review.
3.27pm: Another lender cuts mortgage rates
Halifax has followed NatWest and TSB in announcing mortgage rate cuts.
Not surprising as it's also owned by Lloyds, like TSB.
It's cut selected home mover and first-time buyer mortgage rates 0.22%.
Emma Jones, managing director at Whenthebanksaysno.co.uk: "It never rains but it pours. The rate cuts just keep on coming and it's great to see. Mortgage lenders do not appear to be singing from the same hymn sheet as the markets."
3.10pm: Bank transfers hit by 'global payments issue' says BoE
A global payments issue has hit Chaps bank transfer payments today, the Bank of England has warned, delaying some "high value and time-sensitive" payments, including some house purchases.
"We are mindful of the impact this is likely to have and are working closely with a third party supplier, industry and other authorities to resolve the issue as promptly as possible," the BoE said in a statement.
It said there has not been any effect for retail payment systems "so people and businesses can continue to use cash points, card payments and bank transfers as normal".
2.46pm: Wall Street starts higher
US stocks have mostly opened higher, helped by a big tech rebound.
The Nasdaq Composite index has started 0.1% higher as have the S&P 500 and Dow Jones, though the small-cap Russell 2000 is down 1.4%.
Among the big risers are Nvidia up 3.4% and Meta Platforms up 2.9%.
Topping them is Warner Bros Discovery Inc (NASDAQ:WBD, ETR:J5A), up 4% on reports it is looking at spinning off its digital streaming and studio businesses from its TV networks.
The FT revealed that CEO David Zaslav is examining several options for the company, ranging from selling assets to separating its Warner Bros movie studio and Max streaming service into a new company.
Meanwhile, the FTSE 100 is up 0.7% and the FTSE 250 has jumped 1.1%.
2.27pm: New powers for OBR
Earlier, Rachel Reeves, the new Chancellor of the Exchequer, announced a "fiscal lock" to give the Office for Budget Responsibility more powers.
And the former Bank of England economist has also given her first TV interview, saying that "difficult decisions" lie ahead to help the economy improve.
She told Bloomberg that she and the government "need to unlock that private investment that business tell me they are ready to invest", and that major investors like Aviva and Legal & General have been responsive to Labour’s plans.
The new fiscal lock is aimed at preventing any future government from repeating the moves by former PM Liz Truss and her then-Chancellor Kwasi Kwarteng when they put out their misguided (some might say disastrous) 'mini budget' without getting the independent forecaster to assess their economic plans.
The OBR will have to be consulted and make assessments on any major fiscal policy changes, such as tweaks to taxes or spending commitments worth more than 1% of the size of the UK's economy, such as Truss's announcement of around £45 billion in unfunded tax cuts in September 2022 that forced an intervention from the Bank of England to relieve pressures on pension funds.
Reeves confirmed the plans today, which were part of the Budget Responsibility Bill announced in the King’s Speech, saying: "Never again can a government play fast and loose with the public finances."
— Rachel Reeves (@RachelReevesMP) July 18, 2024
1.34pm: ECB still on course for September cut, economists reckon
"The ECB remains on course for a second rate cut in September," says Deutsche Bank's chief European economist, Mark Wall.
"Despite some recent inflation data being less friendly, the ECB has excused some as one-offs and others as absorbed in profit margins.
"The ECB is taking comfort from the trends and looking through the noise, consistent with being ‘data dependent, not data point dependent’."
Jack Allen-Reynolds at Capital Economics says today’s ECB decisions to leave interest rates on hold and give no clear signals about the future path of interest rates were both in line with expectations.
"A cut in September still seems more likely than not, but it will depend on whether domestic price pressures ease," he says.
He adds that the ECB press release "suggests that policymakers’ assessment of price pressures hasn’t changed much either, stating that the latest data “broadly supports” the Bank’s assessment of the inflation outlook" but that some lines were "arguably a touch on the dovish side", such as domestic price pressures described as "still high" compared to "strong" previously and most measures of underlying inflation "either stable or edged down in June".
At the press conference, which starts at 2.45 CET or 1.45pm in London, he thinks Lagarde "will give little away and will certainly not pre-commit to any further rate cuts".
1.22pm: ECB stands pat on rates
The European Central Bank has left rates unchanged, as expected, and maintained guidance, saying it will keep policy rates sufficiently restrictive for as long as necessary.
It was noted that headline inflation is likely to remain above target well into next year.
"The incoming information broadly supports the Governing Council’s previous assessment of the medium-term inflation outlook," it said in a statement.
"While some measures of underlying inflation ticked up in May owing to one-off factors, most measures were either stable or edged down in June. In line with expectations, the inflationary impact of high wage growth has been buffered by profits."
The press conference is coming up and will be live streamed for those who want to hear what Christine Lagarde says.
1.06pm: Green is the colour
All but two of the 30 largest FTSE 100 companies are in the green so far today.
Frasers remains top of the leaderboard after its results as adjusted PBT of £545 million was a sizeable beat to the consensus forecast of £515 million.
Analysts at Barclays say PBT guidance at the mid-point for the new year is 8% above its forecasts.
Schroders PLC (LSE:SDR) is in second, up over 5%, after being upgraded by Morgan Stanley as part of a review of the European asset management sector.
After underperforming the sector so far this year its valuation is well below the long-term p/e average and the group, the analysts believe, is better positioned for growth than rivals.
Less than 10 mins before the ECB announcement, European stocks are in relaxed mood, with the Euro Stoxx 600 up 0.39%.
12.15pm: Covid inquiry and climate reports published
The UK central and devolved governments "failed their citizens" in failing to properly prepare for the Covid-19 pandemic, according to a 240-page public inquiry report just published.
Health secretaries Jeremy Hunt and Matt Hancock both came in for criticism in the report, which said they failed to better prepare the country for the pandemic, which led to more than 230,000 UK deaths.
The report, which sums up the findings from an inquiry led by Baroness Heather Hallett, calls for a major overhaul in how the government prepares for civil emergencies.
The Covid pandemic "was not a black swan event," Hallett said in the report, with the previous government having "planned for the wrong pandemic".
In the report, she calls for a pandemic response exercise to be run at least every three years, a new civil emergency strategy to be put in place, and an independent statutory body to be established to advise the government, among other things.
This morning, the UK's Climate Change Committee also issued a report calling for action across all sectors of the economy as while the UK has met all its targets so far, the past year saw the previous government signal a "slowing of pace and reversed or delayed key policies".
"The new Government will have to act fast to hit the country’s commitments," it said, adding that renewables, heat pumps and EVs all need to become the norm if the UK is to get back on track for its targets.
11.58pm: FTSE leading European indices
Just over an hour ahead of the ECB meeting, London's blue-chip benchmark is still outperforming its European cousins, and after falls in recent days has been joined by its mid-cap sibling too.
The FTSE 100 is up 0.7%, while the FTSE 250 index has added 173 points or 0.8% to climb above 21,266.
Across the Channel, the major continental indices have picked up a bit after a slow start.
Germany's DAX is lagging still, up 0.15%, but the CAC 40 in Paris is up 0.55%, behind the FTSE MIB in Milan and IBEX 35 in Madrid, both rising over 0.6%.
The Euro Stoxx 600 has ticked up 0.34%, with top riser being Sweden's medical technology group Getinge, up 13%, followed by Volvo and Ocado, both up over 7%.
Looking across the pond, it's a mixed picture at the moment, with Dow Jones futures down 0.12%, S&P 500 futures up 0.12% and those for the Nasdaq flat.
Summing up the morning, analyst Dan Coatsworth at AJ Bell says: "A catastrophic day for US tech shares hasn’t caused widespread contagion on the markets."
"While the Nasdaq had a miserable day on Wednesday, only Japan’s Nikkei 225 caught a cold in response. Its semiconductor industry might be affected if the US government gets heavier with measures to stop China getting its hands on foreign chip technology.
"Take a step back and it looks like a market rotation is slowly bubbling up... Even the UK is getting more attention as the market is full of stocks offering growth at a reasonable price.
"That growth might be more pedestrian than what’s on offer in the US, yet it looks like we’re entering a phase where valuations matter more to investors, and the UK trumps the US on this basis."
He characterises the jump in the FTSE 100 being driven by gains in energy, pharma, banking and mining stocks.
11.33am: Farage de-banking update
Banks have been told by the UK regulator to take more care handling high-profile politicians after NatWest’s dealings with Nigel Farage.
"Public service naturally comes with greater scrutiny. But it must be proportionate and shouldn't disadvantage people running for office or taking senior public roles, or their families," the FCA's executive director of markets and international, Sarah Pritchard, said in a statement this morning.
She adds that this "requires a balancing act" for banks, most of which "try to get it right but there is more they can do".
The FCA says it is following up with those that were getting the balance wrong to ensure they make changes.
11.28am: Lloyds' TSB arm trims mortgage rates
TSB has announced new lower mortgage rates this morning, following NatWest's moves yesterday afternoon.
TSB, which is part of Lloyds Banking Group PLC (LSE:LLOY), trimmed residential, product transfer and additional borrowing rates.
This is despite markets having this week reduced expectations of a Bank of England rate cut in August to around 25% probability, though chances of a September cut are seen as having grown.
"Further rate cuts just shows the potential for a scramble within high street lenders over the summer, as they look to grab business with finer margins," says Justin Moy, managing director at EHF Mortgages.
"Though they may be slightly less imminent, lenders believe cuts to the base rate are still on the horizon. This shows that pricing is not all about the cost of funds. Lenders will also use pricing to manage workloads and may be in a better position to take volume over the coming months."
10.56am: Growing invasion of zombie companies
There has been an accelerating "invasion" of zombie companies around the world in recent years, consultancy Kearney says, which it calls a "troubling trend".
Zombie company numbers have grown by 9% annually since 2010 to reaching 2,370 worldwide, with the "corporate undead" making up 5.8% of publicly traded companies globally.
In the past year, 827 new zombies emerged, outpacing 534 that resurrected and 127 that delisted.
For the uninitiated, zombie companies are older firms that have persistent problems meeting their interest payments, with a more precise OECD definition being that the companies have revenue of greater than zero for 10 consecutive years, demonstrating they are active and are not a start-up, but have not been able to meet interest obligations through operating profits for three consecutive years.
"Markets don’t seem to care that more zombies are clawing their way into the world’s population of publicly traded companies — or that refinancing debt obligations at today’s higher interest rates could amplify the invasion," Kearney said in its report.
10.23am: Semi shocker for ASML an overreaction, says Citi
After being a key piece in the tech selloff last night, Dutch technology giant ASML’s 11% fall yesterday, effectively wiping US$50 billion of value from the company, was an over the top knee-jerk reaction, according to analysts at Citi.
Citi’s head of European technology equity research Andrew Gardiner called it a “material overreaction” that it implies ASML would see a third of its China business at risk.
Shares in ASML are down another 1.5% today, suggesting investors don't share that view.
9.45am: Small cap movers
There's a few other small and mid-cap movers worth noting this morning, quite a few of them down.
Not Intelligent Ultrasound Group PLC (AIM:MED), which is up 59% after it said it has agreed to sell its Clinical AI business to GE HealthCare for £40.5 million.
The board says its intention is to make a "material return of capital" to shareholders once it has reviewed the growth potential and capital requirements of the rest of the business, which it expects to do do in September/October this year.
Elsewhere, William Hill owner Evoke PLC (LSE:EVOK) is down almost 9% after warning that first-half profits will come in around £35-40 million below expectations, or "behind plan" as it says, with full-year results also likely to be hit too.
The company formerly known as 888 Holdings said this was due to lower-than-expected revenues in the second quarter, as UK bookmaking shop revenue was down 8% year-on-year, though stable compared to the second half of last year.
UK chipmaker Sondrel (Holdings) PLC (AIM:SND) tumbled 20% after announcing lower revenues and larger profits, plus also revealing a "transformation plan" that includes cancelling its AIM listing.
Revenue in 2023 came in at £9.4 million, down from £17.3 million, while operating losses grew to £17.3 million from £5.2 million.
9.11am: London leading the way
The FTSE 100 is leading the gains in Europe this morning, up 0.74% so far.
Germany's DAX is the laggard, down 0.13%, while France's CAC 40 and the wider the Euro Stoxx 600 are both marginally above flat, with investors seemingly keeping their powder dry ahead of the ECB meeting later.
Italy's FTSE MIB and Spain's IBEX 35 are better, up 0.24% and 0.41%.
The pound is down slightly against the dollar, back below $1.30 again, and just below flat against the euro too at £0.8411.
Looking ahead to the ECB meeting, Marc Ostwald at ADM Investor Services says: "The stubborn level of services CPI... is among the factors that are expected to see the ECB hold rates today, with most expecting Lagarde to hint at the possibility of, but not commit to a September rate cut, with views on the governing council on how much further rates will fall this year rather divergent, judging by recent comments."
He says the lending survey earlier this week also highlighted that credit conditions are also "bolsters the case for not embarking on a more aggressive rate cut cycle, as does the fact that wage growth is not decelerating at a pace that would make a stronger case for a further rate cut".
Currency analyst Chris Turner at ING says the last ECB meeting before the summer break is "unlikely to drive markets", with the governing council expected to "probably be happy with current market pricing of further 25bp rate cuts in September and December and will prefer not to move the needle today".
He notes the EUR/USD is "starting to show some resilience", which "may also be down to creeping uncertainty in the market over what a possible Trump presidency could mean for the dollar after all".
8.55am: Energy regulator's plans
Shares in National Grid PLC (LSE:NG.) and SSE PLC (LSE:SSE) are also moving in reaction to energy watchdog Ofgem's decision on the financial framework for the next regulatory period starting in 2026.
NG was up earlier but is now flat, while SSE fell initially then rose but the gains are being pared.
The Sector Specific Methodology Document (SSMD) sets the rules for the so-called RIIO3 period from April 2026 through to March 2031 for electricity and gas transmission as well as gas distribution.
Analysts at Barclays say the key point is the cost of equity, which has initially been set by Ofgem in a range of 4.57-6.35%, so the midpoint of 5.43% is "slightly light" compared to the consensus forecast of 5.75%.
This is the early view from Ofgem, with the submission date for companies' business plans in mid-December, followed by draft determinations from Ofgem in June/July 2025 with a final decision late next year.
8.44am: UK investors investing more (mostly overseas) says AJ Bell
AJ Bell PLC (LSE:AJB) shares are up 4.5% as the investment platform said there has been an uptick in dealing activity by retail investors, but it added that this was mostly investors have been buying overseas shares more than UK ones.
International dealing activity was "particularly strong" said boss Michael Summersgill, adding recent stock market performance has boosted confidence among small investors.
Total platform customers increased by 25,000 to 528,000, net inflows were 55% up at £1.7 billion with assets under administration at a record of £83.7 billion or 20% higher than a year ago.
As a reminder, AJ Bell's larger rival, Hargreaves Lansdown PLC (LSE:HL.), said it "would be willing" to recommend a takeover offer from a consortium led by private equity firm CVC Advisers - though there have been objections raised.
8.21am: SSE and Dunelm updates
Elsewhere in the FTSE 100 reporters today, renewable power generator SSE PLC (LSE:SSE) provided a trading update where it restated its growth targets, stating that the Labour government’s clean energy policies will be supportive of its forecasts.
Shares fell initially but now are up 0.8%.
Chief financial officer Barry O’Regan says in the update: "The outlook is supported by the enhanced clean power target of the new UK government which recognises the essential need for investment in renewables, flexible power and electricity networks - areas where SSE has unrivalled capability and significant growth potential."
In the FTSE 250, Dunelm Group PLC is the top riser, up 6% on the back of an update where the home furnishings retailer said it expects full-year profit before tax to come in “slightly ahead of expectations”.
The company noted increased sales volumes in the final quarter of its 2024 financial year, with total sales edging up 5%, meaning full-year sales grew 4%, while margins improved by 1.7% due to lower year-on-year freight rates.
Dunelm expects the consumer outlook to improve in the year ahead, but warned that “the impact and timing on our markets remains unpredictable”.
8.08am: FTSE zooms higher
The FTSE 100 has zoomed up 74 points in early trades, climbing 0.9% to 8,263.
Sportswear and fashion retailer Frasers Group PLC (LSE:FRAS) is up 7%, topping the blue-chips, as its results seem to have impressed.
Diploma PLC (LSE:DPLM) is bottom of the list, down 3% after its third-quarter update, which looks fine ("strong Q3 performance in-line with our expectations, continuing into the final quarter"), but its shares hit an all-time high earlier this week, so this may just be some profit taking.
7.56am: Frasers profits near the top of guidance
Final results from Mike Ashley's Frasers Group PLC (LSE:FRAS) show adjusted profit rose to near the top end of its guidance, though revenues shrank.
Adjusted profit before tax of £544.8 million was reported for the year to 28 April, with the Sports Direct and Flannels owner having previously guided to a range of £500-550 million. Revenue fell 0.9% to £5.5 billion.
For the new financial year, the FTSE 100-listed group said it expects adjusted profit to growth to somewhere between £575 million and £625 million.
Chief executive Michael Murray, son-in-law of Ashley, said it "has been a break-out year for building Frasers' future growth", pointing to "significant progress with our Elevation Strategy", establishing partnerships with new brands and investing operational efficiencies in warehouse automation and digital infrastructure, which he expects to "yield a tangible impact as early as FY25".
7.39am: UK jobs 'not enough for August rate cut'
The UK jobs numbers were "encouraging", but not really enough to raise hopes much for an interest rate cut in August, says economist Ashley Webb at Capital Economics.
"While the easing in wage growth in May was broadly in line with what the consensus and the Bank of England expected, it probably doesn’t offset the overshoot in services inflation in recent months.
"As a result, we have changed our forecast for the timing of the first interest rate cut from 5.25% from August to September, although it is a close call," says Webb.
He sayd there were signs that the labour market continued to loosen, with single-month employment falling by 81,000 and the number of job vacancies fell further too, which "appears to be reducing the upward pressure on wages".
Overall, he says, "we doubt today’s encouraging wage data will be enough to offset concerns about the recent persistence of services inflation".
Economist Monica George Michail at the National Institute of Economic and Social Research notes that, with inflation falling, real income gains for employees was 2.2%, "its highest level in over two years".
"However, the persistence of wage growth prompts the Bank of England to remain cautious about interest rate cuts. We expect wage pressures to ease gradually in the coming months as the labour market cools, with unemployment rising relative to vacancies," she says.
7.25am: ONS says work on improving jobs report not yet done
The Office for National Statistics has provided an update on its work to improve the labour force survey (LFS) and what it called the Transformed Labour Force Survey (TLFS).
The TLFS is the statistical body's long-term "solution" to collecting labour market data given years of declining response rates from its traditional LFS, which it points out is not unique to the UK.
In short, the TLFS is not ready yet.
In the update, the ONS says it has "made good progress", generating a larger sample and higher response rates, but it says "there are issues that remain before we can transition and further steps are required so that the TLFS can reach the quality necessary for users".
So it is extending the dual run of the TLFS and LFS for at least six more months, in which time it will also test further design improvements of the TLFS and take feedback, then report back in the first quarter of 2025.
The LFS will remain the main measure of the labour market.
7.17am: FTSE 100 set for strong start
A strong start is predicted for the FTSE 100 on Thursday morning, following a big sell-off on Wall Street overnight, fresh UK jobs numbers that look mostly in-line with expectations and ahead of the European Central Bank meeting later.
Spread-betters predict the London benchmark will jump 42 points, adding to the 22.56 gained yesterday that left the index at 8,187.46 at the last close.
Last night, a technology rout left the Nasdaq down 2.8% by the closing bell, with the S&P falling 1.4% and the Russell 2000 losing 1.1%, with only the Dow Jones in positive territory, up 0.6%.
It was the Nasdaq's worst day since 2022, pointed out market analyst Ipek Ozkardeskaya at Swissquote Bank.
"While everyone is speculating on how the ongoing international trade war could worsen if Donald Trump returns to the White House, it was Joe Biden who delivered a blow to the market yesterday," she says.
The White House is apparently considering severe restrictions if companies like Japan's Tokyo Electron and the Dutch ASML keep providing China the tools they need to access advanced chip technology, with surging sales to China accounted for almost half of ASML’s revenue in the past quarter, according to Bloomberg.
ASML shares tanked nearly 13%, pulling the Stoxx 50 down with it, Tokyo Electron dived 7% on Wednesday and another 9% today, with Nvidia down more than 6.5%, Broadcom dropped 8% as AMD crashed more than 10%.
7.05am: UK unemployment rate unchanged, wage growth eases
UK jobs numbers are in from the Office for National Statistics, the headlines look like this:
- The unemployment rate in the three months to May remained at 4.4%, as forecast. (est 4.4%; prev 4.4%)
- Average weekly earnings growth fell to 5.7% from 5.9%, as expected, while earnings excluding bonuses eased to 5.7% from 6.0% as expected.
- The UK claimant count rate for June rose to 4.4% from 4.3%.
ONS director of economic statistics Liz McKeown says: “Earnings growth in cash terms, while remaining relatively strong, is showing signs of slowing again. However, with inflation falling, in real terms it is at its highest rate in over two and a half years.
“We continue to see overall some signs of a cooling in the labour market, with the growth in the number of employees on the payroll weakening over the medium term and unemployment gradually increasing.
“The number of job vacancies is down across most sectors, led by retail and hospitality. The total has now been falling for a full two years, though it remains above pre-pandemic levels.”