- FTSE 100 climbs 61 points to 8217
- Ryanair profits plunge and pricing warning hits sector
- Canal+ and Ebury IPO boosts for London
4.11pm: London stocks pacing it home
Both the FTSE 100 and FTSE 250 are heading higher on the final stretch of the session, up 0.75% and 0.5% respectively.
Rentokil and Burberry top the blue chips, with Ocado and Goodwin leading the mid caps.
Airlines are pulling up both rears, with Wizz Air and easyJet down 9% and 7%, while BA owner IAG is down 3.4%.
3.58pm: US earnings in focus
Although Biden and Harris seem to be on all the financial commentators' lips, this week could where fundamentals replace politics as a driver of markets, says market analyst Kathleen Brooks at XTB.
Price action so far suggests that the market is taking the news Biden news in its stride, she says, and as the Democratic candidate will not be confirmed until next month, the focus is likely to shift to corporate earnings (on both sides of the Atlantic, I would add).
"In recent years, the focus has been on the Magnificent 7, particularly Nvidia’s monster earnings reports, which have dominated the market," says Broooks, but while the chipmaker's results are still extremely important for overall sentiment, "there is a hope that sales growth and revenues can pick up across a broad range of global markets and sectors".
After revenue growth surprised on the upside in the first quarter, for the second analysts are expecting a pickup in revenue growth for materials and healthcare, she adds, "which may offset a deceleration in revenue growth for the consumer discretionary sector and the broader tech sector".
Alphabet and Tesla report results on Tuesday night and are "a better test of whether AI investments are paying off and if there is consumer demand for AI, compared to the chip makers like Nvidia, who only provide the hardware for the next ‘industrial revolution’ and are likely to continue to see mega profits for the foreseeable".
As for London's reporting season, tomorrow sees catering giant Compass on a limited menu, while on Wednesday, Aston Martin and Reckitt Benckiser will be in focus (see previews here and here).
Thursday is the big day for UK investors, with AstraZeneca, Unilever, Lloyds, BT Group, Britsh American Tobacco, British Gas owner Centrica, and Vodafone among many others.
3.45pm: Mixed earnings so far
US earnings season peaks this week, with more than 200 S&P 500 companies reporting.
FactSet says earnings season has been mixed so far, with more companies reporting earnings above estimates than the long-term average, but the magnitude of 'beats' coming in below average.
Around 80% of US reporters have beaten Wall Street estimates, with an average earnings beat of 5.5% compared to the long-term average of 8.6%.
As often the case, some sectors are doing better than others, with financials sector having beaten estimates, while energy has missed.
3.39pm: Porsche customers like petrol
Porsche AG (ETR:P911) is no longer aiming to make sure that 80% of its sales are electric vehicles by 2030, as demand for pure EVs has not been as strong as it expected in Europe and China.
"The transition to electric vehicles will take longer than we assumed five years ago,” said boss Oliver Blume in a statement to Bloomberg.
The fourth generation Porsche Cayenne is to be launched as an electric SUV as planned, reports trade title Automobilwoche.
However, the company also plans to continue building the combustion engine and the plug-in hybrid into the 2030s.
Automobilwoche writes that Porsche wants to continue offering the "aging car as a combustion engine and as a hybrid well into the next decade."
Blume told analysts as recently as March that Porsche would “stay true” to its target of over 80% EV sales by the end of the decade.
3.10pm: Microsoft shifts some CrowdStrike blame to EU
Further on Friday's CrowdStrike IT outage, Microsoft has apparently looked to shift the blame onto the shoulders of the EU.
A spokesperson said restrictions enforced by the European Commission since 2009 were partly responsible for the CrowdStrike update bringing down Windows systems.
Under the agreement, the Silicon Valley colossus has been required Microsoft to open up access to Windows APIs to third-party software developers, which the EC enforced as a measure to try and ensure fair competition.
The spokesperson told the Wall Street journal that this prevented Microsoft from stopping this sort of thing happening to the operating system.
2.58pm: US tech stocks power strong start, London stocks knocked
Big tech has again powered gains as Wall Street started the week on the front foot, which seems to have taken some of the wind out of London's premier indices.
The Nasdaq Composite index surged 1.6% higher to back above 18,000 to open the Monday session over 275 points higher, with the S&P 500 rising 1%, as both indexes rebounded from a negative week, with the Dow Jones up 0.11%.
Enthusiasm for the small caps of the Russell 2000, which have benefited in the past two weeks, was not sustained in early trading, with the index down 0.63%,
Among the tech megacaps, Apple and Microsoft rose just under 1%, Alphabet and Meta over 2%, Nvidia was up 2.7% and Tesla 4.6%.
In London, the FTSE 100 has dropped around 90 points from its intraday peak to 8202, though still up around 43 points on the day, or just over 0.5%.
Oil majors Shell and BP are both in the red, hitting the blue-chip index, as Brent crude oil prices drop 1.2% to $81.61 in the past couple of hours.
Brent crude was at $85 on Thursday, but dropped $2 on Friday on renewed hopes over a Gaza ceasefire, with US Secretary of State Antony Blinken hinting that an accord was within "sight", with expectations this could stop the attacks on commercial vessels in the Red Sea too.
But, the FTSE 250 dropped around 50 points, now at 21,149, up 82 points or 0.4%.
2.35pm: Wisdom of Crowds(trike) investment
Crowdstrike shares are continuing to fall in morning trading in the US, as issues stemming from Friday's IT outage issues are still persisting in many corners of the globe
This is "not good news" for CrowdStrike management, says analyst Dan Ives at Wedbush, as "in an already bad situation as it appears a number of businesses are still finding difficulty on the path to normalization from this IT outage despite fixes/mediations released throughout the weekend".
However, he says CrowdStrike "remains the gold standard" and this incident should only be a "dark chapter for the company and not impact the long term bull story for the name although this is a critical week ahead to get things resolved".
As for Microsoft, the cyber meltdown is "less of an issue", says Ives, as despite the Windows computers around the world being hit by the "blue screen of death", this was all related to this update from CrowdStrike.
2.16pm: Market reaction to Biden withdrawal
The dollar weakened slightly following the withdrawal of Joe Biden from the US presidential race but is little moved against pound or euro today.
"At face value, a weakening dollar might suggest traders would have favoured the relative stability of a second Biden term in the White House," says Neil Roarty, analyst at investment platform Stocklytics.
"But Donald Trump was already a clear front-runner, ever since Biden’s disastrous debate performance last month.
"The greenback has surged in value over the last couple of years, particularly as the Fed raised interest rates. Trump has previously said that he prefers a weaker dollar to help domestic manufacturers sell abroad."
As Trump still holds a lead versus Kamala Harris across most polls and prediction markets, the slight downward tick in the dollar "might just be the beginning of a greater trend", says Roarty.
As for US stocks, Kenny Polcari, chief market strategist at Slatestone Wealth, says having "gotten beaten up ...a bounce is not unexpected".
"Some are suggesting that the Biden news means nothing for the markets – and in the long run that is true," he adds, "but I would say that all of this political drama can and does cause short term chaos.
"In fact – you could say that all of the weakness we saw over the past two weeks was because of the uncertainty over what he was going to do. Was he in or was he out? Now that he is out – he’s out. No more uncertainty…. the markets can now focus on who the two candidates will be and then react to what it thinks the chances are for a Democratic win or a Republican win."
1.27pm: Will all airlines be affected like Ryanair?
Analysts are weighing in after Ryanair's warning that pricing remains softer than expected, with shares in easyJet down 8.5% and IAG 3.8% lower on the FTSE 100 and Wizz Air down 8.8% on the FTSE 250.
Deutsche Bank's Jaime Rowbotham said the reports support the hints on pricing his team had been getting from its 'fares tracker' research.
He expects "downward pressure" on the full-year consensus profit after tax forecast for Ryanair, where the consensus is for just under €2.16 billion.
At Peel Hunt, analyst Alexander Paterson noted that rivals IAG and easyJet have "recently updated their guidance without making any changes, and industry commentary suggests that holiday bookings, especially from the UK, are robust, with high prices and very limited availability".
"We therefore speculate that Ryanair’s yield shortfall may be attributed to the loss of key OTA [online travel agency] sales until May, the lagged effect until APIs were set up, and a broader European exposure where there may be weakness in specific markets like Germany and Eastern Europe, which could also hit Wizz Air."
Dan Coatsworth at AJ Bell says "it’s a chaotic time to run an airline as there are so many factors causing turbulence in the sector.
"Cheaper air fares are great for travellers but bad for airlines trying to repair their finances after the pandemic. It puts more pressure on airlines to put bums on seats and fill planes to maximise the revenue potential.
"While travel demand has bounced back since the pandemic, travellers are reluctant to book too far ahead. That’s possibly because they are feeling the pressure of persistent high interest rates or because they are holding out for a bargain."
Jet2 has been warning of the trend for late booking, which has driven the airline industry to lower prices to drive ticket sales.
Ryanair said fares fell by 15% in the quarter to June and it said profit margins had been hit by extra "price stimulation".
1.09pm: Wall Street tipped to join gains
US stocks are expected to start higher, reversing some of the losses seen last week.
"The outcome of the election could be consequential for investors," said UBS chief investment officer Mark Haefele, "especially if either party wins control of both the White House and Congress.
"A Trump victory—especially if supported by a Republican majority in Congress — would likely raise market expectations of tax cuts and lighter business regulation, while adding to concerns over higher trade tariffs. Primary beneficiaries of regulatory changes could include the financial services sector, while higher tariffs on imports could harm US companies with global supply chains."
If a Harris or whoever is chosen leads the Democrats to extend their administration, this is likely to see continued support for initiatives benefiting green energy, efficiency, and electric vehicle makers, Haefela said.
In the near term, investors "should expect some market volatility" as investors digest the news, he added, but pointed out that US political outcomes "are far from the largest driver of financial market returns, or even sector performance".
12.19pm: More London IPO news
As well as the Canal+ IPO reports earlier, London has a second boost today with news that Ebury, the cross-border payments group owned by Santander, has appointed Goldman Sachs to work on its upcoming float in London.
The Financial Times is reporting that the listing could come next year, following up on initial reports of Ebury’s planned £2 billion float back in March.
The potential listing represents another bright spot for the Square Mile, which has seen a dearth of listings in recent years.
Ebury will join the likes of Wise and CAB Payments in London's listed payments sub-sector, though the latter has distinctly underwhelmed since floating last year, with the resignation of its chief executive earlier this year following a profit warning just a few months after its debut.
12.07pm: FTSE 100 strong but held back by airlines and hotels
The FTSE 100 is up around 60 points or 0.7% as we move post-meridiem, with only around four of the index's top 30 stocks in the red.
Rentokil, up 11% on bid reports, and Entain, up 4.2% on its new CEO appointment, are the top risers.
Burberry is up 4.1%, as investors continue ro reassess after its profit warning and change of CEO last week.
Analysts at Stifel put out a note this morning, saying: "Burberry aims to become a more democratic and inclusive brand, with a greater weight of classic timeless pieces in the assortment and price points more familiar to Burberry's traditional clientele. We believe that this should translate into a stronger entry-level offer, but within a genuine luxury context."
Airlines and associated companies are still the main drag on the index after Ryanair's update earlier, with easyJet down 8%, British Airways owner IAG down 4% and engine maker Rolls-Royce down 0.6%.
Hotels groups are also being dragged down by the implications for consumer spending on holidays, with Premier Inn owner Whitbread and InterContinental Hotels Group both slipping 1.1%.
Several European stock benchmarks are outperforming London's, with Frankfurt's DAX and the CAC 40 in Paris both up 1.4%, the FTSE MIB rising 1% in Milan and the IBEX 35 in Madrid up 0.8%. The overall Euro Stoxx 600 has gained 1.2%.
11.45am: Companies in distress
Numbers of UK companies in "significant financial distress" rose 8.5% in the past quarter and was up 37% year-on-year.
This may seem slightly at odds with the GDP forecast upgrade earlier, but these figures are from the first quarter of the year, when the country was emerging from a slight recession.
The Red Flag report from Begbies Traynor (AIM:BEG) found the leisure & tourism, construction, food & drug retail and general retail sectors were under pressure.
In fact, all sectors experienced double-digit growth in financial distress over the last year, the report found, with 554,554 companies in ‘significant’ financial distress, up from 424,041 this time last year.
Numbers of companies in ‘critical’ financial distress fell 15.4% from the final quarter, though are still 20.1% higher than a year earlier.
Julie Palmer, partner at Begbies Traynor (AIM:BEG), said companies servicing lots of debt were facing the most problems, allied to ongoing changes in the consumer backdrop.
"While a fall in inflation to more palatable levels will likely provide some relief, consumers simply aren’t behaving like they used to and these businesses, who are still grappling with higher costs pushed up by higher wages, are really struggling."
11.33am: Movers update
Shares in Hammerson PLC spiked earlier after it announced a £1.5 billion sale of its interest in the company behind the Bicester Village outlet shopping park, though the rise has halved to just over 4%.
The sale of Value Retail to private equity firm L Catterton, backed by LVMH Moet Hennessy Louis Vuitton, will generate around £600 million in cash proceeds for Hammerson, which said the move would simplify its portfolio and allow it to focus on prime urban real estate.
Among small cap risers, Ceres Power Holdings PLC (LSE:CWR, OTC:CPWHF) powered up 14% after announcing a new global long-term licence agreement for its solid oxide electrolyser cell technology with a global OEM based in the Asia Pacific region.
Analysts at Peel Hunt said they anticipate the name of the new partner will be revealed in early August.
Ceres also issued a trading update for the first half of 2024, where this second new license deal in the financial year has led to revenue guidance being raised to £50-60 million, with gross margin also expected to rise.
Pennpetro Energy PLC vaulted more than 30% higher as it said a new well drilling is now expected to start in a matter of weeks.
A trading update from Fonix Mobile PLC (AIM:FNX) sent its shares up 7% as profit and earnings ended the year ahead of market expectations, and the mobile payments and online messaging group added it had been selected as a Eurovision voting partner.
Tristel PLC (AIM:TSTL) scrubbed up 9% after the maker of infection prevention products said revenues in the first half of the year were higher than expected.
Arcontech Group PLC (AIM:ARC) rose 5% after the financial market data provider released a brief yet bullish trading update
11.04am: Buy-to-let mortgages down
Last year was the first that the UK buy-to-let market shrank, with the number of outstanding mortgages down and the volume of lending more than halved.
Mortgages for BTL house purchases plummeted to 12,422 in the first quarter of 2024 from 25,280 in the fourth quarter of 2022, according to figures from the industry.
At the end of March 2024 there were 1.98% mortgages, down from 2.039 million at the end of December 2023, the data from finance sector body UK Finance revealed.
"Rapidly rising interest rates played a major role in this trend, making it harder for those looking to buy a BTL property to pass lenders’ affordability tests," the organisation said, also pointing to the stamp duty surcharge on second and subsequent properties since 2016 and removal of higher-rate income tax relief on mortgage payments for rental properties.
10.42am: UK growth upgrade
The UK economy is "running hotter" than Deutsche Bank economists expected and it has upgraded its GDP growth forecast to 1.2% this year, rising to 1.6% in the next two years.
Their view is that the catch-up effects from coming out of the short technical recession last year may have been underestimated, with supply growth also possibly stronger than previously thought.
"With inflation receding, households and firms are likely to spend and invest in more productive parts of the economy," they added, with the new government expected to be modestly looser with fiscal policy thanks to higher day-to-day spending and investment.
Also, after fourteen consecutive rate hikes to 5.25%, the Bank of England is seen as being likely to start cut rates in the third quarter (most economists think September), as despite recent 'sticky' inflation data forward-looking price data is more encouraging.
"With rates in restrictive territory, we think the MPC will want to gradually dial down restrictive policy to avoid over-tightening."
The likelihood of a mid-cycle pause in rate cuts is also "gaining steam", as growth firms and inflation settles around the BoE's target.
10.06am: FTSE 100 in the green
The FTSE 100 remains well bid in the face of plummeting airline share prices.
EasyJet, BA owner IAG and engine manufacturer Rolls-Royce fell today after Ryanair’s worryingly steep profit decline sent ripples through the sector.
Ryanair said average airfares were down 15% in the first quarter, with boss Michael O'Leary warning that fares in the key summer quarter will be "materially lower than last summer".
Yet the blue-chip index remains over 40 points higher from last week's close, with Rentokil and Entain leading the charge.
Rat-catcher Rentokil scurried over 10% higher following reports of takeover interest, while Ladbrokes owner Entain rallied 5% after naming its permanent new boss.
9.47am: BT fined £17.5mln
BT Group PLC (LSE:BT.A) has been fined £17.5 million by Ofcom due to failures in handling 999 emergency calls.
The fine follows an investigation into an eight-hour period in 2021 when outages led to approximately 11,000 missed emergency calls.
In delivering the fine, Ofcom accused BT of lacking sufficient warning systems to deal with such incidents.
Suzanne Cater, Ofcom’s director of enforcement, stated: “Being able to contact the emergency services can mean the difference between life and death, so in the event of any disruption to their networks, providers must be ready to respond quickly and effectively.
“In this case, BT fell woefully short of its responsibilities and was ill-prepared to deal with such a large-scale outage, putting its customers at unacceptable risk.
“Today’s fine sends a broader warning to all firms -– if you’re not properly prepared to deal with disruption to your networks, we’ll hold you to strict account on behalf of consumers.”
BT shares fell 0.5% in early Monday trades.
9.26am: Canal+ plotting London Stock Exchange listing
Quintessential French television station Canal+ is plotting a share listing in London following a split up of parent company Vivendi.
In December 2023, Vivendi initiated a feasibility study for an atomisation of its operations after struggling with a suppressed market valuation.
Today, Vivendi announced that its three main subsidiaries, Canal+, Havas and Lagardère, will become independent entities with individual stock market listings.
Pending shareholder approval, Vivendi has opted to list Canal+ on the London Stock Exchange “to reflect the company’s international dimension, particularly as part of the ongoing combination with MultiChoice”.
8.34am: Ryanair warning
More on that Ryanair trading statement, where the budget airline said average airfares were down 15% in its first quarter and boss Michael O'Leary said expects fares in the current key summer quarter to be "materially lower than last summer", having previously expected them to be flat or modestly up.
The Dublin-headquartered carrier reported a 10% increase in customers, but a 1% fall in revenue and an 11% rise in costs, leading to profit after tax falling 46% to €663 million. Net profit of €360 million was significantly short of the consensus analyst forecast of €538 million.
Fares were lower in the three months to the end of June due partly to the absence of the first half of Easter which fell into March this year, and "more price stimulation than we had previously expected", said O'Leary.
Analysts at Stifel said: "We expect significant cuts in consensus estimates".
8.15am: FTSE 100 jumps at the open
The FTSE 100 has jumped 47 points to 8202 at the open, undoing pretty much all the losses from the IT-hit end to last week.
Giving a big boost to the index is a 13% surge for Rentokil Initial PLC (LSE:RTO), up on weekend takeover reports.
Entain PLC (LSE:ENT), the owner of Ladbrokes and Coral, is up 3.6% as investors seem to like the look of its new American CEO.
Acting as a drag, airlines EasyJet PLC and BA owner IAG are down 6.3% and 2.3% after Ryanair warned that airfares this summer will be "materially lower" than last year and reported a plunge in quarterly profits.
7.56am: New CEO for Entain
Ladbrokes owner Entain PLC (LSE:ENT) has appointed former DraftKings executive Gavin Isaacs as its new chief executive, taking the helm at the start of September.
He will take over from interim CEO Stella David, who at that point will revert to being a non-executive director but will take over as chair, with Barry Gibson retiring, as announced earlier this year.
As well as US giant Draftkings, Isaacs has held roles at lottery business Scientific Games Corporation and Australian gambling machine maker Aristocrat Technologies, among others, and was inducted into the American Gaming Association's Hall of Fame in 2022.
Isaacs will take over the business at a critical juncture for Entain, as it struggles to recover a share price that has been hammered since turning down takeover offers in 2021, including a £15 billion bid from DraftKings. Entain's market cap is currently £4.4 billion.
7.43am: Ocado upsells new robots to US grocer Kroger
Ocado Group PLC (LSE:OCDO) has boosted its contract with US grocery chain Kroger, with a new robotic arm to be implemented in its semi-automated warehouses.
The FTSE 250-listed group said Kroger has ordered a "wide range of new automated technologies" that "will bring new levels of efficiency and labour productivity".
One of those is On-Grid Robotic Pick technology, which Ocado is already rolling out in UK warehouses and is able to pick up and carry most items, presumably reducing the need for human workers.
7.26am: Vodafone sells another chunk of Vantage towers
Vodafone Group PLC (LSE:VOD) has drummed up €1.3 billion from further selling down its stake in Frankfurt-listed mobile towers venture Vantage Towers, which it said it will use to trim its massive debt pile.
The telecoms group said it sold another 10% stake in Oak Holdings, the partnership that co-controls Vantage, which means it now has a 50-50 joint ownership structure with the consortium of infrastructure investors owning the other half, as set out when the Vantage was spun out.
Vodafone sold the shares for €32 apiece, the same price as the initial transaction in November 2022.
7.18am: FTSE 100 to come out swinging
The FTSE 100 is poised to come out swinging on Monday, reversing losses from the end of last week as markets react to Joe Biden pulling out of the US Presidential race.
London's blue-chip benchmark has been tipped to jump over 50 points at the open, having finished last week at 8,155.72 with a drop of 49 points on Friday.
The pound is little moved against the dollar at 1.2911, after hitting a one-year high last week, with a similar situation versus the euro at 0.8428.
In recent weeks the "Trump trade" has lifted bond yields and affected demand for stocks in certain sectors as confidence in Biden winning waned.
After Biden dropped out and endorsed running mate Kamala Harris as the Democratic candidate, there was a small softening in the dollar and US Treasuries, said Deutsche Bank macro strategist Jim Reid.
Market analyst Ipek Ozkardeskaya at Swissquote Bank said: "The Trump trade could lose some steam but will probably not get reversed if Harris doesn't make a material difference in the polls quickly.
"The latter expectation was reflected with a brief post-announcement selloff and a rebound in Bitcoin."