- FTSE 100 96 points higher at 8,282
- NatWest rallies on profit boost
- French rail fires cause chaos ahead of Olympics
4.02pm: FTSE 100 to close week out in green
London stocks are set to close the week more than 1.5% higher after the FTSE 100 was boosted by the prospect of US rate cuts and strength in some of its constituents's results.
Today, the FTSE is up around 96 points to 8,282.
Bets that the Federal Reserve will cut rates in September have remained in play after the PCE price index, the central bank's preferred measure of inflation, slowed to 2.5%, with core PCE at 2.6%.
Back in the UK, NatWest led the FTSE 100 risers after jumping more than 7%.
The lender lifted both its profit outlook and dividend after posting what analysts labelled a "knockout set of results".
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: "As with Lloyds yesterday, it's the quarter-on-quarter numbers that investors are paying attention to. Second-quarter results have pretty much beaten expectations on every key metric, from income to margins.
“It's also good to see full-year guidance on net interest income finally get the upgrade investors had been hoping to see, and now supports the numbers analysts had been pencilling in.
“That's positive news and helps underpin the stock price which has been on a heater this year.”
3.38pm: Currencies and commodities today
As the FTSE 100 flexes its muscles before closing for the week, here's a look at how commodities and currencies performed today:
- Bitcoin/USD: +2.2% at $67,232
- GDP/USD: flat at $1.285
- GDP/EUR: flat at €1.183
- EURO/USD: flat at $1.085
- Brent Crude: -1.95% at $80.77
- WTI Crude: -2% at $76.71
- Gold: +0.9% at $2,384
- Silver: -0.5% at $27.70
3.14pm: UK borrowing costs drop following US inflation boost
The FTSE 100 has rallied to lift 1.1% higher today, experiencing the positives of US inflation coming in as expected for June.
Bets that the Federal Reserve will cut rates in September have remained in play after the PCE price index, the central bank's preferred measure of inflation, slowed to 2.5%, with core PCE at 2.6%.
In reaction to the improved outlook, the UK's short-term borrowing costs have dropped to their lowest level in six months.
Two-year gilt yileds fell more than six bps to 3.85%, while the US alternative dropped five bps to 4.38%. 10 year yields in the US fell around the same to 4.08%.
2.40pm: Wall Street shifts into gear
US stocks are staging a late-week recovery after trading in the red for the better part.
The Dow Jones Industrial Average flew more than 400 points when markets opened this Friday, marking a 1.1% gain for the Wall Street benchmark.
The Nasdaq 100 also opened in high spirits with a 140-point (0.75%) add, while the broader S&P 500 rallied 41 points (0.8%).
On the macroeconomic calendar, the core PCE price index, the Federal Reserve’s preferred measure of underlying inflation, rose by 0.2% month on month in June,
This was a beat on market expectations of a 0.1% rise.
On an annual basis, core PCE inflation held steady at 2.6%, unchanged from the prior month.
It has provided a further catalyst for FTSE 100 gains, which is now 80 points higher at 8,266.
2.16pm: HSBC's Noel Quinn's swansong approaches
HSBC Holdings PLC (LSE:HSBA) interims scheduled for next Wednesday mark the swansong of Noel Quinn as chief executive.
Quinn departs on 2 September with Georges Elhedery, the bank's current chief financial officer, taking over.
Shore Capital said the move "follows HSBC’s normal route of promoting from within when it comes to CEO appointments and, while this approach brings continuity, it does not bring the sort of fresh insight that an external appointment might".
HSBC’s Asia focus and scrutiny of its lending to fossil fuel companies are expected to be key points of focus in the first-half report.
1.44pm: Bitcoin well bid
Checking in on the crypto markets, bitcoin (BTC) looks well bid today at around $67,200- 2.7% up on the day and more than 5% higher week on week.
This is despite swirling fears of a large-scale sell-off.
After 10 years of waiting, creditors of defunct bitcoin (BTC) exchange Mt Gox are finally receiving their rightful repayments, valued at around $8 billion.
Good news, but the occasion has raised the spectre of a large-scale bitcoin sell-off if these creditors seek to redeem their crypto for cash.
Given bitcoin's bouyant spot prices, early indications suggest these anxieties might not be warranted.
Back to the London markets, the FTSE 100 is also in high spirits, adding 72 points to 8,258.
13.18pm: Virgin Media O2 suffers customer exodus
Virgin Media O2, the mobile and broadband provider jointly owned by Liberty Global and Telefónica, saw more than 118,000 mobile contract customers leave its network in the second quarter of 2024.
Attributing the exodus to “wider market trends”, VMO2 said it ended the second quarter with 15.9 million mobile contract customers.
However, a growing customer base across the prepaid, Internet-of-Things and wholesale markets meant VMO2 saw total mobile connections increase by 403,100 to 45.5 million in the period.
In the broadband space, VMO2 celebrated a new milestone in its full-fibre rollout, which now has a footprint of five million premises after adding a further 295,300 homes in the quarter.
12.58pm: NatWest helps push FTSE 100 higher
London's FTSE 100 is continuing to hold onto its early morning gains, up close to 0.8%, leaving the index on track to post a weekly jump of 1.2%.
Doing much of the heavy lifting was lender NatWest after it shares rallied 6.5% in reaction to it hiking both its dividend and profit guidance in its latest interims.
Speaking on the results, Kathleen Brooks at XTB said: "[NatWest's] results are a reflection on the UK economy, and they are a sign that the UK economy remains resilient even in the face of high interest rates.
"These results also suggests that mid-level UK banks are in ruder health than some mid-level US banks that are burdened by losses on corporate real estate portfolios."
Other risers included Anglo American, Burberry and Intertek.
12.40pm: Mercedes warns on weakening car demand
Mercedes has warned that weaker demand from customers is becoming “increasingly noticeable” after the German carmaker saw a decrease in automotive sales in the first half of 2024.
Mercedes-Benz sold 959,700 units in the first six months, marking a 6% decrease compared to the same period in 2023. This decrease was partly due to high order backlogs caused by the pandemic being curtailed.
Sales in China, where cheaper domestic competition is gaining considerable market share, were particularly muted, with Mercedes delivering 9% fewer units in the period.
Chinese sales in the premium and luxury segment were particularly poor, Mercedes conceded.
12.19pm: CrowdStrike sensors back online after last week's chaos
CrowdStrike boss George Kurtz has revealed that 97% of the firm's Falcon agent sensors are back online following a major outage caused by a botched software update on July 19.
The incident impacted over 8.5 million Windows users and resulted in significant global disruptions, including grounding flights, closing businesses, and halting markets.
Fortune 500 companies experienced approximately US$5.4 billion in losses due to the outage.
The company’s shares have fallen by about 25% since the incident.
Kurtz addressed the situation in a LinkedIn post, where he said: “To our customers still affected, please know we will not rest until we achieve full recovery.”
11.59am: Babcock rises despite defence budget lagging demand
Babcock, the FTSE 250-listed defence contractor, is up more than 5% today after it benefitted from a sustained increase in global defence budgets in its 2024 financial year.
But the London-based group said that rising geopolitical tensions are causing military demand to outstrip the current growth in defence budgets.
Babcock’s primary revenue drivers are naval shipbuilding and nuclear submarine contracts under the trilateral AUKUS relationship between Australia, the US and the US.
“Babcock is well positioned to benefit from the sustained uplift in global defence budgets, driven by the need to recapitalise, re-equip and modernise militaries, resulting in an increase in our opportunity set,” said Babcock’s chief executive David Lockwood.
Despite this increase in defence spending, Babcock said that “the growth in defence budgets is still not matched by the growth in military demand”.
11.27am: iPhone drops out of China's top five smartphones
Apple has lost more ground in the Chinese smartphone market in the quarter to June, knocking it out of the top five.
iPhone shipments in China declined by 3.1% in the June quarter, as local competitors like Huawei Technologies Co. surged ahead.
With an 11% year-on-year rise in Android-powered device shipments, Apple has now been pushed out of the top five smartphone makers in the country for the first time in four years, according to market tracker IDC.
Retailers and Apple itself have resorted to deep discounts to sustain sales.
Meanwhile, Huawei led a resurgence in Android alternatives, with its shipments improving by 50%, which contributed to Apple falling to sixth place in the market.
"We did see a YoY growth in the April-to-May shipments, particularly April, to prepare for the 618 shopping festival. Nevertheless, the offline channel partners, which were more reluctant to burn marketing money, slowed down the pace in the last month of 2Q24 to ensure profitability," said IDC analyst Will Wong.
10.56am: Motorists pay too much for fuel, claims watchdog
UK drivers are being hit with excessive fuel prices, particularly when using supermarket petrol stations, the UK's competition watchdog has said.
Weakened competition in the sector has led to high prices, which in turn has cost motorists £1.6 billion in the last year alone, the Competition and Markets Authority revealed.
Research found that the profit margins of supermarkets for their fuel businesses had doubled since the start of the pandemic.
“When it comes to road fuel, the simple answer is that drivers are still paying too much," CMA chief executive, Sarah Cardell told the BBC.
RAC said the extra costs for drivers were "nothing short of outrageous."
"Drivers have every right to feel ripped off, especially knowing there is virtually no market competition between retailers," said RAC head of policy Simon Williams.
10.37am: Drax rallies as it sees top end profits
Drax Group (LSE:DRX) rocketed more than 10.5% in today as the power station operator unveiled a £300mln share buyback plus a 13% dividend hike to underline its bullish outlook for the future.
Will Gardiner, chief executive, added he saw the business playing a key role in the new government’s net-zero strategy, especially with its carbon capture scheme (BECCS).
"We look forward to working with the new UK Government to help grow the economy and take steps urgently to deliver a net zero electricity system by 2030.
"We believe that Drax and our partners across the Humber and Scotland can accelerate growth, create thousands of new jobs and channel billions in private investment into carbon capture and green energy projects.”
Drax saw profits jump by 37% to £463 million in the six months to end June 2024, adding result for the full year will be at the top end of market forecasts for underlying profits [adjusted EBITDA] of £881-996 million.
10.09am: French rail services hit by arson attacks
France's rail service has been plunged into chaos hours before the Olympics is set to start in Paris after several rail lines were set on fire.
SNCF, the state-owned railway company, said it suffered a "massive attack aimed at paralysing the network" after high-speed rail lines experienced "coordinated malicious acts" over the night.
Around 800,000 customers are expected to be affected by the disruption, which is touted to continue throughout the weekend and could potentially cause issues for those attending the Olympic opening ceremony and events over the weekend.
Queues have been seen across France as well as in London's St Pancras International Station, where Eurostar services depart en route to Paris.
Eurostar said services into the French capital are being diverted and delayed as a result of the attack, with journey times increased by 90 minutes due to the damage to the line between Paris and Lille.
Trains between London and Paris are said to still be running on "classic" lines but will still experience a one-hour delay.
One service from St Pancras to Paris at 3.31pm has been cancelled, according to signs at the London station.
9.48am: Rightmove calls for rate cuts to ease property market
Rightmove has shed its early morning gains and is now trading flat after investors weighed its resilience to headwinds with the overarching challenges of tough mortgage conditions.
Though the online estate agent kept its guidance for this year unchanged, Johan Svanstrom, chief executive, said: “With the election now concluded, the property market looks forward to potential interest rate reductions which will further stimulate activity".
Revenues in the half year to the end of June 2024 rose by 7% to £192 million with profits 1.8% ahead at £132,6 million and revenue per advertiser rising by 6% to £1,497 per month.
Existing home listings and transactions picked up with “a continued yet softening imbalance of demand and supply for rentals” and a tentative outlook for new home development volumes.
Adam Vettese at eToro said that while the market may be subdued, the longer term prospects for Rightmove remain positive.
"Whilst the current market may not be booming for listings, it makes it even less likely that any challenger will come in to take a chunk out of the firm's 86% market share," he said.
“With the election now in the rear view mirror and rate cuts on the horizon, as well as Labour’s promise to get Britain building, the outlook for the property market looks busier and Rightmove will undoubtedly benefit from this.”
9.25am: Banks share data in 'dirty money' crackdown
Barclays, NatWest, Lloyds and other UK banks have provided the National Court Agency with customer data as part of plans to tackle "dirty money" flowing through the company's economy.
The project, which is the largest of its kind in the world, is set to take on criminal gangs and money laundering, which is estimated to cost the economy some £350 billion every year.
It comes around a year after more than six banks, including Lloyds and NatWest, started a trial in which they provided law enforcement with information on client accounts.
The NCA's project went live in May and has already highlighted eight potential crime networks that may be manipulating the financial system.
Other lenders involved in the project include Santander, TSB, Metro Bank and Starling Bank.
Adrian Searle, director at the NCA, said: "The fundamental purpose is to bring together the collective efforts of law enforcement, government, regulators and the private sector to combat economic crime."
9.05am: Disney and Warner Bros team up
Disney and Warner Bros have launched a new streaming bundle, combining Disney+, Hulu, and Max, to compete directly with Netflix, Apple, and Amazon Prime.
Available in the US for $16.99 per month with ads and $29.99 without ads, the bundle offers up to 38% savings compared to separate subscriptions.
This premium package brings together a vast array of content from brands like ABC, CNN, Disney, HBO, Marvel, Pixar, and Warner Bros, among others.
Subscribers can access a library featuring franchises such as Family Guy, Frozen, The Avengers, Star Wars, Batman, Game of Thrones, and Harry Potter.
8.41am: Morning so far
The FTSE 100 is set for another day in the green after a strong open this morning, helped by strong results from NatWest and Rightmove.
While markets in Asia and the US deal with the current tech sell-off affecting stocks like Nvidia, Microsoft and Meta, the UK's sentiment appears to be driven by the prospect of improving financial conditions.
NatWest said it expects full-year income to be ahead of its original forecast after a strong first-half performance, with the second quarter seeing close to every key metric beating guidance.
Analysts said the bank was boosted by an easing economic backdrop, with borrowers holding firm in the face of high interest rates.
Rightmove was also a top riser this morning after it backed its guidance in the face of tougher market conditions in the housing sector.
Despite homeowners facing higher borrowing costs, the online real estate platform still expects high single-digit revenue growth, helped as listings are currently booming.
In the US, Disney and Warner Bros have launched a new streaming bundle, combining Disney+, Hulu, and Max, to undercut rivals with 38% discout comapred to seperate subcriptions.
8.28am: NatWest soars as it lifts profit guidance
NatWest shares have rallied close to 7%, making it the FTSE 100's biggest riser today after it lifted its full-year profit guidance.
The lender now expects full-year income to come to £14 billion, a notable bump from previous forecasts of between £13 billion and £13.5 billion.
It came as NatWest delivered an upbeat first-half financial update that surpassed market expectations.
Total income in the period came to £7.1 billion with operating profit of £3 billion. Though these results represented a year-on-year decline, they still managed to surpass forecasts.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, called them a “knockout set of results”.
NatWest announced total shareholder returns of £1.7 billion for the first half of 2024. This includes an interim dividend of 6p per share, reflecting a 9% increase from the previous year's dividend.
8.08am: FTSE 100 opens higher
The FTSE 100 has opened more than 39 points higher this morning, placing the blue-chip index in position to finish on Friday higher week-on-week.
Shares in NatWest have held relatively flat at the open, but could be expected to rise throughout the day, with analysts calling its interims a "knockout set of results".
More on the lenders to results to come.
Meanwhile, Rightmove has jumped close to 4% after it posted its own set of interims, with analysts impressed by its "robust performance and positive operational momentum" despite being in a challenging mortgage rate environment.
Metro Bank lifted 3% after it confrimed the sale of its residential mortgage book to NatWest.
7.38am: Metro Bank sells mortgage book to NatWest
Metro Bank Holdings PLC (LSE:MTRO) said it will sell its prime residential mortgage book to NatWest for around £2.5 billion, according to an update on Friday.
It comes as Metro looks to streamline its balance sheet and "enhance risk-adjusted returns on capital".
A Metro Bank statement said: "The sale creates additional lending capacity to enable Metro Bank to continue its asset rotation towards higher yielding commercial, corporate, SME lending and specialist mortgages."
Metro said the 4.2% on gross book value would result in an estimated £105 million loss due to the loans being originally given out during a lower rate environment.
Daniel Frumkin, Metro Bank’s chief executive officer, said: “The sale of part of our residential mortgage portfolio is earnings, NIM and capital ratio accretive."
NatWest has released its set of financial results for the first half this morning.
7.15am: FTSE 100 to lift higher
London stocks are set to start the final day of the week slightly higher as the markets look to shrug off the concerns driven by the current US tech sell-off.
The FTSE 100 is looking to continue in the green after closing yesterday up around 30 points, lifting from a 3-month low and helped by strong gains from Unilever and British American Tobacco.
Overnight, Asian markets continued to move downwards a day after their worst session of trading since mid-April.
Asia’s broadest index barring Japanese shares fell by more than 0.5% after sinking close to 1.9% the day prior, while Japan’s Nikkei held flat.
Today, the performance of NatWest’s new boss Paul Thwaite will be under the microscope as the lender reports its first-half results.
Analysts at JP Morgan are confident in the bank’s ability, especially as they believe continued privatisation after the upcoming elections could lead to an increased valuation.