- FTSE 100 up 30 points
- US inflation slows in July
- Betting firms, housebuilders up
3.59pm: FTSE 100 on course for positive finish
The FTSE 100 headed for a positive end to the day on Wednesday, entering late trading 30 points ahead at 8,265.
Gains among housebuilders largely buoyed the index, as UK inflation data in the morning was said to support forecasts for up to two more base interest rate cuts this year.
Leading the risers was Entain PLC (LSE:ENT) though, after rival betting firm Flutter Entertainment PLC (LSE:FLTR) published strong second quarter earnings overnight.
In the absence of any major fallers, miners emerged among the day’s biggest losers, with Anglo American PLC (LSE:AAL), Rio Tinto PLC, Glencore PLC (LSE:GLEN) and Antofagasta PLC (LSE:ANTO) all off the mark late on.
3.52pm: Hedge fund bags £210mln in global market turmoil - report
Caxton Associates made around US$270 million (£210 million) on the back of global market turmoil earlier this month, which prompted a large-scale sell-off of shares.
The London-headquartered firm profited through bets on the likes of US government debt and the Japanese yen, according to the Financial Times.
This was after a sharp sell-off in global stock markets following weak US job data earlier in the month, which had raised concerns of a looming recession in the world’s largest economy.
A surprise interest rate hike in Japan coincided with the turmoil, prompting a sharp unwinding of carry-trades in the yen.
Caxton reportedly saw a 3.9% return in its US$4.5 billion Macro Fund on the back of the turmoil.
3.33pm: British consumer confidence ticks up in July
Consumer confidence ticked up in Britain last month as sentiment around household finances moved into positive territory for the first time in three years, according to YouGov.
A poll by the researcher showed consumer confidence across Britain climbed to 111.3 from 109.4 over the month, with figures above 100 representing a net positive outlook.
Confidence on household finances for the next 12 months grew to 100.9, YouGov said, entering positive territory for the first time since August 2021.
The poll also showed improving sentiment around house prices and business activity over the year ahead, though confidence on job security fell over the month.
2.55pm: US stocks mixed at open
US stocks opened mixed following Wednesday’s opening bell, after data showed inflation subsided in July, but most importantly avoided any surprises.
The Dow Jones notched up 66 points, while the Nasdaq dipped 30 points and S&P 500 traded flat in another calmer start after sell-offs last week.
Analysts noted the inflation figures supported expectations for the Federal Reserve to cut base interest next month, with both 25 and 50 basis point reductions still on the table.
“Markets had been fretting that the US central bank was behind the curve with interest rate cuts and a sharp slowdown or recession was likely as a result,” Charles Stanley analyst Garry White said.
“We think these concerns were over-exaggerated and a soft landing is still in prospect for the world’s largest economy”... Read more
2.30pm: FTSE 100 holds onto gains after US inflation report
The FTSE 100 appeared largely unfazed after US inflation data for July refrained from dropping any major surprises.
Come mid-afternoon, London’s blue chips had navigated a busy day of macroeconomic news to hold onto a 30-point gain and reach 8,263.
Betting firm Entain PLC (LSE:ENT) led the way, climbing 5.2% following a strong set of second-quarter results from rival Flutter Entertainment PLC (LSE:FLTR).
These showed a boost from the Euros, alongside reflecting favourable sports results for bookmakers elsewhere over the period.
Housebuilders also sat among the day’s big risers, with Persimmon PLC (LSE:PSN) and Berkeley Group Holdings PLC (LSE:BKG) both up over 3%, as Taylor Wimpey PLC (LSE:TW.), Vistry Group PLC (LSE:VTY) and Barratt Developments PLC (LSE:BDEV) climbed too.
Inflation data from the UK, showing prices climbed slower than expected last month, appeared to boost hopes for future rate cuts, in turn spelling good news for the housing market.
2.15pm: Fed now has ‘maximum flexibility’ on September rate cut
Analysts believe a September rate cut by the Federal Reserve is all but set in stone after inflation slowed in July, with questions now rather around how much interest will be reduced by.
Discussing the data, which showed inflation slowed to 2.9%, TD Securities’ Gennadiy Goldberg said “it really ticks the box for a September rate cut”.
“It gives the Fed maximum flexibility,” he said, adding “the big question they have to decide is whether they should cut [by] 25 or 50” basis points.
Capital Economics’ Paul Paul Ashworth noted a 25 basis point cut was most likely, given the data did not “suggest price pressures are collapsing in a way that could warrant a bigger [...] reduction”.
That said, Quilter Cheviot research head Richard Carter reassured that “investors should be calmed knowing that rate cuts are coming,” after a weak US jobs report earlier in the month prompted a global sell-off.
Futures showed the Dow Jones, Nasdaq and S&P 500 all moving into positive territory as Wednesday’s opening bell approached, while the FTSE 100 held onto a 25-point gain for the day.
1.51pm: Subsiding inflation solidifies need for rate cut - analyst
A dip in inflation over the course of July is a “clear” signal for the Federal Reserve to now begin cutting interest rates, Charles Schwab director Richard Flynn says.
After Bureau of Labour Statistics data showed consumer prices climbed at their slowest rate in over three years by 2.9% in July, Flynn commented “it’s time for interest rates to fall”.
“While investors have begun to price in a rate cut at the September meeting, we have seen dramatic moves in the market this month - volatility that reflects residual uncertainty about the outlook for the market.
“Although today’s lower consumer price index reading is another convincing piece of evidence in favour of less restrictive monetary policy, we expect that the market will remain highly sensitive to economic data releases until a September slash is locked in.”
Futures had the Dow Jones remaining in the red ahead of Wednesday’s open, while the Nasdaq and S&P 500 looked to rise.
1.36pm: US inflation slower than expected in July
Inflation ticked up 2.9% in the United States over the year to July, just shy of expectations for a 3.0% increase.
On a monthly basis, consumer prices rose by 0.2%, following a 0.1% decline in June, Bureau of Labour Statistics data showed on Wednesday.
The headline 2.9% figure marked the slowest rate of inflation since March 2021, while core data excluding volatile food and energy prices showed the lowest increase since April 2021 of 3.2%.
1.26pm: Mars strikes deal to buy Pringles maker
Confectionary firm Mars has confirmed a US$30 billion (£23.4 billion) deal to buy Pringles maker Kellanova (NYSE:K).
Mars is set to pay US$83.50 a share, representing an almost 33% premium to its market value at the start of the month when the story was first reported… Read more
Shares in US-listed Kellanova (NYSE:K) surged 7.5% in premarket trading, bringing its share price to close to US$80, still marginally off the offer bid.
12.44pm: Dow Jones, Nasdaq called off the mark ahead of inflation data
Futures had the Dow Jones, Nasdaq and S&P 500 just off the mark ahead of Wednesday’s open, as investors await a key set of inflation data.
The Dow Jones was off 11 points before the bell, while the Nasdaq and S&P 500 were called down 11 and 3 points respectively.
This was as investors appeared to avoid any major movements ahead of US consumer price index figures, due on Wednesday morning.
Expectations are for headline inflation to have climbed 3% in July, with the figures set to offer clarity on how quickly the Federal Reserve could move in cutting interest rates over the coming months.
“While still significantly above the Fed’s 2% target, investors are likely to be relaxed if inflation steadies around here,” Trade Nation analyst David Morrison commented.
“Considering past performance, they should be even happier if headline [inflation] breaks below the 3% figure.”
He added a reading outside of market expectations could cause a “spike in volatility,” though expectations for a September rate cut will likely remain unchanged.
12.25pm: Latest mortgage cuts hit as inflation bodes well for housing market
Mortgage rate cuts by Lloyds Banking Group PLC (LSE:LLOY)’s Halifax and Nationwide Building Society hit the market on Wednesday, alongside a positive set of inflation data.
Announced on Tuesday, the cuts by the lenders include interest rate reductions of up to 0.37% on three-year remortgage products at Halifax and 0.20% on Nationwide’s fixed deals.
These follow cuts to mortgage rates by a string of rival lenders, as banks anticipate further reductions in base interest later this year - a narrative supported by inflation data on Wednesday, according to analysts… Read more
Though largely priced in by lenders, according to Hargreaves Lansdown’s Sarah Coles, markets have been left anticipating two Bank of England cuts before the year-end.
This is after ONS data showed consumer prices ticked up slower than expected by 2.2% in July, but key services inflation subsided from 5.7% to 5.2% month on month.
“The outlook for mortgage rates should boost demand in the coming months,” Pantheon Macroeconomics analysts said... Read more
Housebuilders were among the FTSE 100’s big risers on Wednesday following the data, including Persimmon PLC (LSE:PSN), Barratt Developments PLC (LSE:BDEV), Berkeley Group Holdings PLC (LSE:BKG) and Taylor Wimpey PLC (LSE:TW.).
11.47am: AstraZeneca loses £200bn valuation as shares knocked on public funding cut
AstraZeneca PLC (LSE:AZN)’s time as the first £200 billion-plus London-listed company met an abrupt end on Wednesday after shares fell on news public support for one of its projects was to be cut.
Some £65 million had been promised by the former government to support expansion plans its Merseyside vaccine manufacturing site.
However, chancellor Rachel Reeves is believed to be considering reducing the government support by over £20 million, according to the Financial Times.
This move could mean AstraZeneca relocates the project to France, reports said… Read more
Shares in the pharmaceutical giant dipped 0.5% and enough to take AstraZeneca below its £200 billion valuation, hit on Tuesday.
11.18am: Rental cost increases spark long-term concern - industry member
ONS data on Wednesday showed private rental cost increases failed to subside between June and July, rising by 8.6% on an annual basis in each.
Though this was below a peak of 9.2% seen last March, warnings emerged that the continued increases could present issues in the future.
“Our industry must start to seriously consider the long-term effects of ever-increasing rental costs,” personal finance head at savings firm Moneybox, Brian Byrnes, said.
“We know how these are continuing to eat into renters' disposable income and impact their ability to build a deposit for a future home.”
Average rents in England sat at £1,319 in July, and were up by 7.9% and 8.2% at £748 and £965 in Wales and Scotland respectively. In Northern Ireland, rents climbed 10%.
Byrnes acknowledged that there was “perhaps a glimmer of hope for aspiring homeowners” on the new Labour government’s promises for the market.
However, “it remains true that saving a sufficient deposit is one of the biggest challenges many people face and this is why pragmatic measures are needed now,” he added.
10.50am: German economy confirmed to have slowed
Eurostat data on Wednesday confirmed the German economy slightly contracted over the second quarter.
Europe’s largest economy faced a 0.1% decline over the three months to June, following a larger contraction and slight uptick in the two previous quarters.
This comes as sentiment towards the German economy was said on Tuesday to have declined at the fastest pace in two years over the course of recent weeks.
Research institute ZEW noted Germany’s export-intensive sectors had faced a blow as Chinese and US economic outlooks deteriorated.
Elsewhere in the Euro area, the Spanish economy climbed 0.8% on a quarterly basis and by 2.9% on a year earlier, with Ireland seeing 1.2% growth compared to the first three months of the year but a 1.4% contraction against last year.
The jobs market also weakened over the second quarter, with employment climbing by 0.2% against 0.3% over the first three months of the year.
10.14am: Eurozone GDP grows 0.3% in second quarter
The Eurozone economy expanded by 0.3% over the second quarter, official data revealed on Wednesday.
This was in line with expectations and marks a 0.6% increase on the same period a year ago.
Markets across Europe were largely up on the news.
Euro area #GDP +0.3% in Q2 2024, +0.6% compared with Q2 2023: flash estimate from #Eurostat https://t.co/rXsEeDnDSB pic.twitter.com/JejLjc1M9b
— EU_Eurostat (@EU_Eurostat) August 14, 2024
10.07am: Rail fare-determining inflation figure comes in at 3.6%
July inflation data, which has historically determined rail fare increases, came in at 3.6% this year.
The retail price index reading had been used by the government until 2023 to determine train ticket price hikes.
Average wage growth and a figure of 4.9% have been used since to cap annual increases after inflation has soared in recent years.
Were the figure to be based on the retail price index once again, July’s reading has historically been used, with this sitting at 3.6% last month, according to data from the ONS.
A Department for Transport spokesperson commented: “No decisions have been made on next year’s rail fares but our aim is that prices are as affordable as possible for passengers.”
Westminster, alongside the Scottish and Welsh governments, regulates around 45% of fares on Britain’s railways, while others follow these closely due to contracts introduced during the pandemic.
9.51am: Entain leads risers as rate cut hopes also boost housebuilders
Ladbrokes owner Entain PLC (LSE:ENT) got a boost on Wednesday morning after rival betting firm Flutter Entertainment PLC (LSE:FLTR) posted strong results overnight.
Shares in Entain climbed 3.8%, placing it as the FTSE 100’s biggest riser, after Flutter signalled a boost from the Euros and favourable sports results over the second quarter.
Housebuilders also racked up gains on Wednesday, with Persimmon PLC (LSE:PSN), Barratt Developments PLC (LSE:BDEV), Vistry Group PLC (LSE:VTY) and Taylor Wimpey PLC (LSE:TW.) all among the day’s top risers.
This came after expectations for interest rate cuts climbed on the back of inflation data which showed consumer prices rose last month, but more slowly than expected.
Overall, the FTSE 100 ticked up 40 points to 8,275.
9.29am: Further rate cuts expected despite inflation uptick
Analysts expect the Bank of England will cut base interest two more times this year, after data showed inflation ticked up at a slower rate than expected last month.
Services inflation subsided from 5.7% to 5.2% between June and July, as overall consumer prices edged up from 2% to 2.2%, according to the ONS... Read more
“The decline in services inflation [...] was much bigger than anyone anticipated,” Capital Economics deputy chief Ruth Gregory noted, highlighting the metric as key for policymakers.
“This may not alleviate the Bank’s concerns about persistent price pressures entirely. And it probably isn’t enough to prompt a back-to-back interest rate cut in September,” she added.
“But it does lend some support to our view that inflation will be back below [...] target next year and that interest rates will fall further and faster than markets expect.”
Validus Risk associate Pierre Roke said subsiding services inflation could open the door for up to two further cuts before the year-end, with wider markets also pricing in a similar scenario.
Such expectations are currently for the Bank of England to avoid a cut in September, following August’s reduction, with these coming later in the year.
That said, Deutsche Bank analysts argued further labour market and inflation data before rate setters next meet on September 19 could upend these.
“A September rate cut should no longer be off the table,” the bank said, “it’s entirely conceivable to think that we could get multiple more rate cuts this year”.
9.02am: Flutter soars as profits spike, guidance upped on US demand boom
Flutter Entertainment PLC (LSE:FLTR) jumped 10% on Wednesday morning after overnight results showed a spike in profits and signalled strong growing demand across the Atlantic.
Second quarter revenue jumped 20% to US$3.6 billion (£2.8 billion), while net income soared more than four-fold to US$297 million.
US revenue jumped 39% to US$1.5 billion, while in the UK and Ireland this was up 17% at US$928 million.
“Our US performance was excellent in new and existing states reflecting our disciplined approach to customer acquisition and our best-in-class product,” chief executive Peter Jackson said.
This comes after the Paddy Power, Betfair and FanDuel-owner completed the move of its primary listing from London to New York earlier this year.
“This reflects the importance of the US market to Flutter and our view that the US is the natural home for our business.”
Flutter also hiked guidance to reflect an expected 20% and 34% increase in full-year revenue and adjusted pre-tax earnings respectively.
London-listed shares jumped 10% to 16,130p.
8.43am: Sports spending booms during Olympics
Spending on sports clubs and gyms accelerated in July, data from Revolut has revealed.
Some 38% more was spent in July on such activities than a month earlier, the finance app said Wednesday, coinciding with the start of the school holidays and the Olympics in Paris.
“We’ve seen a clear shift towards more affordable and active leisure activities, as many get into the sporting spirit,” Fiona Davies, Revolut head of UK, Ireland and Nordics growth, commented.
Spending on gyms was up 18% over the month, while transactions at sports retailers increased by 11%.
This was as total monthly payments ticked up 16% compared to a year earlier.
Amusement parks, aquariums, museums and cinemas also got a boost compared to June as the school holidays got underway, Revolut said, with spending at fast food restaurants also up.
8.25am: Stocks rise on slower-than-expected inflation
The FTSE 100 got a boost on Wednesday morning, after ONS data showed inflation picked up for the first time this year in July, but at a slower pace than expected.
London’s blue chips added 42 points early on, sending the FTSE 100 to 8,277.
The FTSE 250, 350 and AIM indexes also climbed as trading got underway on Wednesday.
This was after ONS data showed a 2.2% uptick in inflation over the year to July, from 2% in May and June respectively, but below expectations for a 2.3% increase.
Validus Risk Management associate Pierre Roke noted a lower-than-expected service inflation print, of 5.2% against analysts’ 5.5%, could spell good news for further Bank of England rate cuts this year.
“[This] validates the more dovish committee members and potentially leaves room for not just one more cut this year but two.”
8.15am: Aviva unveils higher interim profit
Aviva PLC (LSE:AV.) has unveiled a 14% increase in operating profit to £875 million for the first half of the year, with statutory profit surging 58%.
General insurance written premiums increased 15% year on year to £6 billion while insurance, wealth and retirement sales increased 12% to £19.7 billion.
Of note was the 16% increase in cash remittances from its subsidiaries, which includes cash generated from Aviva’s reinsurance offering.
Aviva expects cash remittances to cumulatively exceed £5.8 billion between 2024 and 2026.
“Sales are up. Operating profit is up. The dividend is up. Our plan to deliver more for customers and shareholders is working really well,” remarked a chipper chief executive Amanda Blanc... Read more
8.07am: John Lewis to cut jobs in shop floor restructuring
John Lewis is set to cut over 150 jobs under plans to restructure its store operations.
Some 153 roles will go, equating to around 1% of the department chain’s headcount, through attrition and voluntary redundancies, according to a report from Retail Week.
This is as John Lewis makes a “multi-million-pound” investment in technology to improve “customer service” and streamline shop floor operations.
Staff will no longer be confined to front or back of store operations under the move, which the chain said would help during busy periods, while £5 million will be spent on headsets to aid communication.
7.57am: Balfour Beatty hikes dividend, expresses confidence on UK projects
Balfour Beatty plc (LSE:BBY) has hiked its interim dividend after revenue and profit ticked up over the first half of the year.
A 3.8p dividend per share will be paid out for the half year, Balfour said in results on Wednesday, up 9% on a year earlier.
This is after revenue climbed by 3% to £4.7 billion over the six months to June, with underlying profit from operations ticking up 6% to £101 million.
According to the FTSE 250-listed infrastructure group, outlook for complex projects remains “encouraging,” despite a series of plans being scrapped under Britain’s new Labour government.
This includes UK energy and transport infrastructure projects, Balfour said, alongside an uptick in defence spending.
“This direction of travel is positive for Balfour Beatty in the medium term,” the group said... Read more
7.28am: Fuel prices see inflation tick up
The data from the ONS confirmed a widely expected uptick in inflation in July, following consecutive lower readings since February 2023.
Consumer prices climbed by 2.2%, following two consecutive readings in line with the Bank of England’s 2% target, though the increase was smaller than analysts’ expectations for 2.3%.
According to the ONS, this was as gas and electricity prices decreased more slowly than a year earlier.
Restaurants and hotel prices were the largest downward contributors, the ONS added, after falling in the year to July following a rise previously.
The consumer prices index including owner occupiers' housing costs was up by 3.1% in July, against 2.8% in June, while core inflation - which excludes food and alcohol costs - subsided from 4.2% to 4.1% between June and July.
Forvis Mazars chief economist George Lagarias commented: “Inflation ticking up will probably not discourage the central bank from further rate cuts.
“Despite the uptick, all key measures, headline, producer prices and services inflation rose less than anticipated by markets.”
7.13am Inflation picks up in July
Inflation data from the Office for National Statistics data on Wednesday morning showed the consumer price index ticked up by 2.2% in July.
This was above the Bank of England’s 2% target, but below market expectations for a rise of 2.3%.
7.13am: Stocks seen higher
The FTSE 100 is expected to get a boost on Wednesday morning as data from the ONS showed inflation picked up in July, but not as much as expected.
Futures had London’s blue chips adding 30 points at Wednesday’s open, as investors mull the scope for further Bank of England rate cuts in the coming months.
Also due on Wednesday are interim figures from Aviva PLC (LSE:AV.) and Balfour Beatty plc (LSE:BBY), alongside crucial consumer price inflation data from across the pond in the US.