- FTSE 100 climbs 5 points to 8,278
- UK public deficit higher than expected in July
- National Express owner Mobico impresses with results
4.06pm: Pick and mix
Into the home straight for today's European stock market session, with the FTSE 100 struggling to make headway today.
The blue-chip index is up less than 0.1% at 8,279, though its mid-cap sibling the FTSE 250 is up 127 points or 0.6% at just over 21,113.
Across the channel, France and Germany's stock markets are up 0.3%, with Italy's benchmark doing a bit better, Spain's modestly in the red and the Euro Stoxx 600 up 0.1%.
4pm: Flota-Shein
Chinese online fashion giant Shein Group may open up its £50 billion London initial public offer to retail investors, according to a Telegraph report, as well as institutional investors.
The company has still not decided whether to go ahead with the listing, but investment banks on the IPO are mulling whether to sell directly to the investing public, the report suggests, suggesting its Gen Z customers might be interested as well as investors on platforms.
Paperwork was filed with the Financial Conduct Authority and Chinese regulators earlier in the summer, while Shein has also started to look for a British warehouse to address complaints from British retailers about its ability to avoid tax by shipping orders directly from China.
3.43pm: Another mortgage cut
Talking of rate cuts, HSBC Holdings PLC has cut mortgage rates to the lowest level among big bank rivals.
Premier account holders at the lender can now access five-year fixes at 3.81% following HSBC’s latest cut, while those without such an account face a rate of 4.83% for the same term, which is also below the current market average.
It comes after a string of reductions among rivals, with Barclays, TSB and Virgin Money cutting rates yesterday, with Barclays PLC trimming a two-year fixed rate deal to 5.07%.
HSBC yesterday said it would be cutting rates on two, three and five-year fixed products.
3.22pm: Bank of England to make one more cut this year, economists reckon
Most economists reckon the Bank of England will cut interest rates just once more before the end of the year.
This is based on a fresh poll by Reuters, which found that 57 of the 60 economists it asked see no change in September, with 39 of 60 predicting one more cut in 2024.
Around a third, 22, expected two or more cuts this year.
November is when the majority of economists expect the second BoE cut of this cycle to be made, following the first cut which came at the start of this month to 5.0% from 5.25% after a 5-4 vote.
2.47pm: US stocks start higher
Wall Street stocks have opened higher, rebounding after a small drop the previous session that ended an eight-day winning streak.
The S&P 500 has added 0.2%, led by a 15% gain for Target Corp (NYSE:TGT) and gains for other consumer cyclical, with the tech-heavy Nasdaq Composite rising by a similar amount.
Target rose after earnings of $2.57 per share beat Street forecasts of $2.19.
Revisions to US job numbers and July’s Fed meeting minutes are due later, with analysts saying these will set the tone for how the session goes.
Back in London, the FTSE is back to flat.
2.24pm: FTSE 100 flailing
The FTSE 100's gains have dwindled in the past half hour, now almost back to flat for the day.
Meanwhile, the FTSE 250 had been moving higher, up 98 points or 0.5% at 21,084.21
US futures have also picked up, with the S&P 500 and Nasdaq called 0.2% higher, with Dow Jones futures up 0.15%.
2.11pm: Cineworld investment proposal
The US backers of Cineworld Group are proposing to invest £35 million in modernising a smaller UK cinema estate if a rescue plan is successful.
This is a report from Sky News, which says doubts are growing about the ability of unhappy landlords to block the proposals, which are to be voted on by creditors next month.
Cineworld filed for Chapter 11 bankruptcy in the US in 2022 due to the weight of its massive debt pile, later delisting its shares from the London Stock Exchange after a restructuring agreement meant lenders took control while shareholders got nothing.
Sky said backers have proposed in a document to Cineworld creditors that they will boost investment to try and catch up with rivals, though the rescue plan will also lead to the closure of dozens of UK multiplexes.
1.57pm: Maccy D's UK expansion
McDonald's Corp (NYSE:MCD) is apparently planning to open over 200 new restaurants across the UK and Ireland, creating some 24,000 jobs, with many set to be placed on high streets.
This marks biggest expansion of the 'golden arches' chain in Britain in over two decades and comes as part of a £1 billion investment spree by the US chain and its franchisees.
New restaurants will be opened over the coming four years under plans set to be unveiled this week, according to The Times.
Fresh restaurant formats, such as smaller sites, will be tested, the report says, with many of the sites set to be opened on high streets.
1.05pm: Swift exits after providing economic stimulus
Taylor Swift’s recent shows in London, Edinburgh, Liverpool and Cardiff are estimated to have dealt a £1 billion boost to the UK economy after the singer performed the last of 15 concerts across the country last night.
This marked the end of the European leg of Swift’s tour, with five nights at Wembley coming after concerts in Edinburgh, Liverpool and Cardiff in June.
According to Hospitality Data Insights, sales at hotels, bars and restaurants within three miles of Wembley averaged £1 million over Swift’s five-night stint in London.
No little spending on helicopters and fuel must also be added to that, if reports are true.
have it on good authority that taylor swift is taking a helicopter from a manor in the cotswolds to wembley and back every day atm lol
— Ed (@ted_pen) August 18, 2024
12.47pm: Another quiet start for New York expected
US stocks are set for another tepid start, futures markets are saying.
Dow Jones and S&P 500 futures are both just above flat and Nasdaq 100 futures are just below.
Meanwhile, the FTSE 100 and 250 in London are both up 0.2%, slightly lagging European counterparts.
12.30pm: EUR/USD at highest since early 2022
The euro has broken above $1.10, up 2.7% over the past six months to $1.113 last night - the highest in over a year, and Deutsche Bank thinks this is down to two things in the past month.
"First, the sharp repricing in Fed expectations," says George Saravelos, head of FX research at the bank, who says forex is more sensitive to terminal rate expectations rather than the exact timing of each central bank’s easing.
"August has not only seen the market price a fast Fed easing cycle but a deeper one too. In turn, relative FX moves have been aligned with this repricing in terminal rates."
Second, he says there has been an "incredibly sharp" unwind in FX carry trades, with the best performing currencies since the July peak in equities being JPY, CHF and SEK as well as low-yielding Asia FX pairs most notably CNH.
Carry trades involve investors borrowing currency at a low cost to help achieve greater returns by investing in another country.
"There is also the drop in Republican market-implied electoral success probabilities following Kamala Harris’ strong polling numbers," says Saravelos, who thinks a Trump presidency would be bullish on the dollar.
In coming months he says Deutsche's house forecasts include a far shallower easing cycle than the market is pricing, as US data continues to outperform the rest of the world.
"What is most notable in recent days is that despite the sharp recovery in risk assets – in line with our own soft landing views of the US economy – FX carry has failed to follow (see graph below).
"We are not convinced this decoupling can last. As long as the dollar’s relative high-yielding position is not undermined by the Fed, positive risk appetite should ultimately be supportive of carry and the dollar as has been the case throughout the last twelve months."
In all, he says the dollar is approaching the bottom end of its “higher for longer” three-year range and Fed pricing at the upper end of dovishness, "we do not see sufficient evidence to be convinced of a sustained break in EUR/USD above 1.10 in H2".
11.34am: UK watchdog shelves Apple/Google probes
As well as waving through the final approval needed for the Barratt-Redrow merger to be completed, the UK's competition watchdog has also shelved its investigations into Apple's App Store and the Google Play Store.
Today the CMA said on the Apple probe: "Case closed on the grounds of administrative priorities", adding the same on Google but also that its decision is "not to accept commitments" from the Silicon Valley giant.
The CMA said it "remains concerned that Google and Apple are using their market positions via the Play Store and App Store respectively to set terms which may be unfair to UK app developers and which may restrict competition and consumer choice, potentially leading to higher prices and reduced choice for app users".
It plans instead to look into competition concerns under the new Digital Markets, Competition and Consumers Act passed in May, though which has yet to come into force.
10.47am: JD Sports and miners lift FTSE
The FTSE 100 is starting to pick up a little now, up into the teens, moving 0.2% higher, while European markets are up too.
JD Sports Fashion PLC (LSE:JD.) is the top riser in the index, up 2.4% ahead of its results tomorrow.
UBS says they expect 3% LFL growth with a "reassuring tone on its performance in North America, despite softer trends for its key vendor, Nike. The key focus will be on its PBT guidance, which is likely to be raised to reflect the Hibbett acquisition."
Miners Rio Tinto and Anglo American are next, both up 2%.
Iron ore prices have bounced back from the recent two-year low to around $94 a tonne amid speculation of potential stimulus measures from China, SP Angel analyst John Meyer points out, noting that increased bond issuance is expected to support the property sector.
Despite this, overall pessimism persists, Meyer says, with Citi predicting a drop to $85/t due to China's economic transition away from steel-intensive construction and the market remaining wary after warnings from China’s largest steelmaker, Baowu, about prolonged weakness in steel pricing.
Copper is holding steady after hedge funds cut bullish positions, Meyer adds, having not moved much for some time now.
He notes that China’s copper production and imports have both increased, while exports have declined and despite disruptions like a railway derailment in Angola that is affecting copper shipments from the DRC, China continues to increase its copper imports from there significantly.
Demand in China is expected to grow modestly, with the Yangshan premium recovering after a dip earlier in the year.
9.45am: Tit-for-tat-for-Temu
More tit-for-tat from China, but this time it's between two companies and it's not just catty but also it's gone legal.
Fast-fashion giant Shein has launched a legal attack on online marketplace Temu in the US.
In a complaint filed in the District Court of Columbia, the fashion site's legal team accused Temu of using an "illegal business model to build a massive counterfeiting and infringement machine in the US".
Temu is also accused of using Shein's trademarks in sponsored ads and creating fake social media accounts impersonating Shein to mislead customers.
Spicy!
9.21am: China plays tit-for-tat
China has seemingly retaliated to the European Union's electric vehicle tariff increase by launching a probe into dairy products.
China's Ministry of Commerce on Wednesday announced the start of an "anti-subsidy investigation" into dairy produced in the European Union, local media are reporting.
Officials said the probe was prompted by complaints from domestic manufacturers over European subsidies.
9.12am: BT keeps falling as analysts highlight pain points
BT Group PLC (LSE:BT.A) shares fell over 7% yesterday and are down 1.3% today, after BT Openreach wholesale customer Sky signed a broadband deal with rival CityFibre.
Analyst Polo Tang (the best name in the City?) at UBS expects this to have an impact of circa £120 million per year on BT’s free cash flow in the medium term.
"Sky is the largest customer of BT/Openreach spending >£950m pa and we expect it to sign at least one further deal," says Tang.
Separately, he notes that Virgin Media O2 is reportedly revisiting M&A discussions with TalkTalk, which is the second-largest customer of BT Openreach, spending £850 million a year.
"UK broadband infrastructure competition is increasing", the analyst says, also pointing to other risks to BT including the outcome of a £1.3 billion class action lawsuit about landline overcharging and pricing pressures in its consumer division, with altnets retail pricing at a 25-40% discount on broadband.
8.43am: Analyst thoughts on results
Reviewing Costain's results (see earlier), analyst Andrew Nussey at Peel Hunt says adjusted profits of £19.4 million are ahead of both its £18.5 million and consensus £17.5 million estimates.
This outperformance is attributed to higher interest income, with average net cash at £168 million.
"Notably, the pension has moved into surplus, enabling a £10m share buyback," Nussey adds, with the outlook largely unchanged, with management reiterating margin goals and order book growth, particularly driven by the water segment.
Shares trading at 6.7 times December 2025 expected earnings "do not fully reflect the strengthening opportunity and balance sheet, in our view", the analyst adds, retaining his positive recommendation.
Costain shares are up 2%.
Elsewhere, Peel's Alexander Paterson has looked at the interims from Mobico Group PLC (LSE:MCG), the owner of National Express coaches and found they were "slightly below our expectations, but not materially so".
Mobico shares have surged 10% on the back of the numbers this morning as the company said that a formal sale process for its North American School Bus business is underway, following a strong bidding season where more routes were won than lost for the first time in over a decade.
"However, we remain concerned that the value realised from a disposal of North American School Bus, after fees and provisions, would allow the group to delever sufficiently," Paterson says, with net debt of £988 million and covenant gearing of 2.8 times at the half year stage.
8.35am: European markets just above flat
The FTSE 100 is just about holding onto its small gain, up less than four points now, while its European cousins have broken into positive territory too.
Germany's DAX and Spain's IBEX 35 are both just above flat, while France's CAC 40 has climbed 0.2%.
The continent-wider Euro Stoxx 600 is up 0.1%, with Austrian engineer Voestalpine the top riser, up 3.6%, while the UK's Softcat (LSE:SCT) and Rio Tinto are in the top 10.
Rio and fellow miners are the main things keeping the Footsie in positive territory, with heavyweight fallers including BT, AstraZeneca, Shell and a group of retailers and utilities companies.
8.21am: Waitrose expansion
In the retail sector, Waitrose is set to open its first new site in six years in the coming month and plans to invest £1 billion in refurbishments and opening 100 Little Waitrose convenience stores over the next five years.
This is a Guardian report, which says the John Lewis-owned supermarket chain plans to also open four large stores under the plan, alongside the new local shops.
Ahead of ex-Tesco man Jason Tarry’s arrival as the new chair of parent company John Lewis Partnership next month, Waitrose returned to profit in March following a turbulent period as surging living costs squeezed consumers’ pockets, before the parent company slashed 3,8000 jobs in May.
8.10am: FTSE starts higher
The FTSE 100 has opened higher, inching upwards in early trades thanks to mining sector gains, while the rest of Europe has opened in the red.
After 10 minutes the London benchmark is up five points at just under 8,279,
The top five risers are all miners, with Glencore PLC, Antofagasta PLC (LSE:ANTO), Anglo American PLC (LSE:AAL) and Fresnillo PLC (LSE:FRES) rising 1.7% and Rio Tinto PLC up 1.4%.
BT Group PLC (LSE:BT.A) is continuing to fall after the Sky deal with CityFibre yesterday.
My colleague Billy Farrington had a think about that deal and wondered if BT might have gained wholesale bargaining chip with the regulator.
7.58am: Costain confident as water contracts flow
Costain Group PLC (LSE:COST) has launched a £10 million share buyback but kept its dividend flat as profits doubled in the first half and the infrastructure construction group continues to snaffle large water sector contracts.
Adjusted operating profits rose 8.7% to £16.3 million as margins improved in transportation and natural resources and reported profits before tax doubled to £17 million, even though revenues dropped 4% to £639.3 million due to a reduction from its transportation arm, which focuses mainly on roads.
Forward work stood at £4.3 billion at the half-year stage, up from £4.0 billion a year earlier and with more than £500 million of water contracts won post the half year.
CEO Alex Vaughan said the buyback was "a result of our confidence in our long-term prospects" and a growing cash balance.
7.43am: NatWest no longer a public company, says ONS
Alongside the public borrowing figures, ONS issued a separate statement to clarify that NatWest Group PLC is no longer a public company.
This follows the government's steady selling down of its bail-out stake in recent years, which reduced below 25% in June.
It is for statistical purposes only, though, and will have no impact on its headline public sector finances, as this excludes banks.
However, it will reduce the total measure of public sector net debt by around £372 billion, based on today’s publication for July 2024.
7.39am: UK public deficit bigger than expected
Spending on public services and welfare pushed the government deficit to £3.1 billion last month, more than expected and double the level from a year earlier.
This was the highest level of July borrowing since 2021, according to the Office for National Statistics, which noted that central government spending on public services and benefits continued to grow with inflation, though these increases were partially offset by a reduction in debt interest payable compared with July last year.
Borrowing in the first four months of the financial year stands at £51.4 billion, the ONS said, which is down £0.5 billion than a year ago but still in the top four highest levels since the 1990s.
At £2,745.9 billion, total debt was 91.9% of GDP, which was 4.9 percentage points more than a year earlier.
On the higher July borrowing, ONS deputy director Jessica Barnaby says: "Revenue was up on last year, with income tax receipts in particular growing strongly.
"However, this was more than offset by a rise in central government spending where, despite a reduction in debt interest, the cost of public services and benefits continued to increase.”
7.24am: Barratt-Redrow deal is gets green light
Barratt Developments PLC (LSE:BDEV) has been told by the Competition and Markets Authority that its takeover of Redrow is likely to be approved.
The CMA said it considers there are reasonable grounds to believe that the undertakings offered by Barratt in response to its initial competition concerns "might be accepted" as a remedy, which will mean it will not need to refer the deal to a deeper 'Phase 2' investigation.
Barratt said the scheme of arrangement for the deal is also expected to become effective later today.
7.16am: FTSE 100 tipped for small gain
The FTSE 100 is being tipped for a cautiously optimistic start on Wednesday after Wall Street finished lower last night.
Futures markets have the London benchmark rising 10 points at the open, recouping a small portion of the 83.6 points lost the day before when the index finished at 8,273.3.
This morning, the Office of National Statistics has released its monthly report on public sector finances, showing borrowing last month was almost £2 billion higher than a year ago. More on that later.
Overnight, US stocks retreated slightly, with the Nasdaq Composite falling 0.3%, the S&P 500 losing 0.2% and the Dow Jones dropping 0.15%, while the small cap Russell 2000 slumped 1.2% lower.
Asian markets are mostly in the red this morning, led by Hong Kong's Hang Seng, which is down more than 1%, while Japan's Nikkei and China's Shanghai Composite are both down 0.3%.
In the UK it looks like being one of the quietest day of the year for releases, not unusual for August.