- FTSE 100 up 5 points
- Shell, BP weigh late on
- Four-day working week on cards
3.53pm: FTSE 100 up, but record appears out of reach
The FTSE 100 looked to be nearing its record closing value earlier on Friday but pared back gains meant this was likely to have to wait another day.
Come late trading, London’s blue chips were up 8 points at 8,385, having fallen back below the 8,400 mark after appearing to head toward May’s all-time closing high of 8,445.
A quiet day on the company front saw Londonmetric Property PLC take the spot as the FTSE 100’s biggest daily riser, as the firm climbed 3.4% and reversed on a slump seen on Thursday.
Premier Inn owner Whitbread PLC (LSE:WTB) emerged as the day’s biggest faller in the meantime, down 1.6%, as it also backtracked on a positive move seen earlier in the week.
Heavyweights Shell PLC (LSE:SHEL, NYSE:SHEL) and BP PLC (LSE:BP.) were also among the day’s losers as oil prices dropped on Friday as demand concerns on OPEC's decision to boost production appeared to overshadow fears of supply cuts from Libya.
2.48pm: Wall Street gains as inflation data boosts rate cut hopes
Wall Street enjoyed a positive start to the day on Friday following a slightly lower-than-expected personal consumption expenditures (PCE) index reading.
The Nasdaq jumped 0.9% on Friday’s open, while the S&P 500 and Dow Jones gained 0.6% and 0.4% respectively.
Bureau of Economic Analysis data showed the PCE index climbed by 2.5% over the year to last month and in line with growth seen in June.
The core reading, which excludes food and energy, came in just below expectations atticked 2.6% and again at the same level as June.
2.08pm: ‘Persistent’ US rate cuts now expected
Analysts have noted that unchanged core PCE figures for July on Friday have opened the door for a string of rate cuts in the US over coming months.
Though cuts had widely been expected already, Close Brothers Asset Management’s Isabel Albarran said the data was “yet another” confirmation of rate reductions to come.
“With inflation cooling, the Fed’s attention is now firmly on the US labour market side of their dual mandate,” she said.
“After the recent market turmoil initiated by weaker than expected non-farm payroll data, Powell and members will no doubt be keeping a close eye on unemployment data to ensure it is not rising too aggressively.
“If we do see further [inflation] cooling, it’s highly likely that the Fed will deliver persistent rate cuts through 2025.”
1.44pm: US PCE comes in lower than expected
The US personal consumption expenditures index ticked up slower than expected in July, marking positive news as markets hope for interest rate reductions in the months ahead.
Bureau of Economic Analysis data showed the index climbed by 2.5% over the year to last month and in line with growth seen in June.
Core PCE, excluding food and energy, ticked up 2.6% over the month, again at the same level as June but below market expectations for a 2.7% increase.
This was as both the headline and core figures climbed by 0.2% month-on-month in July.
Spending and incomes rose by 0.5% and 0.3% over the course of the month respectively, with the latter dropping to 0.1% on a real basis when accounting for inflation.
The figures, which represent the Federal Reserve’s preferred measure of inflation, come as speculation grows for base rate cuts in the US from next month.
1.20pm: Barratt results come amid housebuilding optimism, but headwinds persist
Barratt Develoments plc’s full-year results come amid a renewed sense of optimism in the housebuilding sector and an inflection point for Barratt particularly.
Following Labour’s landslide election victory in July on a pro-build policy platform, the market started to reprice housebuilding shares higher to account for the 1.5 million-new-homes-in-five-years target set out by Labour leader Keir Starmer.
Barratt is well positioned to take advantage of this policy, having just subsumed smaller rival Redrow PLC (LSE:RDW) in a £2.5 million takeover, despite the niggling competition concerns of the national competition watchdog.
It sets the stage for some bullish longer-term guidance when Barratt reports on Wednesday, 3 September.
That being said, there remains a number of imminent headwinds in the housebuilding sector which investors will be keen to hear about.
Deutsche Bank analysts recently lowered Barratt’s pre-tax profit forecasts for the 2025/26 financial year by between 9% and 10%, citing low sales rates, planning delays, depressed margins and fire-safety liabilities.
“We think some other stocks in the sector will need to reduce estimates due to the same headwinds, which is likely to act as a headwind to share prices,” analysts said.
Barratt has already guided to delivering 1,000 fewer homes in the year ahead than previously anticipated, but the real story will be what happens next.
As these results approach, Jefferies has stated that there is little wriggle room in the share price.
“Like others in the sector, Barratt Redrow has significant leverage to the improving housing market as well as the meaningful land investment opportunity that we believe the changes in planning bring.
“And at 1.2x calendar P/ NTAV the group is not expensive.
“But with the risk of hiccups in integration and largest firesafety provision, we see better risk/reward balance elsewhere.
12.34pm: Nasdaq set to lead Wall Street higher as inflation data looms
Wall Street looked set for a boost on Friday morning as attention turned to core personal consumption expenditures (PCE) data and speculation over next month’s base rate call.
Futures had the Nasdaq up 0.8% ahead of the opening bell, while the Dow Jones and S&P 500 were seen 0.2% and 0.4% higher respectively.
Friday’s PCE figures are set to dominate proceedings throughout the day, with the data representing the Federal Reserve’s preferred measure of inflation.
This is as investors await in anticipation of an expected cut to base interest in September, which many believe will be by 25 basis points following an upward revision to second-quarter GDP figures on Thursday.
That said, “any additional disinflation that might come today would help further the case for a 50-basis point cut in September,” Scope Markets analyst Joshua Mahony commented.
“Nonetheless, the trajectory for US inflation looks likely to remain somewhat flat for the rest of 2024, with the Fed having to cut rates despite above-target price growth.”
Expectations are for core PCE to have sat at 2.7% in July, following a 2.6% uptick in June.
12.22pm: FTSE 100 keeps record in sight
The FTSE 100 remained in positive territory into Friday afternoon and within touching distance of its all-time high.
London’s blue chips had added 24 points to reach 8,403 by mid-day, leaving May’s record closing high of 8,445 in sight.
Vistry Group PLC (LSE:VTY) led risers on the index, ticking up 2.5%, followed by Londonmetric Property PLC as it reversed on a drop seen on Thursday.
Burberry Group PLC (LSE:BRBY) and easyJet PLC sat as the FTSE 100’s biggest fallers in the meantime, ahead of an expected exit from the index in next week’s reshuffle.
12.10pm: NatWest stake continues to be chipped away at by government
Britain’s new government has continued to sell off shares in NatWest Group PLC (LSE:NWG), taking the public’s stake in the bank from 18.99% to 17.97%.
This means the government’s stake has been cut by more than half over the course of 2024, ahead of plans for a full exit over the coming year.
Chancellor Rachel Reeves scrapped plans last month to ditch a large chunk of the stake through a retail sale, noting the move would not provide value for money at the time.
Instead, the stake, taken after a bailout of NatWest during the 2008 financial crisis, has continued to be disposed of gradually, with the government losing its spot as a controlling shareholder in March.
“We welcome the chancellor’s commitment last month to returning NatWest Group to full private ownership,” a spokesperson from the bank said.
“This is a shared ambition that we believe is in the best interests of both the bank and all our shareholders.”
11.50am: Aviva accused of dodging Indian tax rules
Aviva Group PLC has been accused of dodging Indian taxes and regulations capping commissions for sales agents with fake invoices and secretive cash payments.
The insurer’s Indian business paid around US$26 million (£19.7 million) from 2017 to 2023 to marketing and training service providers in a bid to grow operations, a tax notice seen by Reuters reportedly said.
These were actually fronts to channel money to Aviva’s own agents, however, the notice from India’s Directorate General of GST Intelligence said.
“Aviva and its officials have indulged in a deep-rooted conspiracy and used the modus of fake invoices to pass on certain money to [...] insurance distributors of Aviva,” it read.
Such fake invoices were used to claim tax credits and evade some US$5.2 million in taxes, the notice alleged... Read more
11.00am: Mortgage approvals, consumer credit hit highest levels since mini-budget
Mortgage approvals and consumer credit hit their highest levels in almost two-years and since the September 2022 mini-budget last month.
Almost 62,000 mortgages were approved across the UK in July, marking an uptick on June and the highest level since September 2022, Bank of England data showed on Friday.
Some £2.8 billion was borrowed for mortgages in the meantime, against £2.6 billion a month earlier and the most since November 2022.
The mortgage approval figure beat analysts’ expectations, with the return to near-September 2022 levels coming after former prime minister Liz Truss’ mini budget at the time sent the housing market into turmoil.
“The interest rate cut at the start of this month with the prospect of more rate cuts to come looks set to boost the mortgage market revival,” Bestinvest analyst Alice Haine commented.
“With inflation now in safer territory and wage growth still fairly robust, the road ahead for mortgage borrowers appears to be clearing.”
10.41am: Eurozone inflation slows in August
Figures on Friday showed inflation across the Eurozone subsided this month as markets hope for a base rate cut in September.
Prices climbed by 2.2% over the month against 2.6% in July, an estimate from Eurostat showed on Friday.
This was as energy prices fell on a year earlier, but services, alongside food and tobacco ticked up.
Euro area #inflation expected to be 2.2% in August 2024, down from 2.6% in July. Components: services +4.2%, food, alcohol & tobacco +2.4%, other goods +0.4%, energy -3.0% - flash estimate https://t.co/Sk1SPtBU6b pic.twitter.com/WtROodAv4n
— EU_Eurostat (@EU_Eurostat) August 30, 2024
10.33am: Chinese EV sales drop in Europe on new tariffs
Chinese carmakers have faced a drop in electric vehicle sales across Europe following the introduction of tariffs by the bloc in July.
According to researcher Dataforce, the share of Chinese EVs registered in Europe dipped from 10.2% in July to 9.9% this month.
This comes after tariffs of up to 48% were imposed on Chinese-made EVs imported into the European Union from July 5, with these set to be made permanent later in the year.
9.55am: European stocks hit record high
A gain on Friday morning saw European stocks chalk up another record high as speculation built across the continent of rate cuts to come.
The Euro Stoxx 600 ticked up 0.3% to 526 points on Friday morning, surpassing its previous record set in early June.
This comes as inflation readings across Europe in recent days have boosted hopes for a September interest rate cut.
Spain and Germany reported lower price rises for August on Thursday, while France said Friday that inflation had cooled to 2.2% and its slowest pace since July 2021 over the month.
Wide-spanning inflation data from the Eurozone is due later on Friday.
9.27am: Retail footfall resilient despite August riots
Riots across England earlier this month failed to heavily weigh on retail footfall in August as shops got a boost from warm weather and summer sales later on.
Footfall in shops dipped 0.4% in August following a steeper 3.3% fall in July, according to the British Retail Consortium (BRC).
This was mainly as visits to retail parks and shopping centres fell by 2.6% and 1.8% respectively.
High street footfall faced a less dramatic drop of 0.3%, following a 2.7% decline in July.
Violence and disorder had broken out across England from late July through to early August, with BRC chief executive Helen Dickinson noting footfall had been impacted initially before recovering in recent weeks.
“Retail parks saw footfall levels rise in the week following the riots as some continued to avoid high streets and shopping centres,” she commented.
“Footfall recovered across all destinations towards the end of the month when warmer weather and summer sales prompted shoppers to browse their favourite stores.”
9.08am: NatWest, HSBC, TSB customers hit by online banking outage
NatWest, HSBC and TSB's apps have all be struck with outages on Friday morning, leaving customers unable to make payments.
According to website DownDetector, the issue with NatWest’s online services peaked just after seven o’clock on Friday morning, with over 1,100 people reporting outages.
A spike in HSBC and TSB customers reporting issues was also seen early on, though the issues appeared to be less widespread than with NatWest.
NatWest customers took to social media X to complain over the issue, with many reporting being unable to send payments online... Read more
8.43am: FTSE 100 gains early on, record in sight
London’s blue-chip index enjoyed a bright start on Friday, gaining 31 points to reach 8,411.
This took the index ever closer to its record high seen in May of 8,447 in intraday trading and an 8,445 close.
An absence of any big blue chip movers saw Londonmetric Property PLC take the spot as the index’s main riser early on, as it climbed 1.8% in a reverse on falls seen Thursday.
Rentokil Initial PLC (LSE:RTO) warded off a major fall following a broker downgrade by JP Morgan in the meantime, dropping 0.8%, while Burberry Group PLC (LSE:BRBY) dipped 1.1% ahead of a likely drop from the FTSE 100, due to be confirmed next week.
In Europe, markets were largely in the green on Friday morning, following gains yesterday on a string of positive inflation data which boosted rate cut hopes.
8.27am: Nvidia drop costs almost $200bn in value
On the topic of Nvidia Corp, a sharp drop in the chipmaker’s share price on Thursday saw some US$200 billion wiped off the company’s value.
Shares fell 6.4% throughout the day, following post-market earnings on Wednesday night, taking Nvidia’s market capitalisation near US$200 billion lower to US$2.89 trillion.
Though the chipmaker had delivered the latest in a string of earnings beats, reporting a more than doubling of second-quarter revenue to US$30 billion, sky-high expectations still saw investors get cold feet.
Forward guidance for the third quarter was for revenue of US$32.5 billion and below the top-end of market expectations.
Capital.com analyst Kyle Rodda noted the drop may well reflect an end to the “Nvidia mania,” after its rise in line with the AI boom has taken shares 2,700% higher in the last five years and up 144% since January.
“The drivers of the company’s fundamentals are better understood,” he said, “reducing the distribution of outcomes for the stock price and making it easier for analysts to model and markets to price-in the future”.
8.11am: Apple, Nvidia mull investment in OpenAI
Apple Inc (NASDAQ:AAPL, ETR:APC) and Nvidia Corp are reportedly mulling investments in OpenAI as the ChatGPT maker closes in on a new funding round.
Microsoft Corp (NASDAQ:MSFT) could also reportedly strengthen its stake in the artificial intelligence firm through this, after investing US$13 billion in OpenAI over the last five years.
The funding round would reportedly value startup OpenAI at more than US$100 billion (£76 billion).
The Wall Street Journal reported on Apple’s involvement, which would come as ChatGPT products are set to feature in the technology giant’s future iOS software for iPhones.
This includes products set for launch later this year, such as the latest iPhone 16, with the software also set to stretch to the 15.
Bloomberg noted sources familiar with the matter had confirmed Nvidia’s discussions with OpenAI over an investment, with its chips used to power such AI models.
Thrive Capital is set to lead the funding round, according to Bloomberg, and would invest about US$1 billion itself.
7.47am: House prices build pace in August
House prices climbed by 2.4% in the year to August and at their fastest pace since December 2022, figures from Nationwide showed on Friday.
This meant houses cost an average of £6,222 more at £265,375, with the increase beating the 2.1% uptick seen in July.
Prices fell by 0.2% month on month when accounting for seasonally adjusted effects, however, and were also down against levels recorded in the summer of 2022 following the pandemic-fuelled property boom.
“While house price growth and activity remain subdued by historic standards, they nevertheless present a picture of resilience,” Nationwide chief economist Robert Gardner said.
This is given the context of high interest and house prices relative to average earnings, he noted.
“Providing the economy continues to recover steadily, as we expect, housing market activity is likely to strengthen gradually as affordability constraints ease.”
Bestinvest finance analyst Alice Haine commented the figures showed the property market was in “recovery mode”.
She said: “Another interest rate reduction from the Bank of England sooner rather than later could catalyse the market even further as the lure of cheaper mortgage rates will be attractive for movers who have been waiting patiently in the wings.”
7.29am: Four-day working week rules under consideration
Britain’s new Labour government is reportedly considering changing flexible working rules which could leave staff able to request four-day working weeks.
Staff would be given new rights to demand the shortened working weeks under plans set to be unveiled this autumn, according to The Telegraph.
This would be through a “compressed hours” system, reports said, meaning staff would still have to meet their contracted weekly hours but could opt to do these in fewer days.
Workers are currently able to request flexible hours but companies have no obligation to agree.
The new law, proposed by deputy prime minister Angela Rayner, would place the power of such decisions with employees instead, rather than employers... Read more
7.12am: FTSE 100 seen higher
London’s blue chips were seen edging upwards on Friday morning in what is expected to be another quiet day on the company front.
Futures had the FTSE 100 adding 7 points to reach 8,436 ahead of the market’s open in London, following a gain on Thursday.
Asian markets enjoyed a solid showing overnight, with Japan’s Nikkei 225 and India’s Nifty Fifty among those rising.
Back in the UK, LNER train drivers ditched plans to strike on every weekend until mid-November after last-minute talks between unions and company officials.
Reports also emerged that Britain’s new Labour government was considering bringing in new flexible working rules which could mean staff are able to request four-day weeks.