- FTSE 100 down four at 8,265
- AB Foods shares fall as Primark sales reverse
- Royal Mail letter consultation by Ofcom calls for service improvements
4.03pm: UK shares flat despite many mini-dramas
The FTSE 100 index has essentially been flat for the entire day, though this masks the mini-dramas within the index, including a 7.6% jump for housebuilder Vistry Group PLC (LSE:VTY) and an 8% fall for Primark owner Associated British Foods PLC (LSE:ABF).
These were both on the back of trading reports, with Vistry having "won over sceptics" with its performance, says one analyst.
AstraZeneca also fell 3.5% on the back of five current and former employees being detained in China by police.
AB Foods on the other hand showed it was far from immune to the vagaries of the British weather and the riots in many British cities in the summer.
As says Susannah Streeter, head of money and markets at Hargreaves Lansdown, "a new pair or sandals or bikini were hardly top of shopping lists for many amid the drizzle and despair.
Meanwhile, the FTSE 250 was up four points at 20,813.
Alfa Financial Software was top of the mid-cap leaderboard, up 10%, followed by WAG Payments and Pennon Group.
Water company Pennon was joined by several other water companies among risers on the blue-chip index too.
This was on the day that bosses from the industry assembled to hear a speech from new Environment Secretary Steve Reed, who ruled out nationalisation and said the industry "needs a new partnership with Government to deliver the vast quantities investment" - more conciliatory than some were fearing perhaps.
3.32pm: US jobs data
A raft of US economic data has come out this afternoon, including the ISM services survey, and various jobs reports.
One of the main ones was the ADP private jobs print, which came in at 99K, down from a revised 111K and below the 145K consensus estimate.
Meanwhile, US weekly initial jobless claims came in slightly stronger than expectations.
The jobless claims was "a fairly strong print considering all the angst over the state of the US labour market", says Ryan Brandham, global capital markets chief at Validus, suggesting the slowing of the US labour market is "not too drastic".
"However, the market may focus more today on the weaker ADP print, which will lower market expectations for Friday’s NFP release and fuel calls for a 50 bp cut in September that is almost 50% priced in by markets.
"We continue to feel there is a risk the market has gotten ahead of itself and priced in a faster pace of cuts than the Fed will end up delivering, much like the beginning of 2024."
The ISM services index was essentially unchanged in August, which Stephen Brown, deputy chief North America economist at Capital Econpmics, says is "something of a relief following the weak ISM manufacturing report earlier this week and the gloomy tone of the Fed's Beige Book, released yesterday".
"In short, there was nothing in the ISM services report to sway the Fed’s decision about whether to kick off its loosening cycle with a 25bp or 50bp cut, which remains dependent on the August employment report tomorrow."
Although the ADP reported a lower rise in payrolls last month, Brown said "there is little correlation between that measure and the official payrolls release, so we continue to expect a 170,000 rise in non-farm payrolls and a small fall in the unemployment rate back to 4.2%".
Indeed, Wall Street is little moved, with the Nasdaq up 0.6% and the S&P 500 still flat.
3.10pm: Anyone here read The Week or Radio Times?
The potential end of Royal Mail deliveries of second-class letters on Saturdays as part of reforms being considered by Ofcom is concerning, says the magazine publishing industry.
Sajeeda Merali, CEO of the PPA, the trade body for trade and consumer magazine publishers, highlights the concern about "the impact this will have on publishers of weekly time-sensitive magazines.
"Consumers who subscribe to these services expect reliable delivery, and delays compromise the value of these products.
"Titles such as The Week and the Radio Times are reliant on an efficient and timely delivery service to their many thousands of subscribers.”
I wonder how many readers of The Week or Radio Times would pay for a first-class stamp to solve that one.
3.03pm: Oasis tickets process to be probed by competition watchdog
The UK financial watchdog has launched a probe into whether the Oasis ticket sales by Ticketmaster breached consumer protection law.
The Competition and Markets Authority said its investigation will consider whether Ticketmaster engaged in unfair commercial practices, and whether people were given clear and timely information to explain that the tickets could be subject to 'surge pricing’.
Also, it will look at whether fans were "put under pressure to buy tickets within a short period of time", ie at a higher price than they understood they would have to pay, following numerous complaints about the ticket sales process.
Talks with Ticketmaster and evidence gathering will possibly also include speaking to the band’s management.
"It’s important that fans are treated fairly when they buy tickets, which is why we’ve launched this investigation," says CMA CEO Sarah Cardell.
"It’s clear that many people felt they had a bad experience and were surprised by the price of their tickets at check-out. We want to hear from fans who went through the process and may have encountered issues so that we can investigate whether existing consumer protection law has been breached."
2.49pm: Tesla climbed on FSD timeline updates
Tesla Inc (NASDAQ:TSLA) is the top riser in the Nasdaq 100, up 4%.
This is after it just tweeted about the roll-out of various features for its Full Self Driving service, including September seeing eye-tracking enabled with sunglasses and an "end-to-end network on highway".
Due to popular demand, Tesla AI team release roadmap:
September 2024
- v12.5.2 with ~3x improved miles between necessary interventions
- v12.5.2 on AI3 computer (unified models for AI3 and AI4)
- Actually Smart Summon
- Cybertruck Autopark ????
- Eye-tracking with sunglasses ????️
-…
— Tesla AI (@Tesla_AI) September 5, 2024
2.42pm: US tech stocks rebound
US stocks have generally started higher, with US tech stocks back to marching at the front, helped by a rebound for NVIDIA Corp (NASDAQ:NVDA), which is up over 2% so far today.
In the first few minutes of trading, the Nasdaq Composite is up 0.5% and the S&P 500 is 0.1% higher, while the Dow Jones is down 0.1%.
The small cap Russell 2000 is down 0.2%.
Back here in the UK, the FTSE 100 is just below flat, down four points at around the same level it has been for several hours, while the FTSE 250 is up 43 points or 0.2%.
2.25pm: Mixed start for Wall Street, and yield curves analysis
A mixed start is predicted for Wall Street today, with Nasdaq futures down 0.3% and the S&P 500 and Dow Jones either side of the flat-line.
There's also some thoughts on what the bond markets are saying about whether the US economy is likely to be heading for a recession and how soon, over in our US market report.
In particular, Deutsche Bank strategists are looking '2s10s' curve, the chart shows the difference between the 10-year yield and the 2-year Treasury yields, and which when it inverts from its usual positive spread often points to a looming recession.
After being inverted for 26 months continuously, "the longest ever", the past 24 hours has seen the 2s10s has poke its head into positive territory.
But the chart below shows "we're not out of the woods yet, as recessions start when curves are re-steepening and not when close to their maximum inversion point", as shown in the last four recessions, which only began once the curve was positive again.
2.07pm: Never knowingly get rid of a good catch-phrase
John Lewis is bringing back its ‘never knowingly undersold’ pledge, just two years after being ditched.
Having branding the commitment previously “not fit for purpose,” the employee-owned partnership said the scheme would return and use artificial intelligence to match prices against 25 rival retailers.
This will also apply to online sales for the first time, having just covered in-store items before being axed in 2022.
Managing director Pete Ruis pointed out staff had been relying on pencils and spreadsheets under the old system to track peers’ prices.
1.41pm: Floating nuclear power stations anyone?
Yes, floating mini nuclear power stations are being explored to provide another means of offshore energy.
This is under a partnership between Italy's Saipem and London based Newcleo, which have teamed up to assess how floating nuclear could be used for powering the offshore rigs.
However, the feasibility of developing floating nuclear units to supply power back on land is also set to be studied.
12.56pm: Sainsbury's gets police to look at Tiktok scam
J Sainsbury PLC (LSE:SBRY) has called in police as it grapples with a rise in fraudulent vouchers which have seen shoppers able to pay virtually nothing for goods from the supermarket.
A TikTok trend, dubbed the ‘Sainsbury’s method’, has seen shoppers take to social media to show off coupons which can be repeatedly scanned at the chain’s checkouts...read more here.
Pubs reckon that supermarket shoppers have been getting away with cheaper booze for too long and the government is being urged to cut duties on beer and bin plans for greater outdoor smoking restrictions to ensure the survival of pubs and bars.
According to the British Beer and Pub Association (BBPA), pubs make an average of just 12p on every pint of beer once taxes and costs have been deducted.
Yet the sector added more than £34.4 billion in gross value added (GVA) to the economy and contributed more than £17.4 billion in tax over the past year, according to Oxford Economics research.
12.10pm: FTSE 100 in the red again, but FTSE 250 in green
It's just after midday and the FTSE 100 is heading lower, while the more domestically focused FTSE 250 is heading higher.
Biggest faller is Associated British Foods PLC (LSE:ABF) as its Primark and Sugar divisions disappointed.
Ex-divs Admiral and DS Smith are also creating a drag on the index.
AstraZeneca PLC (LSE:AZN) is down almost 2% as it confirmed that five current and former employees in China are being held by police for questioning.
One of the investigations is reportedly focused on potential breaches of China’s data privacy laws and the company's collection of patient data, Bloomberg reported, with the illegal importation of a cancer drug also mentioned..read more here.
Top of the London blue-chip leaderboard is Vistry Group PLC (LSE:VTY) after its half-year numbers.
Analysts at UBS note that the business has traded well over the summer months, which are typically seasonally quieter, and the end-June forward sales position was up 19% at £5.1 billion, with the group 91% forward sold for 2024 and encouraged by the direction of the government's policy changes and the prospects for affordable housing.
Top risers down on the mid-cap index are emerging markets asset manager Ashmore Group (LSE:ASHM) PLC, up 7% despite reporting ongoing outflows and final results below expectations at the EBITDA level.
Analyst Stuart Duncan at Peel Hunt highlighted outlook comments that "highlight macro factors that continue to suppress demand for EM despite outperformance and should start to unwind through 2H and beyond".
Alfa Financial is also up 6.4% on its results, with Aston Martin, WAG Payment and Bakkavor also among risers.
11.50am: China EV competition for Tesla
The increased intensity of the EV price war in China is shown by the delivery figures from NIO Inc (NYSE:NIO), says Rosalie Chen, analyst at Third Bridge.
She says the price war evolved from last year’s price adjustments on existing models by major automakers to the introduction of more low-cost new models this year.
Monthly sales for NIO in May and June both topped 20,000 cars, with deliveries in the second quarter actually surpassing the delivery guidance.
Having spoken to experts in the industry Chen says this is mainly due to a decrease in battery-as-a-service (BaaS) rental fees and enhanced promotional policies, more sales personnel, and the CEO and other senior managers using social media to raise public awareness of the NIO brand.
"The biggest challenge NIO now faces is that, despite strong sales figures, investors still cannot see a clear path to profitability for the company.
"The future profitability of battery swap stations also faces limitations, as it currently seems that other car manufacturers find it difficult to accept the potential limitations brought by sharing batteries with NIO," says Chen.
NIO's more affordable Onvo brand is expected to positively impact sales, but the extent of this impact is "difficult to assess at this time", says Chen.
Onvo's order backlog remains high, estimated between 150,000 and 200,000 units, with a cancellation rate expected to be between 20% and 30%, with Third Bridge experts believing the Onvo L60 and Xiaomi SU8 could capture around half of Model Y’s market share.
11.27am: Water bosses could go to jail for breaking new pollution laws
Environment Secretary Steve Reed has told water industry bosses that proposed new laws to combat pollution could see them banned from receiving bonuses and even sent to prison.
In a speech to bosses from Thames Water, Severn Trent PLC (LSE:SVT) and others at Thames Rowing Club in London, Reed says the water industry has declined due to "14 years of Conservative neglect", but says "water companies need to take to responsibility".
The audience was also told that the industry "needs a new partnership with government to deliver the vast quantities investment".
Earlier Reed told the BBC: "Banning the payment of bonuses for bosses who are overseeing failure and making them personally criminally liable if they refuse to comply with investigations will focus them on cleaning up our rivers not lining their pockets."
Prison sentences of up to two years could be sold out to executives who fail to cooperate or obstruct investigators.
Water industry gathered at Thames Rowing Club in London to hear environment secretary Steve Reed threaten to throw some of them in prison (I paraphrase) pic.twitter.com/vrj3zBNHCc
— Paul Kelso (@pkelso) September 5, 2024
11.02am: European stock markets more flat
Markets are more stable this morning amidst "tentative signs that some investors might be shifting their mindset from panic to a state of calm," says analyst Russ Mould at AJ Bell.
The FTSE is weaving a path on either side of the flat-line, while Germany's DAX is up 0.1% and France's CAC 40 is down 0.6%.
Mould calls Europea "essentially flat, which some investors might take as a positive given the volatile conditions we’ve seen in recent days".
On the Ofcom update, he says news that it is considering Royal Mail’s proposal to ditch Saturday deliveries "music to the ears of Czech billionaire Daniel Kretinsky", who is trying to buy parent company IDS.
“It would be an important step in trying to make operations more efficient, something that is of paramount importance to ensuring the business is fit for the future," Mould says.
"Normally this type of news would move the dial for the share price but the bid situation means the stock is unlikely to react to such developments.
"It’s not a done deal and Ofcom has stressed that, whatever the decision, Royal Mail still needs to improve its service levels."
10.41am: FTSE reshuffle confirmed
A bounce from the shares of EasyJet PLC (LSE:EZJ) meant it escaped demotion from the FTSE 100 in the next reshuffle, but Burberry Group PLC (LSE:BRBY) will be relegated when the changes take place from Monday 23 September.
The fashion house will be replaced by insurer Hiscox Ltd (LSE:HSX), as expected.
UK tech firm Raspberry Pi (LSE:RPI) will be added to the FTSE 250 debut after a successful IPO in June.
Analysts say this should help put the stock on the radar of more investors.
Dropping out of the mid-cap index will be Diversified Energy Company PLC (LSE:DEC, NYSE:DEC).
10.19am: BoE 'not likely to cut rates this month'
The BoE decision maker panel "supports the MPC’s decision to cut interest rates", says Pantheon Macroeconomics, as the labour market continues to ease and inflation slow.
"But the survey also shows the MPC will need to take a measured approach to interest rate cuts, and gives the MPC no reason to rush to lower rates again in September," says chief UK econmist Rob Wood.
"They will wait until November to cut again."
Firms’ lower expected price growth over the next year suggests CPI services inflation will continue slowing, he adds, with the panel also showing recruitment difficulties eased.
"Both trends support the MPC’s argument that inflation pressures are receding."
10am: UK company pricing softens
UK company expectations for their own selling prices softened to the lowest in nearly three years last month, the Bank of England’s decision-maker panel showed.
Firms plan to raise their prices by 3.4% over the year from August, down from 3.7% in the last survey a month ago.
Three-month average price expectations fell to 3.6% from 3.7%, which was higher than the consensus forecast of 3.5%.
Company expectations one-year ahead CPI inflation expectations rose to 2.6% in August, matching the consensus and up from 2.5% in July.
9.47am: 'Car sales should rise in second half, but lag other big-ticket spending'
On the SMMT car sales figures, economist Rob Wood at Pantheon Macroeconomics, says he expects big-ticket consumer purchases to "pick up in the second half of the year as rises in consumer major purchase intentions, in response to building expectations of further Bank of England interest rate cuts".
"With consumers also having rebuilt their rainy day savings, they will likely feel able to switch from saving to spending."
He notes that car registrations have been performing worse than the major purchases balance of the GfK’s consumer confidence survey and trends in household income suggest.
"That may reflect car market specific factors, such as the swings in used car prices, changes to government incentives for purchases, and uncertainty after the previous government pushed back to 2035 the switch to zero emissions cars to 2035.
"Even so, we expect private car sales to rise in the second half of the year, but they will probably lag the rest of household demand."
9.41am: UK construction PMI disappoints
UK construction sector activity declined last month, according to the S&P Global construction PMI survey.
The August PMI came in at 53.6, down from 55.3 in July, and below the 54.9 consensus forecast.
Commercial activity was the best-performing segment, despite the pace of growth slipping to its lowest since March.
"A number of firms noted a boost from rising sales enquiries and the release of new orders following the general election," the report said.
Respondents to the survey said improving economic conditions and greater domestic political stability had lifted customer demand, leading to an increase in orders in the past month.
9.36am: UK car sales inch up, led by battery EVs
UK new private car registrations rose 0.1% last month to around 32,100, while total sales, including business and fleet purchases, were down 1.2% year-on-year at roughly 84,600.
Battery electric car demand rose 10.8% in the month as buyers responded to a summer of heavy discounting and the launch of several new models, the Society of Motor Manufacturers reports.
The market share for battery EVs rose to 17.2% last month, and the trade body forecasts it to rise further to 18.5% by the end of the year.
"Despite this growth, this will still be shy of the 22% required by the Zero Emission Vehicle Mandate," the SMMT says.
9.08am: London in the green
The FTSE 100 is moving higher, up 10 points now, while the FTSE 250 is up 35 points.
Insurers, including Beazley, Phoenix Group, Legal & General.; utilities including Severn Trent, United Utilities, SSE, are prominent among the top risers, which points to bond shifts being behind this.
Housebuilder Vistry is top of the blue-chip leaderboard though.
Top of the mid-caps is Alfa Financial Software Holdings PLC (LSE:ALFA) after reporting first-half revenues down 1.1%, in line with its previous update, and EBITDA 9% ahead of expectations.
Given its strong pipeline, Alfa has raised its full-year revenue guidance by £1 million.
8.45am: Analyst thoughts on Royal Mail, ASOS
Ofcom's proposals are "at least partially consistent" with what Royal Mail previously requested, says analyst Alexander Paterson at Peel Hunt.
But he notes that the regulator continues to state that Royal Mail must improve its service levels and become more efficient, with no mention of softening the delivery targets as Royal Mail had requested.
"The timeframe for change is also much longer than Royal Mail had hoped for, and may not conclude until after the decision on regulatory approval and indeed potential closure of the offer from EP."
As for ASOS, it is "on the front foot", with its actions to secure the balance sheet position and a trading update where it says profits should be at the top end of guidance, says fellow Peel Hun analyst John Stevenson.
ASOS is selling 75% of Top Shop into a Bestseller joint venture for £135 million, retaining control of the brand from a trading perspective and paying a royalty into the JV, and is set to issue £250 million convertible bonds.
8.38am: AstraZeneca employees arrested
Shares in AstraZeneca PLC (LSE:AZN) are down 0.5% as we see news that police in China have detained five current and former employees of the pharma giant.
They are being questioned about potential illegal activities, Bloomberg is reporting, citing some people familiar with the matter.
This brings back memories from just over a decade ago, when AZ was one of several drugmakers that were ensnared in a Chinese bribery investigation, where execs from rival GSK were found to have been engaged in bribery.
Chinese police investigated an AZ employee in 2013 over the company's drug pricing in the country.
8.27am. Ex-divs weigh on the index
An extra brake on the Footsie this morning is that it's ex-dividend day for several stocks, but the index has actually moved into positive territory. up just over two points.
DS Smith, Croda International, IAG, Aviva, Admiral, Antofagasta and Prudential have all gone ex-div today, which results in a combined subtraction of just over four points from the index today.
Admiral shares are down 2.1%, DS Smith 1.9%, Aviva 1.7%, ANTO 1% and British Airways owner IAG 0.8%.
8.10am: FTSE starts in the red
The FTSE 100 retreated another 20 points in the first minute or two, but is now down around seven points at just under 8,268.
Primark owner Associated British Foods PLC (LSE:ABF) is leading the fallers, down 3.5% after reporting a decline in same-store sales in the past six months.
Top of the leaderboard is Sage Group, not sure why yet (ed update: it was a UBS upgrade).
It is followed by Vistry Group PLC (LSE:VTY), with the housebuilder's first-half revenues up 11% and operating profit up 10% to impress investors.
The group remains confident about hitting its medium-term targets of 40% return on capital, £800 million of operating profit and shareholder returns of £1 billion...read more here.
7.58am: Currys sales mixed, ASOS agrees Top Shop deal to help cut debt
Currys PLC (LSE:CURY) is reporting a boost thanks to the entry of artificial intelligence-enabled products into the market.
Like-for-like sales were up 2% over the 17 weeks to August for the electronics chain, aided by “encouraging early adoption” of AI products in the UK and Ireland, where LFL sales were up 5%.
With this offset by sales in the Nordics falling 2%, overall group guidance for increased profit and free cash flow this year was held steady...read more here.
Elsewhere in the retail sector, online clothing merchant ASOS PLC (LSE:ASC) has announced the creation of a new joint venture in which 75% of its Topshop and Topman brands will be controlled by Heartland, the holding company of Danish multinational clothing business Bestseller.
Heartland, which was already a major ASOS shareholder, will control 75% of the joint venture with ASOS controlling the rest.
Topshop and Topman were valued at £180 million via the establishment of the joint venture, with ASOS receiving £118 million after expenses from Heartland.
ASOS intends to use the proceeds of the sale to reorganise its debt profile. It separately announced a £250 million bond refinancing to help strengthen the balance sheet...read more here.
7.45am: Ofcom proposes cuts to letters deliveries
Communications regulator Ofcom says it plans to assess "modifications" to the delivery of second-class letter deliveries, following pressure from Royal Mail to reduce its requirements and a wider "national debate".
While first-class post will remain at six days a week, the watchdog says second-class letters could be delivered within three working days but not on Saturdays.
This, it says, would enable Royal Mail to "improve reliability, make substantial efficiency savings, and redeploy its existing resources to growth areas such as parcels".
Royal Mail is part of International Distributions Services PLC (LSE:IDS), which still must wait for a final decision early next year, following Ofcom's consultations on the proposals.
7.32am: Primark sales fall
Primark's like-for-like revenue went into reverse in the second half of its financial year, today's update from parent company Associated British Foods PLC (LSE:ABF) revealed.
Sales are expected to be up 4% in the half year to 14 September, with overall like-for-like sales down 0.5% as boss George Weston said growth was impacted by poor weather. The market was expecting growth nearer 7%.
"While the British weather was not in Primark's favour this summer, robust growth in other markets and new store openings have driven good sales overall."
Primark's added eight new stores in Europe and there in the US, where sales grew by 25%.
ABF’s grocery and ingredients divisions also saw growth, while the sugar division's profitability was hit by a sharp decline in European sugar prices, which is expected to affect FY25 performance.
7.20am: FTSE 100 tipped for more falls
The FTSE 100 has been tipped to spend a fifth day in a row on the slide on Thursday, ahead of a busy day for company and economic news.
The London benchmark is expected to drop around 10 points, following the almost 29-point decline yesterday to 8,269.6. The index is down 1.4% since last Thursday.
Stocks in New York also had a mixed session overnight, with the S&P 500 and Nasdaq both falling for a second day, down 0.2% and 0.3%, while the Dow Jones inched up 0.1%.
Nvidia fell another 1.66% even after saying that they have not received a subpoena from the Department of Justice as reported by Bloomberg the day before.
Global bond yields continued to tumble yesterday, field by another batch of weak US data, and futures also priced in a 44% chance of a 50 basis point rate cut by the Federal Reserve at this month's meeting, the highest probability for three weeks, along with 111 basis points of cuts priced in by the December meeting.
Today we have results from a host of retailers, including Primark owner AB Foods, ASOS, Currys, as well as housebuilder Vistry and animal genetics group Genus.