- FTSE 100 33 points lower
- UK economy flatlines
- Rightmove rejects bid
3.54pm: London to close on a bum note
The FTSE 100 looks like it will close deeply in the red this Wednesday despite towing the line for most of the day.
The index was slapped lower following a poor start to the day for the US S&P 500 index, which is currently down more that 1.5%.
Footsie felt the contagion, sliding 33 points lower from yesterday’s close to 8,172.
Rentokil was by far the worst performer of the day with a bruising 20% dip following a profit warning.
Intermediate Capital Group (LSE:ICP) plc, Entain PLC (LSE:ENT) and Prudential plc held their ground by heading into the final stretch 2% higher.
3.31pm: FTSE 100 takes bearish turn
Stocks have taken a bearish turn in end-of-day-trades, with the FTSE 100 index getting tossed 26 points lower to 8,179.
It follows a mixed opening in the US, when tech stocks were buoyant but the broader S&P 500 fell off 1.5% in opening trades.
3.29pm: Trainline preview: Usage up but competition increasing
Trainline PLC (LSE:TRN) is seeing competition pick up though usage of its ticket apps is rising, UBS analysts said ahead of tomorrow’s interim trading update
UK passenger journeys have risen to 88% of pre-Covid levels from 79% a year ago, said the Swiss bank, and for the full year market volumes might increase by almost 9%.
Combined with increases in fares of almost 5% this year, there is scope for low teen net ticket sales growth for Trainline, according to the bank.
UBS estimates Trainline accounted for 25% of downloads vs peers at 29% and rail operating companies at 46%.
“Competition from other third-party apps (primarily Uber) continues to be a point of discussion and a potential headwind to Trainline's future growth.
“We believe consumers are likely to be sticky but UBS Evidence Lab data does suggest that other platforms - primarily TrainPal - are gaining an increasing share of the market."
Even so, UBS has kept its 405p price target and buy rating given the growth in the market overall and the potential to pick up share in new areas such as France.
For the full year, UBS is forecasting revenues of £434 million and underlying profits of £146 million, both of which are ahead of guidance.
2.50pm: Nasdaq holds onto Tuesday gains
As pre-market trades suggested, the Nasdaq 100 opened flat at a little over 18,800 today, thus retaining the 0.9% of gains tallied on Tuesday.
The broader markets were less buoyant in today’s opening exchanges, with the Dow Jones dipping a full percentage point and the broader &P 500 index falling by 0.6%.
Chimakers led the Nasdaq risers, with ARM Holdings plc, Nvidia Corp, Marvell Technology Ltd and Advanced Micro Devices Inc (NASDAQ:AMD, ETR:AMD) all adding more than 2%.
In the macroeconomic space, US inflation showed slight improvement over expectations in August, with the annual inflation rate slowing to 2.5%, down from 2.9% in July.
This marked the lowest inflation rate since February 2021 and came in below the forecast of 2.6%.
2.19pm: US inflation slightly beats forecasts
US inflation in August showed slight improvement over expectations, with the annual inflation rate slowing to 2.5%, down from 2.9% in July.
This marked the lowest inflation rate since February 2021 and came in below the forecast of 2.6%.
Energy prices contributed significantly to the decline, with gasoline prices dropping by 10.3% and fuel oil by 12.1%.
Food prices also eased, recording a 2.1% increase compared to 2.2% in the previous month, and transportation inflation fell to 7.9% from 8.8%.
In contrast, shelter costs rose by 5.2%, up from 5.1% in July, and remained the primary factor in the monthly rise of the Consumer Price Index (CPI).
On a monthly basis, the CPI increased by 0.2%, consistent with the prior month and meeting market expectations.
Core inflation, which excludes food and energy, rose by 0.3% in August, exceeding the anticipated 0.2%.
Despite the inflation print coming in better than expected, it is unlikely to be enough to rebase the market’s interest rate expectations from the Federal Reserve.
The likelihood remains that the Fed will cut the base rate by 25 basis points rather than a meatier 50 basis points that some doves would like to see.
1.54pm: Government confirms £500mln Port Talbot deal, 2,800 jobs to go
The Labour government has confirmed a package of £500 million worth of subsidies to support the Tata Steel-owned Port Talbot steelmaking plant’s transition from blast furnaces to greener electric alternatives.
Up to 2,800 jobs will be lost in the process.
Ministers said the half a billion pounds in subsidies is contingent on 5,000 workers keeping their jobs.
Under the deal, those who accept voluntary redundancy will be entitled to a minimum £15,000 payout, plus a £5,000 ‘retention’ payment and offering paid-for training “to give workers a steady income and upskill them for the jobs of the future”.’
Secretary of State for Wales Jo Stevens said: “This improved deal secures the immediate future of Port Talbot steelworks, lays the foundations for future investment and enhances protections for the workforce across South Wales, all without further cost to the taxpayer.
“As well as negotiating a better deal than the previous government, we have already released millions of pounds of funding from the Transition Board to support businesses and workers in Port Talbot and across south Wales.
“While this is a very difficult time for Tata workers, their families and the community, this government is determined to support workers and businesses in our Welsh steel industry, whatever happens.”
1.24pm: Nasdaq to retain gains as markets brace for inflation print
US technology stocks are expected to open flat today after a solid session of gains on Tuesday.
The Nasdaq 100 tech index closed 0.9% higher, despite concerns of a slide in Apple Inc (NASDAQ:AAPL, ETR:APC)’s share price following a ‘meh’ unveiling of its new iPhone 16 handheld.
Apple shares ultimately closed 0.4% lower, but this was offset by strong gains for Tesla Inc (NASDAQ:TSLA), Broadcom Inc (NASDAQ:AVGO, ETR:1YD), Moderna Inc (NASDAQ:MRNA, ETR:0QF), Amazon.com Inc (NASDAQ:AMZN) and other tech giants.
Pre-market trades have the Nasdaq 100 stay put at yesterday’s 18,822 closing price, while the broader S&P 500 will also open flat at 5,491.
Futures on the The Dow Jones Industrial Index have it opening 0.25% lower at 40,631.
Most of the attention will be on the impending inflation data.
Annual inflation is expected to fall to 2.6%, potentially marking the sixth straight month of falling prices in a row but still above the 2% target.
Core consumer price inflation, which excludes volatile items such as food and energy, is expected to stay flat at 3.2%.
In London, the FTSE 100 is currently 10 points higher at 8,215.
12.58pm: Water investors met with government
Investors in the scandal-plagued UK water sector have met with government ministers to discuss solutions to address the industry's financial challenges.
This comes amid growing concerns over mounting debt and infrastructure issues that have led to an increase in sewage and pollution incidents in British waters.
All the while, large executive remuneration payouts have stirred up controversy among the public, leading to the prospect of government intervention and even criminal prosecutions.
Environment secretary Steve Reed reportedly said he hopes to “attract billions in private-sector investment” into the industry and make it “become one of growth and opportunity”.
Up to 30 industry stakeholders took part in the Tuesday roundtable, including the Global Infrastructure Investor Association (GIIA).
FTSE 250-listed South West Water owner Pennon Group PLC (LSE:PNN, OTC:PEGRY) was down 0.3% today, while FTSE 100 constituent Severn Trent PLC (LSE:SVT) was up half a percentage point.
The FTSE 100 index is currently up 11 points.
12.06pm: FTSE 100 lifts its head
London’s blue-chip index has shifted into the green as morning trades wrap up.
The index is currently six points higher at 8,212, driven by decent gains for Entain PLC (LSE:ENT), Intermediate Capital Group (LSE:ICP) plc, Prudential plc and miners Fresnillo PLC (LSE:FRES) and Antofagasta plc.
Rentokil Initial PLC (LSE:RTO) remains a substantial drag on the index after nosediving nearly 20% following a profit warning.
11.57am: US inflation preview
The latest inflation data from the US is scheduled for today should help set the tone for the Federal Reserve’s interest rate call on the 18th.
Annual inflation is expected to fall to 2.6%, potentially marking the sixth straight month of falling prices in a row but still above the 2% target.
Core consumer price inflation, which excludes volatile items such as food and energy, is expected to stay flat at 3.2%.
“For the Fed, the current downward trend in all inflation measures is their friend and combined with a less tight labour market, the Fed will conclude that it is time to begin the rate cutting cycle on their next rate decision meeting on 18 September,” said analysts at Saxo Bank.
Some analysts have their bets on a jump 50-basis-point rate rate. Though a 25bps cut is more likely, a lower-than-expected inflation print will likely increase the odds of the former.
Inflation data is due at 1.30pm UK time.
11.02am: Labour poised to confirm Tata Steel subsidies
Reports suggest the Labour government is poised to provide a £500 million support package for the Tata Steel-owned Port Talbot site in Wales.
Business Secretary Jonathan Reynolds reportedly set to announce the details of the package in the House of Commons today.
Tata Steel is in the process of replacing Tort Talbot’s blast steel furnaces with electric alternatives, which are greener but also require fewer workers.
Up to 2,800 people are likely to lose their jobs following the switch.
The £500 million in subsidies for the switch were first pledged by the former Conservative administration.
More to come.
10.01am: Trustpilot soars
Review aggregator Trustpilot plc has outpaced the entire FTSE 350 set with a 14% share price rally.
It follows the announcement of a S$23 million (£20 million) share buyback following stronger-than-expected profitability over the first half.
Shares are currently swapping for a seven-week high of 219p.
Another mid cap, WH Smith PLC (LSE:SMWH), is the second-strongest performer among the FTSE 350 set with a 13% rally following its own share buyback announcement.
Among the blue chips, insurer Prudential plc and Ladbrokes owner Entain PLC (LSE:ENT) are among the top risers.
The FTSE 100 is currently 10 points lower at 8,195.
9.44am: Zara owner Inditex gains in Madrid
Inditex, the Spanish owner of Zara, reported a 7.2% rise in sales to €18.10 billion in the six months to the end of July 2024.
Zara, Inditex's largest brand, saw sales increase by 5.4% to €13 billion.
Inditex operates 5,667 stores globally, including brands like Pull & Bear, Massimo Dutti, and Bershka. The company plans to expand its store footprint by 5% between 2024 and 2026.
Inditex is also executing a €900 million logistics upgrade over two years and reported net cash of €10.90 billion at the end of the half-year period.
Shares in Inditex, which is Spain’s most valuable company, added 4.5% on the Madrid bourse.
9.24am: Frasers-backed model train maker increases profits
Hornby PLC (LSE:HRN), the model train maker that counts Mike Ashley’s Frasers Group PLC (LSE:FRAS) as a major backer, saw its profits increase by 10% year on year in the five months to 31 August.
Frasers owns 8.9% of Hornby’s outstanding shares, having upped its stake by 11.1 million shares in February.
Hornby’s products are stocked in Frasers-owned GAME stores, with Ashley personally acting as a strategic consultant to the group.
In a Wednesday trading statement, Hornby said: “As is usually the case in our industry; the outcome for the full year is subject to the sales rate in the run up to the key Christmas trading period.
“Our outstanding order book is strong with new products still to be released.
In addition, D2C (direct to customer) invoiced sales are up 11% on prior year and 56% up on the same period in 2022.”
9.01am: The morning so far
The markets kicked off on Wednesday with news that the UK economy flatlined for the second month in a row in July.
The latest figures fell short of economists' expectations for a 0.2% increase in GDP.
While services output increased by 0.1% during the month, it was insufficient to offset a 0.8% decrease in production output and a 0.4% drop in construction output.
Attention has now turned to what it could mean for interest rates with Charles Stanley (LSE:CHAS)’s Rob Morgan suggesting it is “still probably a little early” to expect a cut this month, but another 0.25% reduction “looks firmly on the table” for November.
The was a swathe of company news to digest, including Rightmove PLC (LSE:RMV)’s rejection of a “wholly opportunistic” takeover approach from Murdoch-owned REA Group that “fundamentally undervalued Rightmove and its future prospects”.
Rightmove shares added 0.75% on the announcement.
Other big-cap movers included miners Fresnillo PLC (LSE:FRES) and Antofagasta plc, as well as insurer Prudential plc, all of which added more than 2%.
The same cannot be said for pest control big cap Rentokil Initial, which bombed over 19% after warning that sales in North America in the past two months were lower than expected.
Profits are likely to be hit by higher costs and currency headwinds, said the group.
In the mid-cap space, Trustpilot plc added 9% after declaring a new US$23 million (£20 million) share buyback after stronger-than-expected profitability over the first half.
Adjusted pre-tax earnings of US$10.6 million outstripped expectations, Trustpilot reported, having climbed 86% from US$5.7 million previously.
WH Smith PLC (LSE:SMWH) also announced a buyback plan after the FTSE 250-listed retailer posted a strong full-year performance, sending shares up more than 10%.
At the time of writing, the FTSE 100 was flat at 8,205.
8.48am: Brent crude prices at lower levels since december 2021
Brent crude oil prices shot below US$70 a barrel for the first time since December 2021 this morning.
The dip follows a lower demand forecast from OPEC.
In its September report published on Tuesday, the cartel revised its forecast for global oil demand growth in 2024 downward to around two million barrels per day (mb/d), representing an adjustment of 80,000 barrels per day (tb/d).
Looking ahead to 2025, global oil demand growth has also been revised down by 40 tb/d, now standing at 1.7 mb/d.
Concerns over Chinese demand continue to weigh on demand forecasts.
China’s latest economic data shows a widening trade surplus due to a decline in domestic demand for foreign-made goods and services
8.32am: Rentokil slammed 17% lower
Shares in pest controller Rentokil Initial PLC (LSE:RTO) bombed over 17% this morning after warning that sales in North America in the past two months were lower than expected.
Profits are likely to be hit by higher costs and currency headwinds.
Organic revenue growth from the US and Canadian operations is now expected to be around 1% in the second half of the year, down from 2.8% in the first half.
“We continue to believe in the fundamental strength of the North America business,” said management.
“The substantial structural growth opportunities, enhanced by the benefits of the Terminix transaction, means the value creation opportunity remains intact, albeit taking longer to realise than anticipated.”
8.27am: FTSE 100 inches higher
Despite pre-market trades anticipating a fall, the FTSE 100 shot into the green in opening exchanges.
London’s premier index is currently nine points higher at 8,215, with miners Antofagasta plc and Fresnillo PLC (LSE:FRES), plus insurer Prudential plc, adding more than 2% each.
Rentokill, on the other hand, has collapsed more than 17% following a profit warning.
8.17am: What does GDP result mean for interest rates?
With the UK economy unexpectedly flatlining for the second month in a row in July, the discussion has turned to what it means for further interest rate cuts going forward.
The Bank of England’s Monetary Policy Committee knocked 0.25% off the base rate in August and with GDP beginning to still, the prospect of another later this month has raised slightly.
“The stagnant growth picture certainly won’t prompt any significant inflationary concerns among the MPC decision makers at the Bank of England,” said Rob Morgan, chief investment analyst at broker Charles Stanley (LSE:CHAS).
“It’s also not so obviously weak to infer that rates are too restrictive, but it does tilt the odds in favour of a further cut in September a little.”
Morgan suggested it “still probably a little early” to expect a cut this month, but another 0.25% reduction “looks firmly on the table” for November.
“A few more months of data and, perhaps crucially, a Budget from the Chancellor of the Exchequer that lays out tougher fiscal policy, will be important fodder for the decision-making process,” he added.
8.10am: Rightmove rebuff’s REA’s ‘wholly opportunistic’ bid approach
Rightmove PLC (LSE:RMV) has rejected a takeover offer from Australian property website REA Group that valued the FTSE 100-listed property portal at 698p per share.
Although the offer represented a 26% premium on Rightmove, the board deemed it a “wholly opportunistic” that “fundamentally undervalued Rightmove and its future prospects”.
The offer was unanimously rejected by the board.
Under official takeover rules, Murdoch-owned REA has until 30 September to come back with a more enticing offer.
Rightmove shares opened slightly lower at 670p today.
7.59am: Boohoo brings US fulfilment operations to the UK
Boohoo Group PLC (AIM:BOO) has announced that it will start fulfilling US orders from its “state-of-the-art automated distribution centre” in Sheffield, UK.
The British online fashion group made the decision in order to increase its product offering to US customers, who are currently only privy to 60% of styles available in the UK.
Boohoo anticipates a write down on investments and costs associated with establishing its US distribution capabilities, but expects “a significant reduction in ongoing costs over the medium term”.
Its US distribution centre only launched in 2023 as a way of increasing next day and express delivery options for US customers.
The decision could spark some ESG concerns due to the impact on Boohoo’s carbon footprint.
Though the company already produces many of its garments in the UK before shipping them off to the US, it also buys garments manufactured in South Asia.
Boohoo was rapped on the knuckles earlier this year for inaccurately labelling garments as made in the UK.
Boohoo intends to cease operations at its Elizabethtown, Pennsylvania distribution centre in November.
7.19am: UK economy flatlines
The British economy remained flat in July 2024, recording no growth for the second consecutive month, according to the Office for National Statistics (ONS).
The latest figures fell short of economists' expectations for a 0.2% increase in GDP.
While services output increased by 0.1% during the month, it was insufficient to offset a 0.8% decrease in production output and a 0.4% drop in construction output.
The manufacturing sector also recorded a decline, with production falling by 1% after a 1.1% rise in June.
Commenting on the data, Liz McKeown, director of economic statistics at the ONS, said: “The economy recorded no growth for the second month running, though longer term strength in the services sector meant there was growth over the last three months as a whole.
“July’s monthly services growth was led by computer programmers and health, which recovered from strike action in June. These gains were partially offset by falls for advertising companies, architects and engineers.
“Manufacturing fell, overall, with a particularly poor month for car and machinery firms, while construction also declined.”
The data is likely to galvanise the dovish faction of the Bank of England’s Monetary Policy Committee, which has been gunning for more progressive cuts interest rates to stave off a recession.
7.06am: Stocks to open lower
The FTSE 100 is expected to fall back around 16 points to 8,199 when trading commences today, following a bearish Tuesday in which the premier index shed 65 points.
This follows a mixed session in the US in which the Dow Jones closed in the red but the Nasdaq 100 and broader S&P 500 posted decent gains.
Gross domestic product figures are beginning to filter through from the Office of National Statistics, showing that the UK economy stayed flat on a month-on-month basis in July.
Markets will be weighing up what this means for interest rate cuts going forward.
On the company earnings calendar, Trustpilot plc will soon have its mid-year earnings out, while Zara-owner Inditex in Spain will be presenting its second-quarter results.