- FTSE 100 down 55 points
- L&G sells housebuilding business
- UK core CPI inflation ticks higher
4.04pm: FTSE 100 ends bearish Wednesday
The FTSE 100 was trading 55 points lower at 8,254 in the final stretch of a bearish Wednesday session.
FMCG giant Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB) is the day’s biggest riser, added 1.3% following reports that it is spinning off its homecare division.
B&Q-owner Kingfisher plc added 1.25% and Centrica PLC (LSE:CNA) around 1%.
Among the biggest daily fallers are JD Sports Fashion PLC (LSE:JD.), which fell 3.5% and Legal & General Group PLC (LSE:LGEN), which fell 2.5% after announcing plans to sell its housebuilding subsidiary.
2.56am: US stocks open flat
US stocks got off to a muted start today as traders hold off their bids until the Federal Reserve’s interest rate call later today.
The Nasdaq 100 opened flat at 19,427 while the Dow Jones Industrial Average dipped 0.2% to 41,508.
The broader S&P 500 index also opened flat at 5,635.
Among the top risers on the Nasdaq are Apple Inc (NASDAQ:AAPL, ETR:APC), which is up a percentage point, and Moderna Inc (NASDAQ:MRNA, ETR:0QF), which has added 1.5%.
In London, the FTSE 100 is down 51 points to 8,258.
2.49pm: Next preview: Sales guidance upgrade speculated
Next plc could be on course to upgrade sales guidance once again when the retailer reports interim results tomorrow.
Having already reported a 4.4% uptick in sales over the first half in August, unchanged guidance for the rest of the year at the time has prompted speculation of a hike soon.
Hargreaves Lansdown’s Aarin Chiekrie reckons the mounting speculation for another upgrade comes after Next got “into the habit of delivering positive news lately”.
2.37pm: UK renters stuck in ‘rental hell’
Renters across Great Britain continue to face rising costs, with private rents increasing by 8.4% in the year to August, according to the latest data from the Office for National Statistics (ONS).
The average rent now stands at £1,286 per month.
In England, London saw the steepest rise at 9.6%, while the South West experienced the lowest growth, at 6.4%.
Sarah Coles, head of personal finance at Hargreaves Lansdown, called the state of the rental market nothing short of “ensuring rental hell”.
“If renters think there may be light at the end of the tunnel, they’re sorely mistaken. They’re in a deep, dark hole, and that light is coming from somewhere way out of reach. It’s not going to get any closer without significant change to the way the market is operating, and there’s no sign of that any time soon."
Despite government plans to increase housing supply, Coles expressed scepticism that these measures would ease pressures on renters in the near future.
“The government will be hoping that the plan to build more homes will eventually ease the pressure, but this is a long-term ambition, and in the interim, there’s little hope for renters.”
The ONS data also revealed that rental demand remains high, with Zoopla reporting 21 tenants competing for each available property.
The housing market showed a modest uptick, with the average UK house price rising by 2.2% in the year to July, reaching £290,000.
First-time buyers faced an average price of £242,789, while new-build properties saw a significant increase of 23.2%, compared to a 1.3% rise for existing homes.
2.19pm: TGI Fridays’ UK operator collapses into administration
Hostmore PLC (LSE:MORE), the UK operator of Americana-inspired restaurant chain TGI Fridays, has collapsed into administration and therefore been suspended from the London Stock Exchange.
Hostmore’s collapse comes after a failed attempt to acquire the global TGI Fridays brand from the US holding company.
“Unfortunately, all of the board's efforts to implement a lasting solution to support the long-term financial future of the business came against a highly challenging trading and macroeconomic backdrop, and efforts to create value for shareholders through the proposed acquisition of TGI Fridays, while well-advanced, encountered adverse events outside of the Board's control,” the group stated today.
The board has appointed Teneo to oversee the administration process.
“Given the brand recognition, its continued operation in more than 50 other countries, and the level of loyal custom, it’s unlikely to disappear from the UK scene completely,” stated Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“However, a new owner is likely to significantly reduce the number of outlets across the UK, and focus on its more successful restaurants such as in London’s Leicester Square.’’
1.44pm: Train strikes to end as ASLEF accects pay deal
Members of the train driver’s union ASLEF have voted to accept a pay deal, ending a two-year-long dispute with 16 train operating companies.
The agreement was supported by 71% of the union members who voted, bringing an end to a series of strikes across the UK’s rail network.
The settlement includes a backdated pay increase and improvements to working conditions.
Mick Whelan, general secretary, stated: “It just shows what can be done when the grown-ups come into the room.
“The Tory government sat on their hands and refused to talk to us. But this Labour government has worked with us to resolve this dispute.
“The offer is a fair offer and it is what we have always asked for, a clean offer, without a land grab for our terms & conditions.
We achieved more in the first four weeks of a Labour government than we managed under a Tory government that set out to destroy us.”
1.31pm: Wall Street holds steady as interest rate call nears
US markets will hold steady when trading commences this Wednesday as traders await the hotly anticipated interest rate call from the US Federal Reserve.
Futures on the Nasdaq 100 tech index and the Dow Jones Industrial Average suggest they will open flat at 19,454 and 41,645 respectively.
Likewise, the broader S&P 500 is tipped to open flat at 5,640.
Markets are widely expecting a cut from the Fed, but the jury is still out on whether that will be 25 basis points or a chunkier 50 basis points.
Back in London, the FTSE 100 is currently 50 points down at 8,260.
1.03pm: FTSE 100 off its worst?
The FTSE 100 was the worst performing of the European indices at lunchtime, with the London benchmark down 0.7% as it scraped below 8,260 points.
But its now looks to be creeping off its intraday lows, possibly lifted by cautious optimism across the Atlantic.
Next-worst around the continent is the 0.5% decline for the CAC 40 in Paris, followed by the FTSE MIB in Milan, down 0.2%.
Frankfurt's DAX and the IBEX 35 in Madrid are both just below flat, while the Europe-wide Euro Stoxx 600 is down 0.46%.
US futures are pointing modestly higher, with S&P 500 futures just above flat, those for the Nasdaq up 0.2% and Dow Jones futures up 0.1%.
12.46pm: Reckitt in talks to sell £6bn homecare portfolio, reports Bloomberg
Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB) is in talks with interested parties to dispose of its £6 billion homecare portfolio, which includes household brands Air Wick, Mortein, Calgon and Cillit Bang, Bloomberg has reported.
The reported discussions align with an announcement from the FTSE 100-listed FMCG giant in July that plans to get rid of certain non-core products from its portfolio.
In July, management said it plans to make a “sharper, simpler Reckitt” focusing on high-margin ‘Powerbrands’ including Strepsils, Gaviscon, Nurofen, Dettol, Finish, Durex and others in the consumer health and hygiene business.
A formal sale process led by Morgan Stanley (NYSE:MS) is expected to commence within months, according to the Bloomberg report.
Reckitt is also mulling the disposal of its Mead Johnson Nutrition business, housing brands Enfamil and Nutramigen.
The household goods giant has struggled to grow the business in recent years, leading to a double-digit fall on its share price in the past 12 months alone.
Net revenues fell 3.7% year on year and operating profit margins tightened by 20 basis points the first half of Reckitt’s current financial year.
12.30pm: L&G shareholders ‘might be disappointed’ with particulars of CALA sale
Following months of speculation, Legal & General Group PLC (LSE:LGEN) has announced the sale of its housebuilding subsidiary CALA.
The £1.35 billion enterprise value was higher than the previously rumoured £1 billion, but “investors might be disappointed” with the specifics of the disposal, suggested Russ Mould, investment director at AJ Bell.
L&G will only receive £500 million once the deal closes, with the remainder paid out over a five-year period.
That could explain why L&G’s shares fell a little over 2% following the announcement.
On the bright side, the sale is expected to bring with it some shareholder returns.
“Legal & General’s shares have been weak since its strategy update in June,” noted Mould.
“Therefore, it’s not a surprise to see the company imply it might use some of the sale proceeds to fund share buybacks as it needs to deliver some more positive news to win back the market’s favour.”
12.05pm: Lloyds, Barclays put on ‘friendlier’ face following FCA review, but better deals elsewhere
A Financial Conduct Authority review into the high-street banks’ savings rates has had a positive impact for savers, but one analyst warns that despite a “friendlier face”, better deals can be found elsewhere.
The FCA launched a review into the high-street’s cash-savings market in July 2023 to assess whether the big banks were fairly passing interest rate rises through to cash savers.
It discovered that savings rates “significantly lagged” increases in the base rate in the 18 months prior to July 2023, although the degree of passthrough rose faster in the latter months.
Banks earn profit on the gap between the interest they earn on customers’ cash deposits and the interest they pay on these deposits- called a ‘net interest margin’ (NIM).
Record profits from the likes of Barclays PLC (LSE:BARC) proved that banks were pocketing substantial sums by not passing through the full effect of the Bank of England’s interest rate hikes.
Since then, the FCA has laid out a 14-point plan to urge banks and building societies to pass on interest rate rises and communicate more effectively with customers.
It appears to have worked- between July 2023 and June 2024, the average easy-access savings rate has increased from 1.66% to 2.11%.
But Mark Hicks, head of active savings at Hargreaves Lansdown, voiced criticism of the data.
He said: “The high street giants have turned a friendlier face to savers over the past 12 months, but this doesn’t mean they’re your friends.
“You still need to run from the giants as quickly as possible, and find a more rewarding home for your cash – especially at a time when rates are falling.
Hicks agreed that the FCA review “seems to have made a real difference”, but the rates offered by the giants “are still languishing well below the most competitive savings accounts and cash ISAs on the market”.
According to This is Money, challenger banks Oxbury and Monument offer 4.8%-plus annual rates on an easy-access account below the 20% tax threshold.
Lloyds’ easy-saver, in comparison, offers just 1.3% on a sub £24,999 balance.
11.26am: Local communities benefiting from stronger access-to-cash rules
New rules introduced by the Financial Conduct Authority to protect peoples’ access to cash are “already having an impact”, according to the watchdog.
Under rules announced in July before coming into force from today, banks and building societies must ensure that local communities retain access to cash-withdrawal services.
The rules were brought into force in response to the shift to digital banking, which has led to large-scale closures of banking branches across the UK.
Under the rules, banks and building societies must assess whether changes to local services, like closing branches or cash machines, leave local communities without sufficient access to cash.
Residents and businesses can raise concerns with LINK, the UK’s cash access and ATM network, where perceived gaps are found.
Fourteen banks and building societies, including Barclays PLC (LSE:BARC), Bank of Scotland, Lloyds Banking Group PLC (LSE:LLOY) and Santander, have been designated by the Government to support the scheme.
Today, the FCA announced that 15 communities will be given greater access to cash services, either via an ATM, banking hub or Post Office service.
Sheldon Mills, executive director for consumers and competition at the FCA, said: “The way we spend money is changing, and far fewer of us use cash day-to-day. We don’t want to stand in the way of change, but we do want to ensure reasonable access for those who continue to rely on cash.
“Our new rules are already having an impact, protecting vital services for communities across the country.”
10.53am: Eurozone inflation data matches UK
Annual inflation across the eurozone fell to 2.2% in August, down from 2.6% in July and matching market forecasts.
It marks the lowest rate of year-on-year inflation in the bloc since July 2021, setting the stage for an escalation of the European Central Bank’s monetary-easing policy.
Services and food and alcohol contributed the most to inflation, adding 4.1% and 2.3% respectively, but this was offset by lower energy prices.
Last week, the European Central Bank reduced interest rates for the second month in a row to bring the bank rate down to 3.5% for the first time since April 2023.
Another rate call is due on 17 October- today’s inflation data will raise hopes of at least one more cut by the end of the year.
The ECB has been more aggressive in cutting rates compared to its counterparts in the UK and the US, but a decision from the latter this afternoon could see a jumbo 50-basis-point cut from the Federal Reserve.
The Bank of England is not expected to cut rates in tomorrow’s Monetary Policy Committee vote.
10.05am: Property prices see slight fall in July
The UK House Price Index (HPI) for July revealed a 0.3% annual decrease in property prices, making the average property price in the UK £288,216.
Property prices across England saw a 0.2% annual decline, with an average price of £307,495.
In contrast, London experienced a 1.5% rise in prices, bringing the average to £544,580, the highest in the UK.
The North East recorded the largest annual decrease, with prices falling by 4.7%.
On a monthly basis, UK house prices increased by 0.4%.
9.39am: Asda co-owner Mohsin Issa steps down from executive role
Asda has announced that co-owner Mohsin Issa is stepping down from his executive leadership role to focus on his new role as chief executive of EG Group.
The announcement comes following mounting pressure from Asda chair Stuart Rose for him to step down.
Asda is facing a declining share of the British supermarket sector, with Rose admitting he feels embarrassed by the private equity-owned chain's performance.
Asda’s like-for-like sales fell by 5.3% in the second quarter and Mohsin’s brother Zuber Issa’s recent decision to exit his stake in the business did little to encourage optimism.
Issa will remain a co-owner of Asda and non-executive on the board, while Rose will assume his responsibilities.
“I am very proud of the highly experienced team we have built, and the significant progress made to build a bigger and better Asda over the last three years, as well as our unwavering commitment to provide customers with uncompromising value,” stated Issa.
“Given these achievements and the significant strategic steps we have taken, I have decided now is the right time for me to step back from my oversight role at Asda to focus on EG Group as sole chief executive.”
“We respect Mohsin’s decision to move on from his role at Asda,” said Rose.
“We are very grateful to Mohsin for the role he has played in overseeing Asda, including launching into the growth market of convenience stores and introducing a loyalty app now used by more than six million customers.”
9.20am: Airlines pounce on demand
An uptick in airfares kept yearly inflation steady at 2.2% in August in what otherwise could have been a softer print.
Airfares surged 11.9% in the month, predominantly because of more expensive European flights.
Danni Hewson, AJ Bell’s head of financial analysis, surmised that “surging demand for a couple of weeks in the sun enabled airlines to lift their fares this summer”.
Hewson added: “Since the pandemic people have prioritised making memories with family over other expenses and even though prices have jumped, savvy consumers have found ways to fund their holidays with many plumping for all-inclusive deals that have helped them budget.
“The uptick in airfares has offset falling inflation elsewhere this summer, holding the UK CPI number at 2.2%, a smidgeon over the Bank of England’s target but one which is likely to result in some caution amongst central bankers later this week.”
British Airways-owner International Consolidated Airlines Group plc added 0.3% in today’s early trades. easyJet is currently down 0.6% but Wizz Air Holdings PLC (AIM:WIZZ) is up more than 1%.
9.14am: Games Workshop delivers spartan update
In one of the shortest trading statements in recent history, Games Workshop Group PLC (LSE:GAW) delivered an update stating that trading in the three months to 1 September “has been in line with the board's expectations”.
Unsurprisingly, it did little to spur much activity in the Warhammer owner’s shares, which fell 1.6% this morning.
8.57am: The morning so far
Wednesday kicked off with a swathe of macroeconomic data best described as giving mixed messages.
UK's annual inflation held steady at 2.2% in August, matching July, according to the latest data from the Office for National Statistics.
But core inflation, which excludes volatile items like food and energy, remained elevated, rising to 3.6% from 3.3% in the previous month.
The largest contributors to the rise came from airfares, which saw an increase of 11.9%, primarily on European routes.
This has cemented the view that the Bank of England will not be cutting interest rates tomorrow.
On the company news front, Legal & General Group PLC (LSE:LGEN) announced the sale of its UK housebuilding subsidiary CALA Group after months of speculation.
L&G will sell CALA for an enterprise value of £1.35 billion to an entity controlled by investment firms Sixth Street Partners and Patron Capital.
Shares in the insurer fell 1.9%.
Vodafone Group PLC (LSE:VOD) was ordered to pull several advertisements after the Advertising Standards Authority (ASA) after BT Group PLC (LSE:BT.A) challenged Vodafone’s assertions that it provided the “same broadband” or “same broadband technology” as BT at a lower cost.
Shares in both companies ticked higher by less than a percentage point.
The wider FTSE 100 blue-chip index is currently down 25 points to 8,285, dragged by L&G, Rentokil Initial PLC (LSE:RTO), Halma PLC (LSE:HLMA) and Burberry Group PLC (LSE:BRBY).
Attention now turns to the US Federal Reserve’s interest rate call, with analysts still split on whether a 25-basis-point or 50-basis-point cut is on the cards.
8.40am: Vodafone rapped by advertising watchdog following BT complaint
Vodafone Group PLC (LSE:VOD) has been ordered to pull several advertisements after the Advertising Standards Authority (ASA) ruled that claims made in three ads about its broadband services were misleading.
The ruling came after BT Group PLC (LSE:BT.A) challenged Vodafone’s assertions that it provided the “same broadband” or “same broadband technology” as BT at a lower cost.
Vodafone suggested that BT customers could switch to Vodafone and get "the same broadband for less”, but BT argued that the performance of Vodafone's services was not identical to theirs, despite using similar network infrastructure.
Vodafone defended the ads, stating that they were meant to inform consumers that broadband services using the same Openreach network technology generally perform similarly.
However, the ASA concluded that the claims were misleading because they implied that Vodafone’s services were nearly identical to BT’s, without providing sufficient evidence.
The ASA also upheld a complaint against a claim in the TV ad, which stated that "millions of BT customers across the UK are realising they can switch to Vodafone and get the same broadband for less".
The ASA ruled this claim was unsubstantiated as Vodafone had not provided evidence to show that millions of customers had switched or were actively considering switching.
Vodafone was instructed to stop running the ads in their current form.
8.20am: Stocks open lower
Stocks opened in the red today, with the FTSE 100 dipping 17 points to 8,293 in opening trades.
Some of the biggest fallers include Rentokil Initial PLC (LSE:RTO) (down 1.8%), Burberry Group PLC (LSE:BRBY) (down 1.5%) and Legal & General Group PLC (LSE:LGEN) (down 1.3%).
The latter comes after the insurer’s announcement that it is selling its CALA housebuilding subsidiary.
FTSE 100 risers include Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB) (up 2.3%) and Holiday Inn-owner InterContinental Hotels Group plc (up 1%).
8.08am: UK core inflation ticks higher
The UK's annual inflation rate held steady at 2.2% in August 2024, the same as in July, according to the latest data from the Office for National Statistics.
The largest contributors to the rise came from airfares, which saw an increase of 11.9%, primarily on European routes. Other upward pressures included recreation and culture, which rose 4%, and transport, driven by a slower decline in second-hand car prices.
Month-on-month, the consumer price index (CPI) rose by 0.3%, reversing the 0.2% decline seen in July.
Core inflation, which excludes volatile items like food and energy, remained elevated, rising to 3.6% from 3.3% in the previous month.
This persistent core inflation has sparked debate over the direction of interest rates in the coming months.
Myron Jobson, Senior Personal Finance Analyst at interactive investor, stated: “The fact that core inflation, which strips out volatile food and energy prices, remains elevated, ticking higher in August, probably shores up the argument that Bank of England policymakers are likely to hold interest rates tomorrow, as it awaits a major economic puzzle piece to justify a further reduction to the base rate.”
According to Tom Stevenson, investment director at Fidelity International: “The mixed messages in today’s inflation data underline the challenge the Bank of England faces in setting monetary policy in a less stable and predictable environment for prices.
“With the new Labour government pushing for higher growth and productivity, and without the stabilising forces of globalisation, cheap energy and EU membership, inflation is likely to be more volatile in future.”
“A victory lap on the inflation-fighting front would be extremely premature," stated George Lagarias, chief economist at Forvis Mazars, who contended that a November cut is on the cards.
7.25am: Legal & General confirms sale of CALA Homes
Legal & General Group PLC (LSE:LGEN) has announced the sale of its UK housebuilding subsidiary CALA Group after months of speculation.
L&G will sell CALA for an enterprise value of £1.35 billion to an entity controlled by investment firms Sixth Street Partners and Patron Capital.
Speculation over the sale of the company first emerged in March, when it was suggested CALA could be sold for £1 billion.
“A potential sale would not be a surprise”, given L&G’s attempts to streamline the company, analysts said at the time.
Commenting on the announcement today, L&G’s chief executive António Simões said: "This transaction demonstrates continued momentum in executing our strategy, simplifying our portfolio to enable a sharper focus on our core, synergistic businesses.
“Cala has been an important part of L&G for over a decade, with profits increasing tenfold since our initial investment in 2013.
“The sale announced today will provide capital to deliver our strategic goals of sustainable growth alongside enhanced returns for shareholders.”
Kevin Whitaker, chief executive of CALA, added: "Today's announcement is excellent news for Cala.
“The acquisition by Sixth Street Partners and Patron Capital demonstrates confidence in Cala's business plan and growth potential, as our talented team continues to build high-quality, sustainable new homes throughout the UK.”
The deal is expected to close by the end of the year.
7.11am: Stocks to dip
FTSE 100 futures have the blue-chip index dipping 17 points to 8,302 following the opening bell this morning.
This follows a strong Tuesday session when the index closed 31 points higher.
Kicking off a big day on the macroeconomic front, yearly UK inflation came in at 2.2%, squarely hitting the market forecasts.
Core inflation, which strips out the food and energy sectors, came in slightly hot at 3.6% against the 3.5% forecast, while the retail price index also came in slightly hot.
This may have tempered expectations on an interest rate cut tomorrow, which is likely to weigh on stocks.
Eurozone inflation is due shortly, following by a high-stakes interest rate call from hr US Federal Reserve in the afternoon.