- FTSE 100 down 12 points
- GSK jumps on Zantac settlement
- US inflation nudges past expectations
3.59pm: FTSE 100 struggles for direction late on
London’s blue chips bounced between positive and negative territory into Thursday afternoon.
Come late trading, the FTSE 100 was down 12 points at 8,230, with a number of stocks trading without entitlement to their latest dividend payments weighing on the index.
Among risers, GSK PLC (LSE:GSK, NYSE:GSK) retained its spot as the day’s strongest performer on the index after agreeing to settle thousands of cases alleging its Zantac drug caused cancer… Read more
Beazley PLC (LSE:BEZ) also sat among the day’s risers, as analysts guided that losses for insurers due to Hurricane Milton in the US were set to be lower than previously feared.
Vistry Group PLC (LSE:VTY) remained under pressure throughout the day meanwhile, after a profit warning earlier in the week for the coming years continued to weigh.
3.42pm: Chancellor mulling Budget capital gains tax hike
Chancellor Rachel Reeves is reportedly considering upping the rate of capital gains tax to between 33% and 39%.
According to the Guardian, the hike would come as the government grapples with limited options to raise funds to fuel Budget spending plans.
Think tank the Institute for Fiscal Studies estimated the government would need to raise £25 billion for such plans, set to be revealed in the October 30 Budget.
Currently, the tax sits at 24% on gains from residential property, 18% to 28% for interest on investments and 20% for other assets.
A Guardian-cited Whitehall source commented that “some very big tax decisions are being left until very late in the day”.
Another added the Treasury’s plans for the budget were in “complete disarray,” with a spokesperson from the department dubbing the claim “inaccurate”.
3.01pm: Wet weather causes second-worst harvest on record in England
England faced its second-worst harvest on record this year as wet weather hit production of crops.
Wheat harvests were estimated at 10 million tonnes collectively, marking a 21% fall on 2023, think tank the Energy and Climate Intelligence Unit (ECIU) said after analysing government data.
Winter barley production fell by 26% in the meantime, with oilseed rape harvests down by 32% collectively.
This followed record-breaking rain last winter and poor conditions into the spring and early summer which hit yields and farmers’ ability to grow crops
The resulting shortfall was estimated to have dealt a £600 million blow to farmers across the country, based on wheat, winter barley, spring barley, oats and oilseed rape production.
“This year’s harvest was a shocker, and climate change is to blame,” ECIU analyst Tom Lancaster said.
“It is clear that climate change is the biggest threat to UK food security.
“These impacts are only going to get worse until we reduce our greenhouse gas emissions to net zero, in order to stop the warming that is driving these extremes.”
He called on the government to invest in the likes of sustainable farming in the upcoming Autumn Budget, adding rainfall in recent weeks meant production could be even worse next year.
2.43pm: Wall Street down as inflation and jobless claims overshoot expectations
Wall Street faced a tough start on Thursday as recent inflation and jobless claims figures both came in higher than expected.
The Nasdaq fell 0.4% early on, while the S&P 500 dipped by 0.3% and the Dow Jones lost 0.1%.
2.34pm: US jobless claims overshoot expectations
US jobless claims data also came out on Thursday, showing the number of people applying for benefits last week jumped.
Applications for jobless claims climbed by 33,000 to 258,000 over the week to October 3, Labour Department figures showed.
This marked the highest reading for a year and soared past expectations for 229,000.
The rise coincided with strikes by the likes of Boeing and port workers, as well as Hurricane Helene.
Average weekly claims over the month showed figures rose by 6,750 to 231,000.
2.04pm: Rate cut next month ‘on’ after inflation nudges past expectations
Thursday’s news that US inflation ticked up ahead of expectations in September is set to mean the Federal Reserve will cut interest next month, according to analysts.
US Bureau of Labour Statistics figures showed the consumer price index climbed by 2.4% in the year to September.
Though this was below the 2.5% rate seen in August, markets had been expecting the figure to climb by 2.3%.
Robinhood analyst Dan Lane noted a 25 basis point cut in the US was now “on” following the figures, as markets mulled the depth of the next reduction after expectation-beating non-farm payroll data last week.
“Last week’s strong jobs print swiped a 50 basis point cut drop off the table but the market still wants two quarter-point steps down over the last couple of meetings of the year,” he said.
“Today gives another thumbs up to that schedule as it looks like the Fed will actually pull off a soft landing after all.”
Premier Miton Investors’ Neil Birrell echoed the view, explaining the higher than expected inflation figure “shouldn’t be enough to worry markets or indeed the Fed”.
He added the figure would “probably firm up” support for a 25 basis point cut.
“As we know, one rogue number can get people worried or excited in equal measure, but there’s nothing to do that today,” Birrell added.
1.51pm: Gold tipped to hit $2,850 as oil also continues climb
Gold and oil prices have both moved lower this week after recent rallies, but further gains should be on the horizon, according to UBS analysts.
Analysts from the bank forecast gold to hit US$2,850 an ounce next year, which would see the previous record around the US$2,680 mark smashed.
“Geopolitical risks are here to stay and will likely keep a risk premium in the prices of both commodities,” analysts from the bank said in a note.
“We also see fundamental factors that should guide both oil and gold higher in the coming months.”
For gold, demand ahead is expected to pick up as central banks continue to wind down interest rates.
Ongoing buying by central banks should also buoy prices ahead, according to UBS, alongside a seasonal recovery for jewellery purchases and Chinese investor interest.
“Uncertainty around the fast-approaching US election should [also] support the bullion,” analysts said.
Oil was expected to benefit on the back of scaled-back supply, which saw production tick up just 0.3% between December and July, UBS said.
“Demand growth, while suffering from China, continues to lead supply growth with global oil inventories still in decline.”
Monetary easing was also expected to support demand growth ahead, prompting UBS to forecast a rise in oil prices above the US$80 a barrel mark in the coming months.
Benchmark Brent crude was trading at US$78.14 on Thursday, as gold sat at US$2,625.
1.36pm: US inflation slightly ahead of expectations
Inflation in the US ticked up ahead of expectations last month, driven by rising food and shelter costs, Bureau of Labour Statistics figures showed on Thursday.
The consumer price index climbed by 2.4% over the year to September, which was slower than the 2.5% rise recorded for August, but above expectations for a 2.3% uptick.
Increasing food and shelter costs were said to be the key drivers of the uptick over the month, according to the Bureau of Labour Statistics.
Core inflation, which excludes food and energy prices, also rose ahead of expectations, at 3.3% against expectations for 3.2%.
12.40pm: Wall Street seen lower as inflation data awaited
Wall Street appeared on course to fall ahead of Thursday’s opening bell as investors awaited inflation data later on in the day.
Futures had the Nasdaq down 0.2% ahead of trading, while the Dow Jones and S&P 500 were also seen off the mark as caution appeared to take hold ahead of the inflation figures.
Markets are currently weighing the prospect of further interest rate cuts by the Federal Reserve.
Strong non-farm payroll data last week prompted expectations for a second consecutive 50 basis point cut in November to effectively vanish.
Anticipations are now for either no cut at all, or a 25 basis point reduction, with Thursday’s inflation data set to provide further clarity around the scope for either.
Markets expect the consumer price index to have subsided from August’s 2.5% to 2.3% in September.
“If there is an upside surprise like there was to payrolls, then we could see a bigger chance of no rate cut from the Fed next month,” XTB analyst Kathleen Brooks said.
“However, a reading in line with expectations would suggest that the goldilocks scenario for the US economy carries on, which is good news for both bonds and equities.”
12.22pm: Government borrowing costs at three-month high
Government borrowing costs jumped to a three-month high on Thursday on speculation that chancellor Rachel Reeves was lining up for a spending spree in the Autumn Budget.
Yields on 10-year gilts ticked up to 4.23% throughout the morning, reaching their highest since early July and from as low as 3.75% in mid-September.
This followed warnings over a run on government bonds were Reeves to unveil a rapid increase in spending during the Budget later this month, after she has reportedly mulled changing the way debt is measured in a bid to unlock more for investment… Read more
12.08pm: Aldi to add 3,500 roles for Christmas
Aldi has unveiled plans to recruit thousands of additional workers for the busy festive period.
Some 3,500 roles will be added as the supermarket braces for the seasonal uplift in demand, including in-store jobs and managerial positions.
Rivals have also moved to ramp up recruitment ahead of the Christmas months, with Waitrose planning to add 11,000 roles and J Sainsbury PLC (LSE:SBRY) offering 20,000 jobs.
“Our mission is to make affordable, high-quality food accessible to everyone, and that is even more important at this time of year,” Aldi UK recruitment director Kelly Stokes said... Read more
11.47am: EDF seeking extra £4bn for Hinkley Point C
EDF is reportedly seeking a further £4 billion to fund construction of the Hinkley Point C nuclear power plant as costs continue to rise.
French state-owned EDF is looking to raise the funds by selling stakes in the nuclear plant and in turn shares of the profit it makes from generating power, Bloomberg reported.
Talks are ongoing with sovereign wealth and infrastructure funds, according to Bloomberg-cited sources.
Centrica is also said to be considering an investment, with reports earlier this week suggesting this could involve a £1 billion injection into the plant... Read more
11.10am: Mortgage default rates pick up
Lenders have reported a rise in mortgage defaults over the past few months, with another increase expected over the coming quarter.
More UK householders were seen defaulting on secured loans over the three months to August relative to the previous quarter, the Bank of England reported on Thursday.
This marked the seventh consecutive quarter where lenders reported an increase in default rates on secured loans, while expectations were for another jump in those falling behind on payments over the coming three months.
Default rates on unsecured loans fell in the meantime, according to the Bank of England, driven by fewer people missing credit card payments.
KPMG financial services head Karim Haji noted the figures showed households were “still struggling in the current environment”.
“Unsecured lending demand, while stable, remained elevated compared to the first quarter of the year,” Haji continued.
“A fall in default rates for unsecured lending is an encouraging sign and reflects the cautious approach to credit being taken by households.”
A rise in inflation over the coming months, coupled with still-high interest rates could mean “spending power may not be unlocked any time soon” though, Haji added.
“Even then, we are seeing a shift in consumer behaviour over the medium to longer term which is focused on saving not spending.”
10.07am: TSB hit with £10.9mln fine over treatment of indebted customers
TSB Banking Group (LSE:TSB) has been slapped with a £10.9 million fine by Britain's financial watchdog over its treatment of customers in arrears.
“Inadequate processes” in place between 2014 and 2020 meant there was a “real risk” that repayment plans were not realistic, the Financial Conduct Authority (FCA) said on Thursday.
This included inadequate training for staff over dealing with customers’ circumstances, while incentives potentially encouraged plans to be made at pace.
The FCA said TSB risked agreeing to unaffordable repayment arrangements with customer as a result.
“If you get into difficulty, you hope for - and we expect - fair treatment so a stressful situation isn’t made worse,” FCA join enforcement executive Therese Chambers said.
“TSB’s woeful systems and controls exposed its customers to risk of harm and meant it missed opportunity after opportunity to do the right thing.”
TSB has paid £99.9 million to some 232,849 mortgage, overdraft, credit card and loan customers affected since a review by the regulator in 2020, the FCA added.
9.37am: Unilever finally offloads Russian business
Unilever PLC (LSE:ULVR) has completed the sale of its Russian business after coming under scrutiny for not ditching operations in the country following the invasion of Ukraine in early 2022.
The sale to Arnest Group was confirmed to have been completed on Thursday, with this also including Unilever’s four factories in Russia and its business in Belarus.
"Over the past year, we have been carefully preparing the Unilever Russia business for a potential sale,” a statement said.
“This work has been very complex, and has involved separating IT platforms and supply chains, as well as migrating brands.”
Unilever had drawn backlash for not exiting Russia after the invasion of Ukraine, with the latter’s government labelling the consumer goods giant as a sponsor of the war last year.
9.21am: Chancellor warned over Budget borrowing
Warnings have emerged that chancellor Rachel Reeves risks a Liz Truss-esque meltdown in the City if Budget borrowing plans are too high.
Citi chief UK economist Ben Nabarro noted a risk of a run on government bonds had emerged, leaving Reeves needing to clarify that heightened public spending would be gradual.
“There is material concern in the gilt market about an unconstrained dash for investment out there,” he said.
“International investors are not really giving the gilt market the benefit of the doubt.”
The warnings came as part of a report from Citi and think tank the Institute of Fiscal Studies that the government would have to raise an additional £25 billion through the Budget later this month to meet spending commitments... Read more
8.57am: Vistry profit warning continues to weigh
Vistry Group PLC (LSE:VTY) sat among the FTSE 100’s biggest fallers yet again on Thursday after warning on profits for the coming years earlier in the week... Read more
Shares in the builder fell by 1.8% Thursday morning, placing Vistry as the day’s biggest loser when excluding companies trading without entitlement to their latest dividend.
This included Taylor Wimpey PLC (LSE:TW.) and WPP PLC (LSE:WPP), which appeared to weigh on the index as Tesco PLC (LSE:TSCO) and Kingfisher PLC (LSE:KGF) were also among those to go ex-dividend.
Overall, the index was trading flat on Thursday morning, having given up a 25-point gain seen as the market opened.
8.47am: Oil recovers slightly, but below $77
Oil sat below the US$77 a barrel mark on Thursday morning after recovering slightly from a slump late on Wednesday.
Benchmark Brent crude was little changed for the day at US$76.96 on Thursday, having sunk as low as US$75.42 on Wednesday.
This came as concerns over a supply glut later this year and into the next increasingly appeared to outweigh fears over escalating tensions in the Middle East.
Speculation that Israel would launch a return strike against Iran last week had fuelled Brent to above the US$80 mark, with concerns appearing to ease as no such attack had so far come by Thursday.
8.33am: Waitrose ramps up delivery options with Just Eat deal
Waitrose has ramped up its delivery options under a new partnership between the supermarket and Just Eat Takeaway.com NV (LSE:JET, NASDAQ:GRUB).
Some 229 of the John Lewis Partnership-owned supermarket’s sites will be covered under the new deal, including branches in Birmingham, Glasgow, London and Manchester.
This will buoy grocery delivery options offered by the supermarket, which already has existing deals with Uber Eats and Deliveroo PLC (LSE:ROO).
“As demand for greater convenience has grown, so have expectations of convenience food - and rightfully so,” Waitrose executive director James Bailey said.
“Neither show signs of slowing and that is a huge opportunity for us.
“Partnering with Just Eat allows us to reach even more customers who want to be confident they are getting the same commitment to quality, taste and ethical standards whenever and wherever they want to enjoy great food.”
8.18am Stocks open higher as GSK jumps on Zantac settlement
London’s blue chips got off to a good start on Thursday morning, led by GSK PLC (LSE:GSK, NYSE:GSK).
Shares in the pharmaceutical giant jumped 5.9% on news it had agreed to pay up to US$2.2 billion to settle thousands of lawsuits alleging its Zantac drug caused cancer.
This saw it take the spot as the index's biggest riser early on, ahead of Informa PLC (LSE:INF) and Segro PLC.
Overall, the FTSE 100 ticked up 25 points as the market opened to reach 8,269, further recovering on Tuesday’s hefty decline.
8.00am: GSK to pay out $2.2bn in Zantac settlements
GSK PLC (LSE:GSK, NYSE:GSK) will pay up to $2.2 billion to settle some 80,000 US lawsuits over its heartburn medication Zantac, generically known as ranitidine.
The plaintiffs alleged the drug caused cancer, although GSK maintains there is no evidence linking Zantac to an increased cancer risk and has not admitted liability.
The settlement resolves 93% of state court cases, and GSK expects it to be completed by mid-2025... Read more
7.58am: House prices gaining overall for first time in two years
House prices grew overall nationally for the first time in two years in September, The Royal Institute of Chartered Surveyors (RICS) has said.
In its latest survey, RICS said more surveyors had reported prices were rising in their areas than those indicating a fall.
This comes after net readings have been either negative or flat in each month dating back to October 2022.
RICS also reported readings covering demand, sales, and new listings had all returned to growth in a “broadly positive” outlook for the market.
“The latest survey results once again convey a brighter picture for housing market activity, with the recent easing in mortgage interest rates continuing to support a recovery in buyer demand,” RICS market analytics head Tarrant Parsons said.
“Critical for the outlook, a further unwinding in monetary policy is anticipated over the months ahead, which should create a more favourable backdrop for the market moving forward.”
7.42am: Meta AI to launch in UK
Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB)’s artificial intelligence assistant is set to be rolled out to six countries on Thursday, including the UK.
This will see Facebook, Instagram, WhatsApp and Messenger users able to access Meta AI through the company’s social media sites or on the web.
Meta had faced regulatory delays in introducing the model in the UK, while product testing was also said to have held up the launch... Read more
7.15am: Stocks seen off the mark
Futures had the FTSE 100 dipping by 13 points on Thursday morning as London looked set for another quiet day following a sell-off earlier in the week.
Blue chips had gained 53 points on Wednesday, following Tuesday’s 113-point drop as miners, house builders, oil firms and Asia-focused stocks all weighed.
This partially came on a lack of new expected economic stimulus measures from China earlier on in the week.
Chinese markets had taken a beating over the week as a result, though enjoyed a slight recovery overnight, with the benchmark CSI 300 gaining almost 2%.
Back in London, GSK PLC (LSE:GSK, NYSE:GSK) made headlines on Thursday morning with news it was to pay some US$2.2 billion to settle thousands of cases claiming its Zantac drug caused cancer.