- FTSE 100 rises 84 points
- UK inflation fell to 1.7% last month, increasing BoE cut hopes
- Whitbread reports lower interim profits but sweetens the pill
- FCA to investigate insurance market pricing
4.14pm: A day of market machinations
Heading into the close on Wednesday, the FTSE 100 is up 84 points or just over 1% at 8,333, off its intraday high but close to a four-week high.
Similarly, the FTSE 250 is up 1% to 21,017, its highest in over two weeks.
Sparking these gains was the latest UK inflation data, showing the consumer price index softening to 1.7% last month, its lowest annual rate in over three years, with the Bank of England's core CPI and services CPI measures also easing.
This led to traders and economists raising their expectations of more interest rate cuts from the BoE's monetary policy committee, acting in the more "aggressive" way that governor Andrew Bailey suggested recently, with money markets pricing in a 76% chance of two reductions in borrowing costs by the end of the year, up from less than a 50% chance yesterday.
Sterling dropped below $1.30 and hovered around that level, with a 0.4% fall against the euro to £0.8362.
As well as Whitbread, which rose on the back of an upturn in trading, Footsie risers were led by housebuilders, retailers and gold miners, with gold prices also climbing to new highs as bond market yields dropped on lowered inflation expectations on both sides of the Atlantic in recent days.
3.43pm: Budget previews from Pimco, other analysts
As well as speaking to Ryanair's boss, those busy folk at Reuters have also gathered some thoughts from various City folks about the new Labour government's Budget looming large later this month.
Peder Beck-Friis, a senior vice president at the bond trading giant, said "We will be surprised if the government announced anything that would lead markets to question the fiscal credibility that we’ve seen in the UK over the last two years."
In other words, 'you know what happened with Liz Truss and Kwasi Kwarteng, so don't mess about or the bond market will spike you'.
Ahead of the Budget, global investors have been sitting on their hands a bit when it comes to UK government bonds.
Or, as Benjamin Nabarro, chief UK economist at Citi, says: "We have seen a material reduction in demand from international real money."
This may change if Rachel Reeves does not go too Kwarteng.
Or, as says Simon French, chief economist at investment bank Panmure Liberum: "Until you see the proof of that you probably will stay out (of gilts) for a little while and see if she's going to be true to her word."
Bond markets are powerful. Remember what former US political adviser James Carville once said about reincarnation: "I would like to come back as the bond market. You can intimidate everybody."
3.36pm: Ryanair to cut 2025 passenger forecasts
Ryanair Holdings PLC (LSE:RYA) will cut its forecasts for passenger numbers next year because of delays to deliveries from Boeing, its main plane supplier.
The budget airline’s chief executive, Michael O’Leary, said if an expected 20 planes due this year come through in the first two months of 2025 that would be manageable.
“The big issue for Ryanair is we're due 30 aircraft in March, April, May and June of next year, and how many of those will we get?" O'Leary said in an interview with Reuters.
3.21am: Greggs and champers? Go on then
Any readers in Newcastle will soon be able to swing by Greggs PLC (LSE:GRG) for a flute of champagne with their cheese and onion bake.
The high street baker will open the bar situated in the famous Fenwick's department store on Northumberland Street, where local denizens will be able to dip their sausage, bean and cheese melt into a selection of curated dips.
Harissa coconut yoghurt and a romesco sauce with almonds? OK, then!
The refined menu will be paired with “champagne from France and Italy”, indicating a degree of contempt for Protected Geographical Indication (PGI) designations from the sausage roll slinger.
Greggs has been known to roll out special tweaks to its stores in its home turf, with the first of the Gregg’s Moment gentrified coffee shop opened in Newcastle in 2011.
3.07pm: London's blue-chip leaderboard
The Footsie has climbed over 90 points or 1.1% to above 8,340 for the first time in a month, still a way off the 8,474 all-time high back in April.
Only 10 of the London benchmark's constituents are in the red today, with only seven down more than 0.1%, led by Rentokil and insurers Admiral and Beazley.
At the other end, Whitbread is still topping the leaderboard after its five-year guidance upgrade.
A bunch of housebuilders are next as interest rate cut expectations grow, with Barratt Redow PLC, Taylor Wimpey PLC (LSE:TW.) in the top risers, up either side of 5%, with Persimmon PLC (LSE:PSN) up 3.4%.
There's a mix of companies behind, including retailer JD Sports, water company Severn Trent, bookmaker Entain, aerospace manufacturer Melrose and gold miner Endeavour, all rising over 3%.
2.45pm: US tech stocks open lower, London stocks keep rising
US stocks have not opened decisively by any means, with the main Wall Street indices slow to choose a direction in the first minutes of trading.
The Dow Jones has gained 28 points or less than 0.1%, while there is a small fall for the S&P 500 of 0.06%.
Tech stocks seem to be continuing to slip lower, with the Nasdaq Composite down 0.2%, led by falls of around 1% for both Apple Inc (NASDAQ:AAPL, ETR:APC), Microsoft Corp (NASDAQ:MSFT) and Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB), while Nvidia is up 0.4% so far.
Tech fallers are led by ASML NV and Intel Corp (NASDAQ:INTC, ETR:INL), down 1.9% and 1.5%, w
Morgan Stanley (NYSE:MS), after its earnings beat expectations, is up over 5%.
Meanwhile, back in London, the FTSE 100 continues to add to its gains, now up almost 1% to 8,330. The FTSE 250 index is p 218 points or 1.05% at 21,012.
2.14pm: Amazon goes nuclear
Following on from Google's nuclear deal to use small modular reactors (SMRs) to run its energy-hungry artificial intelligence (AI) data centres, Amazon has inked three similar agreements.
The online retailer, which also has a giant cloud server arm, Amazon Web Services, noted that SMRs' smaller physical footprint allows them to be built closer to the grid and built faster too.
Alongside a deal with Energy Northwest, a consortium of state public utilities in Washington, to develop four SMRs, Amazon is also investing in X-energy, a developer of 'next-generation' SMR reactors and fuel.
X-Energy Reactor Co said Amazon led a $500 million 'series C-1' financing round, and that the pair are also collaborating to bring on more than 5GW of new US power projects by 2039, which it said would be the largest commercial deployment target of SMRs to date.
Citadel founder and CEO Ken Griffin also invested in the funding round, along with other institutions.
1.28pm: Brexit has seen 40,000 jobs lost
Brexit has been a ‘disaster’ that has cost the City 40,000 jobs, is the damning assessment of the Lord Mayor of London.
In an interview with Reuters, Martin Mainelli said the impact of Brexit had been far worse and deeper than previously estimated.
Dublin has been the biggest beneficiary, he said, adding 10,000 positions, Paris, Amsterdam and even Milan had been net gainers from people quitting financial jobs in the UK.
1.09pm: Airbus to cut 2.500 jobs in space division
Airbus Group (EPA:AIR) plans to cut up to 2,500 jobs in its defence and space business as part of a restructuring plan.
The French aircraft maker said it planned to axe around 7% of the division’s workforce by the middle of 2026.
First-half results from the company in the summer showed net profit fell by 46%, in part due to a €989 million writedown of the space unit.
Mike Schoellhorn, chief executive of Airbus Defence and Space, said recent years have seen the sector "impacted by a fast-changing and very challenging business context with disrupted supply chains, rapid changes in warfare and increasing cost pressure due to budgetary constraints".
12.42pm: Canadian company's shares rise 1,446% in one day
Yesterday, Bright Minds Biosciences Inc (CSE:DRUG, OTCQB:BMBIF), a biotech in the field of psychedelics, saw its shares rocket by a frankly psychedelic-looking 1,445.8% to $38.49 from $2.50 at the start of the day.
At the request of the Canadian Investment Regulatory Organization, Bright Minds confirmed that management "is unaware of any material changes in the company's operations that would account for the recent increase in market activity".
The shares are down only slightly in pre-market trading, down 17.4% to $31.80.
12.38pm: Water industry debate
Parliament will debate whether ownership of water companies should be decided by a citizens’ assembly.
A private member’s bill is being submitted by Labour MP Clive Lewis, who said he wanted to create an open conversation in parliament and involve the public in water management through a citizens’ assembly.
“This bill puts the conversation about the future management of water where it should be – in the hands of parliament and the public," he said, according to a Guardian report.
“This is a conversation that must take place in broad daylight, not behind the closed doors of boardrooms or through opaque industry lobbying. Water belongs to all of us, so how it is managed is a question of economic democracy. This should not be difficult for any government to grasp.”
12.17pm: FTSE on its own in green, US stock futures mixed
OK, so just after midday, the FTSE 100 index is up 0.6% at 8,298, with the FTSE 250 rising by almost 0.6% too.
Not benefitting from the same inflation boost as the UK market, continental European markets are in the red, though.
Germany's DAX is down 0.3%, while France's CAC 40 falling 0.6% and Italy's FTSE MIB down 0.4%, with Spain's IBEX 35 just below flat.
Paris-listed luxury giant LVMH is one of the big fallers on the Continent, down 4% on the back of a weak quarterly earnings update due to weak consumer demand in China. Burberry Group PLC (LSE:BRBY) and Hermes are down around 1%.
US futures are mixed, with those for the Dow Jones just above flat and for the S&P just above, while Nasdaq futures are up 0.1%.
Semiconductor equipment giant ASML is down another 4% premarket after its 16% decline yesterday, but Nvidia and other semi stocks are trading moderately higher at the moment...read 'ASML loses European tech crown'
11.58am: UK bond yields
More on government bonds - yields on gilts (UK government bonds) retreated sharply with the 10yr back to 4.077%, down from 4.26% seen a couple of days ago.
Market analyst Neil Wilson reckons this also "weighing on yields across the board and given a boost to gold".
Wilson said the UK inflation print has raised the chance, "albeit slim", that the MPC goes for a jumbo cut in November "in acknowledgement that they could and should have cut in September".
The overnight swaps market now shows around 91% odds of a 25bps rate cut next month, up from around 80% before the inflation data, with markets now implying rate cuts at five of the next six BoE meetings through to the middle of next year.
On the fall in the pound, Wilson says there is a sense from the CPI data – one of the weakest monthly moves in core inflation in September in 25 years (similar in France) – "that UK inflation is not proving any stickier than anywhere else".
"Rates markets now pricing for lower GBP at a time when UK assets could get a double whammy from the Budget and US elections.
"In terms of gilts, the data helps wipe the slate clean a bit in terms of the market noise - we now probably have a clearer picture of what impact extra borrowing might have when the Budget comes," he says.
11.49am: Gold hits new highs
Gold prices have risen to a new record high, topping $2,680, which analysts are putting down to movements in government bond markets.
US Treasuries have been rallying this week, having sold off following the US Federal Reserve rate cut decision, which drove the 10 year to a yield of 4.12%, the highest since late July, before a rally yesterday dragged the yield back to circa 4.01%.
Today the US 10-year yield has fallen to just over 4.0%.
"The dollar has been strengthening amid global geopolitical tensions and slowing growth from other global economies," says metals analyst John Meyer at SP Angel.
He said ETF investors "rotating into gold as US Treasury yields slide", also noting that China's yuan has also been weakening as the People's Republic looks to support its economy with a large fiscal stimulus, while the BRIC countries are due to meet next week with "de-dollarisation top of the agenda" following the US freezing of Russia’s foreign reserves.
"Retail sales due tomorrow will be of primary focus to the US Treasury market, with a miss potentially providing the next leg higher for gold."
11.31am: Top risers in the FTSE 350
Top of the FTSE 350 risers is Marshalls PLC, up almost 10% after the building materials manufacturer reported a smaller drop in revenue for the third quarter.
The 3% fall in turnover marked a “material improvement” when compared to the 12% fall in the first half, with sales from the group’s roofing products division climbing 12% thanks to sales of solar panels.
Next is XPS Pensions Group PLC, up 9.1% as its half-year trading statement revealed that regulatory change, including a new funding regime for defined benefit schemes that came into force last month, "continues to support client demand" for its advisory services.
Moonpig Group PLC (LSE:MOON), up 8.8% as it announced a share buyback and reiterated revenue growth targets ahead of its capital markets day event.
Quilter PLC (LSE:QLT) is up 5.8% after saying assets under management had risen 2% in the past quarter.
Highest-placed blue-chip stock is Whitbread PLC (LSE:WTB), with the Premier Inn owner got a warm reception for its half-year numbers, with analysts saying positives from its new five-year plan outweighed the negatives.
Elsewhere in the FTSE 100, precious metals miner Fresnillo is second place, up 3.1% (Endeavor Mining PLC is up 3% and Centamin PLC (LSE:CEY, TSX:CEE, OTC:CELTF) up 2.8% on the 250.)
10.55am: Inflation effects on state benefits
One other point from the lower inflation is that it eases some potential Budget strain for the government, as September's rate of consumer price inflation is used to work out how much benefits will increase next spring.
Families of working-age on universal credit will therefore get a 1.7% hike to benefits, or £253 next year, according to calculations by the Resolution Foundation.
Lalitha Try, economist at the Resolution Foundation, said: "There was a larger-than-expected fall in inflation last month, but it will rise sharply in October driven by base effects from energy prices.
"This temporary fall is badly timed for millions of low-to-middle income families as will result in a lower increase in their benefits next year."
Try said the government "needs to address the age divide in benefits which has left working-age support fall further behind rising wages and living standards".
She noted that as October inflation is expected to pick back up as falls in energy prices last year drop out of the 12-month calculation, means the same family would see their UC award rise by £327 instead, a cash gain of £74.
10.30am: Dodge and Alfa Romeo SUVs recalled
Stellantis NV (NYSE:STLA, EPA:STLA), the maker of Vauxhall, Fiat and Chrysler cars, is recalling 20,755 hybrid crossover SUVs in the US over a worrying brake pedal issue.
This is due to some Alfa Romeo and Dodge SUVs having been made with pedals that could inadvertently become disengaged while being applied, a Reuters report revealed.
The Dutch-headquartered giant said it was aware of 15 cases around the world, but only one that had led to an accident.
Recalled models include Alfa Romeo Tonale plug-in hybrids released this year and some Dodge Hornet based on the same platform.
10.14am: More thoughts on inflation and BoE cuts
More thoughts on the Bank of England's likely reaction to the inflation data.
Paul Dales, chief UK economist at Capital Economics, reckons the MPC will cut next month but not in December.
Most of the bigger fall in core inflation and services inflation was due to a sharp drop in airfares inflation, he notes, from +11.9% to -5.0%, "which the Bank won’t consider a sign that domestic price pressures are becoming less persistent".
CPI, core CPI inflation and services CPI would still have been about 0.1 percentage point lower than Dales expected if airfares were in line with his forecast.
"So underlying price pressures still appear a touch more favourable than we and the Bank thought. But that softening is not as marked as it appears at first sight," he says.
A 25bps cut in borrowing costs from 5.00% to 4.75% at November’s policy meeting already seemed "nailed on" before today’s release, Dales says, but while the chances of a December cut has just gone up, he thinks the Bank will keep rates on hold at the last meeting of the year.
Barclays economist Jack Meaning said the CPI release "adds to our conviction that the BOE will move to sequential 25bp cuts from November", implying another in December.
He notes that it was the first time since September 2022 that UK core CPI has been below US core CPI.
On that note, the pound is back above $1.30, though still down 0.45% today.
9.53am: Barclays overall positive on Whitbread
On Whitbread, Barclays analysts agree with my take that it was a mixed first half seeing "positives and negatives", including that adjusted PBT fell more than expected, to £340 million versus the £350 million consensus forecast.
They say it is likely that there will be a 2-4% reduction on full-year PBT cut by the City today, even if cost saving are circa £10 million higher than expected.
However, the outlook is better, including on the inflection in revPAR recovery, the share buyback was "not widely expected" and the new five-year plan was seen adding several new positives.
9.13am: Economists see two BoE cuts this year
Today's inflation data from the ONS will should allow Bank of England governor Andrew Bailey to be more aggressive with interest rate cuts, as he suggested in a recent interview, says Guy Foster, chief strategist at RBC Brewin Dolphin.
“These weren’t particularly weak inflation numbers, but they were lower than expected. That will come as a pleasant surprise to the BoE," says Foster.
While weaker air fares were a big driver of the decline, Foster notes that recent months have shown "a broader story of weak inflation in these numbers which should encourage the Bank to cut interest rates".
Also, after lower wage growth data yesterday, Foster says the monetary policy committee will therefore "probably" be more likely to increase the cadence of interest rate cuts, rather than a US-style 0.5% cut.
Rob Wood at Pantheon Macroeconomics agrees, saying it is "now a better bet" that the MPC will cut interest rates by 25 basis points at the 7 November meeting and another 25bps on 19 December thanks to the services CPI number massively undershooting the consensus and MPC forecasts.
He said a large part of the headline inflation undershoot was explained by falling motor fuels prices and airfares' massive 34.7% month-to-month fall - the largest September fall since at least 2001, "but both will likely reverse in October".
"So the downside news is smaller than it looks. Even so, the headline of services inflation 60bp weaker than the MPC assumed will leave Governor Bailey chomping at the bit to enact cuts, which Wood said he interprets as reductions at consecutive policy meetings.
8.57am: Europe mostly in red
Across the British Channel, markets are mostly lower mixed, with falls for the DAX, CAC-40 and FTSE MIB.
Only the IBEX in Madrid joining London in positive territory, where retailer Inditex is top of the leaderboard, followed by oil giant Repsol and telecoms group Telefonica.
8.45am: London stocks on the front foot
Checking back on the London indices, the FTSE 100 is up 0.7% at just over 8,309, while the mid-cap FTSE 250 is up 69 points or 0.5% at just under 20,891.
Top riser is Quilter PLC (LSE:QLT), up 7.6% after an encouraging trading statement, where assets under management were up 2%.
Moonpig Group PLC (LSE:MOON) is another riser, up 3% after announcing its first-ever share buyback, of £25 million, even though it said it "will always prioritise growth investment in the business".
Sector peer Ninety One PLC (LSE:N91) is bottom of the list, down 5.2% as its quarterly update was less warmly received, with AUM falling 1% between June and September.
8.29am: FCA probes insurance instalments via premium finance
Insurer Admiral Group Plc (LSE:ADM) is the biggest faller on the FTSE this morning after the Financial Conduct Authority launched a market-wide probe into whether people are being overcharged to pay for car and home insurance in instalments, known as premium finance in the trade.
Due to concerns about rising prices, the a government 'taskforce' has been convened, led by the City watchdog's investigation.
This will look at "whether people who borrow to pay for motor and home insurance are receiving fair, competitive deals”, alongside the launch of the government motor insurance taskforce.
Using premium finance, customers can pay for insurance in instalments, but with the average yearly rate on the amount of money borrowed ranging between 20 to 30%, the FCA said is "concerned that premium finance may not be providing fair value", especially as over 20 million people are estimated to pay for their insurance this way.
On the FTSE 250, Direct Line Insurance Group PLC is down 3%, followed by Close Brothers Group PLC (LSE:CBG) and Moneysupermaket owner Mony Group (LSE:MONY).
8.22am: Inflation softening leads to new BoE expectations
Following the softer inflation numbers this morning, the market is moving quickly to adjust expectations for the Bank of England's next monetary policy meetings.
Traders now expect two interest rate cuts by the end of the year, with around a 75% chance of this currently priced in on rate swaps markets, compared to roughly a 50% chance a few days ago.
Another effect of this is that the pound has dropped 0.65% against the dollar to $1.2989 and is down 0.56% versus the euro to £0.8378.
8.12am: FTSE flies out of the blocks
The FTSE 100 has flown off the blocks, rising 60 points or 0.7% to 8,309.50 in initial trades.
Shares in all but one of the top 20 largest companies in the index are in green so far, and only three out of the top 40 are in red.
Top of the leaderboard is Whitbread PLC (LSE:WTB), up 2.8% on the back of its half-year number results, where a dividend hike and £100 million buyback sweetened the pill of lower profits for the past six months.
AstraZeneca PLC (LSE:AZN), Shell PLC (LSE:SHEL, NYSE:SHEL) and BP PLC (LSE:BP.) are all up over 1%.
7.56am: THG ups funding thanks to founder and Frasers Group
THG PLC (LSE:THG) founder Matthew Moulding has splashed out almost £10 million topping up his stake in the struggling beauty and nutrition products online retailer as it raised £95 million to facilitate the split of its Ingenuity digital arm and beauty and nutrition business.
Moulding, who is chief executive, snapped up around 20.4 million shares at 49p.
Originally, THG raised £75 million from institutions, but the size of the offer was increased thanks to the subscription from Moulding and £10 million from Mike Ashley’s Frasers Group.
7.44am: Whitbread mixed, but FTSE set for a flier
Futures indications are pointing to an even stronger start for the FTSE 100, with a gain of over 35 points now seen.
Will Whitbread PLC (LSE:WTB) be one of those blue-chips in the green?
Maybe, as its interim results are a bit mixed, but the Premier Inn owner has hiked its dividend 6.7%, announced a share buy-back of up to £100 million and set out new profit targets for the next five years.
However, this set of results has "reflect a slightly softer UK demand environment", plus investment in the five-year 'accelerating growth plan' and lower interest receivable, partially offset by positive momentum in Germany.
Revenue was just below flat at £1.57 billion, while underlying profit on an adjusted EBITDAR basis was down 3% to £611 million and statutory pre-tax profit plunged 22% to £309 million.
7.27am: Airfares and petrol prices aid inflation drop
Lower airfares and petrol prices were the biggest driver for softer inflation in September, says ONS chief economist Grant Fitzner.
"These were partially offset by increases for food and non-alcoholic drinks, the first time that food price inflation has strengthened since early last year.
"Meanwhile the cost of raw materials for businesses fell again, driven by lower crude oil prices."
7.22am: UK inflation at three year low
UK inflation eased to its lowest annual rate in three years last month, with September's consumer prices index up 1.7%, compared to 2.2% in August, lower than the 1.9% that the market expected.
On a monthly basis, CPI was flat, down from the previous 0.3% increase and below expectations for a 0.1% rise, according to the ONS update.
Core CPI, which strips out more volatile prices like food and fuel, was up 3.2% year-on-year, down from the prior 3.6% and below the 3.4% consensus forecast,
Services CPI, a key measure for the Bank of England to keep track of the persistence of inflation, printed at 4.9%, down from the prior 5.6% and below the 5.2% expected.
7.15am: FTSE 100 to bounce back
The FTSE 100 is predicted to bounce back on Wednesday on news that UK inflation has eased to its lowest in three years.
After the London benchmark yesterday dropped 43 points to close at just over 8,249, futures are indicating a gain of around 15 point this morning.
Overnight, US stocks retreated, led by tech stocks on the Nasdaq, with the composite index down 1%, while the S&P 500 and Nasdaq both fell almost 0.8%.
A drop in oil and other metals prices hit the FTSE, while semiconductor news undermined the big techs on Wall Street after an unscheduled update from equipment maker ASML.
A few moments ago the UK Office for National Statistics released its inflation update for September, showing the consumer prices index was up 1.7% year on year, well below 2.2% from the month before. More on that in a minute.