- FTSE 100 up 59 points
- Mining giants weigh after China stimulus disappointment
- Rentokil maintains outlook after recent profit warning
- ECB cuts interest rates by 0.25 percentage points
4pm: Stocks up on both sides of the Atlantic
The FTSE 100 has added almost 60 points or 0.7% so far today, climbing to 8,385 with half an hour to go of the session.
Despite declines for some large miners, bond proxy stocks like utilities, and housebuilders, it was another strongly positive day for the London blue-chip index.
Rentokil Initial topped the leaderboard as its third-quarter update was not as bad as a recent profit warning led some investors to fear.
Ladbrokes and Foxy Bingo owner Entain also rose on a stronger quarterly trading update, which led it to nudge up its full-year guidance and impress analysts.
The FTSE 250 was also heading higher, adding 101 points or 0.5%.
Elsewhere, the ECB cut interest rates, as expected, with president Christine Lagarde saying the central bank is "breaking the neck of inflation" and expects a "soft landing" for the wider euro-zone economy.
This led to a further softening in the euro to the lowest levels in two and a half months versus the US dollar.
US stocks on Wall Street were higher, while an unexpected fall in US initial jobless claims and other positive US data led to more greenback appreciation and the pound maintaining around a two-month low.
"The oil prices' 9% drop from last week's high is taking a breather ahead of US crude oil inventories data," says Axel Rudolph, Senior Technical Analyst at online trading platform IG. "Meanwhile the gold price trades in record highs whilst aiming for the $2,700 per troy ounce mark."
3.47pm: More support for AIM?
There have been more demands for the government to support London's small caps today.
A report today, published by New Financial in partnership with Abrdn, Euroclear, Winterflood and the Quoted Companies Alliance (QCA), has called for "a concerted effort across government, regulation, and the industry [to] reverse the ‘doom loop’ and revitalise what should be a vibrant component of UK capital markets".
Entitled 'the future of smaller company capital markets in the UK', the report notes the decline in "virtually every metric" compared to the wider market, including a fall in the number of listed companies valued below £1 billion, a fall in new issues, a collapse in demand from retail and institutional investors, and a "reversal in performance".
The report suggests the challenges facing smaller companies are common across the wider market: "stemming the exodus of pensions from UK equities; re-engaging retail investors; resetting risk culture and the balance between risk, growth, and stability; or addressing governance and regulatory hurdles".
Earlier, the boss of investment group Kelso Group Holdings PLC (LSE:KLSO) also called on the government to provide more support for AIM, calling it "the lifeblood for many small and growing British businesses".
3.26pm: ECB 'breaking the neck' of inflation, says Lagarde
ECB chief Christina Lagarde, in response to a question, says: “Have we broken the neck of inflation? Not yet. Are we in the process of breaking that neck? Yes.”
In the press conference after the meeting, she said the disinflationary process was “well on track”.
All of the data since the September vote “were heading in the same direction - lower”, which had improved confidence among the ECB governing council members that the central bank was on track to hit its 2% inflation goal.
While Germany is seen to be on course for recession, Lagarde said the council does not see a recession for the eurozone as the most likely scenario. “We are looking at a soft landing,” she said.
3.15pm: Buy-now, regulate later
The UK government will reportedly soon unveil plans for new regulations for the buy-now, pay-later (BNPL) sector, with the FCA set to take over governance.
New rules will require BNPL companies to assess consumers' creditworthiness and ensure that loans are genuinely affordable, according to a CityAM report citing people familiar with the matter.
A six-week consultation is set to close at the end of next month, allowing companies like Klarna to feedback on the new rules than three years after a clamp-down was first mooted.
2.48pm: Semis lead Wall Street gains
US stocks have opened higher, led by small caps and tech giants.
The Nasdaq Composite has climbed 0.5% in early trades while the Russell 2000 has jumped 1.6% (correction, dodgy graph).
Both the Dow Jones and S&P 500 are up just over 0.3%, while the Russell 2000 rose initially before falling 0.1%.
Biggest risers among the Nasdaq 100 tech titans are generally in the semiconductor sector, with the leaderboard topped by Broadcom Inc (NASDAQ:AVGO, ETR:1YD), followed by Super Micro Computer Inc, Micron Technology Inc, ARM Holdings PLC, then not far behind it's NVIDIA Corp and Advanced Micro Devices Inc (NASDAQ:AMD, ETR:AMD).
In London, the FTSE 100 is up 0.65% and the FTSE 250 just under 0.6%.
2.21pm: Lloyds hikes mortgage rates
Following Barclays and NatWest hiking mortgage rates earlier this week, Halifax has followed suit today, despite expectations that the Bank of England will cut borrowing costs next month.
From tomorrow, the UK's biggest mortgage lender, part of Lloyds Banking Group PLC (LSE:LLOY), will raise increases on two-year and five-year fixed mortgages by between 0.11% and 0.24%.
Halifax will also raise rates on some mortgage transfers and other products for those looking to either remortgage or extend their existing loans.
Commenting on the move, Rohit Kohli, director at broker The Mortgage Stop, said the big lenders are "looking to protect their profit margins", even though he acknowledged "growing expectations" of the Bank of England cutting the base rate cut next month, following the lower inflation figures yesterday.
Following moves from these two giant high street lenders, he said it was "a surprise move which other lenders may soon follow".
Stephen Perkins, managing director at Yellow Brick Mortgages, said: "Expect U-turns over the coming weeks, unless they are anticipating greater than predicted economic fallout from the Autumn budget."
1.47pm: Revival of Northern powerhouse?
The northern segment of the HS2 rail line scrapped by the former Tory government could be revived by the new Labour government.
A report, from LBC and citing “insiders”, suggested that the Phase 2a leg, which was meant to connect Birmingham to Crewe in Cheshire, could end up seeing the light of day.
Former prime minister Rishi Sunak made the controversial decision last year to scratch ‘Phase 2’ of the high-speed rail project in order to save £36 billion...read more
1.40pm: European shares on the up
In the run-up to the ECB decision, European shares had flattened off (in the case of Germany's DAX, France's CAC 40 and Italy's FTSE MIB) or dropped into the red (for Spain's IBEX).
Following the decision coming in as expected, the stock benchmarks have ticked up a little.
The DAX is up 0.7%, the CAC 1.2%, and the MIB 1.1%, while the IBEX is almost back to flat.
In London, the FTSE 100 is up 0.55%. Thanks to the slower pay growth and lower inflation data boosting hopes for rate cuts, it has gained around 120 points so far this week, around 1.5% to regain the 8,375 mark last seen in late August.
The FTSE 250 is up 131 points or 0.6% so far today at 21,111, up 330 points or 1.6% so far this week. This takes the mid-cap index back to levels seen in the last week of September.
In currency markets, the euro has dropped 0.25% against the dollar to $1.0835 and 0.26% versus the pound to £0.8340.
The pound is back flat against the dollar, meanwhile, at $1.2989.
1.18pm: ECB cuts to 3.25%, as expected
The European Central Bank has cut its key interest rates by 0.25 percentage points, as markets expected, with its main rate lowered to 3.25%.
"We did this because incoming data show we are well on track to reach our inflation goal," the ECB said.
"The incoming information on inflation shows that the disinflationary process is well on track. The inflation outlook is also affected by recent downside surprises in indicators of economic activity. Meanwhile, financing conditions remain restrictive."
Inflation is expected to rise in the coming months and then decline back towards the governing council's target over next year, the ECB statement said.
1.14pm: Big cap IPOs to start again soon
Good potential news for the IPO market, as private capital colossus Blackstone says it is planning IPOs for some of its larger investments.
Alongside reporting third-quarter earnings today, the New York group's president Jonathan Gray told the Financial Times that "discussions have gone from theoretical to practical" as stock market investors are now interested again.
He said Blackstone is "preparing to take some portfolio companies public" and these talks are now focused on the timing of potential listings for the larger investments in its portfolio.
Larger caps are better suited to being listed on public markets than smaller companies, he said.
The FT noted that Blackstone’s investments include Medline Industries, Merlin Entertainments (AIM:MERL), various data centres and logistics warehouses.
With interest rates coming down, analysts have been suggesting that private equity groups will start to look at IPOs again.
In the UK, UBS said these IPOs could include a host of well known 'unicorns' such as Revolut, Monzo, Brewdog, Gymshark, Starling Bank, eToro and DAZN.
EY also forecast a rebound in global listing activity into 2025, as inflation and interest rates decline.
12.17pm: London and European stocks up, US futures flat
The FTSE 100 and 250 are increasingly on the front foot as the day goes on, up 0.4% and 0.6% now, after both struggling with their footwork in the first hour, much like many of the batsman in the Pakistan v England test match in Multan.
In the past hour or so the pound has strengthened against the dollar, up 0.2% to back above $1.30 and a similar amount versus the euro. The dollar index is down 0.1%.
European markets are also firmly in the green, but US futures are only slightly above flat.
AI chip colossus NVIDIA Inc, however, is up 3% premarket, with fellow semiconductor stocks also higher, such as a 2.6% gain for AMD.
This seems to be on the back of stellar earnings from Taiwanese chipmaker TSMC, with revenues and gross margins both beating expectations, with wafer shipments up 15%.
It also released strong guidance for Q4, with better sales and margin than expected, which the company says is down to the strong AI boom, which is continuing to boost sales.
While earlier results this week from ASML were weak, this was driven by the non-AI segments of its business.
11.42am: ECB preview
There are two key events in financial markets today, the ECB policy decision and the Netflix Inc (NASDAQ:NFLX) earnings this evening, says market analyst Kathleen Brooks at XTB.
"Both events are highly anticipated, and the market has big expectations: the ECB will cut rates and signal a new more dovish phase, while Netflix is set to announce a stellar quarter of earnings growth and news about future revenue streams."
Brooks says she agreed with the market in predicting the ECB "will turn super dovish", but does think there is "no room for error".
As of this morning, the market was fully pricing in just over two 25bps rate cuts from the ECB by the end of the year, with more cuts priced for next year on top, with Bloomberg’s 'ECB Speak' index pointing to ECB officials being even more dovish than they were during the peak of the pandemic.
"This also suggests that ECB officials are singing from the same hymn sheet, as the typically hawkish German ECB members also shift to a dovish stance," says Brooks, compared to the the US Fed, where members hover somewhere around neutral and markets have switched from expecting a 50bps rate cut at the November Fed meeting to expecting a 25bps rate cut.
Investors should not be too complacent, suggests Joshua Mahony at Scope Markets.
"Despite the widespread confidence that we will see the likes of the ECB, FOMC, and BoE all slash rates in the coming months, the ongoing recovery for the dollar highlights an element of underlying concern amid a trio of risks from the Middle East, US earnings, and election," he says.
"With the ECB expected to ease, it should come as no surprise to see EURUSD under pressure once again today, with the pair falling into a fresh two-month low."
Against the pound, the euro is down 0.1% at £0.8352.
While the FTSE is up 0.4%, European markets are generally in even more bullish mood, with Germany's DAX rising 0.75%, France's CAC and Italy's FTSE MIB both up 1.1%, while Spain's IBEX is just above flat due to a fall for giant retailer Inditex.
11.25am: Another London IPO?
Selkirk Group PLC, a shell company looking to buy "an undervalued company or business in the UK" in the consumer, technology and digital media sectors, has announce its intention float on London's junior market.
It is led by executive chairman Iain McDonald, the former chair of THG and an early investor in ASOS PLC (LSE:ASC), Anatwine and Eagle Eye Solutions Group PLC (AIM:EYE), who also sits on the board Boohoo Group PLC (AIM:BOO).
McDonald, who this year stepped down from THG after 14 years, wants to raise £7.5 million through a placing in connection with the IPO and target a first investment with a valuation of between £30 million and £1 billion.
Assuming a £7.5 million raise, Selkirk has agreed to 20% of this being invested by a subsidiary of Kelso Group Holdings PLC (LSE:KLSO) and 18% from McDonald's Belerion Capital vehicle.
11am: FTSE banks and aerospace offsetting miners
Three hours into Thursday's trading and the FTSE indices are getting more into their stride.
The FTSE 100 is up 28 points or 0.3% at 8,357, while the FTSE 250 has risen 86 points or 0.4% to 21,066.
Some blue-chip miners are still exerting a downward pull, but oil giants Shell and BP are both higher, though crude prices are little moved.
Banks (HSBC, Barclays and Standard Chartered) are adding their weight to an upward move, along with aerospace & defence (Rolls-Royce, BAE Systems, Melrose) also.
Rentokil and Entain are both extending their leads at the top of the leaderboard, up 9% and 6% respectively now.
10.37am: Tesco solar deal
Tesco PLC (LSE:TSCO) has signed a 15-year deal to source solar energy for 10% of its UK electricity demand.
The contract to buy electricity from the new 373MW Cleve Hill solar farm in Faversham, Kent is Tesco’s largest power purchase agreement to date, a statement said.
Once completed next year, the 560,000 solar panels at the partly will power the equivalent of 144 of Tesco’s large stores.
It is a "significant step in our journey towards carbon neutrality across our own operations by 2035,” said Tesco chief executive Ken Murphy.
10.10am: N Brown - analyst 'surprised it lasted this long'
Shares in N Brown Group PLC (AIM:BWNG) are up 43% this morning, after the board of the Jacamo owner said it was prepared to back a cash offer from board member Joshua Alliance (two board members actually if you include his dad, the former chairman).
The owner of JD Williams and Simply Be seems on course to "join the ranks of UK stocks being taken private", says Russ Mould, investment director at AJ Bell.
He says the clothing retailer "has had a difficult time on the stock market over the past 10 years", with the 40p takeover comparing to around £4 a decade ago.
"It has struggled with fierce competition, tired brands, legal issues, over-estimating the opportunity for plus-sized fashion and for a while seemed to make more money from interest on customer credit than it did from selling clothes," says Mould.
“Many investors gave up on the stock a long time ago so it’s a surprise N Brown has lasted this long as a listed entity.”
9.56am: 'Patriotic millionaires' call for higher capital gains taxes
Among the bundles of pre-Budget lobbying in the papers in recent days there is an interesting report today.
A group of “patriotic millionaires” has urged the chancellor to increase capital gains tax as they say this would not damage investment and entrepreneurship.
Patriotic Millionaires UK, a campaign group of rich self-made entrepreneurs calling for higher taxes on the rich, have contributed to a report by the Institute for Public Policy Research (IPPR) that is urging Rachel Reeves to increase CGT (top rate of 28%) to the same rate as income tax (top band is 45%).
The group includes Mark Campbell, co-founder of piemaker Higgidy, who says: “The UK needs a fairer tax system to invest in its future, and those of us who’ve benefited the most should contribute more so that we have a healthy society and economy for future entrepreneurs to operate within.”
Pranesh Narayanan, research fellow at IPPR, says: “The recent fear mongering from some that increasing capital gains tax will take the economy back to the stone ages is pure hyperbole."
9.47am: Rentokil 'above downgraded expecations' say analysts
On Rentokil Initial PLC (LSE:RTO), analyst Sam Dindol at Stifel says the main thing is that full-year profit guidance was unchanged, following the September profit warning.
Stifel has a 'hold' rating on the pest controller, which the analyst says is "given near-term trading trends are likely to remain subdued following the September profit warning. The key upside risk comes from PE interest and the actions of activist investor Trian, which may look to accelerate change."
At UBS, Nicole Manion notes that Rentokil reports North America organic growth "marginally above downgraded expectations" at 1.4%, versus consensus at 0.9%.
She notes more detail in the release about integration actions underway at Terminix, with ‘minimal’ disruption at locations where systems migration has taken place, plus changes in the North American leadership team, with a new chief marketing officer and chief operating officer, as well as the group looking for a new CFO for the region.
She notes that with the delay to synergies in the US, the consensus currently forecast of adjusted PBT rising to circa £765 million, "may see 1-2% downgrades".
9.26am: Entain, Rank get analyst approval
Gambling sector analyst Greg Johnson at Shore Capital on Entain PLC (LSE:ENT), says the third-quarter update "confirmed the improving revenue trends", with pro-forma digital net gaming revenue (NGR) up 9%, "and importantly the return to growth in the key UK market, ahead of initial expectations and stronger than anticipated".
Full-year EBITDA for the Coral and Sportingbet owner is now expected to be at the top-end of the £1.04-1.09 billion guidance range.
"With digital growth now back at the long-term trend rate and market share having stabilised, the current valuation remains wrong, although budget concerns will likely weigh near term," Johnson says.
On Rank Group PLC (LSE:RNK), Johnson says it was "a highly encouraging Q1 update" and "a further positive milestone on this journey".
Momentum from the end of its last financial year seems to have continued into the Mecca Bingo and Grosvenor casino owner's new financial year, with NGR up 12%, "comfortably ahead of our full year assumptions of 5%".
He is keeping his full-year estimates unchanged at this stage, given the uncertainty around the budget, but "see upside to forecasts were current trends to continue".
9am: Deliveroo and Mecca bingo
Shares in Deliveroo PLC (LSE:ROO) pedalled up 4% as it reported 6% growth in transactions in the third quarter.
Orders climbed 2% to result in gross transaction value in the UK and Ireland jumping 7%.
Elsewhere, Grosvenor casinos and Mecca Bingo operator Rank Group PLC (LSE:RNK) shares are now down 1.25%, having risen 6% in early trades.
It posted an update showing net gaming revenue grew by 12% in the first quarter, with digital growth of 15% outstripping the 10% for physical venues, and Rank saying it expects operating profit for the full year to be in line with expectations.
8.39am: Mid-caps down
The FTSE 100 is back just above flat now at 8,330, while the FTSE 250 is down slightly, nine points lower at 20,970.
Movers among the mid-caps include Tate & Lyle PLC, down 3% in what looks like some mild profit-taking after reports yesterday that the food ingredients group is a takeover target.
Advent International is apparently preparing a potential takeover bid, the Financial Times revealed late yesterday, though no formal offer has been made.
AJ Bell PLC (LSE:AJB) shares are down 2% (from recent all-time highs) after a year-end update shows net flows ahead of expectations for the past quarter, with inflows of £1.5 billion in the fourth quarter.
The company mentions an increase in customers taking tax free cash from the platform ahead of the budget, but also strong inflows from customers looking to take advantage of the tax relief prior to potential tax changes, so overall not a huge impact on flows.
8.15am: FTSE fighting for direction
The FTSE 100 has opened like a ping-pong ball, bouncing higher and lower in the first few minutes of trading as buyers and sellers rush to complete trades, largely cancelling out big movements for the index.
An initial 5-point gain has shifted to a 5-point deficit at 8,323.73.
Rentokil Initial PLC (LSE:RTO), up 7.6%, is top of the leaderboard after its third-quarter results were not as bad as feared, and it maintained full-year guidance, but trimmed expectations for next year.
Second is Ladbrokes owner Entain PLC (LSE:ENT), up 3% after upping full year guidance.
Miners are a big drag, with Antofagasta PLC, Rio Tinto PLC and Glencore PLC down between 2.2% and 1.5%, as metals prices fall on China disappointment (see below).
Top of the fallers is paper and packaging maker Mondi PLC (LSE:MNDI) as it reported lower earnings for the past quarter due to a big fall in sales amidst planned maintenance, softer seasonal demand and higher input costs.
8am: Mixed update from Rentokil
Rentokil Initial PLC (LSE:RTO) has kept its full-year guidance unchanged but said the difficult integration of its Terminix acquisition in North America will see 'synergies' deleted by at two to three months.
The pest controller said the integration "continues to go well" but that as it will be piloting new pay plans and satellite branches, "there will be a review early in the New Year to assess elements of the programme, delaying the timing of synergy delivery".
For the third quarter, the FTSE 100 group reported flat revenues year on year, up 3.8% at constant exchange rates, with organic growth of 2.6%, softening from the 2.8% in the first half.
Pest control, which accounted for 80% of revenue last year, grew organically by 2.2%, the same in the first half, with North America bouncing back to 1.4% in the third quarter from the 1.0% in the second quarter. Management had given guidance for the second half of circa 1%.
7.48am: Entain ups guidance
Ladbrokes and Sportingbet owner Entain PLC (LSE:ENT) has upped its full-year guidance after reporting stronger-than-expected results for the third quarter.
The Ladbrokes and BetMGM owner’s net gaming revenue (NGR) rose by 8% on a reported basis and by 10% in constant currency, supported by growth across all key markets.
BetMGM, Entain's joint venture with MGM Resorts, saw an 18% increase in NGR during the quarter, exceeding analysts’ estimates...read more
7.31am: Alliance family bid for N Brown
There's a fair bit of FTSE 350 company news this morning, but what's caught the eye is another takeover bid.
This is for N Brown Group PLC (AIM:BWNG), the owner of online clothing stores Jacamo, Simple Be and JD Williams.
The offer has been made at 40p by a vehicle owned by one of the board, non-executive director Joshua Alliance, compared to the last closing price of 27p and an average price over the past year of less than 20p.
Valuing the group at £191 million, the offer from Joshua Alliance's has been backed by his father, Lord David Alliance, who is a fellow non-executive board member and owns 33.41%. Added to the 6.6% owned by Joshua, the family forms a 'concert party' that with several other family members owns 53.4% of the N Brown shares.
N Brown's independent directors intend to recommend the offer unanimously.
7.20am: China may weigh on miners
That flatness for Chinse stocks might point to a potential brake that holds back the FTSE, with copper prices down and likely to weight on London's heavyweight miners.
"It’s yet another day of stimulus announcements in China, and another round of letdowns for investors," says market analyst Ipek Ozkardeskaya at Swissquote Bank after Chinese authorities today announced a 4 trillion yuan initiative to facilitate funding thousands of public and private projects in 170 cities of China.
"But in vain, the announcement was again seen as too small to match the People’s Bank of China’s (PBoC) massive monetary easing, and failed to give the Chinese equities a sustainable boost," she says.
Copper and iron ore futures are down this morning, with crude oil little moved.
"China’s inability to cheer investors up and the fading worries that Israel will attack the Iranian oil facilities, combined with a deteriorating global demand outlook suggest that it’s not a matter of if, but a matter of when and by how much US crude will sink below the $70pb level," Ozkardeskaya adds.
7.16am: Further FTSE 100 gains expected
Further FTSE 100 progress is anticipated on Thursday after a positive session on for US stocks overnight and with traders eyeing the European Central Bank policy decision later.
London's blue-chip index is being called 17 points higher on futures markets, adding to the near-80 points accumulated yesterday to finish at just over 8,329.
Overnight, the Dow Jones led the rebounds for Wall Street, climbing 0.8%, while the S&P 500 rose 0.5% and the Nasdaq Composite 0.3%.
Asian markets are mixed this morning, with Japan's Nikkei and India's Sensex down 0.5% and 0.4%, the Hang Seng up 0.4% in Hong Kong and the Shanghai Composite flat. The Asia Dow is up 0.3%.