- FTSE 100 down 6 points at 9,277
- Centrica deal at core of UK-US 'golden age of nuclear' partnership
- News also lifts Rolls to new all-time high
- UK house prices in first annual fall since Jan 2024
- China industrial and consumer data weakens
4.53pm: FTSE little changed
The FTSE 100 closed modestly lower on Monday, down 6 points at 9,277 as investors held off making any major moves ahead of key meetings of the Bank of England and the Federal Reserve in the US.
“The pound is the second best performer in the G10 FX space at the start of the week as the dollar crumbles ahead of the Fed meeting on Wednesday,” noted Kathleen Brooks, XTB research director.
“The pound is at its highest level since July, even though yields are falling and the FTSE 100 is lagging a broader European equity market rally.”
4.02pm: Nuclear deals power gains, but pharma weighs
As the day's trading winds its way into the last half hour, the companies at the centre of two the day's main stories are at the top of the FTSE 100 leaderboard: J Sainsbury PLC (LSE:SBRY) and Centrica PLC (LSE:CNA).
The grocer was lifted 3.7% as news of talks with China's JD.com reminded investors of the potential for this asset to be sold off, even if talks have been curtailed due a disagreement over terms of a deal.
British Gas owner Centrica was powered up 3.9% by a deal to rolls out a potential fleet of small modular reactors around the country, announced as part of a wider UK-US nuclear pact.
Rolls-Royce was also lifted by the news that the two countries will fast-track nuclear reactor regulatory processes, and that it has begun the process to apply for US regulatory permissions for its Rolls-Royce SMR arm on the back of this.
The index was held back as its largest company, AstraZeneca PLC (LSE:AZN), fell 3.2% - possibly on Friday's news that it has paused plans to expand in Cambridge research, in what was being called a fresh blow to the UK pharmaceutical industry.
Other health sector names also weighed, with GSK, Smith & Nephew and Hikma also among the bigger fallers, indicating there may be other factors hitting sentiment.
BT Group PLC (LSE:BT.A) fell 2.3% after it announced that Sunil Bharti Mittal and one associate will join its board as the Indian billionaire follows up on his Bharti vehicle buying a 24.5% stake last year.
3.36pm: Pound likely to have a lively week
Cable, the trader nickname for the GBP-USD currency pair, is likely to have a "lively week" as central banks on both sides of the Atlantic will reveal their new monetary policy decisions in the next four days.
Fawad Razaqzada, market analyst at City Index, says there is also plenty of UK macroeconomic data this week that could see the currency pair moving.
He says he is maintaining a "bullish GBP/USD outlook" because US-UK interest rate differentials "are likely to narrow to zero in the next couple of months, with the Fed seen cutting rates while the BoE may now hold off until December".
UK jobs and pay data is due tomorrow morning, followed by Wednesday’s CPI release, setting the stage for Thursday’s monetary policy committee meeting.
"Unless we see a sharp drop in employment or a surprise easing in wages or services inflation, the BoE is likely to stick to the hawkish message it delivered at its August MPC meeting.
"That view is supported by market pricing, with less than 10 basis points of cuts priced in for this year, which will be influenced by incoming data."
UK inflation is "notably different" from the eurozone and the US, with Razakzada saying it is "arguably the key driver of BoE policy, outweighing everything else".
With the FTSE holding near all-time highs, he says "investors don’t seem to be too bothered" by the political noise, and the GBP/USD outlook "seems to be positive, and the pair could reach for the summer highs near 1.38, with the possibility of making its way towards 1.40 this week, if the Fed strikes a dovish tone."
The GBP/USD hit 1.3619 earlier, but is now back at 1.359, a gain of 0.26% on the day.
2.45pm: US opens mostly higher, Nvidia drags Dow
The main US stock indices are mixed again, with the Dow Jones down by a single-digit number of points, while the S&P 500 and Nasdaq are up 0.4% and 0.6% to new all-time highs.
Tesla is the top riser on the S&P, up over 6% after Elon Musk bought a big chunk of shares.
Elsewhere, Nvidia is down 1.2% on the China news, with is the main drag on the Dow.
Back in London, the FTSE 100 has slipped a little lower.
1.27pm: Rolls climbs to new high
Rolls-Royce Holdings PLC (LSE:RR.) shares are up 1.8% to a new all-time high as the company confirmed that its small modular reactor (SMR) business is in the process of applying for US regulatory permission, with the process on both sides of the Atlantic expected to be eased by a new US-UK nuclear pact announced on Monday.
In a joint statement, the UK and US governments said they will "fast-track nuclear reactor design checks" by recognising each other’s safety assessments, cutting duplication and speeding approvals to around 24 months for advanced designs such as the model that Rolls-Royce SMR has developed.
Rolls-Royce boss Tufan Erginbilgic welcomed the commitment of both governments to accelerate the deployment of new nuclear technologies.
"Rolls-Royce has unique capabilities in nuclear as the only company globally with full lifecycle experience, end-to-end capability and an established supply-chain," he said.
Meanwhile, British Gas owner Centrica is up close to two-year highs as well.
12.36pm: European stocks are up, US futures higher despite Nvidia
The FTSE 100 continues to snake its way sideways on Monday, against the background of a perkier pound.
London's mid-caps are higher, though, with the FTSE 250 rising almost 100 points or 0.5%
Over on the Continent, the CAC 40 is up 1.3% in Paris, while Germany's DAX has advanced 0.5%.
The French index is outperforming peers despite Fitch cutting France’s sovereign credit rating from AA- to A+ at the end of last week.
With this week bringing policy decisions from the US Fed, Bank of England, Bank of Canada, and Bank of Japan, amidst markets hitting record highs in several countries in past weeks, "there is a clear desire to focus on the benefits of looser monetary policy rather than focus on any signs of economic fragility," says Joshua Mahony at Rostro.
"Attention in the US remains fixed on trade and monetary policy, with US-China negotiations in Madrid likely to be strained by the Chinese ruling that Nvidia had violated anti-monopoly laws."
A ruling by the Chinese market regulator has dragged Nvidia shares down 1.4% in pre-market trade, putting downward pressure on the wider markets.
This has dragged the main Wall Street index futures back from earlier levels, with gains of 0.1%-0.2% expected from the Dow Jones, S&P 500 and Nasdaq later.
Last week’s stronger-than-expected US CPI print of 0.4% has all-but nailed on a quarter-point cut and no bigger from the Fed midweek.
Markets are pricing three-quarters of a percent in cuts from the Fed by the end of the year.
11.27am: Pound on the up
The pound is up 0.4% against the US dollar to $1.36, around a two-month high, and 0.2% versus the euro to £0.8640.
The dollar is down a little against the euro too, with a continuation of the bumpy slide for the DXY dollar index since the start of August.
In the background, the Federal Reserve is expected to cut interest rates tomorrow, for the first time this year.
After making some cuts this year the European Central Bank paused last week, while the Bank of England is set to pause this week after an on-off approach to policy loosening this year.
"However, the focus is unlikely to be on what the BOE is doing now and there could be two things to watch in this week’s BOE meeting," says Kathleen Brooks, market analyst at XTB.
"Firstly, there are some concerns that stubbornly high inflation, caused in part by public sector wage rises, will crimp the BOE’s ability to cut rates further and that 4% could be the UK’s new neutral interest rate.
"This week’s meeting could go some way to confirming if this view is correct."
Secondly, there have been calls for the BoE to slow the pace of quantitative tightening, where it sells the bonds on its balance sheet, as the process is contributing to government borrowing costs.
"The UK’s long term borrowing costs are at their highest level for nearly 30 years, and even the Bank has said that its QT program is adding to this pressure.
At the weekend, four former MPC officials urged the BoE to slow or reduce its bond sales, via a Guardian report.
Michael Saunders, a former MPC member now working at Oxford Economics, said it is "highly likely" that the pace of QT will be slowed, with gilt market and global bond market volatile, so keeping up the current pace of active sales "might have an undesirable effect on pushing up yields further".
This week sees the release of UK labour market and inflation reports, where headline CPI is expected to remain at 3.8%, driven by energy price increases, while the core rate is expected to fall a notch to 3.7% from 3.8%, and service price inflation is expected to decline slightly to 4.8% from 5% in July.
10.33am:
China retail sales were the lowest since last November, defying consensus expectations for a slight acceleration, says economist Duncan Wrigley at Pantheon Macroeconomics.
Retail sales growth rebounded in monthly terms, on a seasonally adjusted basis, to +0.17% in August from -0.13% in July and -0.25% in June, with car sales inching up in value terms but slowing in terms of numbers of passenger cars.
"The improvement in value growth versus slowing volume growth implies better pricing power, after the launch of the anti-involution policies in August."
Fixed asset investment extended its decline for a third straight month, he notes, with a slight month-to-month improvement "given how awful the July figures were, and with the rebound in new corporate loans in August suggesting funds being readied for investment".
Given the torrid summer weather hitting construction activity, this is likely to remain the official explanation, he adds.
Property investment dived 18.9%, infrastructure FAI dropped for the second month, while manufacturing FAI declined 1.3%, after a 0.3% dip, the first falls since early 2020.
"The NBS is likely to put the blame on weather disrupting construction, but other factors are probably also at play.
"The anti-involution campaign involves capacity and output controls to stabilise prices, but should also hit manufacturing investment as a side-effect.
"US tariff hikes and uncertainty have led to a sharp fall in China’s direct exports to the US, albeit largely offset by rising exports to the rest of the world.
"As a result, overall exports are still growing but at a slower pace, likely leading to less enthusiasm for investment in certain manufacturing sectors."
This extended summer slowdown "will trigger calls for more stimulus", and Wrigley think Beijing "will opt for further targeted support to counter downward forces, including tariff disruptions to exports, the anti-involution policy hitting manufacturing investment, and local government funding constraints for infrastructure projects".
10.16am: Saino's says no
UBS says Sainsbury talks with JD.com further confirm how the grocery business is the "main driver of value" for shareholders, not Argos.
Analyst Sreedhar Mahamkali at the Swiss bank, who raised his share price target on Friday, said the group has been focused on its Argos transformation programme to address growth/profitability challenges.
The first announcement, on Saturday, was "likely a natural progression of its strategy" and what seemed to be fairly advanced talks, the analyst said.
So the cancellation of talks seems a "short-term negative".
9.39am: BT appoints Sunil Bharti Mittal to boar5d
BT Group PLC (LSE:BT.A) shares are down as it announced that Sunil Bharti Mittal, along with Bharti Airtel boss Gopal Vittal, will join the board of the FTSE 100 group as the Indian billionaire follows up on his Bharti vehicle buying a 24.5% stake last year from France's Patrick Drahi.
BT said Mittal, founder and chairman of Barti Enterprises, and Gopal Vittal, vice chairman and MD of Bharti Airtel, have both been appointed non-independent non-executive directors, with Mittal joining the board's nominations committee.
The company said the appointments are part of a new "relationship agreement" with Bharti Global, which allows it to nominate two board representatives as long as it continues to hold a 20%-plus stake.
If the stake falls to between 10% and 20% this will fall to one board representative.
BT shares are down 3.2%.
9.14am: UK-US tech deals
As well as today's nuclear announcements, this week's Trump state visit is expected to be accompanied by several tech deals.
Nvidia is due to announce an investment in Britain’s biggest data center, near Blyth in Northumberlasnd, which has already got planning permission and investment from Blackstone's QTS infractructure arm and OpenAI also involved.
A "landmark technology agreement" is also expected to be signed as part of the visit to the UK, the British Embassy in Washington said on Saturday, with the aim of boosting collaboration between the two countries' tech sectors, especially artificial intelligence, semiconductors, telecommunications and quantum computing.
BlackRock is planning to invest $700 million in British data centres, Sky News reported on Saturday.
8.55am: Sainsbury's shares highest in four years
Sainsbury's shares are up over 5% to 324p, which looks to be the highest since August 2021 (when they hit 340p).
This morning's statement that talks with China's JD had ended followed a report in the Telegraph newspaper that discussions were being held about a potential disposal of Argos.
House broker Shore Capital notes that profit margins at Argos have been "relatively variable and at times low in recent years, the reasonably
weak British general merchandise market alongside variable weather conditions have also been more of a headwind than otherwise too".
"We can understand why Sainsbury has been open to exploring a disposal of Argos, so permitting more focus, something that we do not believe its shareholders will be wholly surprised to see either," writes analyst Clive Black.
8.41am: AO World-beater
AO World PLC (LSE:AO.) is one of the bigger risers on the FTSE 350, zipping over 9% higher after the electrical goods retailer raised its profit forecast to the top half of previous guidance and announced its first share buyback.
Consumer-focused revenues are set to grow 11% year-on-year in the six months to 30 September, with group revenue up 13%.
Off the back of that start to the year, the e-commerce outfit expects to deliver double-digit revenue growth in the first half of its financial year to March, with adjusted pre-tax profit range tightened up to £45-50 million from £40-50 million.
8.15am: FTSE starts flattish
The FTSE 100 started with a small jump higher but is now down two points at 9,281.16.
Telecoms and drug companies are weighing, with BT Group, AstraZeneca, Airtel Africa, Vodafone and GSK all the bottom end.
J Sainsbury PLC (LSE:SBRY) is top of the tree, up 4.2% after confirming talks with China's JD.com, though it said it has walked away.
7.59am: Swathe of US-UK nuclear deals announced
Splashed over all the papers is this morning's big announcement from Downing Street about a new "golden age of nuclear", with a swathe of deals announced involving the US and UK, agreed ahead of Donald Trump's state visit which begins tomorrow.
Centrica PLC (LSE:CNA), Rolls-Royce Holdings PLC (LSE:RR.) and the company behind Tritax Big Box REIT PLC (LSE:BBOX) are set to benefit from various small nuclear reactor deals and regulatory fast-tracking collaboration between the two governments.
British Gas owner Cetrica has teamed up with US company X-Energy to construct of a fleet of small modular nuclear reactors (SMRs) around the UK, starting with up to 12 advanced modular reactors at EDF and Centrica’s Hartlepool site, which is already designated for nuclear eneregy and could provide up to 960 megawatts (MW) of power, enough for 1.5 million homes.
Tritax had teamed up with Holtec and EDF to develop advanced data centres powered by SMRs at the former Cottam coal-fired power station in Nottinghamshire.
The two governments said they "will fast-track nuclear reactor design checks" by recognising each other’s safety assessments, cutting duplication and speeding approvals to around 24 months for advanced designs such as the Rolls-Royce SMR, which could be good news for the UK company as it currently looks to get its technology approved in the US.
7.31am: Sainsbury's confirms Argos sale talks, but has walked away
J Sainsbury PLC (LSE:SBRY) has confirmed talks with China's JD.com Inc (NASDAQ:JD) about a potential sale of Argos, which it bought in 2016.
The FTSE 100 grocer has put out a statement this morning, in response to weekend media reports, saying it has now ended the talks.
As the discussions progressed, it said, JD's demands for a potential acquisition have hardened such that China's largest online retailer by revenue is "now only be prepared to engage on a materially revised set of terms and commitments which are not in the best interests of Sainsbury's shareholders, colleagues and broader stakeholders".
Sainsbury's said Argos is the third most visited retail website in the UK and the group is "committed to delivering the strongest and most successful future for Argos customers and colleagues".
7.24am: China data slows
China retail sales were up 3.4% year-on-year last month, easing from 3.7% in July and below the 3.8% that economists expected.
Industrial production increased 5.2% in August, also backing off from 5.7% in July and below the 5.6% consensus forecast.
Fixed asset investment growth slowed to 0.5% for the year to date from 1.6% in July and below the consensus of 1.5%.
Property investment also dropped 12.9% in the year to date, extending from the 12.0% seen to July. Consensus was -12.5%.
7.15am: FTSE 100 to start in neutral
The FTSE 100 is poised to start the week in a low gear as traders keep their powder dry ahead of central bank meetings in coming days.
On the futures market, the London benchmark has been called one point higher. Last week ended on a down note, with a loss of 14 points at 9,283.2, but over the five days the index regained its mojo, climbing 75 points to return close to its record high.
Wall Street had a mixed end to last week, though the Nasdaq advanced to a succession of new all-time peaks, along with the S&P 500 and Dow, though the latter closed lower to wrap things up.
Asian markets are mixed this morning, with Japan's Nikkei up 0.9% but China's domestic Shanghai Compostite and India's Sensex both just below flat.
Chinese industrial and retail sales data earlier were weaker than expected.
Back in the UK, housing market data from Rightmove reveals a 0.1% decline in house prices than a year ago, the first annual fall since January 2024.
The dip in annual prices is driven by London and the south, as the south underperforms the rest of Great Britain.