- FTSE 100 finishes 34 points higher
- JD Sports benefits from Nike figures
- Kingfisher falls after figures
4.50pm: FTSE closes higher as strength in equities powers markets into positive territory
The FTSE 100 finished the day on strong footing with a 0.5% gain at 7,477 points.
A risk-on mood dominates the day in financial markets, and equities have found the strength to move higher once more, said Chris Beauchamp, chief market analyst at online trading platform IG.
“Rising bond yields continue to bolster financial stocks around the globe, and after the recent strength in commodity names, today it is the turn of the FTSE 100’s finance contingent to rise. Still, after the huge bounce from early March the index, and markets generally, is going to need a major new catalyst to drive it higher from here.”
3.47pm: Market shrugs off economic and Ukraine concerns
Leading shares are off their best but remain positive as we head into the close.
The FTSE 100 is up 26.69 points or 0.36% at 7469.08, despite the continuing conflict in Ukraine with no peaceful solution in easy reach.
The mid-cap index is also higher, up 0.57% at 21,125.
Ahead of the chancellor's spring statement tomorrow, investors have shrugged off news of higher UK borrowing costs and a CBI report showing a record number of manufacturers expect to raise prices in the coming weeks, adding to the pressures on living costs.
How much chancellor Sunak does tomorrow to ease any of these pressures remains to be seen.
Banks continue to be supported by the prospect of further interest rate rises, following hawkish comments from US Federal Reserve chairman Jerome Powell in a speech on Monday and St. Louis Fed president James Bullard today.
HSBC Holdings PLC (LSE:HSBA) is 3.2% higher, NatWest Group PLC (LSE:NWG) is up 3.01%, Lloyds Banking Group PLC (LSE:LLOY) has been lifted 2.98% and Standard Chartered PLC (LSE:STAN) is ahead by 2.69%.
Insurers are also wanted, with Prudential PLC (LSE:PRU) putting on 3.78% and Aviva PLC (LSE:AV.) adding 3.07%.
JD Sports Fashion PLC (LSE:JD.) has climbed 3.02% after a positive update from Nike.
But results from B&Q owner Kingfisher PLC (LSE:KGF) have disappointed, and its shares are down 4.02%.
It reported record revenues and profits, but was cautious about the outlook
AJ Bell investment director Russ Mould said: "Kingfisher benefited from people looking to do up their homes during the pandemic, however the world has since moved on and, despite management reporting a strong start to the current year, there has to be a risk that the company’s moment in the sun has passed.”
3.15pm: Oil slips after attempted recovery
Oil continues to be fairly volatile.
It lost early gains as profit takers moved in, edged higher again, and is now just about in the red.
Brent crude is down 0.29% at US$115.29 while West Texas Intermediate is off 1.24% at US$110.73.
2.44pm: Wall Street on the up
Wall Street stocks started higher on Tuesday, shaking off the falls of Monday after the hawkish comments from Fed chair Jerome Powell on interest rates.
In New York, the Dow Jones Industrial Average added around 155 points at 34,708. The S&P 500 gained around 16 at 4,477.
The tech-heavy Nasdaq Composite index added around 59 points to stand at 13,898.
Shares in Nike raced ahead as the sports shoe and clothes posted third-quarter results, which beat analysts’ estimates due to robust demand for its products across North America.
And for its current fiscal year, the firm reiterated expectations for sales to grow mid-single-digits from the year-earlier period. Nike shares added 5.8% in New York to US$137.60.
Meanwhile, traders today continue to monitor the ongoing war in Ukraine, global inflationary pressures and supply chain issues as well as corporate earnings.
In the UK the FTSE 100 is up 35.78 points or 0.48% at 7478.17.
1.10pm: US bond market hints at recession fears
US bond yields are rising but this could be signalling worries about a recession rather than rising inflation.
AJ Bell investment director Russ Mould said: “It was former US President Bill Clinton’s economic adviser James Carville who said that if he were reincarnated, he would like to come back as the bond market because then ‘you can intimidate everybody.’
"Now that US bond yields are surging and prices are falling, stock market investors need to seriously think about whether it is time to be frightened or not.
“Benchmark 10-year yields are still way below the prevailing rate of inflation, to suggest that fixed-income investors either don’t believe in the US Federal Reserve’s apparent new-found resolution to tighten monetary policy or fear that a recession will strike first and force the American central bank to quickly backtrack (again).
“The 10-year US Treasury yield stands at 2.33%, its highest level since May 2019, but that is still miles below the prevailing rate of inflation of 7.9%.
“The strange shape of the US yield curve also suggests that holders of US Treasuries are far from convinced that the Fed will follow through on its threats of faster interest rate rises, and Quantitative Tightening (QT) from May onwards, should it deem them necessary. Again, yields are nowhere near the prevailing rate of inflation and are instead closely hugging the five-year, five-year forward inflation expectation of 2.3%."
12.34pm: Banks dominate UK risers
Banks are now dominating the risers in the UK blue chip index.
We already knew interest rates were going to continue rising, as central banks try and deal with soaring inflation.
But the hawkish comments in a speech by US Federal Reserve chair Jerome Powell have suggested the increases could come more quickly than previously expected.
So HSBC Holdings PLC (LSE:HSBA) is 3.49% higher, NatWest Group PLC (LSE:NWG) is up 2.97%, Standard Chartered PLC (LSE:STAN) has climbed 2.81% and Lloyds Banking Group PLC (LSE:LLOY) has been lifted 2.45%.
Overall the FTSE 100 is fairly stable, up 30.39 or 0.41% at 7472.78, although off the day's best level of 7490.
Investors are also keeping an eye on the situation in Ukraine, and the prospect of peace talks with Russia.
Ukrainian president Volodymyr Zelensky said any deal agreed would be put to a referendum.
He told news site Suspilne: "I explained it to all the negotiating groups: when you speak of all these changes (in a future accord) and they can be historic...we will come back to a referendum.
"The people will have to weigh in on certain kinds of compromise,"
11.35am: US markets set for positive open
US stocks are expected to open higher on Tuesday on expectations that US interest rates will rise quickly after Federal Reserve Chairman Jerome Powell talked tough on Monday that aggressive increases may be needed to fight inflationary pressures.
Recent rises in oil prices and the likelihood that the war in Ukraine will lead to higher commodity prices and supply chain constraints are sparking fears of spiraling inflation across the globe, keeping markets jittery.
Futures for the Dow Jones Industrial Average gained 0.5%, while those for the broader S&P 500 index rose 0.4%, and contracts for the tech-heavy Nasdaq-100 were up 0.5%.
“Jerome Powell wants to see the US interest rates rise faster. At a speech titled ‘Restoring Price Stability’ yesterday, Powell told the National Association for Business Economics that there could be a 50-bp hike in May, and at subsequent sessions, if the Federal Reserve (Fed) officials conclude that it’s more appropriate to move faster,” Ipek Ozkardeskaya, senior analyst at Swissquote said.
“And it will probably be more appropriate for the Fed to move faster, as inflation will certainly continue spiking toward fresh multi-decade highs given that the latest numbers don’t even factor in the war-led surge in oil and commodity prices, and the Covid-led restriction measures that add an additional pressure on the global supply chain crisis," she added.
Last week, the Federal Reserve raised interest rates by a quarter-point, its first increase since 2018. Now, rapid rate hikes are expected after Powell noted in a speech that inflation is “much too high” while the “labour market is very strong.” His remarks led to a jump in bond yields.
“Powell is now playing with an open hand, as he doesn’t necessarily rock the boat with surprise hawkish moves which would get investors to dampen their assets faster than necessary. And a panicked market is not the ideal environment to hike rates,” Ozkardeskaya concluded.
Possible EU sanctions on Russian oil and an attack on Saudi oil facilities on Sunday are propping up oil prices. The news flow on the war in Ukraine and on the possibility of an oil embargo is likely to affect sentiment, keeping in focus wider concerns about global inflation.
Back in the UK, the FTSE 100 is off its highs but still heading in the right direction.
It is currently up 30.58 points or 0.41% at 7472.97.
11.11am: UK factories see strong growth but warn on prices
UK manufacturers have reported strong growth in the three months to March, according to the latest CBI industrial trends survey.
But the balance of manufacturers expecting to increase prices rose to a survey record high, showing the worsening pressure on costs following the Ukraine conflict.
A balance of +80% forecast rising prices, up from +77% in February. The balance is the difference between the percentage of firms reporting an increase and those reporting a decrease.
The balance of manufacturers expecting to raise prices in the next three months rose to a survey record high in March (a question first asked in January 1975). pic.twitter.com/brp453lJsW
— CBI Economics (@CBI_Economics) March 22, 2022
Output volumes continued to grow with a balance of +27% from +26% in the three months to February, and a similar rate is expected in the three months ahead.
Output increased in 10 out of 17 sectors, with growth driven by the motor vehicles and chemicals sub-sectors.
Total order books matched the record level seen in November 2021 (+26% in March, from +20% in February. Export order books were above normal to the greatest extent since March 2019 (+7% from -7% in February).
Anna Leach, CBI deputy chief economist said: “This survey highlights strong order books and output growth, but the cost pressures facing manufacturers have been amplified by the conflict in Ukraine.
“The Government must use tomorrow’s Spring Statement to provide relief to both energy intensive industries and vulnerable consumers."
Following the news the FTSE 100 has eased a little, now up 34.59 points or 0.46% at 7476.98.
10.53am: Kingfisher under pressure
Leading shares remain in positive territory, helped by the banking sector betting on further interest rates rises after hawkish comments from US Federal Reserve chair Jerome Powell.
The FTSE 100 is up 42.14 points or 0.57% at 7484.53, with HSBC Holdings PLC (LSE:HSBA) 3.34% higher and NatWest Group PLC (LSE:NWG) up 3.15%.
But Kingfisher PLC (LSE:KGF) has fallen 4.74%. The B&Q owner reported results for 2021 well ahead of market forecasts but said profits will fall this year as the lockdown bounce continues to ease and inflation pressures mount.
Meanwhile Auto Trader Group PLC (LSE:AUTO) is down 3.61% as the online car marketplace operator said it would buy Autorama, which operates under the Vanarama brand, for up to £200mln.
9.47am: Oil slides on profit taking
Oil has slipped back after making early gains.
Brent crude is down 1.58% at US$113.87 a barrel while West Texas Intermediate, the US benchmark, is 2.16% lower at US$109.7.
Victoria Scholar, head of investment at interactive investor, said: “Oil started the session strong, having surged 7% on Monday but it has since turned negative with Brent crude retreating back below $115 a barrel.
"This week’s rally has been driven by the divide between European Union foreign ministers over whether to follow the US and the UK by banning Russian oil, amid concerns about EU’s energy. This has prompted fresh supply concerns in a market that is already grappling with a significant demand-supply imbalance, bolstering the value of both WTI and Brent crude again.
"However, the shift from green to red suggests some traders are taking profit after Monday’s jump and serves as a reminder that this is a highly volatile and uncertain period for the market."
So the UK oil giants are barely changed, with BP PLC (LSE:BP.) up 0.08% and Shell PLC (LSE:SHEL, NYSE:SHEL) ahead 0.28%.
Even so, the FTSE 100 continues on its merry way, up 42.80 points or 0.58% at 7485.19.
9.04am: UK market outperforming many peers so far this year
Despite rising inflation, higher borrowing costs and a war in Europe, the UK's leading index is holding up pretty well.
The FTSE 100 is currently up 43.33 points or 0.58% at 7485.72, and only 0.38% down on the year, unlike many other major markets.
AJ Bell investment director Russ Mould said: “The FTSE 100 extended its recent strong run and is now not too far off the levels it reached before the Russian invasion of Ukraine and only marginally lower year-to-date.
“This doesn’t mean investors have shrugged off the first major war in mainland Europe in a generation but it reflects an index which is relatively well positioned against the current backdrop.
“It has substantial commodities exposure, a decent yield which appeals in an inflationary environment and more discounted valuations than seen in other global markets.
“By contrast the US S&P 500 and Germany’s DAX index, despite both eking out recoveries in the last week or two, are down 7% and more than 10% respectively since the start of 2022."
8.27am: Banks help push market higher
Leading shares have made a positive but cautious start, as investors await the chancellor's spring statement and assess the latest developments in Ukraine.
The FTSE 100 is up 26.62 points or 0.36% at 7469.01 in early trading.
With hawkish comments yesterday in a speech from US Federal Reserve chair Jerome Powell, the likelihood of further interest rate rises has lifted bank shares.
NatWest Group PLC (LSE:NWG) is up 2.18% while HSBC Holdings PLC (LSE:HSBA) is 2.14% higher.
Among the other risers, JD Sports Fashion PLC (LSE:JD.) is up 3.69% after strong results overnight from Nike.
7.43am: Interest payments push up goverment borrowing costs
UK government borrowing rose by more than expected last month, in a piece of bad news for chancellor Rishi Sunak ahead of tomorrow's spring statement.
With debt interest payments pushed up by rising inflation, the Office for National Statistics said the budget deficit was £13.1bn in February, compared to forecasts of £8.1bn.
This was the second-highest February borrowing since monthly records began in 1993. It was £2.4bn less than in February 2021 but still £12.8bn more than in February 2020, before the coronavirus (COVID-19) pandemic.
On the positive side, borrowing for the first 10 months of the year was £138.5bn, £25.9bn less than the official Office for Budget Responsibility forecast which may give the chancellor some leeway tomorrow.
Sunak is under pressure to help out households who face surging energy prices and higher food costs, as well as a controversial rise in national insurance payments.
He is expected to announce a cut in fuel duty as one measure in his spring statement/mini-budget, but this is not likely to do much to ease the jump in living costs.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "We expect the chancellor to tread cautiously tomorrow and to announce a limited package of measures, amounting to a net giveaway in 2022/23 of about £13bn or 0.5% of GDP.
"That probably would mean that households still will experience this year the biggest annual decline in their real disposable income since the Second World War."
6.50am: Flat start expected for Footsie
The FTSE 100 is expected to open in impassive mood on Tuesday as the continued rumblings of war in Ukraine acts as a depressant but also lifts commodity-related companies.
Oil prices, in particular, are marching higher again, with Brent crude up 3% to US$119.10 per barrel on reports that the EU is mulling a more stringent embargo on Russian energy later this week.
This is lifting the FTSE’s oil majors BP PLC (LSE:BP.) and Shell PLC (LSE:SHEL, NYSE:SHEL), with the latter reported to be reconsidering its decision to withdraw from the large new Cambo oilfield off the west coast of the Shetland Islands.
But any support for these companies is predicted to be balanced out, with the Footsie starting flat, after adding 37.66 points or 0.5% to reach 7,442.39 at the start of the week.
Wall Street had an off night, with the Dow Jones down 0.6%, Nasdaq falling 0.4% and S&P 500 just below flat.
Putting traders off their equities, for the time at least, Federal Reserve chair Jerome Powell said policymakers would not hesitate to raise rates more sharply if required, opening the door to potentially more than one hike of 50 basis points to bring inflation under control.
In the UK, the focus is on tomorrow’s spring statement, with today’s UK public sector borrowing numbers “expected to reinforce the narrative that the Chancellor of the Exchequer has room to be a little generous when he gets up to deliver his spring statement tomorrow in the House of Commons”, says market analyst Michael Hewson at CMC Markets.
Government borrowing is expected to come in as much as £23bn lower than the Office for Budget Responsibility’s forecasts, thanks to better than expected tax receipts.
“With soaring energy prices set to more than double energy bills over the next 12 months, Rishi Sunak is faced with a double whammy of a slowing economic picture, as well as higher interest rates due to rising inflation,” said Hewson.
“Nonetheless any relief offered tomorrow is likely to be a small price to pay compared to the damage to the UK economy if he does nothing.”
6.50am: Early Markets - Asia / Australia
Asian stocks were mostly higher on Tuesday as Hong Kong-listed shares of Alibaba surged after the firm announced an upsizing of its share repurchase program from US$15 billion to US$25 billion.
Japan’s Nikkei 225 lifted 1.48% and South Korea’s Kospi gained 0.97%.
The Shanghai Composite in China dipped 0.01% while Hong Kong’s Hang Seng index jumped 1.89%.
Australia’s S&P/ASX200 ended the day 0.9% higher, helped by energy and mining stocks.