LaToya Harding
Wall Street and FTSE higher as traders look to Fed rate decision
LaToya Harding
·Business Reporter, Yahoo Finance UK
Updated
The FTSE 100 (^FTSE) advanced on Monday, with Wall Street following its lead, ahead of the US Federal Reserve’s interest rate decision due on Wednesday. It also comes ahead of a key jobs report on Friday that could set the tone for market direction in the near-term.
Meanwhile European stocks were muted as the Japanese yen fluctuated wildly overnight. The currency surged after hitting a fresh 34-year low against the dollar, fuelling speculation that Japanese authorities may have intervened to support the currency for the first time since late 2022.
The currency has come under renewed pressure after the Bank of Japan (BoJ) kept interest rates on hold and refused to tighten monetary policy further at its meeting last week.
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London’s benchmark index was 0.1% higher by the end of the session.
Germany's DAX (^GDAXI) lost 0.2% and the CAC (^FCHI) in Paris headed 0.2% into the red.
The pan-European STOXX 600 (^STOXX) was up 0.1%.
Wall Street opened higher with a surge in Tesla (TSLA) shares on the back of expectations it will launch its self-driving software in China.
UK house prices climb over £5,000 driven by demand for smaller homes.
Follow along for live updates throughout the day:
LIVE COVERAGE IS OVER23 updates
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Well that's another day done — thanks for following along. Be sure to tune in again tomorrow when we will be back for more of the latest market news and happenings across the global economy.
Have a good evening folks!
- LaToya Harding
Bread, biscuit and beer prices could rise due to wet weather
The price of bread, biscuits and beer could be at risk of rising thanks to months of wet weather in the UK.
According to a new report by the Energy & Climate Intelligence Unit (ECIU), harvests of crops including wheat, barley and oats could fall by more than 17% this year compared to 2023.
If there is a shortfall in UK crops, food producers may have to import more from overseas, potentially increasing costs, it said.
It comes as the UK has had one of the wettest winters on record with many fields too damp to be planted with new crops.
The ECIU said that UK production of wheat, barley, oats and oilseed rape may drop by four million tonnes in 2024.
- LaToya Harding
Job vacancies fall and unemployment rises in March
Job hunters are facing a turbulent year ahead with vacancies falling and unemployment rising in March.
An early snapshot of the UK jobs market has revealed that vacancies dropped again last month, down 0.46% to 862,294, holding back economic growth.
Here are the key findings from Adzuna:
PR, Advertising and Marketing roles fell hardest (-11.09%), while Travel (+16.27%) and Manufacturing (+6.09%) continue to drive growth
As job vacancies fall and unemployment rises to 4.2%, average advertised salaries continue to rise – up 0.41% month-on-month and 2.95% year-on-year to £38,638
The East Midlands continues to be the region with the highest annual increase in salaries, up 6.48% annually
Andrew Hunter, co-founder of Adzuna, said:
“The outlook remains poor...Adzuna’s data, collected month-to-date in April, suggests no clear signs of a hiring recovery just yet.
"The rise in salaries is expected, with wages often lagging behind labour market slack so these figures will likely embolden the Bank of England’s monetary policy committee to begin cutting interest rates this summer.”
- LaToya Harding
The UK regions with the least emergency savings
People in Northern Ireland (68%), West Midlands (64%) and the North East (64%) officially have the smallest amount of emergency savings in the UK, it has been revealed.
A new 8,000-person study from credit management company Lowell revealed that more than 1 in 10 Brits have no savings at all, and a third have less than £500.
On a national scale, 59% lack sufficient emergency savings, which is up from 56% in 2020.
John Pears, UK chief executive of Lowell UK, said:
“In a year marked by soaring inflation and interest rates, people have had to make tough decision to make ends meet, with the results from our latest survey shining a light on the widespread impact across different regions.
“We hope that the results from our recent survey will help to spark meaningful discussions and encourage people to use this time to assess their financial health and take proactive steps towards greater financial resilience amidst ongoing economic uncertainties.”
- LaToya Harding
Why interest rates matter to bonds, stocks and cash
Interest rates are currently at an all-time high as central banks such as the Bank of England, the US Federal Reserve, and the European Central Bank aim to bring inflation down to their targets.
In the video we explain how interest rates and the stock market have an inverse relationship. When interest rates rise, share prices fall and the return available from cash and bonds becomes more attractive.
- LaToya Harding
Delivery app Getir to leave UK
Delivery app Getir is planning to exit the UK, putting as many as 1,500 jobs at risk.
The Turkish business, which also owns food delivery app Gorillas, said it was heading out of Britain, Germany, the Netherlands and the US, to focus on its home market.
“This decision will allow Getir to focus its financial resources on Turkey,” the company said
- LaToya Harding
Shell earns $1bn a year from US crude trading
Documents in a lawsuit filed by a former Shell employee has revealed that its US crude trading regularly earns around $1bnevery year.
Reuters has the details...
Testimony by a former head of Shell's US crude trading division filed in a Texas state court has offered a rare look at the huge profits of its trading operations and the multi-million dollar bonuses bestowed on traders.
John Dimech, who was a manager in Shell's crude oil trading group in Houston for 11 years, said in a deposition last year that the crude trading unit typically made between $950 million to $1bn a year.
That is between 13% and 15% of Shell's overall US pre-tax profits in recent years, according to calculations based on company filings.
Shell's 2022 tax contribution report detailed a pre-tax profit of just over $7bn total in the US that year, while its 2021 pre-tax profit stood at about $6.36 billion.
- LaToya Harding
Wall Street set to open higher
Wall Street is set to open higher today as traders shift there focus to the US Federal Reserve’s interest rate decision due on Wednesday.
It also comes ahead of a key jobs report on Friday that could set the tone for market direction in the near-term.
Mohit Kumar, chief economist Europe at Jefferies, said:
"We are not expecting a lot from the Fed this week. Powell would likely reiterate his latest comments that the recent set of strong data would delay rate cuts.
"Focus would also be on reducing the pace of (quantitative tightening)."
- LaToya Harding
Ireland returns to growth
Ireland’s annual inflation rate slowed to 1.6% in April, down from 1.7% the month before, new data has shown.
Meanwhile, first-quarter gross domestic product (GDP) increased 1.1% quarter-on-quarter, after shrinking slightly in the second half of last year.
The government has long cautioned against using GDP to accurately measure economic growth as it is routinely impacted by multinational activity. Its preferred measure, modified domestic demand, is not included in the flash estimates.
Analysts at Investec say:
"Recent revisions now mean that the Eurozone was in a technical recession in H2, albeit by the slimmest of margins. Given that economic data at the start of 2024 has been more positive, we expect the Eurozone exited that recession in Q1, with a 0.1% quarterly expansion in output.
- LaToya Harding
Tesla shares climb 10% in pre-market trading
Tesla stock was up 10% in premarket trade on Monday, having dropped 1.1% on Friday amid a mixed batch of news for the electric car company.
Following layoff announcements in the region, CEO Elon Musk has reportedly clinched key approvals in China to introduce the company's self-driving software to the market.
Reuters reported, citing two sources, that, the company had reached an agreement with Baidu (BIDU) to use the Chinese tech firm's mapping license for data collection on China's public roads.
The collection and storage of Chinese data, and how much of it is allowed back into the US has been a key concern for years with the interaction of US companies on Chinese soil, or visa versa.
Musk is looking to obtain approval to transfer data collected in the country abroad to train algorithms for its autonomous driving technologies, a source told Reuters.
Read more: Trending tickers: Tesla, Hipgnosis, oil, yen
Read more: Stocks that are trending today
- LaToya Harding
Oil prices fall
Oil prices have slipped today with Brent crude, the international benchmark, down 0.6% to below $89 a barrel after gaining 2.5pc last week. Meanwhile West Texas Intermediate dropped 0.4% towards $83.
It comes as US Secretary of State Antony Blinken is expected to step up efforts to secure a truce in Gaza during a visit to the region.
Ricardo Evangelista, senior analyst at ActivTrades, said:
Brent oil prices fell in early Monday trading as the market assessed reports of peace talks between Israel and Hamas.
This development offers a glimmer of hope for de-escalating the conflict, thereby lessening the risk of its regional expansion.
“The spectre of a full-scale war in the Middle East, which could disrupt crude exports from one of the world's primary producing regions, has been the main driving force behind recent oil price increases.”
“Traders may begin factoring in these expectations of de-escalation in Gaza, which could exert downward pressure on prices.”
- LaToya Harding
Pound rises ahead of Fed decision
The pound (GBPUSD=X) is up against the dollar this morning ahead of a decision next week from the US Federal Reserve.
Sterling rose 0.3% against the dollar to $1.2530 and was up 0.1% against the euro, which is worth 85p.
ING strategist Francesco Pesole said:
“Expect Bank of England rate expectations to be influenced primarily by the Fed and US data this week, as domestic drivers will be quite scarce.”
- LaToya Harding
Eurozone economic sentiment falls
Economic sentiment in the EU and the euro area has marginally declined as Europeans worry about their employment prospects.
The Economic Sentiment Indicator fell by 0.3 points to 96.2 in April in the EU, and by 0.6 points to 95.6 within the eurozone.
The employment expectations gauge dipped more sharply.
Confidence among industrial firms, and among services companies also dropped while consumer confidence inched up but remained in negative territory.
Within individual countries, economic sentiment deteriorated significantly in France (-4.8 points) and more moderately in Italy (-1.3 points), while it improved markedly in Spain (+2.3), Germany (+1.5) and Poland (+1.5). The ESI remained broadly stable in the Netherlands (rising by 0.3).
- LaToya Harding
Philips shares surge after legal case settlement
Shares in Dutch medical device maker Philips climbed by a third after it settled a legal case in the US over its breathing devices.
Philips has agreed to pay $1.1bn, which is less than feared, to settle all personal injury claims filed in the US over its sleep apnea machines.
The devices were recalled in 2021 over concerns that they used foam which could degrade and become toxic, carrying potential cancer risks.
Philips shares jump more than 30% on US recall settlement news, but the road is long to get back to June 2021 levels, when sleep apnea machine issues were first unveiled pic.twitter.com/qAuc8D5XNL
— IG (@IGcom) April 29, 2024
- LaToya Harding
Public could benefit from £30bn a year windfall from digital pound
The government could see its fiscal space increased by £30bn a year by the end of the decade if it goes ahead with plans for a digital pound.
This is according to new analysis from research and campaign group Positive Money.
As a new publicly-issued form of money, a digital pound would allow the public to recapture ‘seigniorage’ - the profits from issuing money, it said.
Like with banknotes, the publicly-owned Bank of England would generate seigniorage revenue from issuing a non-interest bearing digital pound in exchange for interest-bearing assets, with profits transferred to the Treasury.
With the introduction of a digital pound expected by the end of the decade, Positive Money calculates that by 2029 the government could be set to gain between around £15bn a year in lower adoption scenarios, where 20% of bank deposits are switched to a digital pound, and upwards of £30bn a year in higher adoption scenarios, where 30% of deposits are switched to a digital pound.
Simon Youel, author of the research and head of policy and advocacy at Positive Money, said:
“While politicians often claim there is ‘no money’ for increased public spending, the government looks set to receive a significant windfall from the introduction of a digital pound in the coming years, which doesn’t seem to have yet factored into debates over ‘fiscal headroom’.
“The government would have to decide how this money is used. Though gains from a digital pound could be simply used to cut taxes or increase day-to-day spending, the most impact could perhaps be achieved by investing funds in the UK’s long-term economic development through a national development bank, which could channel finance towards a just green transition.”
- LaToya Harding
FTSE finding favour
London's benchmark index has now added 6% so far this year, with its constituents additionally providing an average dividend yield of 3.6%.
Richard Hunter, head of markets at Interactive Investor, said:
"There are increasing questions as to whether the FTSE 100 has finally found favour on the global stage.
"The premier index continues to scale new highs, where It will not have escaped the attention of international investors that the UK remains relatively cheap in terms of valuation compared to most developed markets.
"Rising commodity prices and especially gold have boosted large sectors to be found within the premier index, while the relative weakness of sterling has been an additional boost.
"Around 70% of FTSE100 earnings come from overseas, making them more profitable when translated back to sterling."
- LaToya Harding
Mortgage repayments up 60% since 2021
Zoopla has revealed that higher mortgage rates are adding to the affordability pressures on UK buyers, as well as dragging on house price inflation.
The company calculated that the average home buyer taking out a 70% loan to value mortgage now faces annual mortgage repayments that are 61% higher today than three years ago.
Mortgage rates currently stand around 4.5% today compared to below 2% in March 2021, meaning average annual mortgage repayments have risen from £7,100 to £11,400.
However, only two-thirds of this increase is driven by higher mortgage rates, with a third down to the fact that house prices are 13% higher than 3 years ago, Zoopla said.
Londoners face the largest increase of £7,500 per year while
Buyers in the South West, South East and East of England face paying at least £5,000 per year more.
Across other regions and countries of the UK, the increase is lower, at between £2,350 and £3,900 a year.
- LaToya Harding
Frasers launches new share buyback
Frasers Group (FRAS.L) has risen 2% today after announcing a new buyback programme. It plans to buy back £80m worth of shares in a bid to reduce the share capital of the company.
The group, which is largely owned by retail retail tycoon Mike Ashley, and which owns the likes of Sports Direct, will buy as many as 10 million of its shares.
Deutsche Bank (DB) initiated coverage of the stock with a “Buy” recommendation and 1000p target price.
- LaToya Harding
Blackstone agrees to buy Hipgnosis in £1.3bn deal
Hipgnosis has agreed to an improved takeover offer by US private equity giant Blackstone, valuing the company at around £1.3bn.
The offer of $1.30 per share beats a previous deal made between the board of the company and US-based Concord Music last week.
A bidding war has played out between the two suitors for the business, which owns the rights to the back catalogues of artists including Shakira, Justin Bieber, and Neil Young. Blackstone had previously made a $1.24 a share offer.
The deal represents a 48.1% premium on its closing price on 17 April before the first takeover approach was made.
Robert Naylor, the Chair of Hipgnosis, said:
“The board is pleased to unanimously recommend this US$1.6bn offer for Hipgnosis from Blackstone. Since we started our strategic review, we have been clearly focused on looking at all the options to deliver shareholder value.
"We are delighted that, following competitive interests in acquiring Hipgnosis, our investors now have a chance to immediately realise their holding at an increased premium.”
- LaToya Harding
Regional house price breakdown
Continuing on the previous post, let's dive into how house prices are performing on a regional level...
Scotland saw the strongest growth in prices for flats over the last year, rising by 5.9% or £6,489 to sit at £116,477.
Only one UK region saw a decrease in flat prices over the last year, falling by 2.9% in Yorkshire and Humberside.
At a national level, flats remain 11.9% (£17,349) above pre-pandemic levels, with East Midlands posting the biggest gains (18.7%, £20,923) of any region.
The North East has seen prices for terraced houses rise the most on an annual basis, up by 7.6% (£8,938).
Once again, the North East saw the biggest increase in average price, up by 5.9% (£10,381) annually.
However, three regions saw average prices for semi-detached properties fall: Eastern England (-1.3%), Greater London (-1.2%), and the South East (-0.8%).
Yorkshire and Humberside recorded the biggest increase in detached house prices of the last year, up by 5% (£17,300).
- LaToya Harding
UK house prices climb over £5,000 driven by demand for smaller homes
UK house prices experienced a growth of 1.9% in February, indicating a £5,318 increase over the past year. This means properties are now only £7,801 shy of the peak observed in August 2022.
Demand among buyers for smaller homes helped to drive growth in UK property prices in the early months of this year, according to Halifax.
Flats and terraced houses made up for 57% of all homes purchased by first-time buyers last year. However, this varies by region. For example in London, which has the highest average property price in the UK by some margin, flats and terraced homes account for 90% of all first-time buyer purchases.
Flats prices rose most quickly at the start of the year than any type of property.
Annual growth reached 2.7% in February, or £4,290 up over the last year. The average price paid of £163,016 is just £5,551 below the peak price recorded for flats in August 2022.
Alice Haine, personal finance analyst at Bestinvest, said:
“This could signal that the race for space is over, reflecting the toll high living costs and high interest rates have taken on buyers’ affordability levels.
"With interest rates holding at 5.25% since August last year and inflation, although easing now, remaining high throughout 2023, people found their mortgage affordability levels severely constrained."
- LaToya Harding
Asia and US stocks
Stocks in Asia were higher overnight as traders continued the optimism from the rally on Wall Street on Friday.
The Hang Seng (^HSI) climbed 0.5% in Hong Kong while the Shanghai Composite (000001.SS) was also 0.8% up by the end of the session.
Trading on the Nikkei (^N225) was closed in Tokyo for a Japanese national holiday, Showa Day. Japan has a series of holidays coming up known as the Golden Week.
It came as the yen swung wildly, surging after hitting a fresh 34-year low against the dollar and fuelling speculation that Japanese authorities may have intervened to support the currency for the first time since late 2022.
The dollar’s rally came as another forecast-topping US inflation report knocked hopes for interest rate cuts this year from the US Federal Reserve.
The yen slipped to 160.17 to the greenback in volatile morning trade, with liquidity thin amid a holiday in Japan. The fall stirred speculation that authorities would intervene to arrest its slide.
It later bounced back to 155.05, and Bloomberg reported the move suggested investors were weighing the prospect that officials would step in to financial markets.
The currency has come under renewed pressure after the Bank of Japan (BoJ) also refused to tighten monetary policy further at its meeting last week.
- LaToya Harding
Coming up...
Good morning, and welcome to our first markets live blog of the week. Stay tuned to keep updated with what's happening across the global economy, and what's moving markets.
Here's a quick look at what's on the agenda for today:
7am: Trading updates: Schroder Income Growth Fund, Beazley, DPP
7am: Sweden’s GDP report for Q1 2024
8am: Spanish inflation report for April
10am: Eurozone consumer confidence, economic & industrial sentiment data for April
10am: EU Industrial Confidence
11am: Ireland’s GDP report for Q1 2024
3.30pm: The Dallas Fed manufacturing index
Watch: Why interest rates matter to bonds, stocks and cash
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