Wall Street stock fell in New York on Thursday while the FTSE pushed higher. (John Freeman)
Stocks on Wall Street fell on Thursday as the US economy grew at a slower pace than expected.
US gross domestic product (GDP) increased at an annualised rate of 1.3% in the first quarter of 2024, below an initial estimate of 1.6%, according to official figures.
Personal spending, which is the economy’s main driver of growth, rose 2%, compared to the previous estimate of 2.5%. Meanwhile, the Federal Reserve's preferred metric of inflation showed a 3.3% increase in prices in the first quarter, slightly down from previous projections.
The FTSE 100 (^FTSE) and European stocks retreated from their losing streak on Thursday, making gains in the afternoon, despite ongoing inflation fears.
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Traders are concerned that global interest rates will stay higher for longer as the yields on government bonds push higher. On Tuesday, inflation in Germany came in higher than expected.
London’s benchmark index gained 0.6% on the day, breaking a previous run of six days of losses
Germany's DAX (^GDAXI) rose 0.1%, while the CAC (^FCHI) in Paris headed 0.5% into the green
Well that's all we have time for today — thanks for following along as always. Be sure to join us again tomorrow when we'll be back for more news of what's moving markets and happening across the global economy.
Until then... have a good evening all!
LaToya Harding
Queen could sell catalogue to Sony for $1bn
Sony Music is reportedly in talks to buy the music catalogue of rock band Queen.
According to Bloomberg, the company is working with another investor, which could potentially total $1bn (£790m).
The deal would cover Queen's songs and all related intellectual property - including the rights to logos, music videos, merchandise, publishing and other business opportunities.
Discussions over the sale have been taking place since last year.
It comes as Sony also acquired a 50% interest in Michael Jackson’s music earlier this year from the late singer’s estate. This was at a cost of at least $600m (£472m).
LaToya Harding
Red Bull in sponsorship deal with Leeds United
London, UK. 26th May, 2024. Leeds United forward Georginio Rutter (24) during the Leeds United FC v Southampton FC sky bet EFL Championship Play-Off Final at Wembley Stadium, London, England, United Kingdom on 26 May 2024 Credit: Every Second Media/Alamy Live News (Every Second Media, Every Second Media)
Red Bull has snapped up a minority stake in Leeds United, set to become the club’s main shirt sponsor next season.
The energy drinks brand already has deals with football clubs RB Leipzig, Red Bull Salzburg and New York Red Bulls.
Leeds will spend a second consecutive season in the Championship after losing to Southampton in last weekend’s play-off final at Wembley.
Oliver Mintzlaff, Red Bull’s head of corporate projects and investments, said:
“The ambition to bring Leeds United back to the Premier League and establish themselves in the best football league in the world fits very well with Red Bull.”
LaToya Harding
US jobless claims rise
The number of Americans filing new claims for unemployment benefits rose slightly, but still remains on historically low terms.
There were 219,000 fresh initial claims for jobless support last week, an increase of 3,000.
The initial claims data is a proxy for the number of workers laid off by US companies and has been low in recent years as firms have held onto labour.
US new weekly unemployment claims last week were 219,000. That was +3,000 WoW. pic.twitter.com/a3yko0DCVF
The US economy grew at a slower pace than expected, new data has shown. Gross domestic product (GDP) increased at an annualized rate of 1.3% in the first quarter of 2024, below an initial estimate of 1.6%, according to official figures
Personal spending, which is the economy’s main driver of growth, rose 2%, compared to the previous estimate of 2.5%.
Meanwhile, the Federal Reserve's preferred metric of inflation showed a 3.3% increase in prices in the first quarter, slightly down from previous projections.
⚠️Breaking! US GDP Growth Revised Lower: The US economy expanded at an annualized rate of 1.3% in Q1 2024, down from the initial estimate of 1.6%, and significantly lower than the 3.4% growth recorded in Q4 2023. #MMpic.twitter.com/0DTVOvVBT2
Mortgage rates were virtually unchanged this week, but future homeowners are still struggling to find a decent price and more are taking loans well into retirement.
The average rate on a two-year fixed deal this week stood at 5.89%, the same as before, while rates for a five-year deal came in at 5.35%, slightly lower than last week's 5.39%, according to figures from Uswitch.
With fewer BoE interest-rate cuts now expected in 2024, lenders appear split on the direction of travel for mortgage rates, with increases and cuts across the big six lenders.
Ether price rallies on ETF speculation as Solana surges
Ether (ETH-USD), the native cryptocurrency of the Ethereum blockchain, rallied in the past fortnight, outperforming bitcoin. This comes as the US Securities and Exchange Commission (SEC) approves eight spot ether exchange-traded funds (ETFs).
On 23 May, the SEC approved spot ether ETF applications from fund managers including BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galaxy and Franklin Templeton.
In the two weeks leading up to the approval and afterwards, the value of ether rose by over 28%, reaching $3,748 (£2,948) as of the time of writing. In the same period, other major crypto tokens, bitcoin (BTC-USD) and solana (SOL-USD) increased by 4.2% and 6.25% respectively, according to Coingecko data.
The anticipation surrounding the impact of these ETFs led to a surge in investor interest. Derivatives market indicators show that many traders expect ether to increase in value once these ETFs begin trading on major exchanges, such as the Chicago Board Options Exchange (CBOE), Nasdaq (^IXIC) and the New York Stock Exchange (^NYA) in the coming weeks or months.
Nightcap has walked away from a potential rescue deal for struggling Revolution Bars.
The company, which runs 46 UK bars including Dirty Martini chains, said it was “disappointed” its merger proposal had been rejected by its competitor earlier this week.
Last month Revolution launched a sale process and major restructuring plans in a bid to stay afloat. The plans included a £12.5m fundraising and the closure of 18 venues.
However, on Tuesday it rebuffed the proposed offer from Nightcap, warning it was “incapable of being delivered”.
LaToya Harding
Wall Street set to open lower ahead of GDP data
Wall Street is set to open in the red later today as investors eye US GDP data.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said:
"All eyes are on the US GDP update due today, and the Fed's favourite gauge of inflation - the core PCE number - due tomorrow. The US GDP is expected to have slowed significantly in the Q1, with - however - a significant rise in price pressures (that's already priced in), while the core PCE print for April could hint at some easing in the latest pickup in inflation.
"The best outcome would be a reasonably soft growth coupled with easing price pressures, but we could realistically get a slowing growth coupled with an insufficient easing in price pressures, instead. To the Fed, the inflation number will matter more than the growth update as regardless of the deteriorating economic growth, the progress in inflation will determine whether the Fed could remain on path to cut rates this year.
"Therefore, it will be hard to interpret today's GDP data before seeing tomorrow's PCE print. And even then, Citigroup thinks that this week's data will trigger limited price action; the upcoming US jobs and CPI updates in the next weeks will matter more."
LaToya Harding
Almost half of people dipping into savings
Almost half of Brits are dipping into their savings to cover everyday expenses as the squeeze on household finances continues to bite.
People are having to dip into their savings around three times a month on average, according to a new survey by Compare the Market.
Some 27% said they are unable to save anything at all, while a quarter can only save between £100 and £250 per month.
Andy Hancock, chief growth officer at Compare the Market, said:
It is encouraging that people are seemingly confident about their ability to manage and pay their everyday bills in the summer months ahead, signalling a positive outlook on the consistency and reliability of their financial situations.
However, our research shows that many people are still struggling to save on a monthly basis, and a significant number are having to rely on those savings each month to pay for everyday bills or lean on credit cards for additional costs such as holidays.
LaToya Harding
Eurozone unemployment rate falls to record low
People stand in line outside a government job center in Madrid on Monday, July 19, 2010. In the first quarter of this year Spain limped out of nearly two years of recession with unemployment at over 20 percent, the highest in the 16-nation eurozone. (AP Photo/Arturo Rodriguez). (Arturo Rodriguez, Associated Press)
Unemployment in the eurozone has fallen to a new record low, statistics body Eurostat has said.
The seasonally-adjusted unemployment rate across the euro area fell to 6.4% in April, down from 6.5% in March. This was the lowest since the single currency was created.
In the wider EU, the jobless rate remained at 6%.
Eurostat estimated that 13.149 million persons in the EU, of whom 10.998 million in the euro area, were unemployed in April, adding:
Compared with March 2024, unemployment decreased by 103 thousand in the EU and by 100 thousand in the euro area. Compared with April 2023, unemployment increased by 95 thousand in the EU and decreased by 101 thousand in the euro area.
South Africa’s rand has fallen more than 1% against the US dollar today, as early results from the South African general election come in.
Early results suggest the governing African National Congress (ANC) party could lose its majority, although it is still expected to remain as the largest party.
Reuters said:
"With results in from 10% of polling stations, the ANC’s share of the vote in Wednesday’s election stood at 42.3%, with the pro-business Democratic Alliance (DA) on 26.3% and the Marxist Economic Freedom Fighters (EFF) on 8.1%, data from the electoral commission showed.
"If the final results were to resemble the early picture, the ANC would be forced to make a deal with one or more other parties to govern - a situation that could lead to unprecedented political volatility in the coming weeks or months.
#SouthAFrica: the rand slips as early results show the ANC's vote dropping a lot.
From ballots from 10% of voting districts counted, the ANC's share is 42.3%. Big drops in Gauteng, KZN and W Cape.
Global stock market gains are likely to continue over the summer months, an analyst has said.
This is despite short-term concerns over interest rates, and it also historically being a slow season for equities.
Nigel Green of deVere Group said:
"One of the primary drivers of the current bullish market sentiment is the expectation of sustained economic growth, despite this meaning that we expect global monetary policy to remain ‘higher-for-longer’ for the rest of the year.
“Institutions like the International Monetary Fund (IMF) and Bloomberg have recently revised their global economic forecasts upwards, further fuelling investor confidence. This positive outlook is underpinned by strong economic indicators, particularly in the US.
“Key metrics such as consumer spending, job creation, and corporate earnings continue to show robust performance. This solid economic foundation fosters a sense of stability and resilience in the world's largest economy, reassuring investors of its continued growth trajectory.”
LaToya Harding
Auto Trader top FTSE gainer
File photo dated 01/01/21 of new cars at the port of Southampton. The new car market recorded its strongest February in 20 years, figures show. Registrations of new cars were up by more than 10% last month compared with February 2023, the Society of Motor Manufacturers and Traders (SMMT) said. Issue date: Tuesday March 5, 2024. (Steve Parsons, PA Images)
Auto Trader (AUTO.L) soared 13% on Thursday to the top of the FTSE 100 after beating full-year profit estimates.
The online car marketplace cashed in on “robust” demand for used cars with an 18% increase in pre-tax profits to £345m for the year to the end of March as two-thirds of UK car buyers used its platform.
It added that losses of £8.8m from its car rental business Autorama are expected to reduce, despite the leasing market remaining tight.
Nathan Coe, chief executive of Auto Trader, said:
This has been another year of strong financial, operational and strategic progress for Auto Trader.
We are confident in our prospects for the year ahead and, in the longer term, we see significant opportunities to continue growing our marketplace and to move more of the car buying process online, on Auto Trader.
LaToya Harding
De La Rue in takeover talks
De La Rue is in takeover talks with potential buyers of each of its core divisions, it has revealed.
The banknote printing company, which makes notes for the Bank of England and other central banks around the globe, said it had spoken to a “number of parties who have made proposals” related to either its currency or authentication operations.
Clive Whiley, chairman of De La Rue, said:
"Since my appointment a year ago, the board has considered a broad range of possible strategic alternatives including transactions with multiple parties which may involve a combination with, or the sale of, the group’s divisions.
"The board confirms that the discussions with the relevant parties are advancing, and we expect to update further at the time of the full year results in July."
LaToya Harding
Average tax refund up 6.1% annually
The latest data release by tax specialists, RIFT Tax Refunds, has revealed that the average taxpayer could be owed as much as £1,562 by HMRC, with this total having increased by 6.6% over the last year alone.
In 2023, the average tax refund owed by HMRC came in at £1,562, a 6.6% increase versus the previous year.
However, what many may not realise is that it is possible to claim a tax refund for up to the last four years, with the average four year refund currently sitting at just over £3,000 according to RIFT.
With the 2023/24 financial year having now come to an end as of 5th April this year, it means that anyone who hasn’t claimed a tax refund for the 2019/20 financial year is now unable to do so. But they are still well within their rights to claim for the last four tax years before next year’s April deadline.
While anyone could be owed a tax refund, some of the most common sectors include the armed forces, those working either offshore or in construction, as well as those working within the security sector.
In fact, in 2023 it was construction workers who were owed the most by HMRC, with the average one year tax refund claim coming in at £1,125, having increased by 3.7% year on year.
Those working in the security sector saw the largest year on year increase, with the average one year claim climbing by 3.9% to an average of £846, while the average one year claim for the armed forces also exceeded £800.
While offshore workers received the lowest amount for a one year claim, the average worker still secured a tax refund to the tune of £753 from HMRC in 2023.
LaToya Harding
Salesforce slips on weaker-than-expected revenue
Shares in Salesforce (CRM) plunged by over 16% in pre-market trading after the business software maker reported weaker-than-expected revenue and issued guidance that trailed Wall Street’s expectations.
Salesforce called for adjusted earnings per share in the current quarter of $2.34 to $2.36 on $9.2bn to $9.25bn in revenue. Analysts had expected $2.40 in adjusted earnings per share on $9.37bn in revenue.
Net income jumped to $1.53bn, or $1.56 per share, from $19m, or 20 cents per share a year ago.
The company's first-quarter adjusted earnings per share jumped 44% to $2.44, higher than expectations of $2.38.
Salesforce left its fiscal 2025 revenue forecast unchanged, but cut its operating margin expectations to 19.9% from its prior forecast of around 20.4%.
Chief executive officer Marc Benioff underscored the recent emphasis on profit and the long-term potential of artificial intelligence as positive for the company.
“We’re incredibly well positioned to help companies realise the promise of AI over the next decade,” Benioff said in a statement.
Brent oil prices (BZ=F) dipped during early Thursday trading, down 0.1% to 83.52 at the time of writing, primarily driven by fears over future demand.
The US economy remains resilient, with inflation continuing to be a concern.
Ricardo Evangelista, senior analyst at ActivTrades, said:
“Against this backdrop, the Federal Reserve has room to maintain higher rates for longer, a dynamic that bodes poorly for oil demand forecasts and puts downward pressure on prices.”
“Another consequence of this situation is a general fall in risk appetite in the financial markets, which also weighs negatively on the price of oil.”
LaToya Harding
UK car output down for second month in a row
UK car production slipped 7% year-on-year in April, falling for a second consecutive month.
The Society of Motor Manufacturers and Traders (SMMT) said on Thursday that manufacturers wound down existing models and more plants transitioned to electric vehicle (EV) production.
A total of 61,820 cars rolled off production lines last month, compared with 66,527 units in the same period last year. March production volumes were down by 27.1%.
It came as electrified vehicles, which included fully electric models, plug-in hybrids and full hybrids, represented 40.5%, up from 37.7%, of all cars produced.
Manufacturers produced a combined 25,031 units of EVs, a modest 0.1% rise on the previous year, the industry body said.
SMMT CEO Mike Hawes said:
"With a general election in a matter of weeks, the next government must ensure the conditions are right not just for the competitiveness of UK manufacturing, but for the investment required to transition the sector to a net zero future."
LaToya Harding
Dr Martens shares rise on cost-savings plan
File photo dated 03/08/07 of a general view of a Dr. Martens store in Covent Garden, central London. Bootmaker Dr Martens is expected to post tumbling profit and revenue amid weakness in the US, its biggest market, with turnover predicted to come in at less than £900 million, an 11% drop from last year when it broke the £1 billion barrier for the first time. Issue date: Sunday May 26, 2024. (Tim Ireland, PA Images)
Dr Martens (DOC.L) shares kicked 8% higher on Thursday after it laid out cost-saving plans of between £20-25m.
The iconic boot brand saw profits slide 43% last year amid struggling demand in its US wholesale business. Profit came to £97.2m as revenue declined by 12% to £877m.
After a number of recent profit warnings, the company said current trading is in line with expectations.
CEO Kenny Wilson said:
“Our FY24 results were as expected and reflect continued weak USA consumer demand. This particularly impacted our USA wholesale business and offset our Group DTC performance, where pairs grew by 7%. We have achieved robust performances in EMEA and APAC, and our supply chain strategy continues to deliver good savings.
“We are clear that we need to drive demand in the USA to return to growth in FY26 onwards and are executing a detailed plan to achieve this, with refocused and increased USA marketing investment in the year ahead.
"I am confident that the actions we are taking as we enter this year of transition will put us in good shape for the years ahead.”
LaToya Harding
Will the general election affect the UK property market?
The snap general election in early July is not expected to hit the UK housing market, with currently 392,000 homes in the sales pipeline working their way through to completion over 2024.
An increase in fall-throughs is unlikely due to the election announcement as there is not a huge divide in policy between the two main parties,” according to Zoopla.
“The announcement of the election will slow the pace at which new sales are agreed while greater choice for buyers will keep house prices in check over 2024. It's essential that those serious about moving in 2024 price their homes realistically if they want to achieve a sale,” executive director Richard Donnell said.
Still, the pace at which sales are being agreed is likely to slow in the coming weeks which means the total number of sales for 2024 could drop below 1.1 million.
LaToya Harding
Number of UK homes up for sale hits 8-year high
The UK currently has £230bn ($293bn) worth of houses in the market, the highest supply of homes for eight years, which will keep house prices in check for the rest of 2024.
The supply of homes for sale is 20% higher than this time last year, up £45bn on this time last year, with the average estate agent handling 31 homes for sale – the highest level of supply in eight years, according to Zoopla.
Richard Donnell, executive director at Zoopla, said:
“The growth in the supply of homes for sale is evidence of renewed confidence amongst homeowners, some of whom delayed moving decisions in 2023. The quarterly rate of house price inflation has picked up in recent months as more sales are agreed and prices firm."
Sales agreed are up 13% year on year and while most homes for sale are new to the market, around a third (31%) of homes for sale were marketed in 2023.
The growth in supply has been driven by a rebound in the number of three and four+ bed homes for sale as existing owners return to the market and feel more confident to move after rising mortgages hit demand.
LaToya Harding
Asia and US stocks
Stocks in Asia ended with another loss overnight, taking their lead from a retreat on Wall Street.=
The Nikkei (^N225) slumped 1.3% on the day in Japan, while the Hang Seng (^HSI) fell 1.3% in Hong Kong. The Shanghai Composite (000001.SS) was 0.6% down by the end of the session.
Across the pond on Wall Street, the S&P 500 (^GSPC) closed down 0.7% at 5,266.95, while the Dow Jones (^DJI) closed 1.1% lower at 38,441.54.
The tech-heavy Nasdaq Composite index (^IXIC) fell 0.6% to close at 16,920.58.
Yields on the benchmark 10-year US Treasury bonds hit a four-week high at 4.61%, up from 4.54% late on Tuesday.
LaToya Harding
Coming up...
Good morning, and welcome back to our markets live blog. As usual we will be taking a look at what's moving markets and happening across the global economy.
Here's a quick look at what's on the agenda for today:
7am: Trading updates: Dr Martens, Auto Trader, One Media
7am: Nationwide House Price Index
8am: Swiss GDP report for Q1 2024
10am: Eurozone unemployment report for April
10am: Eurozone confidence stats for May
10am: Statistics on EU trade with Ukraine
1.30pm: Second estimate of US GDP for Q1 2024
1.30pm: US jobless claims
Watch: How does inflation affect interest rates?
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