Yahoo Finance AI chipmaker adds $277bn in history’s biggest ever stock rally
US microchip maker Nvidia achieved the biggest one day increase in value of any company in history as investors clamour for a stake in the AI industry.
Shares in the Californian company surged 16.4pc in New York on Thursday, adding $277bn (£219bn) to its market value.
The rise eclipsed a $197bn gain made by Meta at the start of the month to become the biggest increase in value of a company during a single market trading session.
Nvidia, which is seen as a market leader in AI chips, is now worth $1.96 trillion.
The stock price leap came after Nvidia reported that its quarterly revenues had climbed 265pc to more than $22bn. Its full-year revenues more than doubled to $60bn.
On Wednesday night, chief executive Jensen Huang said he believed the world was at an AI “tipping point” and said demand for its microchips was “surging worldwide across companies, industries and nations”.
The US company has been designing high-powered graphics processing chips that are favoured by developers.
Tech giants and nation states have been buying up hundreds of thousands of Nvidia’s most powerful H100 chips. The British government has made plans to buy thousands of the company’s processors to bolster its AI supercomputing capabilities.
Nvidia’s performance sparked a broader rally for tech shares and drove the S&P 500 index to a record high, up 2.1pc to 5,087.03.
Thursday’s share price gain made Nvidia the world’s third most valuable business, above Amazon and Google-owner Alphabet. It also inflated the net worth of Mr Huang, 61, to around $59.6bn, according to Bloomberg. That leaves the entrepreneur, who cofounded Nvidia in 1993, just outside the top 20 richest people in the world.
Analysts at Morgan Stanley said Nvidia’s growth continued to be “remarkable”, while predicting “AI usage will almost certainly continue to grow”. Nvidia said it would record revenues of $24bn in the next three months alone.
However, the rapid surge in technology stock values has prompted fears of a bubble fuelled by AI mania.
Richard Windsor, an independent analyst, said: “For better or for worse, Nvidia is stuck on this rollercoaster and there is no way for it to get off should the bubble burst.”
Read the latest updates below.
06:17 PM GMT
Signing off
Thanks for joining us today. Chris Price will be back in the morning but I’ll leave you with some of our latest business stories:
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06:15 PM GMT
Anglo American profits plunge 94pc
Anglo American told investors yesterday that its profits for 2023 had slumped by 94pc to $283m (£224m).
Revenues slid 13pc to $31bn amid falls in the prices of metals it mines, such as platinum and nickel, and a slowdown in customer demand for diamonds. It wrote down $1.6bn from the value of its diamond business De Beers.
The FTSE 100 mining company promised to slash overheads by $1bn a year and investment expenditure by $1.6bn, while ditching unprofitable work. Duncan Wanblad, chief executive, said that “nothing is off the table”.
05:34 PM GMT
Fresh record for American stocks as S&P 500 hits record high
The benchmark S&P 500 index hit a fresh record high today after a blowout revenue forecast from AI darling Nvidia boosted investor confidence in the sector and sparked a rally in growth and technology stocks.
Nvidia’s shares surged 15.2oc after the chip designer forecast a roughly three-fold surge in first-quarter revenue on strong demand for its AI chips and beat expectations for fourth-quarter revenue.
This pushed the benchmark S&P 500 up 1.77pc to an all-time high of 5,069.98 points.
Nvidia’s earnings were a major test for the AI-fueled rally on Wall Street that first pushed the S&P 500 above the 5,000 point mark earlier this month. Some analysts had cautioned that disappointing results could spark a steep selloff among technology stocks.
Andre Bakhos, president at Ingenium Analytics, said:
The whole package of Nvidia’s reporting lends a bedrock of credibility for other AI and technology companies as it clearly appears that Nvidia and AI are here to stay.
05:21 PM GMT
Nestle shares drop 5pc on sales slowdown
Shares in food giant Nestle have dropped around 5pc today after it revealed a slowdown in sales growth with shoppers deterred by price hikes.
The Swiss food producer said on Thursday that it saw “organic” growth of 7.2pc in 2023 compared with the previous year, although this was caused by a 7.5pc increase in pricing over the year as volumes declined.
This was below the expectations of market analysts.
Nestle said it expects organic growth to be slower for the current year, at around 4pc, due to lower levels of price inflation. However, it said it would spend more on marketing and work on the “affordability” of its products.
It also delivered “high single-digit growth” in confectionery, with KitKat sales performing strongly.
04:58 PM GMT
Footsie closes up
The FTSE 100 closed up 0.29pc. The biggest riser was insurance company Beazley, up 8.93pc, followed by Rolls-Royce, up 8.29pc. WPP was the biggest faller, down 6.38pc, followed by Endeavour Mining, down 4.72pc.
Meanwhile, in the FTSE 250, the biggest riser was pharmaceutical company Indivior, up 22.42pc, followed by Photo-Me passport photo company ME Group, up 20.03pc. The biggest faller was Hargreaves Lansdown, down 7.23pc, Tullow Oil, down 5.25pc.
04:41 PM GMT
Pimm's up for sale as Diageo focuses on whisky and tequila
Diageo is eyeing a sale of Pimm’s, as the spirits giant sharpens its focus on whisky and tequila. Daniel Woolfson reports:
The world’s biggest drinks company has hired bankers at Rothschild to explore a potential sale of the British summertime staple, Sky News reported.
Pimm’s was first made in 1840 by James Pimm, a London oyster bar owner who created the liquor to help customers digest the molluscs.
These days it is best known for its association with British sporting and cultural events such as Wimbledon, the Chelsea Flower Show and Henley Regatta, and has been owned by Diageo since 1997.
It is being put up for sale alongside two other brands, Safari, a fruit liqueur, and Pampero, a rum brand. Diageo and Rothschild both declined to comment.
It comes as Diageo has spent recent years focusing on more premium spirits such as tequila and Scotch whisky. Sales of tequila have soared in the US over recent years on the back of booming demand for the Mexican spirit.
Trevor Stirling, drinks industry analyst at Bernstein, said that despite being well known in Britain, the Pimm’s brand had little overseas appeal and would appeal more to domestic buyers.
He said: “Pimm’s is only sold in the UK, and even in the UK it’s very much a summer drink. Diageo has tried valiantly to make it a year-round drink. But they haven’t really succeeded.
“Likewise they have tried to develop it outside the UK and that hasn’t succeeded either. So I think it’s definitely going to be one of the companies more comfortable with specialty brands.”
04:19 PM GMT
Vauxhall to build electric vans in Luton
The owner of Vauxhall is to make a “limited” number of electric vans in the UK for the first time from next year, according to reports.
Stellantis, which also owns Peugeot and Chrysler, wants government cash to support a full conversion of the Luton factory for the production of electric vehicles.
The firm, which is run from Amsterdam, is initially investing £10m to upgrade its existing diesel production line.
Maria Grazia Davino, head of Stellantis UK, said:
Whilst this decision demonstrates Stellantis’ confidence in the plant, this first step in its redevelopment towards a fully electric future requires the UK government to stimulate more demand in the electric vehicle market and support manufacturers that invest in the UK for a sustainable transition.
04:05 PM GMT
Shares in advertising giant WPP fall
Shares in advertising giant WPP have dropped 5.6pc today after the company reported a near quartering of profits last year.
Before tax profit fell 70.1pc to £346m, bosses revealed this morning, but that was in part because the company wrote down the value of the property it owns.
Headline pre-tax profit which strips out such one-off costs, fell 4.8pc to £1.5 billion, the business said.
Hargreaves Lansdown analyst Sophie Lund-Yates said:
The media, analytics and advertising giant is in the firing line for any slowdown in corporate spending or sentiment, as its products are often nice-to-have, rather than something that helps companies keep the lights on.
With that said, WPP has done an awful lot of the right things to position itself for the future.
It’s throwing money at improving its offering, including AI capabilities.
There will be some trepidation surrounding exactly when these hefty investments will bear meaningful fruit, but it’s a step in the right direction.
Ultimately, WPP is an economic bellwether, which will struggle to really thrive until corporate purse strings are a bit more fast and loose.
The version of WPP waiting in the wings for that moment is in a much better position to capture demand.
03:54 PM GMT
Profits halve at sportswear brand Gymshark after wave of redundancies
British sportswear brand Gymshark has seen its profits halve after over-hiring in the US prompted redundancies. Hannah Boland reports:
The fitness company, which was founded by entrepreneur Ben Francis when he was 19, said its pre-tax profits slumped to £13.1m in the year to the end of July 31, down from £27.8m a year earlier.
The drop was fuelled by redundancy payouts. Gymshark slashed its team in North America to from 125 people to just 40 and closed its regional sourcing offices in Hong Kong and Mauritius during the year.
Gymshark also drew down on its revolving credit facility to fund expansion plans, pushing up debt interest payments. The company said the changes were designed to make the business more efficient, freeing up funds to invest more in its clothes and expansion into new countries this year.
Gymshark said it was plotting a push into the Middle East in the coming months, with Mr Francis saying: “Earlier on in the year we paid a visit to Dubai and we were blown away by the fitness scene there.”
He said Gymshark would be launching online in the region in the spring. Gymshark is also planning to launch a more premium range of its sportswear, which will be rolled out in Selfridges.
Mr Francis founded Gymshark from his parents garage in 2012 and grew the business rapidly by paying online fitness influencers to wear its clothes.
The company was valued at over £1bn in 2020 when investment group General Atlantic bought a stake.
Accounts show Gymshark’s sales growth slowed last year. Revenues rose by 15pc to £556.2m, slower than the 20pc growth seen a year earlier and the 54pc seen in 2021.
Mr Francis said there were challenges in the year but said: “2023 was a really strong year despite quite a difficult start of the year with the cost of living crisis and everything that was going on in the world.
“This year we plan on doing even better. We see more of an opportunity in offline and in retail.”
03:45 PM GMT
Nvidia on track for largest stock market gain in history
The chipmaker Nvidia has jumped in value by $260bn today, putting it on track to deliver the biggest increase in market value of any company in a single day’s trading in history.
The increase outpaces the $197bn increase made by Facebook owner Meta at the start of February. It comes after the chipmaker last night posted strong results and an upbeat forecast, which has poured more fuel on the artificial intelligence-led rally in technology shares.
Revenue more than doubled to over $60bn in its latest financial year, while profit soared to nearly $3bn.
Paul Nolte, a market strategist for Murphy & Sylvest in Texas, said: “The assumptions are that earnings are going to grow at this pace for the next four-five years and that for a company that size in market value, is going to be a difficult hurdle.”
Yesterday, Nvidia chief executive Jensen Huang said: “Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries and nations.”
Shares are currently up over 15pc.
03:32 PM GMT
Handing over
That’s all from me for today. I’ll leave you in the hands of Alex Singleton, who will keep you updated on this frantic day for global markets.
I’ll leave you with some images of the launch of the first Gibson experience store outside the US:
03:18 PM GMT
Wall Street joins record-breaking stocks surge amid AI mania
Wall Street joined a record-breaking global rally in stocks after chip maker Nvidia revealed blockbuster results that have fuelled a clamour for AI-linked investments.
The S&P 500 rose 1.6pc to touch to a new record high of 5064.12 amid the excitement, while the tech-heavy Nasdaq Composite jumped 2.3pc to 15,940.43.
Nvidia shares surged nearly 15pc to a new all-time peak after it reported that quarterly profits soared to $12.3bn.
Its market capitalisation has surged past $1.9 trillion (£1.5 trillion) after it forecast a roughly three-fold surge in first-quarter revenue on strong demand for its AI chips.
The excitement after Nvidia’s results were published late on Wednesday helped Japan’s Nikkei 225 break its record which had stood since 1989 following the bursting of its financial bubble.
The Dow Jones Industrial Average was up 0.8pc at 38,931.06.
02:55 PM GMT
I’m a victim of Morgan Stanley’s abuse, says Mike Ashley
Mike Ashley has claimed to be a “victim of Morgan Stanley’s abuse” after the Wall Street bank demanded $1bn (£790m) from his retail empire.
Our reporter Adam Mawardi is at the High Court:
Mr Ashley, who is suing the lender for its attempts to force his company, Frasers Group, to abandon share price bets in May 2021, suggested that the cash call was unfair and motivated by snobbery.
Giving evidence in the High Court, the billionaire said that he did not have funds readily available to pay the money and it risked causing his company serious harm as a result.
He said: “I’ve said it before, I don’t have it under the bed. I can’t have done more than I did – that’s not fair.”
Read Mr Ashley’s latest evidence and how the case hinges on a process known as a margin call.
02:43 PM GMT
Diageo 'exploring Pimm's sale'
FTSE 100 drinks maker Diageo is reportedly exploring a sale of its quintessentially English brand Pimm’s.
The company has hired bankers at Rothschild to explore a possible deal for the brand, according to Sky News.
Diageo acquired Pimm’s in 1997 as part of a merger between Grand Metropolitan and Guinness, which led to the formation of Diageo.
02:36 PM GMT
Wall Street markets leap higher as Nvidia profits surge
US stock markets have lurched upwards at the opening bell after chip maker Nvidia’s bumper profits triggered a race to buy-up AI-linked stocks.
The tech-heavy Nasdaq led the charge, jumping by 2pc to 15,886.25. Nvidia’s shares jumped by 12pc as trading began to hit a new record high.
The Dow Jones Industrial Average jumped 0.7pc to 38,866.11 while the S&P 500 rose 1.2pc to 5,041.67.
02:24 PM GMT
Volkswagen to recall 261,000 cars over fire risk
Volkswagen is recalling more than 261,000 cars in the US to fix a potential fuel leak that can increase the risk of fires.
The recall covers models made between 2015 and 2020, including the Audi A3s, VW Golfs and GTIs and VW Jettas.
The German carmaker reported a problem with a pump seal in documents sent to the US National Highway Traffic Safety Administration.
It said the fault can let fuel leak from a charcoal canister in the emissions control system. The agency said leaking fuel increases the risk of a fire.
Dealers will replace the pump, which is inside the fuel tank, at no cost to owners. VW will send out notification letters starting April 12.
The recall is the second for many of the car owners. VW recalled about 110,000 cars for the same problem in 2016, but the company found that the replacement pumps from the previous recall also were failing.
02:11 PM GMT
Australian buyer of Britishvolt still owes money, say administrators
Administrators for collapsed battery factory project Britishvolt have said they are still chasing money from the Australian buyer of the site - and are considering other potential deals.
EY said Recharge Industries is still “in default” a year after it agreed to sell the Cambois site in Northumberland where Britishvolt had said it wanted to build a factory.
The administrators said they have “held discussions” with some other potential buyers for the site.
It comes as the BBC reported on Thursday that Northumberland Council will set aside money to potentially buy the plot.
Britishvolt fell into administration early last year, having promised to build a £4bn plant and create 8,000 jobs - attracting a £100m pledge of Government grants.
EY agreed a deal with Recharge Industries last February which would see the Australian firm buy the Northumberland site for less than £10m. But last summer it emerged that Recharge had missed some of the payments on the site.
EY said in a document filed to Companies House: “The buyer continues to remain in default ... and, as such, the joint administrators have held discussions with a number of additional parties who have intimated that they may be interested in acquiring the proposed gigafactory site in Northumberland.”
The administrators said that “negotiations are ongoing” with the potential other suitors.
01:56 PM GMT
US jobless claims continue decline
The number of Americans applying for jobless benefits fell to its lowest level in five weeks, even as more high-profile companies announce layoffs.
Applications for unemployment benefits fell by 12,000 to 201,000 for the week ending February 17, the Labor Department reported.
The four-week average of claims, a less volatile measure, fell by 3,500 to 215,250, down from 218,750 the previous week.
In total, 1.86 million Americans were collecting jobless benefits during the week that ended February 10, a decrease of 27,000 from the previous week.
Weekly unemployment claims are broadly viewed as representative of the number of U.S. layoffs in a given week. They have remained at historically low levels in recent years, despite efforts by the US Federal Reserve to cool the economy.
Claims:
1/ Absolutely no sign that all those scary layoff announcements are having an impact on UI claimants.
Using the 2017-18 seasonal adjustment factors, CC are actually down a little relative to the fall 2023 peak. pic.twitter.com/mGc4hY9f5E— Guy Berger (@EconBerger) February 22, 2024
01:49 PM GMT
Energy bills to fall to two-year low under new price cap
Household energy bills are expected to fall by more than £200 a year under the new Ofgem price cap to be announced on Friday.
Our energy editor Jonathan Leake has the details:
The energy regulator is expected to confirm that the price cap will fall from its current rate of £1,928 a year for a typical dual-fuel household to £1,656 from April 1, according to analysts at Cornwall Insight.
If confirmed, it would represent the lowest price cap for two years. In 2022, it rose from £1,215 a year in January to £1,877 from April. In October, it rose again to £3,371.
Energy bills are expected to continue falling over summer.
Read what other announcements are expected from Ofgem.
01:34 PM GMT
Turkey leaves interest rates on hold at 45pc
Turkey’s central bank left its key interest rate unchanged at 45pc, pausing a series of aggressive rate rises aimed at taming high inflation.
The central bank said it was keeping the benchmark one-week repo rate on hold in its first interest rate decision under its newly appointed governor, Fatih Karahan.
The move was in line with expectations that the rate would be kept constant after the bank said last month that monetary tightness needed to “establish the disinflation course” was achieved.
The bank suggested the current rate would be maintained until “there is a significant and sustained decline in the underlying trend of monthly inflation”.
President Recep Tayyip Erdogan appointed Karahan as central bank governor on February 3, replacing Hafize Gaye Erkan who resigned after claims of nepotism emerged in local media.
Erkan, a former US-based bank executive and Turkey’s first woman governor, strongly rejected the claims.
Under Erkan’s tenure, the central bank had raised the benchmark interest rate from 8.5pc in June to 45pc last month.
The rate hikes came after Erdogan, who was reelected in May, reversed his unconventional policies that economists say helped trigger a currency crisis and drove up the cost of living, leaving households struggling to afford basic goods.
01:13 PM GMT
Taxpayers to back 99pc mortgages for first-time buyers
Young people could get on the housing ladder with a deposit of less than £2,000 under a revamp of a government-backed scheme designed to help first-time buyers.
Our economics editor Szu Ping Chan has the details:
The Treasury is considering allowing families to put down a 1pc deposit to secure a property in a move that could potentially leave taxpayers on the hook for hundreds of millions of pounds.
Plans to introduce a scheme where families could take out a loan worth 99pc of a property’s value could be announced ahead of the Budget on March 6.
Whitehall sources have suggested that Mr Hunt has around £13bn of headroom to play with in the Budget, and are prepared to spend around £7bn of that on tax cuts.
Read how the plan exposes taxpayers to more risk.
12:55 PM GMT
Stock markets rally amid AI-fuelled mania
Global stock markets rose as investors cheered bumper profits from US chip giant Nvidia, which have triggered a race to take advantage of the development of artificial intelligence.
Stock markets in London, Paris and Frankfurt were all higher, while Japan’s Nikkei broke a record-high that has stood since 1989.
The highly-anticipated results from Nvidia after the Wall Street close on Wednesday saw the company post quarterly profit of $12.3bn on record revenue, driven by demand for its AI-powering chips.
Nvidia, one of the so-called Magnificent 7 set of global tech stocks, surged 14.3pc in premarket trading after the chip designer forecast a roughly three-fold surge in first-quarter revenue on strong demand for its AI chips.
Wall Street is expected to open higher across the board later, with the tech-heavy Nasdaq on course to jump more than 2pc.
The Dax in Germany was up 1.5pc and the Cac 40 in Paris gained 1.2pc, although the FTSE 100 was a notable laggard due to its lack of tech firepower. The UK benchmark was up 0.1pc.
12:42 PM GMT
European Central Bank makes first loss in nearly 20 years amid record interest rates
The European Central Bank has made its first loss in nearly two decades after raising interest rates to record highs.
The Frankfurt-based institution lost €1.3bn (£1.1bn) last year, after breaking even in 2022.
The loss - the first since 2004 - would have been far greater if the ECB had not deployed the full €6.6bn it had set aside in the past to soak up losses.
Bosses said the loss comes after “almost two decades of substantial profits” and reflects the “necessary policy actions” taken to combat inflation.
The ECB began raising borrowing costs at an unprecedented rate in July 2022 after Russia’s war in Ukraine pushed up energy and food costs.
It has held rates steady at a record 4pc since October in the face of cooling inflation and a stuttering eurozone economy
However, the higher rates have “resulted in increased interest expenses” paid to eurozone members’ national central banks.
At the same time, interest income on bonds hoovered up by the ECB over years of crisis-fighting has failed to keep pace.
12:29 PM GMT
Driverless car rollout paused in California after fire and crashes
California has blocked a Google-backed driverless car company from expanding to more cities after a series of accidents.
Our senior technology reporter Matthew Field has the latest:
The California Public Utilities Commission (CPUC) has suspended a request by Waymo, which is owned by Google’s parent company, to launch its robotaxi business in more cities within the state.
Vehicles from Waymo and Cruise, a rival, have been operating in San Francisco for years. Waymo had been seeking permission to expand to Los Angeles and the wider San Francisco peninsula.
However, David Canepa, a local politician in San Mateo County, California, said its application had been paused because of what he claimed was Waymo’s failure to engage in “meaningful” discussion about “our very real public safety concerns”.
Read how it follows public opposition to driverless cars and a string of accidents.
12:01 PM GMT
Former Sainsbury's boss Justin King joins Ovo
Justin King, the former chief executive of Sainsbury’s, has been appointed as chairman of energy supplier Ovo.
Mr King, who ran the supermarket for a decade until 2014, will take over from Stephen Murphy, who is stepping down after nine years with Britain’s fourth-largest gas and electricity company.
Mr Murphy departs after overseeing Ovo’s acquisition of SSE’s retail arm and its expansion into electric vehicle charging.
Mr King is credited with delivering record growth at Sainsbury’s, having previously held senior roles at M&S and Asda.
He said he would help the company’s “further expansion into home technologies and EVs”.
It comes as consumers wait to find out how their energy bills will change in the coming months, with Ofgem expected to announce on Friday that it will lower average household payments by £293 a year from April under its price cap.
11:36 AM GMT
Oil edges higher amid market optimism
Oil has shifted higher amid a global wave of optimism, even as the industry-funded American Petroleum Institute reporting a big rise in US crude stockpiles.
Brent crude was last up 0.2pc at more than $83 a barrel after closing 0.8pc higher on Wednesday, while US-produced West Texas Intermediate rose 0.2pc to more than $78.
Traders have ploughed money into riskier assets today after Nvidia’s blockbuster results triggered a wave of optimism across global markets about potential demand for products linked to AI.
It comes as investors continue to weight up the impact of potential risks to supply from the Middle East and the Red Sea.
11:18 AM GMT
Price cap anomaly puts wind giant ScottishPower in profit
ScottishPower saw profits at its energy supply arm soar last year despite falling numbers of customers, thanks to a mechanism in the price cap.
The Spanish-owned business said operating profit at the unit hit £545m in 2023, up from a £273m loss the year before.
The turnaround was purely in the first half of the year though after Ofgem allowed suppliers to claw back some of the excess costs they faced during the energy crisis. Rivals also saw their profits soar last year for that reason.
In the second half of the year, ScottishPower’s energy supply unit made a multi-million-pound loss.
The number of customers that the supplier serves has dropped from 4.6m in September to 4.5m today, ScottishPower said.
In 2023 customers used 14pc less electricity and 13pc less gas than the year before.
The company is also a major producer of wind power. Like rivals, its onshore wind farms have been hit by storms, which reduced production by around 18pc. But that was offset by a 13pc rise in production from the business’s offshore turbines.
Operating profit at the renewables arm rose 35pc to £633m, while its networks arm, which operates parts of the electricity grid, saw a 20pc rise to £709m.
11:04 AM GMT
AI now 'growing problem' for creative industries, warns senior MP
AI is a “growing problem” for creatives, former culture minister Dame Caroline Dinenage has told the Commons.
The chairman of the Culture, Media and Sport Committee told MPs:
Creators across the creative industries are really concerned about AI developers, some of whom are worth as much $100bn, using their works without consent and without compensation, and the Government’s working group’s inability to agree a code of practice on AI and IP fuels concerns that the status quo is only working for the developers and this is only going to be a growing problem.
Culture Secretary Lucy Frazer responded:
I want to assure her that the conclusion of the IPO working group is absolutely not the end of our work to find an appropriate regulatory solution for AI.
“We are absolutely committed to ensuring that AI development supports rather than undermines human creativity.
Shadow culture minister Sir Chris Bryant said the Government response to questions “was a load of hot air that frankly could have been written by ChatGPT”.
He said: “The truth of the matter is that the Government’s flagship on AI as it relates to creative industries, which is meant to be protecting the moral and economic rights of artists, musicians and authors whilst at the same time recognising the important advances that AI can bring, has sunk.”
10:51 AM GMT
Fresh blow for London market as drug maker joins exodus to New York
Indivior, the British drug maker, is to ditch its primary listing on the London Stock Exchange for New York in the latest blow to the Square Mile.
Our retail editor Hannah Boland has the latest:
The company, which makes treatments for opioid addiction and schizophrenia, said it could move its primary listing to the US as soon as this summer and is consulting shareholders over the switch.
Shares in Indivior surged by as much as 22pc on the announcement, the highest since late November.
The FTSE 250 company said it was proposing the move as there was more opportunity for its treatments in the US and almost half of its shares were already held by investors based there.
Read how it is the latest in a series of setbacks for the City.
10:38 AM GMT
Mike Ashley arrives at High Court
Retail tycoon Mike Ashley has arrived at the High Court for the second day of the Morgan Stanley trial.
Read how he accused the Wall Street bank of dropping a “nuclear bomb” on his business with a demand for $1bn (£790m) that he alleges was motivated by “snobbery”.
10:27 AM GMT
Google suspends AI image generator after creating ethnically diverse Vikings
Google has suspended its artificial intelligence image generator after it was ridiculed for generating ethnically diverse images of historical characters such as Vikings, Popes and knights.
The internet giant said it would “pause the image generation of people” after it drew criticism on social media for what were seen as excessive efforts to promote diversity with the latest version of its artificial intelligence system, called Gemini.
Google said it would “re-release an improved version soon” after blaming the results on a bug.
See how prompts such as “give me an image of a medieval knight” would return images of men and women from ethnic minorities.
We're already working to address recent issues with Gemini's image generation feature. While we do this, we're going to pause the image generation of people and will re-release an improved version soon. https://t.co/SLxYPGoqOZ
— Google Communications (@Google_Comms) February 22, 2024
10:21 AM GMT
Germans revolt over expansion of Tesla gigafactory
German voters have revolted over Elon Musk’s plans to expand a vast Tesla “gigafactory”, dealing a setback to his efforts to accelerate production in Europe.
Our technology editor James Titcomb has the details:
Residents of the Grünheide municipality in Brandenburg voted by 3,499 votes to 1,822 to oppose Tesla’s proposals, which included expanding the site by more than 50pc and clearing around 250 acres of forest.
While the vote was not binding, local officials said they would respect its results, meaning they will have to go back to the drawing board with Tesla and come up with new plans.
Tesla’s factory east of Berlin is its only plant in Europe, alongside facilities in California, Texas, China and a planned gigafactory in Mexico.
Read how the EV company is likely to attempt to push revised plans to expand the facility.
10:08 AM GMT
Bank of England 'will not rush to cut rates,' say economists
Interest rates will not be cut soon after the PMI survey suggested that higher labour costs remained the main factor pushing up business expenses, according to economists.
Alex Kerr, assistant economist at Capital Economics, said:
The services output prices balance rose from 57.2 to 58.5, which survey respondents attributed to continued higher labour costs.
This is consistent with services CPI inflation easing only gradually from 6.5pc in January to just above 5pc in six months’ time.
This will add to the Bank of England’s unease about lingering domestic price pressures.
At the margin this may mean the Bank won’t rush to cut interest rates.
But we still think overall CPI inflation will fall below 2pc in April and that the Bank will be in a position to start cutting rates this summer.
09:57 AM GMT
Inflation fears to create 'caution' on interest rate cuts, economists warn
The latest PMI data also contained a warning that inflationary pressures “remained elevated” in February, dashing hopes of early interest rate cuts by the Bank of England.
It said the rate of input price inflation edged up to its strongest since August amid rising salaries in the service sector.
S&P Global chief business economist Chris Williamson said services inflation remained “stubbornly elevated thanks to higher wage costs and the pass-through of some higher goods prices”.
Manufacturers recorded only a modest rise in their input prices, despite higher shipping costs and worsening supply chain disruptions in the wake of the Red Sea crisis.
The latest lengthening of suppliers’ lead times was the greatest recorded since July 2022.
Mr Williamson added:
The resulting increased cost of shipping contributed to the largest monthly rise in selling prices for goods seen over the past nine months.
With growth accelerating and prices on the rise again, February’s data mean policymakers are increasingly likely to err on the side of caution when considering the appropriateness of cutting interest rates.
09:37 AM GMT
UK private sector growth hits nine-month high in sign Britain exiting recession
Britain’s private sector grew at its fastest pace in nine months in February, a closely-watched survey showed, in a sign that the economy is already exiting recession.
The S&P Global Flash UK PMI rose to 53.3 last month, up from 52.9 in January, marking the fourth consecutive month that business activity has increased. A reading above 50 indicates growth.
Britain was boosted by another strong month from its dominant services sector, with business optimism about the year ahead at its highest since February 2022 when the war in Ukraine began.
Chris Williamson, chief business economist at S&P Global said:
This is by no means a one-off improvement, as faster growth has now been recorded for four straight months after a brief spell of decline late last year.
The survey data point to the economy growing at a quarterly rate of 0.2-3pc in the first quarter of 2024, allaying fears that last year’s downturn will have spilled over into 2024 and suggesting that the UK’s ‘recession’ is already over.
It’s particularly encouraging to see that the upturn in growth has been accompanied by a surge in optimism about year-ahead prospects to the highest for two years, in turn encouraging a second month of increased employment.
09:30 AM GMT
Germany's manufacturing slump deepens
Germany’s manufacturing downturn unexpectedly deepened in February, with activity declining at a faster pace amid falling demand at home and abroad.
The HCOB Flash Germany purchasing managers’ index (PMI) for the country’s industrial sector dropped to 42.3 from 45.5 in January – a four-month low well below the 50 mark separating growth from contraction.
Meanwhile, private sector activity across the eurozone fell at the slowest rate for eight months in February, with business confidence about the year ahead hitting a 10-month high.
The HCOB Flash eurozone composite PMI rose to 48.9 from 47.9, reaching an eight-month high.
09:17 AM GMT
Danone and Nestle pledge to slow down price rises
Danone and Nestle, two of the world’s top food companies, said they will slow the pace of price increases after two years of hikes that have prompted shoppers to seek cheaper alternatives for basic goods like yoghurt and coffee.
Danone, which owns brands including Evian and Badoit water and Activia yoghurt, warned prices would still rise as it battles to offset labour costs and shipping prices.
Their comments follow British rival Unilever, the maker of Ben & Jerry’s ice cream and Dove soap, which also said this month that price increases would start to ease.
The packaged goods industry has hit shoppers with higher prices for more than two years amid rises in input costs that started with the pandemic and were exacerbated by Russia’s invasion of Ukraine.
Everything from sunflower oil to freight has become more expensive, taking a toll on global supply chains and fuelling a protracted cost of living crisis.
Nestle chief executive Mark Schneider said: “We hadn’t seen that sort of inflation spiking since 1973, 1974.”
09:05 AM GMT
Hays warns of more job cuts as recruitment slowdown
Recruitment firm Hays has warned over further job cuts after revealing that half-year profits slumped by more than 70pc amid a difficult hiring market worldwide.
The group said it slashed its total workforce by 9pc last year to save costs as the jobs markets globally slowed significantly, cutting its fee-earning consultants by 12pc - and by 7pc in the final six months alone - to 7,971.
Hays cautioned it expects to reduce its total workforce by another 3pc to 4pc in the first three months of 2024 amid efforts to save about another £20m in the second half of its financial year, on top of the £30m in annual savings made between August and December.
Hays reported pre-tax profits slumping 71pc to £27.6m in the six months to December 31 as net fees tumbled 11pc.
However, shares climbed by 1pc as chief executive Dirk Hahn said he is “not satisfied with our profit performance” and pledging that “operating profit growth should exceed fee growth”.
08:47 AM GMT
FTSE 100 gains amid surge in global markets
UK shares gained amid the global wave of optimism triggered by AI-darling Nvidia’s robust quarterly results.
However, the blue-chip FTSE 100 was up only 0.1pc after a slide from AstraZeneca. The mid-cap FTSE 250 index added 0.4pc.
Sentiment was high across markets in Asia and Europe after chip designer Nvidia forecast a surge in quarterly revenue, with its Frankfurt-listed shares soaring more than 10pc.
In the UK, Beazley climbed 9.4pc to the top of the FTSE 100 after the insurer earmarked around $300m (£236m) for shareholder returns.
Rolls-Royce advanced 8.6pc as the jet engine maker said its profit more than doubled last year and is expected to rise further this year.
Anglo American rose 4.3pc after the miner said it would review its assets, after posting a 94pc plunge in annual profit.
Gains on the FTSE 100 were however limited after shares of heavyweight AstraZeneca fell 1.8pc, as the drugmaker’s stock traded ex-dividend.
08:31 AM GMT
WPP investors 'should brace themselves for more underwhelming results'
After WPP revealed a plunge in profits, eToro market analyst Mark Crouch said:
Advertising is typically first on the chopping block in times of economic uncertainty and with inflationary pressures hampering businesses across the globe in recent times, this has translated into an underwhelming set of results for WPP.
The firm saw revenues grow by just 0.9pc like-for-like in 2023 as weak spending by tech, healthcare and retail clients held back growth in Britain and India.
Shareholders will likely still be reeling from the two profit warnings issued by the company in 2023 and would have been eager to see what the business plans to do in order to turn their fortunes around and pull the advertising agency out of this current rut.
While the company remains optimistic they can deliver accelerated and increasingly profitable growth over the medium term, it’s fair to assume market conditions will need to improve quickly in order for that to happen.
08:25 AM GMT
WPP slumps despite cutting costs by £450m
Advertising giant WPP was trying to capitalise on the artificial intelligence boom as its boss described its “detailed our strategy to capture the opportunities of AI”.
However, it revealed a sharp fall in profits as sales in its US business continued to slow as it restructured its agencies to cut costs.
Shares have fallen as much as 4pc in early trading after pre-tax profits plummeted by 70pc to £346m for the whole of 2023, despite bosses saying they had managed around £475m of gross savings in 2023, which is ahead of the originally planned £450m.
Revenue declined 4.5pc in the US in the fourth quarter, primarily due to lower spending by technology, healthcare and retail clients. In all, its North America business declined by 2.7pc in 2023.
However, the group saw strong growth in the UK and India, and reported annual revenues up 2.9pc to £14.8bn. Chief executive Mark Read said:
AI will be fundamental for our business and we are embracing the opportunities that it presents, putting it at the heart of our operations and our work for clients.
Our AI-powered platform, WPP Open, is now being used by more than 30,000 people across WPP with growing adoption by our clients.
While 2023 was more challenging than we expected due to cuts in spending by technology clients, we delivered a resilient performance for the year with 0.9pc like-for-like growth and a 0.2 point improvement in our headline operating margin at constant currency. This was driven by disciplined cost control, while continuing to invest in AI, data and technology.
08:03 AM GMT
UK markets open higher amid AI optimism
UK stock markets have opened higher after huge growth from chip maker Nvidia triggered a surge in optimism around the globe.
The FTSE 100 rose by 0.3pc to 7,682.76 while the midcap FTSE 250 gained 0.5pc to 19,205.53.
07:47 AM GMT
Japan's stock market returns to highs after 'lost decades'
Japan’s Nikkei 225 finally broke through a record high set just before the country’s asset bubble catastrophically burst in the early 1990s.
The index of blue-chip stocks hit a peak of 39,156.97, beating the record of 38,957.44 set in December 29, 1989, before easing to 39,098.68 points at the end of trading, its highest closing level.
By doing so the Nikkei finally broke through the levels seen during the boom years of 1985-1989 when it quadrupled in value and Japanese assets soared.
Tokyo property prices at the time were hundreds of times more than in Manhattan, golf club memberships would cost millions of dollars, and bankers would sprinkle gold dust into their drinks.
Flush with cash and aided by the strength of the yen, Japanese companies also went on an overseas shopping spree, with Sony taking over Columbia Pictures and Mitsubishi purchasing New York’s landmark Rockefeller Center.
Japanese investors became major buyers in the international art market, setting new records for Impressionist painters like van Gogh.
But a crash came in the early 1990s as investors fled in panic, with the Nikkei roughly halving in 1990 and real estate prices falling sharply.
This ushered in Japan’s “lost decades” of economic stagnation, deflation and ballooning national debt - while it was also hit by global downturns such as the burst of the dot-com bubble in the early 2000s and the 2008-2009 financial crisis.
07:38 AM GMT
Lloyds braces for £450m hit from motor finance sales compensation
Lloyds Banking Group booked a £450m provision to cover possible compensation claims arising from a probe into historic motor finance sales.
Our reporter Michael Bow has the details:
The bank took the charge after the Financial Conduct Authority last month announced plans to review the sale of loans to fund drivers buying second hand cars.
Lloyds owns Black Horse, one of the biggest lenders in the car finance market. The £450m provision could be “higher or lower” once the outcome of the review is known, the bank said. The FCA is set to report its findings in September.
Lloyds becomes the first bank to book a motor finance provision. Close Brothers, another motor finance lender, last week cut its dividend last week but said there was too much uncertainty around the review to take a charge.
The FCA is examining whether motor dealerships failed to inform customers about commissions paid by banks in relation to the loan interest rate.
Lloyds chief executive Charlie Nunn said in a statement: “There remains significant uncertainty as to the extent of any misconduct and customer loss, if any, the nature of any remediation action, if required, and its timing.
“Hence the impact could materially differ from the provision, both higher or lower.”
07:29 AM GMT
Rolls-Royce reveals surging orders for jet engines despite increasing prices
Rolls-Royce says orders for large airplane engines have surged to their highest in 15 years, as the British engineering giant posted annual profits of £1.3bn.
Our industry editor Matt Oliver has the latest:
The FTSE 100 company, which is in the midst of a major turnaround under boss Tufan Erginbilgic, said engine flying hours also recovered to 88pc of their pre-pandemic levels in 2023, up from 65pc the previous year.
In another sign that Mr Erginbilgic’s overhaul is bearing fruit, the company reported a doubling of its profit margins to 10pc and said free cash flow had surged to a record £1.3bn.
That is partly thanks to price increases pushed through under the chief executive, who has said Rolls’ customers must pay more for its engine maintenance services.
At the same time, net debt was slashed from £3.3bn to £2bn.
However, despite the earnings boost, Rolls said it would pay no dividend until its balance sheet is stronger.
Mr Erginbilgic said: “We are unlocking our full potential as a high-performing, competitive, resilient, and growing Rolls-Royce.”
The company is predicting profits of between £1.7bn and £2bn in 2024.
07:25 AM GMT
Lloyds Bank reveals record profit amid higher interest rates
Lloyds Banking Group has reported record-high annual profits as it generated more income from higher interest rates through the year.
The banking group said it made a pre-tax profit of £7.5bn over 2023, surging by 57pc compared with the £4.8bn made in 2022, and coming in ahead of analysts’ expectations.
But the bank said it set aside a remediation charge of £450m to cover potential costs related to the financial regulator’s review into historic car finance selling practices.
Lloyds’ chief executive Charlie Nunn said the group was “focused on proactively supporting people and businesses through persistent cost-of-living pressures” during 2023.
07:21 AM GMT
Rolls-Royce returns to profit amid turnaround
Rolls-Royce has returned to profit a little over a year after Tufan Erginbilgic took over as chief executive and described the British company as a “burning platform”.
The aircraft engine maker delivered pre-tax profits of £2.4bn after a loss of £1.5bn the previous year, with underlying operating profits more than doubling to £1.6bn.
Revenues grew by 21pc to £15.4bn as it reported record free cash flow of £1.3bn weeks after announcing it was cutting 2,500 jobs in a push to slash costs. Mr Erginbilgic said:
Our transformation has delivered a record performance in 2023, driven by commercial optimisation, cost efficiencies and progress on our strategic initiatives.
This step-change has been achieved across all our divisions, despite a volatile environment with geopolitical uncertainty, supply chain challenges and inflationary pressures.
We are managing the business differently and our significant performance improvement in the year reflects the hard work and focused actions of all our teams.
We are also continuing to invest to drive future sustainable growth. Our strong delivery in 2023 gives us confidence in our 2024 guidance and is a significant step towards our mid-term targets.
We are unlocking our full potential as a high-performing, competitive, resilient, and growing Rolls-Royce.
07:05 AM GMT
Japan's stock market breaks 34-year record as AI booms
Japan’s benchmark stock index surged past a record high set more than 34 years ago after greater-than-expected earnings from tech giant Nvidia fuelled a clamour for AI-related shares.
The Nikkei 225 closed 2.2pc higher to end at 39,098.68, breaking a record set in 1989 before the country’s financial bubble burst.
The surge was triggered by the highly-anticipated results from US chip titan Nvidia, which beat expectations as they were published after Wall Street closed on Wednesday.
The company reporting a quarterly profit of $12.3bn (£9.7bn) on record-high revenue driven by demand for its AI-powering chips, with record revenue of $22.1bn in the quarter that ended in January and $60.9bn for the fiscal year.
Asian markets were mainly higher as Nvidia’s results triggered more AI stocks mania, helping the Nikkei surge to a new record.
The Nikkei had enjoyed its boom years between 1985 and 1989 when it quadrupled in value and Japanese assets soared.
But a crash came in the early 1990s as investors fled in panic, with the Nikkei roughly halving in 1990 and real estate prices falling sharply.
This ushered in Japan’s “lost decades” of economic stagnation, deflation and ballooning national debt.
A record high for Japanese stocks caps a long walk out of the investment wilderness as money, momentum and signs of change in the country’s corporate world put the market back at the top of global portfolios.
It has been a long time coming: more than 34 years and long enough to scar a generation of Japanese investors, who through bitter experience have been sellers into this powerful rally.
With the Nikkei up 50pc in just over a year, however, global managers are now feeling the pain of missing out and scrambling to get in.
Favourable valuations, buybacks and other market-friendly corporate decisions also have investors convinced there is no bubble this time around.
Inflows are only getting started, say dealers and fund managers, and barely weeks into the year brokerage analysts have been revising price targets upwards.
Shinji Ogawa, co-head of Japan cash equities sales at JP Morgan in Tokyo, said:
If I was going to put it terms of (a) baseball analogy, I think that we’re still in the second inning.
The number of incoming requests into my team are literally exponential the last few months – it’s overwhelming how much demand or interest there is in Japan at the moment.
06:49 AM GMT
Good morning
Thanks for joining me. Japan’s Nikkei broke a record high last set in 1989 after blockbuster results from US chip giant Nvidia fuelled AI stocks mania.
The Nikkei 225 closed 2.2pc higher to end at 39,098.68, breaking a record last set before the country’s financial bubble burst 35 years ago.
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What happened overnight
Japan’s benchmark Nikkei 225 index surged Thursday past the record it set in 1989 before its financial bubble burst, ushering in an era of faltering growth.
The index closed Thursday at 39,098.68, up 2.2pc. It had been hovering for weeks near 34-year highs. Its previous record was 38,915.87, set on December 29, 1989.
That was more than a generation ago at the height of Japan’s post-war boom.
Elsewhere, Hong Kong and Shanghai stocks were trading higher, as were Seoul, Taipei, Bangkok, Manila and Wellington. Sydney was flat.
In America, the S&P 500 rose 0.1pc, to 4,981.80. The benchmark index spent much of the day in losing territory before climbing higher just before markets closed.
The Dow Jones Industrial Average of 30 top American companies also eked out a slight gain after losing ground most of the day. It rose 0.1pc, to 38,612.24. Meanwhile, the technology-heavy Nasdaq Composite index fell 0.3pc, to 15,580.87.
Yields in US Treasury bonds rose on Wednesday after minutes from the Federal Reserve’s last meeting showed concerns about cutting interest rates too soon. The yield on benchmark 10-year Treasury bonds rose to 4.33pc from 4.28pc late on Tuesday.
