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FTSE 100 Live 2 February: 'Interest rate cuts moving ever later', London shares close down

FTSE 100 Live (Evening Standard)
FTSE 100 Live (Evening Standard)

Dividend-paying Meta Platforms led the way for the Magnificent Seven last night after the Facebook owner reported a trebling of quarterly profits.

With fellow tech giants Apple and Amazon also posting strong figures, markets on both sides of the Atlantic are poised for strong sessions today.

The gains come despite continued uncertainty over when the Federal Reserve and Bank of England will begin cutting interest rates.

FTSE 100 Live Friday

  • Water industry bills to rise

  • Meta Platforms unveils first dividend

  • Ryanair and Wizz Air post updates

FTSE 100 ends week slightly down at 7,615.54

Friday 2 February 2024 17:29 , Daniel O'Boyle

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The FTSE 100 ended the week with a 6.6-point decline to 7,615.54, after shares fell this afternoon.

London's top flight had been up for the day, as a high as 7664, but fell on diminished hopes of US rate cuts.

That leaves it down 0.3% for the week, and down 1.4% in 2024 so far.

The day's top riser was Rolls-Royce while Endeavour Mining and Fresnillo led the fallers.

TSB plans job cuts and branch closures as it sets aside £29m for cost savings

Friday 2 February 2024 15:14 , Daniel O'Boyle

High street bank TSB could see jobs cut and branches closed this year as part of plans to reduce costs across the group.

The bank has set aside about £29 million for a programme of initiatives which it said will help manage business expenses.

The boss of TSB’s Spanish owner Sabadell, Cesar Gonzalez-Bueno, told reporters the plans will “include both” a reduction in bank staff and branches.

Read more here

Mixed start for US stocks, but Meta soars

Friday 2 February 2024 15:04 , Daniel O'Boyle

It's been a mixed, but mostly positive, start for US stocks so far on Wall Street, as reduced chances of interest rate cuts and disappointing earnings from oil giants offset some of the tech stock boom from Meta's results last night.

The S&P 500 is up 0.3% to 4,921.11 and the Nasdaq is up 0.8% at 15,478.66 but the Dow Jones is down 0.3% to 38,388.13.

Meta is up more than 20% so far and Amazon up 7%.

Blank Street Coffee auditors warn figures in accounts could be ‘misstated’

Friday 2 February 2024 14:43 , Daniel O'Boyle

Blank Street Coffee’s auditors raised questions about stock levels that could be “materially misstated”, newly filed accounts show, as the cafe chain made a £2.9 million loss in its first six months in the UK.

The venture capital-backed coffee shop, founded in New York in 2020, launched in the UK in June 2022. It quickly became almost unavoidable in central London, opening 14 shops in 2022 followed by another 15 in 2023.

Turnover between launch and the end of 2022 was £1.9 million with 150,000 customers served. But costs of sales outstripped the turnover figure, putting the business in the red even before administrative costs.

Read more here

'Interest rate cuts moving ever later'

Friday 2 February 2024 13:51 , Daniel O'Boyle

Richard Carter, head of fixed interest research at Quilter Cheviot, says:“Once again the US has surpassed expectations with the latest jobs numbers showing an economy that has no intention of grinding to halt despite restrictive financial conditions. Talk of any rate cuts in the first half of this year are becoming harder and harder to envisage as the economy just keeps trundling on and the jobs data looks this strong.

“Ultimately, the soft landing narrative is becoming stronger and it appears the Federal Reserve has navigated things well. The inflation warning signs are no longer flashing, but they will still not want any fresh spike to arrive following any move downwards in rates. Given how cautious they were at the beginning of the hiking cycle, waiting for more concrete data, it will be similar on the way back down.

“This latest data point does potentially put them on a collision course with the US election, and given they will not want to look to have any say on the outcome, their job is likely to become more difficult the longer they wait for that first rate cut.”

'Strong US economic data keeps coming'

Friday 2 February 2024 13:44 , Daniel O'Boyle

Neil Birrell, Chief Investment Officer and lead manager of the Premier Miton Diversified Funds, Premier Miton Investors, said: “In a busy period for central bank policy announcements and corporate reporting, the economic data keeps coming. The US employment data provided a shock, beating expectations by miles, with earnings much higher than expected as well. These numbers show the US economy to be strong and will sway anyone thinking a March rate cut was on the way to look further out. Any thoughts of recession are off the mark as well for now, and markets will have to adjust towards the Fed’s view of when policy will change.”

'Markets coping well with high rates'

Friday 2 February 2024 13:36 , Daniel O'Boyle

The possibility of a 'soft landing' in the US continues to look more certain, boosting hopes it's possible here too.

But it now seems less likely that interest rate cuts from the Fed will come soon. That may encourage the Bank of England to wait too.

Richard Flynn, Managing Director at Charles Schwab UK notes: “Today’s strong jobs report indicates that demand in the labour market is higher than expected. Up until recently, this may have set alarm bells ringing in the market. Cooler employment figures would imply lower inflationary pressures, potentially paving the way for rate cuts.

"And while lower interest rates would surely be welcomed, it is becoming increasingly clear that markets and the economy are coping well with the high rate environment, so investors are perhaps feeling that the need for monetary policy to ease is less urgent. Today’s figures may be another factor delaying the Fed’s first rate cut closer to summer, but if the economy maintains its comfortable trajectory, that might not be a bad thing. What’s the hurry?”

US jobs crush forecasts again

Friday 2 February 2024 13:32 , Daniel O'Boyle

The strength of the US labour market continues to confound economists, as the country added an astounding 353,000 jobs in January.

That's roughly double the consensus expectation.

The US unemployment rate remained at 3.7%, defying expectations of a rise.

US jobs figures imminent

Friday 2 February 2024 13:26 , Daniel O'Boyle

With US jobs figures to come, markets expect the world's largest economy to have added 176,500 jobs in January.

Unemployment is expected to tick up to 3.8%.

Superdry boss holds talks over takeover of fashion firm

Friday 2 February 2024 13:21 , Daniel O'Boyle

Superdry boss and co-founder Julian Dunkerton is in talks over a possible takeover deal for the troubled fashion brand.

The retail business saw shares rocket by as much as 110% on Friday morning amid takeover speculation.

It told shareholders that Mr Dunkerton “is engaged in discussions with potential financing partners” over a possible takeover offer for the business.

Mr Dunkerton, who co-founded the brand in 2003, already owns roughly 26% of the business.

Read more here

Mohsin Issa confirms relationship with ex-EY tax partner after Asda auditor resignation

Friday 2 February 2024 12:39 , Daniel O'Boyle

Billionaire Asda co-owner Mohsin Issa has confirmed he began a relationship with a former tax partner at EY after it was revealed the firm resigned as auditor of Asda last year.

In a statement, the pair said: "Victoria and Mohsin are highly private people who are in a relationship and building a life together. They ask that the privacy of themselves and their respective families is respected going forward."

Read more here

Best profits in six years for Jaguar Land Rover

Friday 2 February 2024 11:35 , Daniel O'Boyle

Jaguar Land Rover reported its biggest quarterly profits in six years as the car manufacturer put supply chain issues in the past.

The firm said “favourable volumes and reduced chip sales” drove higher profitability, of £627 million in the three months to 31 December.

Revenue was also up to £7.4 million, which was the highest ever for the final three months of a calendar year.

Adrian Mardell, JLR’s Chief Executive Officer said: “We have delivered a further outstanding financial performance in quarter three, with our best quarterly profit for seven years and our highest ever revenue for the first nine months of a financial year.”

Speculation about JLR’s plans has been mounting for weeks (PA) (PA Archive)
Speculation about JLR’s plans has been mounting for weeks (PA) (PA Archive)

'Good isn't always good enough' for Magnificent Seven

Friday 2 February 2024 11:34 , Daniel O'Boyle

Commenting on Amazon's results and US tech giants in general Garry White, Chief Investment Commentator at Charles Stanley, says that good isn't always good enough.

He said: "In the fourth-quarter tech reporting season it has been clear that being merely “good” is not good enough. Amazon’s results were slightly better than good and have jumped in after-hours trade. The online retail and cloud group beat Wall Street expectations significantly in almost all metrics in the final quarter of last year. Strength in retail sales and margins was welcome, but markets welcomed its upbeat assessment of prospects for the first quarter. The company has just introduced advertising on its prime video service. So, we will see in coming quarters about how much people value this service. With its positive first-quarter guidance, it looks like management could be upbeat about ad revenues and subscriptions here too.”

Small investors pull money out of UK stock market at record pace

Friday 2 February 2024 10:35 , Daniel O'Boyle

Small investors are yanking money out of the UK stock market at a record pace, industry figures are poised to reveal.

Trade body the Investment Association is finalising its figures for 2023, which seem sure to be the worst ever for outflows from UK funds.

Around £25 billion has been taken out of the UK stock market in the last two years alone, which partly explains why London shares have much more lowly valuations than rivals in the US and elsewhere.

This comes as the London stock market struggles to attract floats of big companies, which are heading to New York instead.

Read more here

FTSE 250 outperforms after 1% jump, Wizz Air shares up 10%

Friday 2 February 2024 10:18 , Graeme Evans

YouGov shares have consolidated their 70% surge since October after the polling, research and data services firm posted an in-line half-year update.

Strong momentum among tech industry clients meant AIM-listed YouGov offset challenging conditions elsewhere to report a significant acceleration in sales compared with a weak first quarter.

Currency headwinds ensured the shares gave up a modest 15p to 1205p but analysts at Peel Hunt responded to the update and stronger prospects by raising their price target to 1500p.

The mood elsewhere in London reflected tech sector optimism after three of Wall Street’s Magnificent Seven stocks posted strong results last night.

The FTSE 100 index rose 31.81 points to 7653.97, but some of the upside from Wall Street’s strong session was limited by weaker oil and mining stocks.

BP dropped 2% or 9.4p to 456.2p and Shell fell by 19.5p to 2486.5p as the price of Brent Crude stood near $79 a barrel after a 5% fall over the week.

On the risers board, Sainsbury’s lifted 7.4p to 274.6p and BT put back 3.3p to 112.3p after yesterday’s surrender of earlier trading update gains.

The FTSE 250 index reflected optimism for interest rate cuts by the summer with a rise of 1.1% or 204.78 points to 19,335.94.

Shares in JD Wetherspoon and National Express owner Mobico rallied 3% but the best performer was Wizz Air, which jumped 10% or 201p to 2185p thanks to a combination of a broker update and strong passenger figures.

Supermarket launches new hybrid fruit in response to drop in satsuma production

Friday 2 February 2024 09:37 , Daniel O'Boyle

A UK supermarket giant is launching a range of new hybrid easy-peeler citrus fruit, as it reported that satsuma production is in decline because the European market traditionally prefers seeded clementines.

Growers in Spain and Morocco have been reducing their production of satsumas, which are unseeded and preferred by the UK market but not by those on the continent, according to Tesco.

In response, the superstore has been working with mainly Spanish growers on a breeding programme to produce so-called mandarin hybrids which have fewer pips.

Read more here

'We may have to wait a little while' before interest rate cuts

Friday 2 February 2024 08:31 , Daniel O'Boyle

After yesterday’s hold from the Bank of England, markets are speculating on when the first cut might be.

Matthew Ryan, head of market strategy at global financial services firm Ebury, said: “We see yesterday’s communications as consistent with our view that we may have to wait for a little while yet before the BoE is ready to pull the trigger on looser policy.

“The tweak in the communique that removed the line regarding additional tightening is the first clear step on the path towards lower rates. It is pretty clear, however, that most committee members will need to see far more signs of disinflation, and probably an easing in wage pressures, before committing to cuts, and we remain of the opinion that a first cut is unlikely until at least the June MPC meeting.”

Oil stocks limit FTSE 100 progress, Wizz Air leads stronger FTSE 250

Friday 2 February 2024 08:30 , Graeme Evans

The FTSE 100 index is 23.82 points higher at 7645.98, with the upside from last night’s strong session on Wall Street limited by weaker oil and mining stocks.

BP dropped 2% or 8.8p to 456.8p and Shell eased 17.5p to 2488.5p after the price of Brent Crude stood 5% lower for the week near to $79 a barrel.

On the risers board, Sainsbury’s lifted 5.7p to 272.9p and Barclays cheered 2.5% or 3.7p to 149.7p. BT put back 2.2p to 111.2p after yesterday’s surrender of the initial gains posted following a third quarter update.

The FTSE 250 index reflected optimism for interest rate cuts by the summer after posting a rise of 0.9% or 169.57 points to 19,300.73.

Big risers included Wizz Air, which jumped 6% or 127p to 2111p after it reported a rise in passenger numbers for January and benefited from an upgrade by analysts at Barclays.

Mercuriadis moves from CEO to chair of Hipgnosis Songs Management

Friday 2 February 2024 07:58 , Daniel O'Boyle

Music industry veteran Merck Mercuriadis is taking a step back from his direct involvement with managing music rights, as he moves from CEO to chairman of Hipgnosis Songs Management (HSM), the investment advisor for the Hipgnosis Songs Fund.

Ben Katovsky will become chair of HSM, which also manages a portfolio of unlisted songs co-owned by Blackstone.

HSM said: "Merck will continue to lead engagement with songwriters, artists and the music industry, generate opportunities to increase consumption and enhance the value of HSM’s client’s portfolios, lead acquisitions and advocate on behalf of songwriters, artists and HSM.

"Ben will assume responsibility for executive management of the business, implementing HSM’s strategy to build on the company’s position as the premier platform for acquiring and managing Song assets."

The move comes as the Hipgnosis Songs Fund considers plans to win back shareholders after they voted to wind up the fund. One possible option appeared to be the replacement of HSM as investment manager, but the change in CEO might make a change less likely.

Merck Mercuriadis and Nile Rodgers attend The Serpentine Summer Party 2023 at The Serpentine Gallery on June 27, 2023 in London, England. (Dave Benett)
Merck Mercuriadis and Nile Rodgers attend The Serpentine Summer Party 2023 at The Serpentine Gallery on June 27, 2023 in London, England. (Dave Benett)

Water bills to go up 6% as industry opens the taps on investment

Friday 2 February 2024 07:55 , Michael Hunter

The lobby group representing the UK's embattled water companies said that the average household bill will go up 6% this year, a rise of around £27.

Water UK said the increase will come as the industry plans to invest over £14.4 billion in better infrastructure after the public outcry over sewage discharges into rivers and leaking mains supply.

That came alongside anger at high pay for senior executives in the industry, that led to the departure of Thames Water's CEO, Sarah Bentley, in June last year.

London's heavily indebted utility has been grappling with a £14 billion debt burden amid concern about its ability to continue as a going concern. Its new permanent CEO, Chris Weston, has led efforts to buy back some short -term debt and issue longer term bonds.

Water UK said today that "customers have seen their bills fall in real terms over the last decade" as it pointed to the £2 monthly rise, due to kick in from April.

Investment plans will help build 10 new reservoirs nationally. There is also "targeted support" for those struggling to pay their bills.

It added: "If water bills had kept pace with inflation since 2014-15, they would be around £60 higher today.

"Increased bills are only allowed where they pay for investment in things that are genuinely new and genuinely needed, like meeting targets for our water and sewerage system."

Meta shares jump on first dividend, profits surge

Friday 2 February 2024 07:52 , Graeme Evans

Meta Platforms is to pay a dividend of 50 cents a share on 26 March, its first-ever distribution after posting strong fourth quarter results last night.

The Facebook and Instagram owner, which has previously returned capital through share buybacks, intends to make quarterly dividend payments.

It said revenues rose 25% to $40.1 billion (£31.4 billion) in the three months to 31 December. Net income jumped 201% to $14 billion (£11 billion).

Shares rose 15% to $454 in after-hours dealings following the dividend and better-than-expected results performance. It revealed headcount of 67,000 at the end of December, a decrease of 22% year-over-year.

Chief executive Mark Zuckerberg said: “2023 was our "year of efficiency" which focused on making Meta a stronger technology company and improving our business to give us the stability to deliver our ambitious long-term vision for AI and the metaverse.”

More passengers, but also more empty seats at Ryanair and Wizz

Friday 2 February 2024 07:49 , Daniel O'Boyle

Ryanair and Wizz Air both saw a big rise in empty seats in January compared to 2023.

The falling load factors at both the two low-cost airlines could be the latest sign safety and geopolitical fears are putting people off travel, though Wizz Air noted that new visual flight rules and “reallocation of capacity” also played a part.

The number of passengers who flew with both low-cost carriers continued to rise, but Ryanair’s load factor fell to 89%, while for Wizz Air it was just 82%.

File photo dated 02/09/22 of a Ryanair Boeing 737-8AS passenger airliner comes in to land at Stansted Airport in Essex. Ryanair revealed sharply falling profits following a surge in fuel costs and cut its full-year profit outlook after being removed from some online travel agent websites. (PA Wire)
File photo dated 02/09/22 of a Ryanair Boeing 737-8AS passenger airliner comes in to land at Stansted Airport in Essex. Ryanair revealed sharply falling profits following a surge in fuel costs and cut its full-year profit outlook after being removed from some online travel agent websites. (PA Wire)

YouGov stands by profit forecasts helped by tech firms

Friday 2 February 2024 07:31 , Michael Hunter

London-listed polling and market intelligence group YouGov stood by its profit forecasts today, helped by demand from the tech sector for its market insight.

The company, best known for its political polling tracking the fortunes of parties around major elections, also conceded that "some other sectors have been more challenging".

It also said there had been "FX headwinds", a reference to the stronger levels of the pound on currency markets, meaning revenue earned abroad buys less sterling.

"Reported revenue for the first half will be strong and we have continued to invest in the business, in particular on staff costs," it said.

The £1.4bn company's half-year results are due in late March.

Markets seen higher as tech giants lift mood, Meta surges on first dividend

Friday 2 February 2024 07:17 , Graeme Evans

US stock markets are set to open higher after a largely positive reaction to results by Magnificent Seven tech giants Apple, Amazon and Meta Platforms.

Plans by Facebook owner Meta to pay its first dividend following the trebling of fourth quarter profits meant its shares led the way with a rise of 15% in after-hours dealings.

Retailer Amazon’s 14% increase in net sales for the quarter caused its shares to lift 7%, but Apple fell 3% as concerns over slower growth in China offset forecast-beating results.

In Thursday's regular trading, the S&P 500 index and Nasdaq Composite rose by more than 1% as traders quickly came to terms with the Federal Reserve’s guidance that a March cut in interest rates is unlikely.

Today’s Wall Street session includes results by oil giants Chevron and ExxonMobil and the latest non-farm payrolls figure, which is expected to highlight the resilience of the US economy with 180,000 new jobs added compared with 216,000 in December.

The FTSE 100 index closed 0.1% lower last night but is forecast by CMC Markets to start today’s session 60 points higher at 7682.

Recap: Yesterday's top stories

Friday 2 February 2024 06:46 , Simon Hunt

Good morning from the Standard City desk.

The post-pandemic conventional wisdom that London would be saddled with millions of sq ft of empty office space in the working from home era is now looking laughably wide of the mark.

As a new report yesteday shows, the opposite is true.

The pipeline of new office schemes is in fact nowhere near full enough to meet the demand for extra new space from companies hauling their workers back into central London.

One of the great strengths of London — unlike some of its more museum-like European rivals such as Paris and Rome — is that there are plenty of ugly bits that can be knocked down or reinvented to make way for the new. So expect more cranes as the depleted office building pipeline fills up again to meet the demand.

The London skyline will once again be transformed with a new generation of tall buildings. That will not please everyone. But ceaseless reinvention is a key part of what make London such a compelling world city.

Here's a summary of our top stories from yesterday:

 (PA Archive)
(PA Archive)