Yahoo Finance FTSE 100 Live 9 May: Bank of England holds interest rates, shares jump to new record
The outlook for a summer interest rate cut should become clearer today when the Bank of England publishes its latest economic forecasts.
Interest rates are set to stay at a 16-year high of 5.25%, with the focus on whether inflation has been tamed to allow a rate cut as soon as next month.
On the corporate front, Balfour Beatty, ITV and BAE Systems have posted updates while Watches of Switzerland has bought an American retailer.
FTSE 100 Live Thursday
ITV boosted by ad recovery
FTSE 100 steady at record level
Watches of Switzerland strikes US deal
FTSE 100 closes up at 8.382, a fresh record
Thursday 9 May 2024 16:42 , Simon Hunt
The FTSE 100 hit another record today, closing up 28 points to 8,382.
With this weekend set to be the warmest of 2024 so far, the City will be hoping that the strong spring run turns into a red-hot summer for London shares.
The FTSE’s strong run has helped to close the valuations gap with the US, which has been a major source of concern in the City. The massive difference in valuations between British firms and similar ones in the US, especially in the tech sector, led to a number of listed firms like Darktrace and DS Smith being bought out, while others such as Flutter and CRH switched their listings to the US.
But cracks appeared in America’s tech-led 2024 stock surge overnight, fuelling the narrative that London’s ‘boring’ index and its heavy weighting towards sectors like consumer goods and industrials might not look so unappealing.
Results from Cambridge-based chips giant Arm disappointed Wall Street, sparking concerns that the AI-driven boom in New York-listed stocks was coming to an end. Arm had been a key symbol of the London valuation crisis, after its decision to sell its shares in New York instead of London, despite Government pressure.
Arm shares fell by 10% in post-market trading, taking $10 billion off its market cap. Other American tech darlings like Nvidia and AMD lost ground too. Arm shares recovered slightly this afternoon.
Bank of England forecasting under the spotlight as Committee questions Dr Ben Bernanke
Thursday 9 May 2024 15:55 , Simon Hunt
Dr Ben Bernanke will appear in front of the Treasury Select Committee next week to discuss his recently published review into Bank of England forecasting.
The independent review of the Bank of England’s forecasting was revealed in an exchange of letters with the Chair of the Treasury Committee in June 2023, following vocal criticism by the Committee of the Bank’s failure to anticipate the trajectory of inflation.
Dr Bernanke published his findings 12 April 2024. In its response, the Bank of England confirmed it was now in the process of developing detailed plans for implementing Dr Bernanke’s recommendations.
Dr Bernanke expressed concerns about the software and models used at the Bank for producing the quarterly forecast and other analysis. He also suggested changes to how Bank Rate forecasts are produced and recommended the Bank should publish selected alternative scenarios to aid their external communications.
MPs are likely to ask Dr Bernanke whether he believes the issues he identified at the Bank of England may have led to preventable mistakes, as well as the extent to which he believes this impacted inflation in the UK.
Given his international experience, the Committee may choose to probe the witness on whether he found evidence of groupthink in the organisation and how he believes the Bank of England is performing when compared with other central banks.
John Lewis boss sees pay top £1m
Thursday 9 May 2024 15:07 , Simon English
John Lewis chairman Dame Sharon White was paid £1.12 million this year, the annual report for the retailer reveals.
That was in line with her pay last time, and is comprised of pay of £990,000, pension payments of £118,000 and other benefits of £13,500.
Staff did not get a bonus this year, nor in 2023 as the group restructures. It did make a profit this year of £56 million compared to a loss the previous year of £234 million.
The report said: “ As noted previously, the Chairman voluntarily chose not to accept a pay review in 2023 or 2024. The Chairman’s ay therefore remains at £990,000 which is unchanged since her appointment in 2020.”Dame Sharon is standing down in February 2025 after a five-year term.
US stocks broadly unchanged amid weaker earnings
Thursday 9 May 2024 14:50 , Simon Hunt
US stocks were broadly unchanged in the minutes after markets opened on Wall Street after data that showed U.S. weekly jobless claims rose more than expected was dampened by a string of weak earnings.
The Dow Jones Industrial Average was up 0.02%, at the open to 39064.27. The S&P 500 rose 0.03% to 5189.03, while the Nasdaq Composite was up 0.13% to 16323.738 at the opening bell.
Climate and pro-Palestinian activists target Barclays AGM
Thursday 9 May 2024 14:27 , Simon Hunt
Climate activists and pro-Palestinian protesters have held a demonstration outside the Barclays AGM as they urged the bank to divest.
The demonstrators claim Barclays has ties with companies supplying arms and military technology to Israel, and that it invests in fossil fuels.
Two figures dressed as the Grim Reaper stood watch over lines of child sized coffins outside the AGM at the SEC in Glasgow on Thursday.
The black-clad “oil slick” silent performers from Extinction Rebellion were among those taking part, along with the Gaza Genocide Emergency Committee, Scottish Palestine Solidarity Campaign, Christian Climate Action, Fuel Poverty Action, Scottish Friends of Palestine, and Biofuelwatch.
Today's vote is setting us up for a June rate cut, says Janus Henderson
Thursday 9 May 2024 13:15 , Simon Hunt
Portfolio Manager Stephen Payne said: The big news was that the vote split shifted, with two members now voting for a cut, whilst seven remain on hold.
“The Deputy Governor has shifted to voting for a cut. Interestingly the BoE has also revised down its own inflation forecasts, even assuming market forecasts of rate cuts to come, such that it expects inflation to be below target in two years’ time and even more so in three. They comment that “the risks from inflation persistence are receding”.
“This all provides scope for a loosening of policy, setting us up for a June rate cut followed by more to come.
“Markets have been moving to price this in over the last week and this has continued today with gilt yields down a bit more and domestic equities rallying.”
Bailey: Rates could fall faster than markets expect
Thursday 9 May 2024 12:47 , Daniel O'Boyle
Andrew Bailey says the Bank has ‘no preconception’ about how fast or far the Bank should cut interest rates, but that they could fall more sharply than markets expect.
He said a cut in June is neither ruled out or planned.
BoE projections suggest 'inflation already under control'
Thursday 9 May 2024 12:41 , Daniel O'Boyle
Kathleen Brooks at XTB says: “The Bank of England kept rates on hold on Thursday, however, the interesting part of this meeting was the release of the second Monetary Policy Report of the year. As expected, growth was revised higher, while inflation was revised sharply lower for the UK. The BOE no longer sees UK inflation with a 3% handle in its forecast period, which is out to 2027. This is a big shift for the UK, and suggests, that the UK’s inflation problem is now under control, and price pressures have slowed sharply even though the economy is near full employment. While the BOE thinks that it is too soon to declare victory over the cost-of-living crisis, the BOE also thinks that the key indicators of inflation persistence are moderating, which is helping the overall disinflation trend to continue. The BOE’s forecasts for the unemployment rate were also revised lower, which could mean that the UK economy will get its very own soft landing.”
MPC 'not implying it will cut in June' but could do so depending on data
Thursday 9 May 2024 12:24 , Daniel O'Boyle
Paul dales of Capital Economics says: “The retention of the previous guidance that policy needs to remain restrictive for “sufficiently long” and for “an extended period” suggests to us that the Bank is not implying it will cut rates at the next policy meeting in June. But the new line that the MPC will “consider forthcoming data releases and how these inform the assessment that the risks from inflation persistence are receding” implies that the MPC is willing to change its stance and that the data will determine when that happens.
“At the moment, it feels to us as though the MPC may be on track to cut rates at the August meeting if the inflation and wage data evolve as it expects. But if we’re right in expecting the incoming data to be softer, the Bank may cut rates at the next meeting in June (note there are two inflation and labour market releases between now and then).”
Is the stage set for 20 June rate cut?
Thursday 9 May 2024 12:09 , Daniel O'Boyle
Jeremy Batstone-Carr, European Strategist at Raymond James Investment Services, says: “The Bank of England has voted to hold the base rate at 5.25% for the sixth consecutive time, setting expectations that the long-awaited rate cut will come on June 20th. Since the Monetary Policy Committee’s (MPC) last meeting, headline and core inflation have dipped, with the descending trend expected to continue.
“Ahead of June 20th, April’s CPI data on May 22nd is expected to show that price increases have fallen sharply, laying the ground for rate cuts the following month. Although the labour market has shown signs of loosening, providing additional encouragement to the MPC, the possible inflationary consequences of a rate cut remain concerning to some the rate-setters. The Committee thus remains divided on the road ahead, with some finding that the pace of deflation is still too slow for comfort.”
MPC 'prepared to adjust policy' based on data
Thursday 9 May 2024 12:06 , Daniel O'Boyle
The Bank of England Monetary Policy Committee said: “The MPC remains prepared to adjust monetary policy as warranted by economic data to return inflation to the 2% target sustainably. It will therefore continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole, including a range of measures of the underlying tightness of labour market conditions, wage growth and services price inflation.
“The Committee will consider forthcoming data releases and how these inform the assessment that the risks from inflation persistence are receding. On that basis, the Committee will keep under review for how long Bank Rate should be maintained at its current level.”
Bank of England holds interest rates
Thursday 9 May 2024 12:01 , Daniel O'Boyle
The Bank of England voted 7-2 to hold interest rates at 5.25%.
Dave Ramsden joined Swati Dhingra in voting for a cut.
Hold close to certain
Thursday 9 May 2024 11:52 , Daniel O'Boyle
Bets on the Bank of England holding interest rates have risen ahead of the Bank’s decision today.
City traders now see only a 4% chance of a cut.
Signs of UK-listed firms narrowing valuation gap after record FTSE run
Thursday 9 May 2024 11:26 , Daniel O'Boyle
New hopes that London shares could be on their way back in fashion by the summer emerged today, as the latest surge in London shares and signs of a US tech slowdown helped narrow the valuation gap between the US and UK.
But City experts warned that more needed to be done to keep driving interest in UK stocks.
The FTSE 100 hit another all-time high today in early trading, after a long spell in the doldrums, but its momentum was slower compared to its performance over the last four-and-a-half weeks, when it gained 550 points. It remained close to yesterday’s record close this morning at 8,3560.
FTSE 100 firm as banks and BAE Systems make progress
Thursday 9 May 2024 10:27 , Graeme Evans
London’s top flight also held firm, rising to a record 8365 at one point before settling 6.82 points higher at 8360.87. BAE Systems traded at an all-time high after its in-line AGM trading update helped shares lift another 10.4p to 1391.9p.
Banking stocks Barclays and NatWest also continued their recent progress by adding a penny to 1.4p to 213.1p and 1.9p to 318.9p respectively. HSBC moved the other way, down 4% or 28.2p to 692.6p as the stock traded without its forthcoming dividend award.
On the fallers board, Airtel Africa dropped 6% or 6.5p to 109.4p after currency movements weighed on the annual results of the telecoms and mobile money services business.
Thursday 9 May 2024 10:06 , Simon English
ITV saw a recovery in the ad market in the first quarter in what some City analysts saw as a strong sign for the wider economy.
The broadcaster is often seen as a bellweather for the economy as its ad revenue reflects wider business confidence.
Ad revenue was up 3% in the first quarter and is likely to boom in the second quarter due to the Euros football tournament in which there are high hopes for the success of the England team.
Overall, there was a 7% fall in revenue to £887 million largely due to the Hollywood writers’ and actors’ strike.
ITV did especially well from the hit drama Mr Bates vs The Post Office and from Love Island.
The shares rose 2% to 76p today which leaves the business valued at £3 billion.
CEO Carolyn McCall said: “Over the full year we expect ITV Studios revenues to be broadly flat. We have a strong pipeline of programmes, good demand for our quality content as we increasingly diversify our customer base towards streamers and the phasing of deliveries is heavily weighted to the second half of the year, including Hells Kitchen US, The Better Sister,A.C.A.B, Showtrial and Ludwig.”
FTSE 100 holds firm, ITV update boosts shares in FTSE 250
Thursday 9 May 2024 08:46 , Graeme Evans
The FTSE 100 index has made a subdued start to trading although today’s peak of 8365 represents a fresh record for the top flight.
BAE Systems rose 2p to 1383.5p after its AGM trading update but Airtel Africa fell 3p to 112.9p following annual results.
Private equity firm 3i also gave up 94p to 2880p as full-year figures gave investors the chance to take profits after a strong run for shares.
The FTSE 100 later stood 3.70 points lower at 8357.75, with the FTSE 250 index 10.62 points weaker at 20,481.37. ITV shares improved 2p to 76.4p following its update.
John Wood Group posts fall in revenue amid scrutiny from activist investor
Thursday 9 May 2024 07:58 , Michael Hunter
John Wood Group, the oilfield and engineering services group, has reported a drop in revenue, coming at a time it is under scrutiny from activist investors.
Sparta Capital has been pushing for the group to consider selling itself, or to move its shares from London to the US to boost valuations.
Wood revealed today that first quarter revenue fell 6% to $1.4 billion “with growth in Operations offset by lower revenue in Projects, mainly reflecting lower pass-through activity”.
Its order book at 31 March 2024 was $6.2 billion, up 9% year-on-year.
Watches of Switzerland buys the US retail business of Italian jeweller Roberto Coin for $130 million
Thursday 9 May 2024 07:47 , Michael Hunter
Rolex retailer Watches of Switzerland has bought the US retail business of Italian jeweller Roberto Coin in a “major milestone” in its push into the American market.
The FTSE 250 company paid $130 million, it said today, to snap up the sixth largest jewellery brand in the US by sales.
The Roberto Coin US business has “exclusive perpetual rights” to import its former parent’s products into the world’s biggest jewellery market.
Watches of Switzerland said Roberto Coin “ has developed a strong position” in the market, “competing successfully with other top 10 industry leading brands such as Cartier, Tiffany, Van Cleef & Arpels, Bvlgari and David Yurman”.
Blackstone and HSM winners in Hipgnosis saga as Concord pulls out of bid war
Thursday 9 May 2024 07:31 , Daniel O'Boyle
The Hipgnosis Songs Fund saga appears to be coming to an end as US-based music investor Concord said today it will not make a higher bid for the fund, seemingly ensuring Blackstone wins the bidding war.
Concord said it would not submit any bids above its $1.25 per share offer, which Blackstone topped last week with a bid valuing the fund at $1.57 billion.
The deal also appears to secure the future of Merck Mercuriadis’ Hipgnosis Songs management, which manages the portfolio of hits by artists including Shakira and Beyonce. Concord intended to ditch HSM to let its own team manage the portfolio, while Blackstone, which backs HSM, said it planned to keep it in place as investment adviser.
HSM held a call option for all of the investment vehicle’s songs, putting it at an advantage in the bidding war.
ITV sees ad recovery in first quarter
Thursday 9 May 2024 07:31 , Simon English
ITV saw advertising revenue up 3% in the first quarter in a sign the ad market is recovering. Mr Bates vs The Post Office was perhaps its biggest hit in the period.
CEO Carolyn McCall said ITVX, the broadcasters streaming channel, “continued to build on its strong first year”.
She said: “We have a strong pipeline of programmes, good demand for our quality content as we increasingly diversify our customer base towards streamers and the phasing of deliveries is heavily weighted to the second half of the year, including Hells Kitchen US, The Better Sister, A.C.A.B, Showtrial and Ludwig.”
Total revenue was down 7% at £887 million. ITV is planning £40 million of cost savings in 2024.
Balfour Beatty points to Rolls-Royce nuclear submarine deal as it stands by profit forecasts for the year
Thursday 9 May 2024 07:24 , Michael Hunter
Balfour Beatty, the construction and infrastructure group, underlined its full-year forecasts today, saying profits would rise.
The FTSE 250 constituent highlighted its contract with Rolls-Royce to expand the engine maker’s capacity to make reactor components for nuclear submarines at its plant in Raynesway in Derby.
It also pointed to work on nine electricity transmission projects in the north of Scotland.
The £2 billion firm said its average monthly closing net cash balance was £756 million, up from an average of £700 million in 2023. It said the figure for 2024 would be “roughly in line with 2023” which closed out at £842 million, “reflecting an expected working capital outflow”.
It is also in the process of a £100 million share buyback, with £50 million completed so far.
FTSE 100 seen higher ahead of rates call, Dow Jones extends run
Thursday 9 May 2024 07:15 , Graeme Evans
The pound is just below $1.25 while the FTSE 100 index is set to open slightly higher as traders await today’s Bank of England policy announcement.
Interest rates are set to stay at a 16-year high of 5.25%, with the main interest on whether policymakers signal they are ready to consider a cut as soon as next month.
The pound has weakened from above $1.28 in early March amid expectations that US rates will stay higher for longer in the fight to tame inflation.
US stock markets had an indifferent session yesterday, although the Dow Jones Industrial Average rose for a sixth session in a row with a gain of 0.4%.
The FTSE 100 index posted another record close of 8354 yesterday and is forecast by IG Index to add another 30 points at today’s opening bell.
Recap: Yesterday's top stories
Wednesday 8 May 2024 22:08 , Simon Hunt
Good morning from the Standard City desk.
City market-implied odds of the Bank of England cutting in interest rates by August are roughly the same as those from the bookies for Manchester City winning the Premier League.
Meanwhile the chances of rates staying on hold through to September are on a par with those of Arsenal landing the title.
Given that Pep Guardiola’s men are only a stumble away from handing the honours to the Gunners, that feels like an unexpectedly high possibility of no summer moves from the Bank of England.
By the time the MPC make their decision on 20 June it will have before it two more sets of inflation data, including the crucial April figures.
That was the month when the energy cap fell 12% and the Consumer Prices Index is widely thought to have dropped back below the 2% target for the first time since July 2021. We’ll soon find out if it did.
There will be statistical meat for the hawks to gnaw on as well, notably the inflationary impact of a near 10% rise in the minimum wage.
Perhaps more significant still is the fairly startling fall in the oil price over the past month with Brent Crude down from $90 a barrel at the start of April to below $82 as hopes of a ceasefire in Gaza build.
If, and it is a huge if, that can be sustained, the MPC might really start to hope that inflation has been tamed and it is time to get the wheels of the economy turning again with a rate cut. It is still very much in the balance and another flare up in the Middle East could easily scupper things.
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Here’s a summary of our top headlines from yesterday:
Fast fashion retailer Boohoo makes £160 million loss in “difficult macroeconomic environment” and competition from Shein
Wetherspoon like for like sales up 6% as real ales boom, young people adopt Guinness and “chattering classes” enjoy Kiwi Sauvignon Blanc in their local Spoons
Oxford Cannabinoid Technologies becomes latest pharma firm to quit London stock market blaming “particularly challenging times in UK capital markets.”
Direct Line suffers £33 million claims from winter storm damage
Luke Johnson’s Brighton Pier makes £9 million loss after being hit by terrible summer weather
And...London to become 'Manhattan-on-Thames' with 600 more skyscrapers in pipeline
