FTSE 100 Live 19 July: Session closes lower as LSEG services resume; CrowdStrike shares sink amid IT meltdown
Disruption from today’s major global IT outage has been felt in the City after traders were left without any regulatory news announcements.
Stock market dealings are taking place as normal, but with the FTSE 100 and other European markets struggling.
The UK economy provided today’s other focus after updates on retail spending and public sector borrowing.
FTSE 100 Live Friday
LSEG hit by RNS outage
Borrowing setback for chancellor
Retail sales fall more than expected
FTSE closes lower amid problems with London Stock Exchange
16:36 , Simon Hunt
The FTSE 100 has ended the session lower after a bumpy day of trading in which today’s global IT meltdown triggered problems with the London Stock Exchange.
Exchange operator LSEG said a technical problem that had impacted its spot and forward rates on currencies had now been resolved and services restored.
LSEG's Regulatory News Service, which publishes company updates, also resumed, while prices and news for a range of assets were available on its Workspace platform. Both had been disrupted earlier in the day.
The FTSE 100 ended the day down around 50 points to 8,155. It finished the week around 100 points lower compared to last week’s close.
Ryan Thornley, Security Practice Lead GCP consultancy Appsbroker CTS said: “We don’t yet know the full extent of this incident, but what’s clear at this point is that the recovery phase for businesses and public organisations is going to be huge and very costly.
“Potentially millions of machines around the globe, from hospital computers to supermarket checkouts have received a defective content update to Crowdstrike and in many situations will need to be physically accessed to make them bootable again. This will be a mammoth undertaking and a real stress test for companies’ disaster recovery plans. In cases like hospitals and emergency services, this could be life-threatening.”
Top British banks set to reveal lower earnings amid mortgage price war
15:52 , Simon Hunt
Top British banks are set to reveal lower profits as the benefit from higher mortgage rates starts to subside, despite elevated borrowing costs still gripping households across the country.
UK banking giants Lloyds and NatWest will report their half-year results on Thursday and Friday respectively, while Santander will also update investors on Wednesday.
Lloyds Banking Group, which incorporates the Halifax brand and is the UK’s largest mortgage lender, is expected to report a pre-tax profit of £3.2 billion for the first six months of the year.
It would be about a fifth lower than the £3.9 billion half-year profit the bank generated this time last year.
Shares in CrowdStrike sink amid IT meltdown
14:45 , Simon Hunt
Shares in CrowdStrike have dropped more than 12% in the opening minutes of trade on Wall Street as the cybersecurity firm suffered from the ramifications of a software glitch that sparked a widespread IT meltdown.
Microsoft shares, which had fallen 3% in pre-market, were largely unchanged despite the tech giant conceding that it had to wrestle with IT issues itself this morning.
Other tech stocks also slid as investors weighed the scale of the fallout from the IT troubles. The S&P 500 1.22 points at 5,543.37, while the Nasdaq Composite dropped 35.63 points to 17,835.59 at the opening bell.
CrowdStrike ‘actively working’ to fix flaw that sparked global IT outage
14:28 , Simon Hunt
Cybersecurity firm CrowdStrike is “actively working” to fix a “defect” in an update for Microsoft Windows users which sparked a global IT outage, the company’s chief executive has said.
George Kurtz said Mac and Linux users were not impacted by the fault and it was “not a security incident or cyber attack”.
In an interview with NBC’s Today Show in the US, Mr Kurtz said the company is “deeply sorry for impact that we’ve caused to customers”.
He added the firm is “working with each and every customer to make sure that we can bring them back online”, confirming a “bug” related to a software update was the cause of the outage.
Mr Kurtz said there had been a “negative interaction” between the update and Microsoft’s operating system, which had then caused computers to crash, sparking the outage.
City Comment: Tesla shares shoot for the moon, or maybe Mars
13:37 , Simon English
Next Tuesday is a big day for fans of Tesla shares, the price of which is either indicative of a genius at work, or some sort of collective madness.
At $252 each, stocks in the cars that can drive themselves (sometimes) are worth nearly $800 billion.
That makes the business more valuable than Mercedes-Benz, VW and Stellantis combined, as AJ Bell points out, after recent leaps in the stock.
“Quite what inspired this romp is hard to divine,” says the broker, an allusion to Tesla being a dream led by a cult.
Elon Musk is plainly brilliant, plainly, perhaps literally, shooting for the stars.
He was right about electric vehicles and has turbo charged that industry in what is an extraordinary example of one-man bending events to his will.
It still seems most likely that in the future, if we drive at all, if will be Ford’s, VW’s and Toyota’s, same as now.
If you haven’t driven a Tesla, try it. It’s exhilarating and slightly scary.
But the business case is under pressure due to tumbling cash flow and a drop in production levels.
Second quarter results on Tuesday will do well if Wall Street and City folk can see that the business aside from the cars -- energy storage, energy generation and other business lines – is on the up.
If they aren’t, investors are buying a dream – actual financial results be damned.
Which is fine, so long as they know.
I might buy a car, if I suddenly had some money coming my way. The shares? Not on this planet.
Like our own Ocado, Tesla is a perpetual jam tomorrow story. Away from Tesla, Elon Musk might colonise Mars and save enough humans for the race to continue.
If things get that bad, the value of Tesla shares and indeed all shares is, sadly, zero.
Lunchtime update: European stocks slump amid ongoing IT outage
12:17 , Simon Hunt
Midway through the day’s trading session in London, the FTSE 100 remains down around 0.5%, paring back some of the losses from earlier this morning after a number of blue-chips including stock exchange operator LSEG were impacted by widespread IT issues.
Insurance firms including Beazley and Hiscox have seen some of the biggest share price falls in signs traders are pricing in big payouts under business interruption cover.
“The world grinding to a halt because of a global IT meltdown shows the dark side to technology and that relying on computers doesn’t always make life easier,” says Dan Coatsworth, investment analyst at AJ Bell.
“The severity of the problem boils down to how long it lasts. A few hours’ disruption is unhelpful but not a catastrophe. Prolonged disruption is another matter, potentially causing damage to companies and economies.
“Stock markets continued to function as normal despite corporate news feeds and information terminals being impacted by the tech outage. Futures prices imply a small pullback when Wall Street opens later today, but so far investors have not shown any panic. Whether that remains the case as the day goes on is another matter.”
Competition watchdog clears Nationwide’s £2.9bn Virgin Money takeover
11:31
Nationwide’s £2.9 billion takeover of banking firm Virgin Money has been cleared by the UK’s competition regulator.
The building society agreed the takeover of its London-listed rival in March.
In May, the Competition and Markets Authority (CMA) watchdog launched an initial merger inquiry to consider whether the deal – which is the biggest UK banking merger since the financial crisis – could “result in a substantial lessening of competition” within the UK market.
Crowdstrike tumbles on outage concerns
10:51 , Simon Hunt
Shares in Crowdstrike have tumbled as much as 14% in pre-market trading amid signs its security software shares some responsibility for the widespread global IT disruption we’re witnessing.
Microsoft shares have also fallen 2%, though the tech giant has resolved its own cloud-based outages.
Crowdstrike said it has identified the issues and has deployed a fix. CEO George Kurtz said the outage is not the result of a cyberattack.
What's behind today's IT meltdown?
10:14 , Simon Hunt
What’s behind today’s IT meltdown?
Tom Kidwell, Co-founder, Ecliptic Dynamics and former British Army and UK Government intelligence specialist, said: “The outage impacting Windows devices this morning appears to have been caused by a driver update by CrowdStrike, bricking older windows devices and servers, which will be worst hit.
“Unfortunately for CrowdStrike, if that is the case, it could be nauseating to fix. Due to the nature of the update, an individual from every organisation will need to boot into safemode, remove the issue file/driver, and then either roll back or update to a new version, something CrowdStrike will need to release very quickly.
“Incidents like this highlight the vulnerability in using a single supplier on such a vast scale, and why it’s critical that organisations have a backup plan. Best practice for vendors is to pressure test any updates before rollout, however this can be difficult when you serve 60-90% of the world.”
FTSE 100 struggles amid LSE disruption
09:52 , Graeme Evans
Stock market dealings are taking place as normal, even though the LSEG’s Regulated News Service feed is yet to update due to this morning global IT outage.
The problems, which have affected some global airlines and banks, fuelled a risk averse session as the FTSE 100 index weakened 53.95 points to 8150.94 and other European benchmarks also struggled.
Big fallers in London included British Airways owner IAG, down 3.85p to 170p, and the thermal energy firm Spirax with a reverse of 7% or 610p to 8355p.
Miners and China-focused stocks were under pressure amid disappointment at the lack of new policy initiatives from a gathering of the Communist Party’s central committee.
Burberry shares fell another 28.8p to 723.2p, Prudential dropped 14.4p to 702.8p and Glencore weakened 8.85p to 44.205p.
Mexico’s Fresnillo lost 4% or 24.5p to 600p after the gold price fell back from this week’s record high. The risers board was led by Rolls-Royce, up 5.4p to 440p.
Gloomy economic data deals fresh blow to Rachel Reeves
09:52 , Simon Hunt
The scale of the challenge facing Britain’s new chancellor Rachel Reeves was laid bare today after a flurry of fresh data betrayed an economy stuck in reverse gear and a Treasury saddled with ballooning deficits.
Retail sales figures for June came in significantly worse than anticipated. Sales were down 1.2% compared to the previous month, meaning the sector delivered no growth in the first half of the year. Economists had predicted a much shallower fall of 0.6%.
Consumer confidence figures released by GfK today will have failed to lift retailers’ moods, with a subdued one-point improvement in the overall index score in July along with no change to confidence in the UK’s wider economy over the next 12 months, which stood at minus 11 points.
But their hopes may have been buoyed by a seven point uptick in the major purchase index – an indicator of confidence in buying big ticket items, that could translate into improved footfall in the months to come.
Hit shows and cheaper memberships spark Netflix subscriber surge
08:59 , Simon Hunt
A flurry of new hit shows including the latest season of Bridgerton and drama Baby Reindeer helped Netflix storm past market expectations and add a bumper eight million new subscribers in the three months to June.
The results handed the streaming giant its second best-ever first half, beaten only by a boom in 2020 when pandemic lockdowns led to millions of extra sign-ups.
A crackdown on password sharing and the offer of new lower-tier advert-filled membership options are thought to have contributed to the subscription jump, though the company conceded the “near-term challenge (and medium term opportunity) is that we’re scaling faster than our ability to monetize our growing ad inventory.”
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “This is a new challenge for Netflix; you can’t simply chuck a load of non-tailored adverts into your product to keep users happy, even if that’s what they signed up for.
“Squeezing every possible dollar from the new ad-watching user base is proving a challenge, and with users growing so fast, it’s struggling to fill all the ad slots it has at its disposal.”
FTSE 100 lower amid RNS disruption
08:34 , Graeme Evans
Stock market trading is underway, but the global technical issues affecting the Regulated News Service mean investors are still without the majority of today’s corporate updates.
The FTSE 100 index is down by 0.6% or 51.99 points to 8152.90, with the ongoing jitters over China’s economy reflected in weaker sessions for the shares of Burberry and mining stocks including Glencore.
A reverse in the gold price following this week’s record high meant Mexico’s Fresnillo is the biggest faller, down by 5% or 33.5p to 591p.
London Stock Bloomberg London Stock Exchange joins banks, airlines reporting technical issues
08:27 , Simon Hunt
A series of technical glitches disrupted services at airlines, banks and the London Stock Exchange on Friday, an unusual cascade of failures that erupted from the US to Asia after Microsoft Corp. reported an outage across its online services.
The first glitches emerged in the US late on Thursday, blamed on a failure of Microsoft services including Azure and 365. Denver-based Frontier Airlines, a unit of Frontier Group Holdings Inc., grounded flights for over two hours and blamed issues with Microsoft’s online services. The airline lifted a nationwide pause on departures and started the process of resuming flights from 11 p.m. New York time.
Borrowing figures deal blow to new chancellor
08:01 , Graeme Evans
Higher-than-expected public borrowing figures today suggested less wiggle room for new chancellor Rachel Reeves ahead of the Budget this autumn.
Borrowing — the difference between public sector spending and income — was £14.5 billion in June. This was £3.2 billion less than in June 2023, but higher than the £11.6 billion forecast by the Office for Budget Responsibility (OBR).
Capital Economics said borrowing is on track to come in a little higher than the OBR’s 2024/25 forecast of £87.2 billion.
It said: “Admittedly, the OBR may grant the Chancellor a bit more wiggle room to loosen fiscal policy in an autumn fiscal event.
“But we doubt there will be much room to announce big changes on top of the £8 billion increase in spending and equivalent rise in taxes outlined in Labour’s manifesto.”
LSEG investigates RNS outage amid widespread Microsoft service disruption
07:45 , Simon Hunt
The London Stock Exchange Group (LSEG) has just said it is investigating a technical issues after users have reported problems with its regulatory news service (RNS) for stock exchange updates.
It’s suspected that the problems are linked to Microsoft, which this morning reported worldwide service outages and has said that some of its ‘365’ services are in a ‘degraded state’. The problems also appear to be causing disruption to airlines and airports, which this morning have reported widespread IT issues.
In a statement on its website LSEG said: “RNS news service is currently experiencing a 3rd party global technical issue, preventing news from being published on www.londonstockexchange.com.
“Technical teams are working to restore the service. Other services across the Group, including London Stock Exchange continue to operate as normal.”
Ofcom bans mid-contract price rises linked to inflation
07:36
Ofcom has said it will end the practice of broadband and mobile providers adding inflation-linked prices midway through contracts.
The regulator has said the any price rise written into a customer’s contract from January 2025 will need to be set out in pounds and pence, prominently and transparently, at the point of sale; and providers will need to be clear about when any changes to prices will occur.
It said the move was to protect consumers and remove the uncertainty over the effect of future rates of inflation on fees.
Cristina Luna-Esteban, Ofcom Telecoms Policy Director, said: “With household budgets squeezed, people need to have certainty about their monthly outgoings. But that’s impossible if you’re tied into a contract where the price could change based on something as hard to predict as future inflation.
“We’re stepping in on behalf of phone, broadband and pay TV customers to stamp out this practice, so people can be certain of the price they will pay, compare deals more easily and take advantage of the competitive market we have in the UK.”
UK retail sales fall more than expected
07:18 , Simon Hunt
Retail sales figures for June have come in significantly worse than anticipated.
Sales excluding fuel were down 1.5% compared to the previous month. Economists had predicted a much shallower fall of 0.5%.
Volume sales fell across all sectors except for fuel, according to data from the Office for National Statistics. Department stores fared the worst, with volumes down more than 3% month-on-month, while household goods stores were not far behind with a more than 2% drop.
Erin Brookes, European Retail and Consumer Lead at Alvarez & Marsal, said: “Unfortunately June has been a washout for retail sales, with retailers yet to sustain two consecutive months of sales growth this year, with another slowdown after an uptick in May.
“The poor weather in June saw disappointing sales of summer goods including across food and clothing. This comes despite significant discounting and deflation in fashion retail, with volumes remaining stagnant.
“Looking ahead, England reaching the final of the Euros, and the start of the school holiday, may have driven sales higher in July, but retailers will be concerned about structural volume decline against a backdrop of intensifying competition.”
Consumer confidence poll signals spending boost
07:16 , Graeme Evans
The latest GfK consumer confidence index has provided some comfort for retailers after it showed an uptick in major purchase intentions.
The overall index posted a one-point improvement to minus 13, which compares with minus 30% for July last year.
The biggest change out of five measures was the major purchase index, which signalled a potential boost to footfall by surging seven points to minus 16.
The view on personal finances over the last 12 months also improved by two points to minus eight, but fell one point in relation to the next 12 months.
The consumer view on the UK’s wider economy has paused with scores that are identical to last month
GfK client strategy director Joe Staton said: “July’s consumer confidence poll suggests a note of caution as people wait to see exactly how the UK’s new government will affect the wider economy and their personal finances.”
FTSE 100 seen lower, Netflix results fail to boost shares
07:04 , Graeme Evans
The pressure on Wall Street technology shares continued yesterday after the Nasdaq Composite declined 0.7% and the S&P 500 index by 0.8%.
Apple shares fell 2% and Microsoft by 1% but Nvidia put back 3% after heavy selling across the semiconductor sector in the previous session.
The Dow Jones Industrial Average fell 1.3%, having closed at record highs in its previous three sessions.
In post-close dealings, Netflix shares were slightly lower despite beating forecasts with second quarter results and increasing its revenues outlook.
The FTSE 100 index is forecast to open 27 points lower at 8178 after giving up most of yesterday’s strong start to finish 0.2% higher. The pound is at $1.293.
Recap: Yesterday's top headlines
06:58 , Simon Hunt
Good morning from the Standard City desk.
To some people husband and wife team Alan and Gina Miller are troublemakers.
He for his attacks on the over-paid, over-priced fund management sector that he once did very well from personally.
She for her anti-Brexit political positions, for challenging the prororgation of Parliament and just generally being a woman with an opinion. (Some of Britain is still lost in 1965.)
Today they have a plan; a suggestion for how to boost the beleaguered UK stock market via pension funds.
They have written to Chancellor Rachel Reeves and Work and Pensions Secretary of State Liz Kendall to outline their ideas, and deserve a response.
In brief, they think UK pension funds should be required to have at least 20% of the shares they hold in UK equities. If that sounds tough or nannying, it would only return the funds to where they were as recently as 2017.
The MP’s own pension funds have just 2.8% invested in UK listed companies, so that would be a good place to start.
The 20% rule would direct nearly £42 billion into the market, boosting liquidity and stability.
And making the shares more attractive to foreign investors, since they can see there is solid support for companies worth about 25% less than they should be, according to analysis by SCM Direct, the Miller’s investment operation.
What’s the cost to the taxman of this? Hopefully nothing. And if it encourages economic growth, then HMRC is quids in.
How about it?
~
Here’s a summary of our top headlines from yesterday:
Strong wages data adds to the feeling the BOE will cut rates later than August - average earnings up 5.7% in May, same as in April. The overall unemployment rate is also stuck, at 4.4%; but a higher-than-expected rise in jobless claimants for June at 32.3K comes as a reminder of the economy's struggles
The world's largest contract chipmaker TSMC said it expects third-quarter revenue to surge by as much as 34% from a year earlier as AI adoption helped it weather the tapering off of pandemic-led electronics demand.
Frasers says it is pivoting into more luxury retail, offering more luxury brands to deliver a jump in profits next year after sales for the year to end April fell 1%, falling short of forecasts.
Client numbers boom at AJ Bell as rising markets encourage investors to save. Calls for govt to simplify savings regime
Bloomsbury to get a £400 million boost from a partnership of local landowners to give the area a facelift, including three new hotels and the refurbishment of the Imperial Hotel.
Developers unveil designs for redeveloped 8 Canada Square for after HSBC exits the building.