Yahoo Finance FTSE 100 Live 31 January: US Fed holds rates, London index closes down after late slide
The property market’s new year resilience and upgraded GSK targets are in focus ahead of tonight's US interest rates decision.
Nationwide’s latest figures showed January’s average house price little changed on a year earlier, a better performance than expected by analysts.
London’s session also included robust results and targets by drugs giant GSK before the attention turns to tonight's updated rates guidance by the US Federal Reserve.
FTSE 100 Live Wednesday
GSK results beat expectations
Nationwide reports house price rise
US rates and tech figures in focus
Bank of England set to follow Fed
19:18 , Daniel O'Boyle
Attention now turns to the Bank of England, which is also seen as near certain to hold rates.
Lindsay James, investment strategist at Quilter Investors, says: “The Federal Reserve has kick started 2024 with a further hold on interest rates, the fourth consecutive meeting at which it has left rates unchanged, but with a further hint that rates are likely to be eased in the coming months.
“The question now is not whether the Fed will look to cut rates, but rather what will the timing and pace of its rate cuts look like? Macro-economic data has been strong, and the Fed’s preferred measure of inflation, core PCE, has been trending much closer to target. In fact, on the basis of annualization of the last three months of readings, it is already back below the 2% level. Job openings have continued to look robust, coming in well ahead of estimates, demonstrating the labour market remains an important driver of economic growth and serving to underline that the second of the Fed’s goals, namely ‘maximum employment’, is also looking like it’s been achieved.
“Though strong macro-economic data alone is not a reason for the Fed to delay rate cuts, only should it serve to trigger a further inflationary pulse, the market has seen the likelihood of a first rate cut in March slashed, and today’s meeting will almost certainly trigger further calibration around the extent and timing of future cuts. The Fed has reiterated its ‘data dependent’ decision making, but so long as inflation continues its downwards trajectory it is unlikely it will hold out on cuts for too much longer.
“With both the Federal Reserve and the European Central Bank opting to hold rates, the Bank of England is expected to follow suit at its MPC meeting tomorrow. The central banks will be reluctant to move too much too quickly for fear of disrupting the progress they have made in getting inflation under control, but it is only a matter of time before one of them begins the shift in policy.”
'May most likely' month for Fed rate cut
19:07 , Daniel O'Boyle
Richard Garland, Chief Investment Strategist at Omnis Investments, comments on tonight’s Fed rate decision: “It's too early to expect any reduction in interest rates from the Fed, but the possibility of any further hikes is well off the table. The run rate of inflation is now moving within range of their target and with employment costs also slowing materially, the Fed is set to join the 'when, not if' narrative for rate cuts. May is the most likely time for the first reduction, whilst March is not off the table and it would take a stout shock in growth or inflation to deflect markets from that view.”
FOMC 'remains highly attentive to inflation risks'
19:03 , Daniel O'Boyle
While holding US interest rates, the Federal Open Market Committee said: "Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have moderated since early last year but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated.
"The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are moving into better balance. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks."
US Fed holds
19:01 , Daniel O'Boyle
The US Federal Reserve has kept its interest rates unchanged, as expected.
It is the fourth consecutive hold.
'96% chance' Fed holds rates
18:48 , Daniel O'Boyle
With just 10 minutes until the Federal Reserve's latest interest rates decision, markets see a 96% chance that the US central bank holds its base rate.
The market prices a cut in March as slightly more likely than not, and a cut by May as near-certain.
FTSE closes down 0.5% after late fall
17:06 , Daniel O'Boyle
The FTSE 100 closed at 7,630.57 today, down half a percent, after a sharp decline following the start of US trading.
London’s top flight was at 7687 in the mid-afternoon, on course for its highest close in three weeks.
But as US tech giants fell following disappointing results last night, London shares dipped as well.
The index ends January down 90 points, in a tough start to the year.
The top riser today was Croda International and the top faller was WPP.
Fetch.ai boss offers reassurance after UK firm put in administration
16:09 , Simon Hunt
The boss of Fetch.ai has sought to allay investor concerns after the firm’s UK business was put into administration over “financial difficulties” following a million-dollar London court case.
In an interview with the Standard, founder Humayun Sheikh insisted it was “business as usual” for the tech firm and operator of the FET cryptocurrency as he outlined plans to restructure as part of a shift in operations from the UK to Dubai.
Fetch.ai’s UK entity was put into administration earlier this month, the Standard revealed yesterday, after company filings suggested the firm was in “financial difficulties” and its directors believed it was “likely to become unable to pay its debts.”
Administration proceedings for the firm first began on 24 November last year, a week after the company lost a High Court case in London after which it was ordered to pay just under £1 million plus interest to settle a claim made against it by a former contractor. The claim included around $750,000 in connection with unpaid FET tokens as part of a software deal.
US tech stocks slide on disappointing earnings
15:13 , Simon Hunt
Google, Apple and Microsoft shares slid after markets opened on Wall Street after investors were left disappointed with a string of tech earnings.
Google shares fell the most down around 6% after the firm posted advertising revenue that failed to impress. Meanwhile, Microsoft shares fell around 1% after its earnings forecasts were not greeted with enthusiasm. Apple fell 1.3%
"A lofty valuation means even the slightest hint of disappointment will be seized on by investors, and Microsoft's guidance for revenue growth in its cloud division to slacken a little in the current quarter was enough to see the shares dip modestly," said Russ Mould, investment director at AJ Bell.
Gene Munster, managing partner at Deepwater Asset Management, told Reuters he is looking for more from his firm's stakes in Alphabet and Microsoft.
"Investors want to see more contribution from AI," he said about Alphabet. "Microsoft is still nascent, but showing some AI uptick."
City Voices: The Bank of England has failed. It must urgently lower interest rates
14:09 , Daniel O'Boyle
Ben Ramanauskas writes that the Bank of England's Monetary Policy Committee has repeatedly failed the British people over the past few years.
The Bank of England’s Monetary Policy Committee has failed.
It failed in its role of keeping inflation at 2% by letting it get out of control. It responded far too late and so it was ordinary people who paid the price as they saw their cost of living shoot up and struggled to make ends meet.
While the MPC eventually did the right thing by increasing rates, it has now for several months turned a blind eye the economic warning signs that monetary policy is too restrictive and so it kept interest rates high in a futile attempt to claw back credibility.
Ikea doubles its profits in the UK as sales surge to almost £2.5 billion
13:54 , Daniel O'Boyle
The UK operations of Swedish furniture giant Ikea more than doubled their profits to almost £111 million last year as online sales surged.
Latest accounts for Ikea UK show turnover grew 12% to £2.46 billion in the year to end August with in-store visits up 2.2%, remote online sales 24% higher and click and collect purchases up by half.
The company said it improved its margin from 2.3% to 4.5% boosting UK operating profits from just under £50 million to £110.7 million.
Transport for London seeks partner for ‘effectively car-free’ 1,500-new-home development in Newham
13:27 , Daniel O'Boyle
Transport for London’s property development arm Places for London is looking for a joint venture partner for a ‘car-free’ scheme to deliver 1,500 new homes at the Limmo Peninsula near Canning Town.
The five-hectare Docklands site was previously used by TfL for work on the Elizabeth Line, but is now set to become a new residential development. Places for London, which exists to develop land owned by TfL, often around its stations, will hold a minority stake in any joint venture, with the winner of a newly opened tender process being the majority stakeholder.
The new development is expected to feature affordable housing, and Places for London has an “ambition” for 50% of homes at its developments on average to be affordable, but the percentage of affordable homes planned for Limmo Peninsula was not provided.
City Comment: Four years on, there's no sign of the Brexit dividend
13:10 , Jonathan Prynn
Much ink will be spilled today — and in the coming weeks — on the long-running political soap opera that is Brexit. It is four years to the day since Britain ceased being a member of the European Union.
Almost unbelievably, it is now more than 11 years since David Cameron uttered the fateful words, “It is time for the British people to have their say.”
We all know how that ended.
New Morrisons boss to draw up plans to ‘reinvigorate’ supermarket chain
12:49 , Daniel O'Boyle
The boss of Morrisons has said the firm is developing plans to “reinvigorate, refresh and strengthen” the supermarket group as it revealed a rise in sales.
The debt-laden company, which is the UK’s fifth largest supermarket group, has witnessed a challenging two years since being taken over by a US private equity firm in a £7 billion deal.
Morrisons has seen its share of the UK grocery market decline over the period as cash-strapped shoppers have increasingly moved towards discounter rivals, with Aldi overtaking Morrisons as the UK’s fourth biggest grocer as a result.
Market snapshot as FTSE 100 turns positive
11:55 , Daniel O'Boyle
Take a look at today's market snapshot as the FTSE 100 moves into positive territory
Cheaper mortgage rates drive house price recovery to start 2024
11:00 , Daniel O'Boyle
Cheaper mortgages have put an early spring in the step of the property market with prices rising a higher than expected 0.7% this month, according to latest figures from Nationwide.
Britain’s biggest building society said the average cost of a home in the UK rose to £257,656 during the month. That leaves it just 0.2% below the same month last year.
In December prices were falling at an annual rate of 1.8%. The first major house price index of the year confirms anecdotal evidence that a mortgage price war among leading lenders over recent weeks has re-energised the market.
Santander UK profits rise, but bank sees more borrowers under stress
10:07 , Daniel O'Boyle
Santander UK has notched up a rise in annual profits after being boosted by higher interest rates, but flagged rising numbers of borrowers falling behind with repayments.
The Spanish-owned bank said it is seeing a “modest” increase in customer arrears across mortgages, credit cards, unsecured personal loans and overdrafts in recent quarters.
But the high street lender is predicting cuts to interest rates this year, falling from 5.25% to 4.5% by the year-end as inflation eases back, which it said will “ease cost-of-living pressures for our customers”.
Vodafone struggles continue in FTSE 100, Virgin Money tops FTSE 250
10:06 , Graeme Evans
Vodafone shares today fell 4% or 2.7p to 66.1p as investors reacted to the mobile phone giant’s failure to strike a merger deal in Italy.
Europe’s Iliad will now pursue a stand-alone strategy in the country after its attempt at creating a 50/50 joint venture was rebuffed by Vodafone.
Iliad said its updated proposal would have generated proceeds of 6.6 billion euros (£5.6 billion) for Vodafone in a struggling Italian market.
The developments left the value of Vodafone, which is due to post a trading update on Monday, back at a two decades low.
The slide came in a lacklustre London session, with the FTSE 100 index 7.24 points lower at 7659.07 following Wall Street’s downbeat reaction to robust Microsoft and Alphabet results.
Risk appetite was also curbed by the prospect of tonight’s Federal Reserve interest rate decision and guidance on the timing and speed of potential cuts in 2024.
The best performing blue chip was speciality chemicals firm Croda International after a jump of 4% or 179p to 4765p, while Virgin Money topped a subdued FTSE 250 index with a 3.7p improvement to 158.8p.
The lender benefited from the read-across to Santander results after the banking group’s UK operation lifted annual profits 13% to £2.1 billion and reported a 36% drop in the amount set aside to cover potential loan losses.
Property transactions slip in December
09:59 , Daniel O'Boyle
HMRC Property Transactions data published this morning shows there were 80,420 UK residential transactions in December, down 18% lower from last year and 1% from November.
Nick Leeming, chairman of Jackson-Stops, said: “Despite today’s figures showing a subdued final quarter of 2023, a seasonal slowdown is par for the course as celebration and reflection takes priority in December.
“If last year was characterised by greater supply and tentative buyer appetite, the cautious hope is that 2024 will shepherd in a period of greater steadiness and predictability. Buoyed by falling inflation and competitive mortgage rates, a strong response from buyers to renew their searches and push forward with completions should also encourage sellers to return their properties to the market at realistic guide prices.
“On the eve of the Bank of England’s next interest rate decision, the expectation that rates will hold firm is another important piece of the property prosperity puzzle. If the Bank of England opts to err on the side of stability, it will go some way to help the market level out and return to a stable footing both in terms of sales agreed and property prices.”
Polestar UK boss: Britain doing ‘less than any country in Europe’ to encourage electric vehicle sales
09:43 , Daniel O'Boyle
Polestar’s UK boss said the country does “less than any country in Europe” to encourage a switch to electric vehicles, as the electric car maker announced the launch of what it says is the first car without a rear window.
The new car, the Polestar 4, is set to go on the road in August and will cost £59,990. It uses a rear camera with screens on the rear-view mirror instead of a window for the driver to see behind the vehicle.
Polestar head of UK Jonathan Goodman told the Standard: “You’ve got a very limited view from the rear window. If you add anyone to the back seat, that’s obstructed further.
Market snapshot
08:54 , Daniel O'Boyle
Take a look at the latest market snapshot with the FTSE 100 very slightly below where it started the day.
French inflation cools significantly
08:50 , Daniel O'Boyle
Inflation in France cooled significantly to 3.4% in January, its lowest level in two years.
The figure was well below December's 4.1%, and was also lower than economists' projected reading of 3.6%.
The decline will be a major boost to hopes of the European Central Bank butting its interest rates soon.
Germany’s inflation rate is set to be published later today, after Europe’s largest economy contracted by 0.3% in the final quarter of last year.
GSK shares struggle despite upbeat results, FTSE 100 lower
08:29 , Graeme Evans
GSK’s new targets and better-than-expected 2023 results failed to ignite its share price today, with the FTSE 100-listed stock 5.2p cheaper at 1532.6p.
The performance was in keeping with a lacklustre session for London’s wider top flight, which dipped 17.88 points 7648.43. Other fallers included Vodafone, which dropped 3% or 2.1p to 66.6p after Deutsche Bank cut its price target.
Specialty chemicals firm Croda International led the risers board with a gain of 100p to 4686p, while Taylor Wimpey improved 1.7p to 149.2p following today’s robust Nationwide update on house prices.
The FTSE 250 index fell 35.35 points to 19,314.15, but Virgin Money rose 4.45p to 159.55p and Dunelm lifted 26p to 1112p.
Shock as H&M boss quits
08:26 , Daniel O'Boyle
H&M boss Helena Helmersson is leaving the fast fashion giant with immediate effect after four years in charge, to be replaced by insider Daniel Ervér.
Ervér has been at H&M for 18 years, and had been responsible for the H&M brand.
"The board of directors would like to express a big thank you to Helena for her valuable contributions during a very intense time. Helena is an appreciated leader that has decisively and effectively led and navigated the H&M group through a time largely marked by pandemic, geopolitical and macro-economic challenges. During this time, we have gradually taken clear steps towards our long-term goals.
"The H&M group is in a strong position, with a positive profitability trend and good conditions to make further improvements in 2024. As Helena has now chosen to leave the CEO role, we are pleased to appoint Daniel as CEO of the H&M group today. Daniel is a competent, experienced and respected leader and has the qualities needed to continue to develop the H&M group," says Karl-Johan Persson, chair of the H&M group."
Fed message will be 'one of patience'
07:56 , Daniel O'Boyle
Analysts at Dutch bank ING say that the Fed is unlikely to signal a March rate cut when it announces its rates decision today. A hold at today's meeting is seen as all-but certain.
Frantisek Taborsky, Chris Turner and Francesco Pesole of ING's foreign exchange team said: "Expectations of the first Federal Reserve rate cut in March continue to fade as US data comes in on the strong side. Our bias is that the message from today’s FOMC meeting is also one of patience and the dollar can stay bid. In contrast, soft January CPI releases from Germany and France today could fan fears of an April ECB rate cut and keep the euro on the soft side"
GSK beats analysts expectations as full-year sales top £30 billion
07:29 , Simon Hunt
GSK beat analyst expectations for the fourth quarter as the pharma giant marked the end of its first full year after spinning off consumer business Haleon.
The firm reported sales of £8.05 billion compared with analysts' average expectations of £7.29 billion according to LSEG data. Full-year sales hit £30 billion, as it was boosted by strong sales of its vaccines Shingrix and Arexvy.
GSK said it was increasing its dividend and expects its adjusted profit per share to increase between 6% and 9% in 2024, on sales growth of 5%-7%.
CEO Emma Walmsley said: "We are now planning for at least 12 major launches from 2025, with new Vaccines and Specialty Medicines for infectious diseases, HIV, respiratory and oncology.
"As a result of this progress and momentum, we expect to deliver another year of meaningful sales and earnings growth in 2024, and we are upgrading our growth outlooks for 2026 and 2031."
STV takes majority stake in Blue Lights maker
07:21 , Daniel O'Boyle
Scottish television channel and studios business STV has taken a majority stake in Blue Lights maker Two Cities.
STV previously held a 25% stake in Two Cities, but has now upped this to 51%. It said it held an option to increase its stake to a majority position when Two Cities became profitable.A price was not given.
Two Cities is expected to deliver revenue of £55 million over the next three years.
Simon Pitts, Chief Executive of STV Group plc, said: "Michael and Stephen have delivered significant creative and commercial success on the back of the standout performance of Blue Lights and there is so much more to come. STV's consolidation of Two Cities is clear evidence of the ongoing success of our Studios strategy of taking minority stakes in high potential production companies. We're very proud to be in business with Two Cities and look forward to our continued partnership."
Tech giants struggle despite robust results, US rates decision in view
07:19 , Graeme Evans
Wall Street has given a muted reaction to the first of this week's heavyweight tech sector results, even though Microsoft and Google parent Alphabet narrowly beat revenue and earnings estimates.
Alphabet shares slid more than 5% in after-hours dealings amid concerns over lower-than-anticipated advertising revenues for Google. Microsoft shares finished broadly flat, having initially fallen 3%.
Apple, Amazon and Meta Platforms, whose valuations account for a combined 13% of the S&P 500 index, report figures after tomorrow’s closing bell.
The S&P 500 index finished the regular session flat and the Nasdaq Composite down by 0.8% as more robust economic figures prompted investors to revise bets on the timing of the first cut in US interest rates.
The Federal Reserve is widely expected to keep rates unchanged later today, with the main focus on what policymakers signal about the timing and speed of rate cuts in 2024.
Meanwhile, figures showing a decline in China factory activity for the fourth month in a row have put pressure on Asia markets as the Shanghai Composite and Hang Seng index are down by around 1.5%.
The FTSE 100 index is forecast by CMC Markets to open seven points higher at 7673, having risen 33.57 points by the close of yesterday’s session.
Nationwide: House prices rise 0.7% in January
07:07 , Daniel O'Boyle
House prices rose by 0.7% in January, as the rebound of the property sector continued into 2024.
On a year-on-year basis, prices were still down but only by 0.2%.
The monthly rise was well ahead of economists' expectations.
Matt Thompson, head of sales at Chestertons, said: “The gradual introduction of more attractive mortgage products boosted buyer confidence in January, resulting in more buyers entering the market.
"This increase in activity was further driven by pent-up demand from house hunters who were unable to find a property last year and are motivated to finalise their search. Sellers also feel more confident about attracting the right buyer for their home which led to a slight increase in the number of properties being put up for sale in January.”
Recap: Yesterday's top stories
06:42 , Simon Hunt
Good morning from the Standard City desk.
Yesterday's numbers from the Insolvency Service make sobering reading.
We still do not know whether or not the British economy slipped into the mildest of recessions in the second half of last year.
We will not get confirmation of that until February 15 with the fourth quarter GDP data. But either way what we do now know is that last year’s grim harvest of corporate failures was the worst since 1993.
The official figures show there were 25,158 company insolvencies in 2023. The headline total was the highest for 30 years, although the larger number of businesses in the economy now means that the rate of failure was “only” the worst since the financial crisis a mere decade and a half ago.
It is a number that should be front of mind when the Monetary Policy Committee meets this week to decide its next move on interest rates.
Every one of those failures represents jobs lost, suppliers and other creditors left unpaid and a toll of human misery that in many cases can be directly linked to the high level of borrowing costs over the past two years.
Yet the MPC is almost certain to leave things as they are on Thursday. The first half of 2024 is likely to be another six months when mere survival is the name of the game for thousands of companies that have been doing no better than keeping the administrators at bay since the pandemic.
Here's a a summary of our other top stories from Yesterday:
PRA fines HSBC £57 million for “serious failings” in its systems in biggest ever penalty for UK high street bank
Downturn in Latin America and Carribean hits first half sales and profits at Diageo
Pets at Home hit by disappointing Christmas sales as dog and cat owners cut back on spending
Saga profits set to double on cruise bookings boom
