Yahoo Finance FTSE 100 Live: 'Rates will need to stay high for some time', Andrew Bailey warns
Andrew Bailey writes exclusively for the Standard
Thursday 2 November 2023 12:42 , Simon Hunt
"The increase in inflation we have seen over the past two years has been a huge shock to families and businesses across the country. The rises in food and energy prices in particular, have hit the least well off the hardest. But everyone has been affected. It’s our job at the Bank of England to get inflation back to the 2% target.
"On that front, there's some good news. Inflation has fallen significantly and we expect it to fall significantly further, probably to below 5%, when the data for October are published in a couple of weeks. Our previous increases in interest rates are working to bring inflation down."
Stocks finish higher after interest rate decision
Thursday 2 November 2023 16:59 , Simon Hunt
The FTSE 100 edged up 1.4% at the end of the day's trading session in London, after the Bank of England once again pushed pause on any changes to interest rates.
Laith Khalaf, head of investment analysis at AJ Bell,said: “No news from the Bank of England is good news for the UK’s mortgage holders. The Bank has now kept interest rates on hold for the second month in a row, and there is a growing body of evidence to suggest we have reached the peak of the interest rate cycle. Inflation is falling, the labour market is slackening, and the effects of previous rate rises are still working through the economy.
"It also appears the replacement of Jon Cunliffe with Sarah Breeden on the interest rate committee has shifted the balance in a dovish direction, with six members now voting to keep rates on hold, up from five in September.
“Rishi Sunak won’t be too happy with all the latest forecasts coming out of the Bank of England. While the Bank’s figures suggest he is on course to meet his pledge to halve inflation, the promise of a growing economy looks firmly wedged in the weeds. The central forecast is for the economy to flatline in the next twelve months, before eking out just 0.4% growth in the year after.
"That’s a bleak prediction for a government seeking to overturn a large gap in the polls, and both the PM and the Chancellor will be hoping the OBR has a rosier view of the future when it compiles its all-important forecasts for the forthcoming Autumn Statement.”
City Comment: BT was stuck in the mud until Jansen arrived
Thursday 2 November 2023 15:53 , Simon English
Philip Jansen gave his BT swan song today, the last results before he moves on to be replaced by Allison Kirkby.
If you look just at the share price – down 55% over his five-year tenure – it’s not obvious that he has been a success. Jansen acknowledges that and wishes the shares were at least flat.
Ignoring the share price, everything else is miles better. Half-year results today have revenues of £10.4 billion and profit topping £1 billion.
There’s a divi, despite the strain on the company finances from its CapEx – it has spent, is spending, a fortune on transforming the nation’s broadband, building ultra-fast wi-fi “like fury” as Jansen likes to say.
It is that which will be his legacy, a brilliant national infrastructure that Covid made even more crucial.read more here
Andrew Bailey explains BoE interest rate decision
Thursday 2 November 2023 14:22
In a video posted online, Bank of England Governor Andrew Bailey explains today's interest rate decision.
Doordash leads US stock rise
Thursday 2 November 2023 13:59 , Simon Hunt
Stocks opened higher in the opening minutes of trade on Wall Street, with the S&P up 1% and the Nasdaq up 1.8%.
Doordash led the pack, with the food delivery chain up 14% after its third-quarter results beat expectations and investors were wooed by its bullish forecast.
Here's a look at your key market data:
BoE decision 'reflects emergent progress on disinflation and slowing economy'
Thursday 2 November 2023 13:28 , Simon Hunt
Gurpreet Gill, Macro Strategist, Global Fixed Income, Goldman Sachs Asset Management said: “The decision to keep the Bank Rate unchanged was widely anticipated and, in our view, reflects emergent progress on disinflation and a slowing economy.
“Bank of England officials have started to acknowledge that tight policy is impacting the economy, which we believe implies limited desire to move further into restrictive policy territory.
“We continue to think rates will stay at the current cycle high into 2024, a trajectory that the Bank’s Chief Economist, Huw Pill, has likened to Table Mountain.”
Muted market reaction to rates decision
Thursday 2 November 2023 12:35 , Simon Hunt
Financial markets and City experts were united in expecting the BoE to leave rates alone this month, so reaction was muted. Sterling held levels seen in the run up to the midday announcement, which left it established above $1.22. It was up 0.5% for the session at $1.2214.
The returns demanded by investors to lend to the UK government, or the yield on Gilts, were also steady. Ten-year Gilts yields eased further under 4.5% – to 4.379% after the vote – having started the day at 4.499%.
How did they vote?
Thursday 2 November 2023 12:08 , Simon Hunt
The MPC voted 6-3 to hold interest rates. Here's how members voted:
BoE leaves interest rates on hold at 5.25%
Thursday 2 November 2023 12:00 , Michael Hunter
The Bank of England has left interest rates on hold for the second month in a row.
Its Monetary Policy Committee voted 6 to 3 to keep the base cost of borrowing at 5.25%.
Earnings and rates guidance lift market mood, FTSE 250 up 2.6%
Thursday 2 November 2023 10:32 , Graeme Evans
Investors toasted a super Thursday of corporate updates today as the London market finally rediscovered its appetite for risk.
Alongside stronger-than-expected performances by the likes of BT Group and Sainsbury's, the mood benefited from a revival in fortunes for interest rate-sensitive stocks.
The wave of buying helped the FTSE 100 index put on 1.2% or 91.47 points to 7433.90, while the heavily sold FTSE 250 index rebounded 2.6% or 455.31 points to 17,641.20.
The turnaround in sentiment was aided by the handover from Wall Street after comments from the Federal Reserve boosted hopes that US interest rates are at their peak.
AJ Bell investment director Russ Mould said the performance of Ocado as the FTSE 100’s “biggest blue-sky company” was a good indicator of the wider stock market mood.
He said: “If it is falling then investors are feeling cautious. Today we’ve got an 8% share price hike.”
Ocado’s rise of 43.1p to 519p at the top of the FTSE 100 index was accompanied by a surge for property stocks after long-term bond yields fell in the UK and US.
Retail warehouse business Segro rallied 5% or 35.2p to 744.6p, just ahead of 4% gains for student accommodation firm Unite and the offices landlord Land Securities.
Smith & Nephew joined them, lifting 34.4p to 957.8p after third quarter revenues growth of 7.7% prompted the medical devices firm to forecast a 2023 performance towards the top end of previous guidance.
More than 50 stocks in the top flight rose by 2% or more, but exceptions included the consumer healthcare business Haleon after its shares eased 6.35p to 324.75p. The weakness came as quarterly sales growth of 5% marginally missed City hopes.
The FTSE 250 risers board included gains of above 10% for three stocks, led by Helios Towers after the telecoms infrastructure firm increased its full-year guidance.
Helios shares rebounded 7.65p to 69.1p, just ahead of 31.6p to 320p for OneSavings Bank after the buy-to-let specialist forecast stronger-than-expected loan book growth of 9% for the year.
The third double-digit stock was offices firm Derwent London, up 193p to 2038p after reporting continued strong letting activity since the summer and an improved vacancy rate of 3.7% at the end of September.
Revolut hires new UK CEO
Thursday 2 November 2023 09:51 , Simon Hunt
Revolut has hired a former Barclays and Deutsche Bank executive as its new UK CEO as the London fintech seeks to strengthen its top team ahead of a decision by regulators over its banking license application.
49-year-old Francesca Carlesi, who also founded Molo, a digital mortgage lender, was previously responsible for regulatory affairs at Deutsche and oversaw strategy at Barclays.
Revolut has been without a UK CEO since March following the departure of James Radford, while CFO Mikko Salovaara resigned for "personal reasons" in May and group COO Michal Laube left in February.
Francesca’s hire is not directly related to the license application but she will be leading a team at Revolut NewCo, an entity set up to apply for the license, a spokesperson said. Revolut has been waiting for more than two years for UK regulators to make a decision.
Richard Holmes, Chairman of Revolut UK, said: “we continue to build out our leadership team, her extensive experience across the banking and fintech sectors makes her the perfect CEO to drive our UK business forward.”
FTSE 100 makes gains
Thursday 2 November 2023 09:05 , Simon Hunt
One hour into the day's trading session in London, the FTSE 100 is up 0.3%. Here's a look at your key market data
Sainsbury grabs sales from Aldi and Lidl
Thursday 2 November 2023 08:58 , Simon English
Sainsbury today claimed it was grabbing market share from every competitor including the discount kings Aldi and Lidl for the first time as it put food “back at the heart of Sainsbury’s”.
More and more customers watching budgets want to dine at home, says chief executive Simon Roberts. “Customers are choosing to treat themselves to a night in. They want a Taste the Difference meal in front of Strictly,” he said.
In the half year to September overall sales rose 2.9% to £18.8 billion. But notably, grocery sales are up 10.1% while clothing sales fell 8.4%.
Analysts say that is due to a damp summer that saw Sainsbury’s range shunned by shoppers.
Full year profit should be between £670 million and £700million – a boost to previous guidance.
But for the half-year profits fell 27% to £275 million.
Roberts said: “We’ve never been more competitive on price and our focus on value, innovation and service is giving more customers more reasons to shop with us. We know people are still finding things tough and we’re working harder than ever to reduce our costs.”
Official figures show food inflation is down to 5.2% in October, the fifth month running where it declined.
Shoplifting remains a problem. Roberts said: “It is the number one issue; the safety of our people and our customers. There is a significant rise in retail crime. First report I look at every morning is serious incidents from yesterday.”
Sainsbury shares rose 10p to 272p as the City noted that debts are down by £700 million to £5.6 billion while the dividend is maintained at 3.9p.
Richard Hunter at interactive investor said: “Keeping shopping prices low has had a positive impact on the group’s market share, but of course this comes at a cost to Sainsbury itself. Since March, for example, the company has invested £118 million on price reductions. The ferocity of competition, particularly in the supermarket arena, is well established and shows little sign of abating, such that the group will need to keep a constant lid on prices in order to remain inthe mix.”
BT and Sainsbury's lead FTSE 100, Trainline ahead in FTSE 250
Thursday 2 November 2023 08:45 , Graeme Evans
Shares in BT Group, Sainsbury’s and Smith & Nephew top a stronger FTSE 100 index after their latest updates boosted City confidence.
Sainsbury’s led the way with a gain of 12.3p to 274.1p, while BT Group rose 3.7p to 114.8p and the medical devices firm Smith & Nephew added 39.2p to 962.6p after forecasting revenues towards the top end of expectations.
Rate sensitive stocks also rallied after last night’s Federal Reserve announcement, with the wider FTSE 100 index tracking Wall Street with a gain of 1% or 73.62 points to 7416.05.
The blue-chip fallers board was led by gambling firm Entain, Howden Joinery and the consumer healthcare firm Haleon, with all three down by more than 3% after their updates.
The FTSE 250 index jumped 1.4% or 241.66 points to 17,427.55, with Trainline, One Savings Bank and Helios Towers up by more than 6% after updating investors.
Shell to pay out $3.5 billion to shareholders after quarterly profit of $6.2 billion
Thursday 2 November 2023 07:46 , Michael Hunter
Oil giant Shell launched a $3.5 billion payday for investors as it reported quarterly profit of $6.2 billion today.
The third-quarter earnings were up by around 23%, but narrowly under City forecasts of around $6.5 billion for the period.
The rise came after oil prices rose in the period, when oil prices rose as exporting nations cut production, boosting refining margins at energy giants.
But as the cost-of-living crisis lingers –having been sparked by high energy and fuel prices after Russia's invasion of Ukraine – the payout for shareholders is likely to stir controversy.
BoE seen keeping interest rates on hold
Thursday 2 November 2023 07:43 , Graeme Evans
The Bank of England’s monetary policy committee (MPC) announcement at 12 noon is expected to show interest rates unchanged at 5.25%.
The decision is likely to be more clear cut than in September, when members voted 5-4 to pause their long run of rate increases.
Today's main focus will be the Bank’s updated projections, which may provide the City with a steer on the potential for rate cuts in 2024.
Deutsche Bank expects a 6-3 vote to keep rates on hold, with the three members in favour of another quarter point hike.
It also sees the MPC reiterating its message that policy will remain “sufficiently restrictive for sufficiently long” to get inflation back to 2%.
Trainline growth on track after sales rise by a quarter
Thursday 2 November 2023 07:31 , Simon Hunt
Trainline cheered the introduction of increased rail operator competition after it reported a rise in sales by a quarter.
The train ticket ordering app reported a 23% rise in net ticket sales, while revenue climbed 19% to £197 million as it tightened earnings guidance towards the upper end of expectations.
CEO Jody Ford said: "In recent weeks we have seen several exciting announcements around the arrival and growth of new rail carriers, which could mean more customers in the UK, in Europe and those crossing the Channel reap the benefits of increased carrier competition.
"Our customers in Spain and Italy already enjoy these benefits, and we believe more should have the opportunity to do so."
Markets lifted by Federal Reserve comments, BoE in focus
Thursday 2 November 2023 07:14 , Graeme Evans
European markets are set to open higher after Wall Street took a relaxed view of the latest comments from Federal Reserve chair Jerome Powell.
Speaking after the central bank left interest rates unchanged for a second month, Powell said there are signs that restrictive monetary policy is putting downward pressure on economic activity and inflation.
However, he said it was too soon to start talking about the potential for interest rate cuts.
The 10-year Treasury yield retreated to a two-week low of 4.75% after the meeting, a move that benefited tech stocks as the Nasdaq Composite closed 1.6% higher and the S&P 500 index by 1%.
Wall Street’s performance boosted Asia markets, while CMC Markets expects the FTSE 100 to open 33 points higher at 7375 after adding 21 points by yesterday’s close.
The yield on 10-year gilts also retreated yesterday amid confidence that the Bank of England will leave interest rates unchanged at 5.25% later today.
Recap: Yesterday's top stories
Wednesday 1 November 2023 23:37 , Simon Hunt
Good morning. Here's a summary of our top headlines from yesterday:
Asos makes £300 million loss and warns sales will fall by up to 15% next year
Next sales hit by hot September but upgrades profit guidance yet again
Nationwide says house prices rose slightly in October despite depressed sales activity
Aston Martin reports strong demand across the third quarter but remains deep in the red
And...why it's time for the UK to forge its own crypto future.
