Stocks fell on Wall Street as US Federal Reserve chair Jerome Powell gave a hawkish address at the Jackson Hole economic policy symposium in Wyoming.
A 80% jump in Ofgem’s energy price cap today lifted the typical annual household bill to £3,549 from 1 October.
The cap impacts around 24 million households and will remain in place until 31 December, when it is likely to be revised higher amid surging wholesale costs.
FTSE 100 Live Friday
Markets focus on hawkish Federal Reserve speech
German consumer confidence hits record low
Royal Mail shares rise on stake speculation
Gains fade on London’s FTSE 100 as investors absorb hawkish signals on US rates
15:35 , Michael Hunter
The UK’s main stock index was lower in afternoon trade as traders across global markets were taking in signs that US policymakers were preparing to intensify their fight against inflation.
Hotly anticipated remarkes from the chairman of the Federal Reserve, Jay Powell, were being interpreted as hawkish, taking the edge of investors’ appetite for risk at the end of a week dominated by anticipation of the Jackson Hole speech and further sharp rises in energy costs.
The FTSE 100 was down 33 points at 7443.0 in afternoon London trade. The decline also came as UK regulators lifted the country’s price cap on consumers’ annual energy costs by 80% from October. That left stocks exposed to constrained consumer spending exposed as the wider sentiment soured after Powell’s remarks. It had been higher for much of the session, trading as high ads 7530.6.
Ocado, the online grocer, fell 2.6% to 744p. Sainsbury lost 2.1% to 204p. JD Sports was down 2% at 112p.
Wall Street’s S&P 500 falls as Fed chairman sounds hawkish on US interest rate hikes
15:15 , Michael Hunter
New York stocks fell on Friday after much-anticipated remarks from Jay Powell, the chairman of the Federal Reserve, sounded hawkish on the outlook for rate rises from the central bank.
“Restoring price stability will take some time and requires using our tools forcefully,” he told the annual gathering of central bankers at Jackson Hole, Wyoming. The remarks came at one of the most hotly-anticipated events by traders, who are on watch for insight into the balance of thinking among policymakers on the room they have to fight inflation without holding back the world’s biggest economy too much.
“There will very likely be some softening of labor market conditions. While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” said Powell.
A recent run of strong economic data in the US, especially from the labour market, has looked to give the more aggressive voices on the rate-setting Federal Open Market Committee greater sway.
It has already adopted bigger-than-usual rate hikes of 0.75% and taken its target range for the Fed Funds rate to 2.25% to 2.50% with rises of 2.25% in total this year.
US stocks open lower as investors await Powell speech
14:54 , Simon Hunt
Stocks opened lower in the opening minutes of trading on Wall Street as investors held their breath in anticipation of hawkish mood music from Fed chair Jerome Powell as he gives his annual Jackson Hole speech.
The S&P500 opened 0.38 points lower while the Nasdaq dropped 8.69 points.
Electronic Arts opened 4% higher on speculation of a potential takeover by Amazon, while Alibaba grew 0.7% on news US regulators had reached an agreement with China on audit inspection rules.
Moderna to sue Pfizer and BioNTech over coronavirus vaccine patents
14:38 , Simon Hunt
Moderna has said it will sue Pfizer and BioNTech over claims the companies used its patented mRNA technology in their coronavirus vaccines.
Moderna chief legal officer Shannon Thyme Klinger said: “We believe that Pfizer and BioNTech unlawfully copied Moderna's inventions, and they have continued to use them without permission.”
Moderna said it would not be challenging the use of its intellectual property in low and middle income countries, but expected its patents to be respected in other markets.
BioNTech shares fell 1% in early trading in New York.
Amazon won’t be buying EA, CNBC says
14:20 , Simon Hunt
Amazon will not be making a bid for Electronic Arts according to news outlet CNBC.
Shares in FIFA Football video game maker EA had jumped 15% in pre-market trading amid speculation that it was going to be acquired by the e-commerce giant.
The company has made a string of acquisitions in a bd to bolster its market share in the digital media space recently, including buying James Bond maker MGM studios in a £6.8 billion deal in March.
US regulators reach audit agreement with China
13:34 , Simon Hunt
The US audit regulator says it has reached an agreement with Chinese authorities over inspecting the accounts of firms registered in China and Hong Kong, in the first sign a protracted dispute between the two countries could be cooling.
The Public Company and Accounting Oversight Board said the agreement was the most detailed ever reached with China.
It comes after five US-listed Chinese firms, including China Life Insurance and PetroChina said they would be delisting from the New York Stock Exchange after the US Securities and Exchange Commission said they had not met US auditing requirements.
The Chinese securities regulator has since said the delistings can be avoided if the regulatory needs of the two nations can be met.
Jim Ratcliffe’s Ineos in $330 million swoop for Singapore chemicals firm
12:50 , Simon Hunt
UK billionaire Sir Jim Ratcliffe’s company Ineos is buying a fellow chemicals firm in Singapore for $330 million, in a move that takes one of its main businesses into the Asian market.
Ineos Phenol will buy Mitsui Phenols Singapore from Mitsui Chemicals of Japan, adding over one million tonnes of production capacity to the group for compounds used to make materials used to make plastics, synthetic fibres such as nylon and solvents.
Ineos runs a range of autonomous divisions which, as a group, make up one of the top five biggest chemical businesses in the world, generating the revenue for Ratcliffe’s move into sport.
Ineos Phenol describes itself as the biggest maker of phenol and acetone operating in Germany, Belgium and USA.
British Honey Company warns of revenue dip
11:58 , Simon Hunt
Honey and spirits maker The British Honey Company today warned of fall in revenues as “substantial” cost of living increases hits customer purchasing power.
It said that end-of-year results were now likely to “fall below” previous market expectations and that the business now expected to deliver revenues of “approximately £6 million”.
The Buckinghamshire firm told investors it was “experiencing more challenging conditions in the second half of the year, exacerbated by substantial domestic cost of living increases and international geo-political instability as the war in Ukraine continues, inflating raw materials costs and adding to supply-chain issues.”
Shares in BHC were suspended from the alternative trading platform Aquis last month after it said it needed additional time to complete the audit of its full year results.
The business is now expected to be accepted back as it seeks to deliver last year’s financial results next month.
News of £5.1bn takeover sees Micro Focus shares skyrocket 90%
11:28 , Simon Hunt
Shares in British tech company Micro Focus almost doubled this morning after it agreed a £5.1 billion takeover from Canada’s OpenText.
They were up most than 90% at 512.40p — just under the 532p offer price — in early trading following news of the deal announced late last night.
The Newbury industrial software provider becomes the latest large British company to go under the hammer as the weak pound is attracting suitors.
Blow for Musk as US judge scorns demand for Twitter user data
11:00 , Simon Hunt
Elon Musk has suffered a setback in his legal battle with Twitter after his demands that the firm hand over user data was dismissed by a judge as “absurdly broad”.
“No one in their right mind has ever tried to undertake such an effort,” Chancellor Kathaleen McCormick said in a Delaware court.
Musk walked away from his Twitter takeover offer after accusing the company of understating the number of fake accounts on its platform. Twitter has denied this.
Musk’s argument got a boost this week after the US securities regulator wrote to Twitter’s CEO, Parag Agrawal, requesting details on its methodology for estimating the number of fake accounts.
Royal Mail shares higher, FTSE 100 holds firm
10:25 , Graeme Evans
Royal Mail shares have risen 2.5%, up 6.4p to 272.5p, on the first day of industrial action involving 115,000 workers.
The increase has been driven by speculation around the 22% stake held by Czech billionaire Daniel Kretinsky’s Vesa Equity Investment.
Shares also rose 4.5p yesterday as Royal Mail said it had been told by business secretary Kwasi Kwarteng that he ‘reasonably suspects’ that Vesa plans to increase its stake, If this happens it would trigger an investigation through the recent National Security Investment Act.
Royal Mail shares have been trading at two-year lows after the company’s recent warning that the fortnight of strike action planned by the Communication Workers Union would leave its UK delivery business “materially loss making” in 2022/23.
The first day of action is taking place today, with other walkouts due on Wednesday and 8 and 9 September. The company has offered an unconditional 2% pay increase backdated to 1 April, with a further 3.5% increase subject to a series of business changes.
Much of the company’s stock market value is tied up in the profitable European parcel delivery operation GLS, which is likely to be the focus of Kretinsky’s interest.
Royal Mail shares were among the factors helping the FTSE 250 index to improve 88.46 points to 19,346.33 today.
London’s top flight gained 19.13 points to 7498.87, with investors seeing value in GSK and its former consumer healthcare division Haleon after their recent Zantac-driven losses. Shares rose 15.6p to 1406p and 5.6p to 269.2p respectively.
Copper’s latest price rise meant mining stocks were higher, led by Chile’s Antofagasta following a rise of 22.5p to 1189.5p. The metal has surged by about 15% from its low in mid-July, helping Anglo American up by another 42p to 2961.5p today.
Miners boost FTSE 100, Micro Focus jumps 92%
08:43 , Graeme Evans
Copper’s latest price rise meant mining stocks were at the forefront of an improved session for London’s FTSE 100 index today.
The metal has surged by about 15% from its low in mid-July, aiding the valuation of Chile’s mining giant Antofagasta. Its shares rose 23.5p to 1,190.5p, while Rio Tinto and Anglo American were also higher by 2% today.
The FTSE 100 index lifted 0.6% or 42.92 points to 7522.66, with GSK and former consumer healthcare division Haleon also on the risers board. Fallers included London Stock Exchange, which dropped 98p to 8312p.
The FTSE 250 stood 105.96 points higher at 19,363.83 as investors got their first chance to react to the planned takeover of former blue-chip stock Micro Focus International.
Shares in the enterprise software provider jumped 92% after its board recommended an offer from US-based information management business OpenText at 532p a share or £1.8 billion. The stock, which was above 720p prior to the pandemic, jumped 247p to 514.8p.
German consumer sentiment at record low
08:01 , Graeme Evans
Germany’s latest consumer sentiment reading has fallen to a new record low as Europe’s energy crisis takes its toll.
GfK’s figure of minus 36.5 was much worse than expected and compared with minus 30.9 the previous month.
The gauge relating to buying appetite fell 1.2 points to minus 15.7, the lowest since October 2008 as households focus on dealing with surging energy bills.
Powell speech in focus, FTSE 100 higher
07:45 , Graeme Evans
A potentially market-moving address by Federal Reserve chairman Jerome Powell will today provide guidance on how the central bank intends to get inflation back under control.
Powell’s comments, which will be made to the Jackson Hole economic policy symposium in Wyoming at about 3pm UK time, are likely to dash any hopes that the Fed is ready to slacken its stance on tackling price pressures.
The hawkish message will point to interest rates staying higher for longer and suggest that a “neutral” level is far from the 2.5% seen by some on Wall Street in recent weeks.
Michael Hewson, chief market analyst at CMC Markets, said the Fed will want to be sure that inflation is falling at a sustainable enough pace before it signals any sort of dovish shift or pivot, especially if inflation turns out to be stickier than expected.
He added: “If inflation finds a base at a level which is still well above their 2% target it's extremely unlikely the Fed will lean into any sort of guidance that suggests a rate cut is coming.”
Ahead of Powell’s address, CMC expects the FTSE 100 index to 23 points higher at 7,502 after a broadly flat session yesterday.