Yahoo Finance FTSE 100 Live: Coutts CEO quits, shares higher on hope ECB’s rate rise is the last
Shell, Barclays and BT are among the heavyweight companies updating investors today.
A busy session for corporate results also includes British Gas owner Centrica, Frasers Group and broadcaster ITV.
Meanwhile, traders have reacted calmly to last night’s Federal Reserve meeting after interest rates rose to a 22-year high.
FTSE 100 Live Thursday
British Gas half-year profits near £1bn
Missed targets hit Barclays shares
Shell profits haul disappoints City
FTSE 100 closes at 7,692.76
16:37 , Daniel O'Boyle
The FTSE 100 closed at 7,692.76 today following a deluge of corporate results, the European Central Bank’s rate hike and US GDP stats.
Centrica and RELX were the top risers after strong results.
Ocado was the biggest faller after a dramatic rise yesterday. It’s still up by double digits this week.
Homeowners hope mortgage rates have peaked as Nationwide becomes biggest lender yet to cut prices
16:35 , Daniel O'Boyle
Hope grew today that mortgage rates have peaked as Nationwide became the biggest lender yet to cut its rates.
The country’s biggest building society is cutting the price of a fixed rate mortgage by up to 0.35 percentage points and a tracker mortgage by 0.2 percentage points. It joins HSBC, which became the first of the ‘big six’ to reduce rates when its lower prices came into effect yesterday, as well as Barclays.
With three top lenders having now cut their rates, Halifax, NatWest and Santander are expected to follow soon in order to stay competitive.
London gets another AI boost as Autogen raises $22.3 million
15:36 , Simon Hunt
Autogen has become the latest London-based AI firm to complete a major funding round after it raised $22.3 million (£17.4 million) just months after its launch.
The Kentish Town-based business, set up in 2022, has attracted the support of Old Street-based investor Blossom to enhance its contract procurement technology.
Autogen uses artificial intelligence to help help major businesses write bids and tenders for public sector and corporate contracts.
More than £370 billion is spent annually by the UK Government and local authorities on procuring public services – equivalent to one in every £3 of public spending. Bidding costs can easily account for 10% of the total contract value of a service. Autogen says it can reducing the time taken to write a first draft for a procurement deal by 70%.
City Comment: CPTPP will do nothing for London
15:09 , Simon Hunt
The government has hailed its signing of the CPTPP trade deal as a landmark moment that will “strengthen ties with some of the world’s most dynamic economies.” What they didn’t mention is the deal will no almost nothing for London.
CPTPP, or the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, to give its full title, is essentially a trade bloc of countries in the Asia-Pacific region. Reaction to the UK joining has been mixed and rather predictably divided down Brexit lines.
Cheerleaders of the deal have thrown around ridiculously optimistic figures about the potential economic benefits and have claimed that it will prevent the UK from rejoining the EU while opponents have pointed to the government’s own scoping assessments of the modest economic boost.
Coutts CEO quits amid Farage controversy
14:12 , Daniel O'Boyle
Peter Flavel has quit as Coutts CEO, NatWest has said.
He follows NatWest CEO Dame Allison Rose out the door amid the controversy over the closure of Nigel Farage’s Coutts account.
Paul Thwaite, NatWest Group CEO, saidL “I have agreed with Peter Flavel that he will step down as Coutts CEO and CEO of our Wealth Businesses by mutual consent with immediate effect. Whilst I will be personally sorry to lose Peter as a colleague, I believe this is the right decision for Coutts and the wider Group.”
Flavel said:"I am exceptionally proud of my seven years at Coutts and I want to thank the team that have built it into such a high performing business. In the handling of Mr Farage’s case we have fallen below the bank’s high standards of personal service. As CEO of Coutts it is right that I bear ultimate responsibility for this, which is why I am stepping down.”
Mohammad Kamal Syed will be interim CEO.
London shares extend gains after ECB decision
13:49 , Daniel O'Boyle
The FTSE 100 rose slightly further today after the ECB’s interest rate rise, as investors view the Bank’s slight changes of wording in announcing the decision as opening the door to a pause.
Take a look at all the key market data.
ECB raises rates by another quarter point
13:19 , Daniel O'Boyle
The European Central Bank raised its interest rates again by a quarter of a percentage point.
Traders are divided on if it could be the last hike, however.
The Bank said: “Inflation continues to decline but is still expected to remain too high for too long. The Governing Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner. It therefore today decided to raise the three key ECB interest rates by 25 basis points.”
ECB set to hike rates
12:29 , Daniel O'Boyle
The European Central Bank is widely expected to raise rates again, as investors wonder if it could be the last hike of the cycle.
Euro area annual inflation was 5.5 % in June 2023, but varies significantly by country. The rate of price rises was slightly below the 2% target in Spain and Greece, but is nearly 11% in Slovakia ad 9..2% in Estonia.
With inflation across the currency union still significantly above tagret, another rate hike is seen as cllose to certain. But markets will be paying close attention to Christine Lagarge’s comments that will come after the expected hike, looking for a signal that the ECB may be done raising rates.
Yesterday, the US Federal Reserve upped its own interest rates. Markets believe that the decision is likely to be the last hike before the Fed starts to bring rates down again.
Rentokil sets its high-tech sights on London’s rats as revenue rises
11:48 , Daniel O'Boyle
London’s rats are facing a high-tech threat after Rentokil Initial doubled down today on plans to use Artificial Intelligence in the fight against them.
The FTSE 100 constituent’s pest control businesses is using AI in against the unwelcome rodents, using it to track their movements and define the best way of dealing with infestations.
It means Rentokil can automate tracking techniques, giving the company local-level insight into how to intervene early to minimise infestations. High-tech targeting also means less rat poison is needed.
Frasers Group profit doubles as high street empire grows
11:04 , Daniel O'Boyle
Sports Direct owner Frasers Group has reported a “record” financial performance with profits doubling after the high street empire took more brands under its wing.
The group, which also owns House of Fraser, Jack Wills, and Missguided, reported a pre-tax profit of £661 million in the year to the end of April, nearly double the £336 million made last year.
It steamed ahead with a buying spree in the last year, with new acquisitions including Savile Row tailor Gieves & Hawkes, and 15 brands from competitor JD Sports such as Choice and Missy Empire.
Wizz Air to reassess rejected flight disruption cost claims
10:52 , Daniel O'Boyle
Rejected claims for costs incurred by Wizz Air passengers during flight disruption are to be reassessed.
The Civil Aviation Authority (CAA) said the carrier has committed to reconsider claims it received for money owed to cover the cost of replacement flights, transfers between airports, and assistance such as hotels.
This is in relation to Wizz Air flights due to operate to or from the UK which were cancelled or significantly delayed.
Shell under pressure, Lookers backs new £504m bid
10:21 , Graeme Evans
Shell shares fell 2% or 47p to 2349.5p afrer second quarter profits fell 56% on last year’s record to $5.1 billion (£3.9 billion), some 9% short of City forecasts.
New boss Wael Sawan backed the “strong operational performance” and confirmed a 15% dividend hike to $0.331 (0.26p) a share. He also launched another round of buybacks worth $3 billion (£2.3 billion) in the current quarter.
The results-day disappointment was highlighted by the performance of BP, which added 0.6p to 479.2p ahead of its results on Tuesday.
BP benefited from Brent Crude’s three-month high of $83.62 a barrel, with today’s session boosted by the Federal Reserve’s view that the US should avoid recession.
Policymakers hiked interest rates by another 0.25% last night but kept their options open on whether a further increase is needed in September.
This put the US dollar under more pressure, causing the overseas earnings focused FTSE 100 index to underperform with a rise of 0.3% or 23.35 points to 7700.24.
In contrast, the UK-driven FTSE 250 index surged 0.8% or 158.72 points to 19,345.26.
This was helped by Jupiter Fund Management, which put on 11.9p to 120p after half-year results included surprise net inflows of around £900 million for the second quarter.
Vehicle distribution business Inchcape also jumped 13% or 105p to 885p after upgrading 2023 guidance on the back of a 32% rise in half-year profits to £249 million.
In the FTSE All-Share, Lookers jumped 25% after the Manchester-based car retail chain backed a new takeover offer from Toronto’s Global Auto Holdings.
The proposal at 130p a share is worth £504.2 million, up 8% on the previous bid rejected by major shareholder Cinch last week. Shares jumped 25.8p to 123.8p, but still below the offer price.
M&B distances itself from shareholder Joe Lewis after insider trading allegations
10:16 , Simon Hunt
Pub chain Mitchells and Butlers today sought to distance itself from one of its biggest shareholders after he was accused of insider trading by the US authorities.
Bahamas-based Joe Lewis, the billionaire co-owner of Tottenham Hotspur, controls a 57% share in the business via a holding company, Odyzean, which he set up with currency trader Derrick Smith and an investment firm backed by Irish horse race horse owners John Magnier and JP McManus.
On Tuesday Lewis was accused of “brazen” insider trading after having “abused his access to corporate boardrooms and repeatedly provided inside information to his romantic partners, his personal assistants, his private pilots and his friends,” according to Damian Williams, the US attorney for the southern district of New York. He has pled not guilty to the charges.
A Mitchells and Butlers spokesperson said: “This is a US legal matter concerning one of our shareholders that has nothing to do with the company.”
The company today reported a 9.7% rise in sales in the three months to the 22nd of July, as it cheered a slowdown in cost inflation, which it said would come in at the bottom end of estimates.
Price cap changes let British Gas profits balloon to near £1bn record
10:01 , Daniel O'Boyle
Profits at the UK’s biggest energy supplier British Gas ballooned to a record of almost £1 billion in the first half of the year at a time when millions of families were struggling to pay their bills.
British Gas’s owner, energy giant Centrica, said the near tenfold increase in profits to £969 million in the six months to June was “mainly due to oneoff factors” linked to the operation of Ofgem’s price cap.
The company said it had made around £500 million in extra profits through a mechanism under the price cap that allows it to recover costs at a time of “increasing and volatile” wholesale prices from 2021 onwards.
City Comment
09:32 , Simon English
We are in prime bank bashing period , a regular part of the social season this time given the added spice of the Alison Rose/Nigel Farage affair.
Farage, who never knows when he has won, wants the whole NatWest board to go, not just the CEO.
That would be destabalising for an important bank, but since he’s already done that to an entire nation, it’s small beer to him.
One thing the Farage farrago has done is to detract attention from bank profits.
Yesterday Lloyds Bank reported half year profits of knocking on £4bn.
Today Barclays offered £4.6 billion.
Tomorrow NatWest will reveal how good a CEO Alison Rose was with profits of around £3.5 billion.
Is this too much?
Well, only if you think they are ruthless profiteers. If they were, bank shares would surely be better investments than they are.
Politicians like to say that banks make too much money because there is a gap between what they pay us on savings and charge us on loans – the NIM, or net interest margin, in City speak.
The NIM at Lloyds is about 3%, which hardly looks extreme.
(Unilever’s profit on a jar of Hellmann’s is about 17% -- ruthless mayonnaise mafia that it surely is.)
In any case, those angry about banks not passing on savings increases at the same time as they put up borrowing costs assume the loans are funded by the savings.
Mostly banks go to the money markets to lend the money, where interest swap rates dictate the price, not whatever measly rate they are giving on savings accounts.
Bank profits are not where the scandal lies. Banker pay, well, that’s another story. Maybe Nigel Farage can get into that one, but as a former banker, I’m guessing that issue doesn’t exercise him quite so much.
Foxtons says London rents will keep rising even as property prices fall
09:28 , Daniel O'Boyle
London’s top estate agent Foxtons says rents in the capital will keep rising as the year goes on, albeit more slowly, even as property prices decline.
The estate agent expects lower sales for the rest of the year as interest rates soar, driving buyer demand down. It is optimistic that “demand may rebound strongly” next year if inflation keeps falling.
But for lettings, where Foxtons does most of its business, it said “the ongoing supply and demand imbalance” would drive rents, meaning prices will keep rising. The increases will “moderate” as the year goes on, however.
The forecast comes as Foxtons reported 42% profit growth for the first half of the year. Shares are up by 1p to 39p.
Julie Palmer, partner at Begbies Traynor, said: “The shortage of rental properties means that finding somewhere to live is an ordeal for tenants but it’s a dream for Foxtons.”
Meta beats expectations
09:24 , Simon Hunt
There were early signs of a recovery in the digital advertising market last night after social media giant Meta beat expectations with a jump in revenues.
Sales in the three months to the end of June rose to $32 billion (£24.7 billion), around $1 billion ahead of analysts expectations, while turnover in the current quarter was set to be higher still, founder Mark Zuckerberg boasted, coming in between $32 billion and $34.5 billion.
Meta shares rose as much as 9% to $325 in after-market trading.
The Facebook and Instagram owner said its shift to promoting what it calls ‘Reels’, a short video format resembling what users watch on rival TikTok, had proved popular with users, as well as with advertisers who have rushed to produce video content for the new feature.
The California-based business has seen mixed results from its new rival to Twitter, text-based app Threads, which launched earlier in July. The app amassed over 100 million sign-ups in a matter of days, breaking a previous record set by AI site ChatGPT. But there have since been reports that daily user numbers have sunk to just 7 million.
Barclays under pressure from City
09:10 , Simon English
BARCLAYS felt the pain today from a decline at its Wall Street trading arm and the need to increase provisions against bad debts in the UK.
A slump in corporate dealmaking and growing pressure on UK businesses gave Barclays a double whammy as it missed City targets.
Under former CEO Jes Staley the investment banking arm was a strength – lately it has struggled, along with bigger rivals Goldman Sachs and JP Morgan.
For the first half of the year Barclays made £4.6 billion, an amount likely to lead to further complaints about bank profits from politicians.
But it set aside £896 million to cover possible credit impairment charges. While banks have benefitted from rising interest rates, that has increased the risk of mortgage defaults.
Income at the investment bank fell 22% to £3.2 billion in the last quarter – trading in bonds and shares tumbled.
Barclays shares fell 6% to 154p on the figures, despite a £750 million share buyback deal, that is up on the £500 million completed earlier.
Analysts at Jefferies said: “The £750 million pound buyback is the silver-lining in what was a modestly disappointing quarter for revenue with only the UK in-line.”
CEO CS Venkatakrishnan, who has been in treatment for cancer, said: “We have positioned Barclays carefully for this mixed macroeconomic environment. This means we are able to distribute increased capital returns to shareholders, while providing targeted support to our customers and clients. Looking forward we are very confident of meeting our targets for the full year.”
Chris Beauchamp at IG Group, said: “Once again the prospect of reduced interest income has hit banks, with Barclays in the firing line this morning. Even a buyback scheme and a solid rise in profits have not cheered investors, and while the shares are still up 20% from their March lows it seems today’s results have not gone down well.”
Jimmy’s iced coffee snapped up by Britvic
09:04 , Simon Hunt
Iced coffee brand Jimmy’s has been snapped up by drinks giant Britvic as it seeks to diversify its offering beyond fruit juices and sodas.
The brother-and-sister-run firm, which was founded in 2010 and first sold in Selfridges, has become the fastest-growing iced coffee brand in the UK with sales of £17 million in the year to the end of June.
Jimmy’s co-founder Jim Cregan said: “We are so delighted with this deal which is the culmination of twelve years of monumental hard work by my sister and I. We have poured our heart and souls into making this business what it is today.”
The terms of the deal were not disclosed. Brivtic, which is known for its Robinson’s fruit juice and Tango fizzy pop drink brands, also unveiled a second acquisition today of Brazil-based energy drink Extra Power.
Barclays down 5%, fund manager Jupiter rises 14%
08:30 , Graeme Evans
Pressure on banking stocks continued today, with Barclays 5% or 8.6p lower at 155.4p after its half-year figures underwhelmed the City.
Other results-day fallers included Shell, which dropped 41.5p to 2355p after reporting a bigger-than-expected drop in second quarter profits to just over $5 billion.
On the risers board, British Gas owner Centrica lifted 5.35p to 129.35p and Rentokil Initial added 2% or 13.8p to 652.6p after their respective results.
The FTSE 100 index improved 4.24 points to 7681.13 and the FTSE 250 index added 89.19 points to 19,275.73.
The strongest mid-cap stock was Jupiter Fund Management, which surged 14% or 15.6p to 123.7p after announcing a special dividend alongside robust half-year figures.
ITV hails streaming success, but digital costs keep growing
07:55 , Daniel O'Boyle
ITV has hailed the success of its ITVX streaming platform as digital revenue grew by a better-than-expected 24%, but profits plunged as it continued to pour money into the streaming arm.
Revenue was effectively flat for the first half of the year, despite a decline in traditional advertising revenue.
Its studios arm grew to now make up the majority of revenue, while streaming beat expectations.
But profits were down by 61%, as costs rocketed at its media and entertainment arm that includes both its channels and ITVX.
That came as it spent an extra £43 million on new programming to try to bring people to ITVX, plus further tech costs to support the platform. ITV has added programmes such as A Spy Among Friends as streaming exclusives at a time when many market-leading streamers like Netflix have been cutting back.
Carolyn McCall, ITV chief executive, said: “The continued momentum behind ITV’s strategic transformation delivered strong growth in Studios and Digital revenues in the first half of the year, largely offsetting the expected weakness in the UK advertising market - with total revenue declining just 1% in H1, even in a very tough advertising market.”
Sterling higher after Fed meeting, oil at three-month high
07:50 , Graeme Evans
Sterling rose to $1.295 today as traders bet that the US Federal Reserve has reached the end of its monetary policy tightening cycle.
The dollar index, which covers a basket of currencies, weakened 0.5% yesterday despite the US central bank increasing interest rates to a 22-year high to a range of 5.25%-5.5%.
The pound has rallied in recent weeks, with the Bank of England expected to hike rates by at least another 0.25% next week as inflation continues to run hot in the UK.
Meanwhile, optimism over the world’s largest economy following the Federal Reserve’s upgrade to growth expectations helped oil prices today.
Brent Crude futures stood at a three-month high above $83 a barrel this morning, with the prospect of further stimulus measures in China also boosting the demand outlook.
Dow Jones extends run after Fed meeting, FTSE 100 seen higher
07:17 , Graeme Evans
The Dow Jones Industrial Average is on its best run since 1987 after Wall Street reacted calmly to the Federal Reserve’s latest policy announcement.
The US central bank increased interest rates by another 0.25% and said the potential of further tightening in September was data dependent, with two sets of inflation and jobs reports before then.
Policymakers were also more positive about the US economy after upgrading growth forecasts from “modest” to “moderate” and no longer seeing a recession.
The Dow Jones finished 0.2% higher, which took its sequence of gains to a 13th session in the best performance for more than 35 years. The S&P 500 index and tech-focused Nasdaq Composite were marginally lower.
Attention now turns to the European Central Bank, which is widely expected to deliver a 0.25% hike that would take its deposit rate to 3.75%. Guidance on the potential for a further increase to 4% in September will be the main focus for traders.
Asia markets are trading higher on the back of the Federal Reserve meeting, while CMC Markets expects the FTSE 100 index to improve 18 points at 7695 this morning.
Morning refresh: what you need to know to start the day
06:58 , Simon Hunt
Good morning from the City desk of the Evening Standard.
Banks were rocked yesterday after the shock departure of NatWest CEO Dame Alison Rose following revelations that she had leaked information about Nigel Farage’s Coutts account to the press. The move came despite the NatWest board’s offer of their confidence in her, in signs it was government pressure that prompted her to quit. Banks are braced for the spectre of fresh regulation over when they can and can’t close customer accounts.
Our finance editor Simon English says women in the City think there is rather more at stake here than just whether Nigel Farage has a posh bank account or not.
Last night the Federal Reserve once again raised interest rates by a quarter-point but Wall Street analysts are hoping this will mark the end of its campaign of successive rate rises.
Overnight, shares in Meta got a boost after they reported an 11% rise in quarterly revenue on the back of stronger advertising sales.
Here’s a summary of our other headlines from yesterday:
The boss of Lloyds Bank says he expects lower mortgage rates are on the way as he forecast that the UK would not enter recession.
Rolls-Royce shares got a lift after it upped its profits forecast.
Hospitality group Revolution Bars saw its trade hit by young customers’ squeezed incomes.
