Yahoo Finance FTSE 100 Live: Blue-chip index closes down 100 points after Fitch US downgrade, oil price up
Stock market sentiment has taken a hammering after Fitch removed its top-notch rating on US debt.
The agency’s downgrade to AA+ in the wake of Washington’s latest debt ceiling standoff cast a cloud over Asia shares as well as the FTSE 100 index, which shed 140 points at one point, and cllosed down by 1.36%.
Shares in BAE Systems and Taylor Wimpey weathered the storm after posting well-received half-year figures.
FTSE 100 Live Wednesday
Stocks slide after Fitch cuts US to AA+
BAE surges on record order backlog
Taylor Wimpey revenues down 21%
FTSE 100 closes at 7,561.63
16:39 , Daniel O'Boyle
The FTSE 100 closed down over 100 points today at 7,561.63 amid jitters about the US economy following a ratyings downgrade.
Stocks fell upon opening following yesterday’s decision by Fitch, and declined further in the morning. A rally just before noon faded, leaving the index of London blue-chips down by 1.4%.
Almost all of the companies in the index were down for the day, with the ever-volatile Ocado the biggest loser.
Convatec and BAE systems bucked the trend, with results-day rises of more than 5%.
UK to adopt global sustainability rules to crack down on greenwashing
16:03 , Daniel O'Boyle
The Government has announced it will adopt internationally-approved sustainability standards to help crack down on corporate greenwashing and bolster London as a global financial centre.
In a statement on Wednesday, the Department for Business and Trade said the UK’s disclosure standards will set out rules on how companies share their sustainability-related risks and opportunities.
It said the rules will be based on those published last month by the International Sustainability Standards Board (ISSB) – a group set up at Cop27 to set global rules on climate reporting.
Holidaymakers ‘spend nearly £100 more per day than they would at home’
14:58 , Daniel O'Boyle
Holidaymakers spend nearly £100 per day more typically while they are away than they would at home, a survey indicates.
On average, people spend £95.40 more per day, in addition to travel to and from and accommodation at their destination, while they are away, compared with their spending at home, Starling Bank found.
This equates to around £688 more spent over the course of a holiday lasting one week.
US market snapshot
14:51 , Daniel O'Boyle
Take a look at our US market snapshot as shares fall on the back of Fitch downgrading the country’s credit rating.
Grant Shapps convenes summit with energy giants in Downing Street
14:32 , Daniel O'Boyle
The UK’s energy industry leaders will gather in Downing Street on Wednesday to discuss economic growth and energy security with Grant Shapps.
The Energy Security Secretary will meet companies including EDF, SSE, Shell and BP, which collectively have multibillion-pound plans to invest in low and zero-carbon projects.
Mr Shapps will highlight the Government’s decision to invest in home-grown energy sources, including renewables, nuclear power and backing North Sea oil and gas, and the steps it has taken to ensure critical energy infrastructure is protected from disruptive protests.
BAE Systems breaks records as governments beef up defence spending
14:19 , Daniel O'Boyle
The impact of the war in Ukraine on global geopolitics has led to a record level of orders at BAE Systems, with governments beefing up spending on defence from nuclear submarines to tanks and fighter jets.
Shares in the London-listed multinational topped the FTSE 100 after it revealed a £66.2 billion order book alongside a sharp rise in profits and a fresh £1.5 billion payout for investors.
BAE’s chief executive, Charles Woodburn, told the Standard that the “very tragic circumstances” of the Ukraine war had drawn attention to the importance of defence companies.
Wall Street futures lower
13:39 , Daniel O'Boyle
Wall Street stock futures are down, though by less than London stocks, after credit ratings agency Fitch downgraded the US.
Dow Jones futures are down by 0.4% to 35,624.00, while S&P 500 futures are down 0.6% to 4,575.75. Futures in the tech-led Nasdaq index are down 0.8%, to 15,690.25.
The biggest losers include Elon Muskj’s Tesla and Peter Thiel’s Palantir.
Times are tough, but the doomsters’ predictions have been wrong so far
13:25 , Daniel O'Boyle
Two pieces of news to report this morning, which don’t bode too well.
Overnight, US credit rating giant Fitch downgraded the value of US debt, just a notch from AAA to AA+. This doesn’t mean the US has any chance of going bust — since it controls and prints the dollar, if it needs more of them, more shall appear.
And in any case, the track record of rating agencies is not great. Where were they before the 2008 financial crash? Such warnings might have been helpful. They were in bed with investment banks insisting everything was hunky dory.
FTSE 100 rallies but still down by almost 1%
13:11 , Daniel O'Boyle
The FTSE 100 was down by as many as 140 points earlier this morning, but has rallied slightly. However, it is still down by close to 1% for the day.
Taylor Wimpey and oil supermajors Shell and BP bucked the trend as the biggest risers of the day. Smurfit Kappa is the biggest faller.
Good news to come on inflation?
12:55 , Daniel O'Boyle
Economist Simon French notes that construction material prices are now falling, which could lead to good news for prices down the line.
The data could be an important point for the Bank of England to consider as it mulls whether to raise interest rates by a quarter or half-point tomorrow.
Asda to display live fuel prices online after Government pressure
12:38 , Daniel O'Boyle
Asda is to display daily fuel prices live online for the first time after pressure from the Government and the UK competition watchdog on supermarkets.
The Leeds-based chain claimed it will be the first supermarket to publish all local fuel prices online.
It said prices for each filling station will be available alongside other key information on the Asda Store Locator pages on its website.
Hugo Boss looking good as it raises sales outlook
11:20 , Joanna Bourke
Hugo Boss has raised its full-year outlook after the upmarket fashion firm defied economic gloom and cheered a 20% sales surge.
The Germany-headquartered suit seller said currency adjusted sales hit €1.03 billion (around £880 million) in the second quarter.
Chief executive Daniel Grieder said momentum in the period “exceeded” the firm’s own high expectations “despite the challenging and uncertain market environment”.
The company was boosted by the popularity of Spring/Summer 2023 campaigns, and its Hugo and Boss brands further expanded market shares worldwide, especially among younger customers.
Business in Europe, the Middle East and Africa benefited from robust domestic spend and a pick-up in tourist demand. It also saw US growth.
Hugo Boss forecasts annual sales to climb 12% to 15%, compared with previous guidance of around 10%. Underlying profit growth expectations have also been upgraded.
Chloe Collins, head of apparel at analytics firm GlobalData said: “Luxury players have recorded significant slowdowns in the market in recent weeks, but clearly Hugo Boss, as a more accessible premium player, is still driving strong demand.”
Bank of England set to raise interest rates above 5%
11:16 , Daniel O'Boyle
The spotlight is back on the Bank of England, which is expected to hike interest rates for the fourteenth consecutive time tomorrow, in what could be one of the last rounds in its long fight against inflation.
Policymakers are widely expected to vote through the fourteenth consecutive rise. It would take the cost of borrowing above 5% and to its highest since the financial crisis in 2008.
The increase would lift the cost of monthly repayments for anyone on a variable rate mortgage and increase the prices of new home loans offered to first-time buyers and anyone re-mortgaging when coming off fixed-rate deals.
Rishi Sunak believes ‘light at end of the tunnel’ on inflation
10:57 , Daniel O'Boyle
Rishi Sunak said inflation is not falling as fast as he would like, but believes people can “see light at the end of the tunnel”.
The Prime Minister made it his Government’s top priority to halve inflation – a measure of how much prices for goods and services have increased over time – in 2023.
The rate needs to be around 5% or lower by the end of the year for Mr Sunak to meet his pledge, with Consumer Prices Index inflation at 7.9% in June – down from 8.7% in May and the lowest rate since March 2022.
Stocks slide after US ratings downgrade, Aston Martin reverses 5%
10:17 , Graeme Evans
The FTSE 100 inddex has slumped 1.7% or 135.73 points to 7530.54 following last night’s move by credit ratings agency Fitch to downgrade the US to AA+.
As well as America’s high and growing debt burden, Fitch cited an “erosion of governance” over the past two decades due to repeated borrowing standoffs and last-minute resolutions in Congress.
It is the second agency to remove the triple A status after S&P Global Ratings did so during another borrowing crisis in 2011.
Treasury Secretary Janet Yellen called the Fitch move “arbitrary” and “outdated” but investors took no chances during a bleak session for European shares.
AJ Bell head of investment analysis Laith Khalaf said: “When the debt of the world’s largest economy is seen as lower quality, it will naturally trouble investors and make them rethink their portfolios.”
Big fallers in the FTSE 100 included the Tesla and Netflix backer Scottish Mortgage Investment Trust, which lost 3.5% or 25.6p to 704p. British Airways owner IAG dropped 5.6p to 164.6p and transatlantic-focused retailer JD Sports Fashion eased 4p to 149.2p.
Endeavour Mining topped the fallers board, sliding 7% or 134p to 1696p as the West Africa-focused gold producer reported a decline in second quarter profits.
Only three stocks found positive territory, with all doing so on the back of half-year results. Alongside big gains for BAE Systems and Taylor Wimpey, the medical devices firm Convatec jumped 4% or 7.8p to 213.6p after upgrading full-year guidance.
Oil and gas stocks withstood much of the day’s selling pressure after figures showing a big drop in US stockpiles sent Brent Crude to a three-month high above $85 a barrel. BP, which yesterday announced a 10% dividend hike, lost just 1.2p at 478.9p.
The risk-off mood left the FTSE 250 index 1.5% or 292.83 points lower at 18,772.83, with Aston Martin Lagonda among the casualties as shares surrendered some of their recent gains to trade 5% or 18.4p cheaper at 368.6p.
HMRC pursues Uber for another £386 million
10:15 , Daniel O'Boyle
The taxman is chasing rideshare service Uber for another £386 million worth of VAT, after it paid a £615 million settlement last year.
Uber revealed in its half-year results last night that HMRC “disputed the amount and manner in which we were applying VAT to our UK business”.
The San Francisco-based company had previously argued it was exempt from VAT because its drivers had been classed as self-employed. However, after a Supreme Court judgement required its drivers to be considered employees, it faced questions of whether VAT now applied.
Another blow for beleaguered Home REIT as tenant goes bust
10:09 , Simon Hunt
Beleaguered property business Home REIT suffered another blow today after one of its biggest tenants went bust.
Redemption Project, a tenant of 152 properties in the company’s portfolio, had entered into voluntary liquidation, Home REIT said, another tenant, Serenity Support, which occupied 10 properties, had also collapsed.
Together, the two firms made up 12% of Home REIT’s rent demanded in June. Begbies Traynor and Cornerstone Business Recovery had been appointed as liquidators.
Redemption Project, a non-profit, was set up to provide accommodation for rough sleepers, victims of domestic abuse, sexually exploited women and recovering drug addicts. It was registered as a Community Interest Company (CIC), a corporate status for businesses which support local communities. Serenity Support was also a CIC and was launched to help those with mental health conditions.
Home REIT said discussions with prospective new tenants for the site were already underway and it was “working with the respective liquidators to ensure a smooth handover in an attempt to minimise any potential disruption to underlying occupants.”
Home REIT has been under scrutiny over the last few months after a short-seller report by Viceroy Research questioned the ability of its tenants to pay rent, among other issues.
The firm rebuffed those concerns, but it has since admitted it “has seen a general deterioration in its rent collection position” with several of its clients failing to pay rent on time.
Trading in its shares has been suspended since 3 January.
Strong start for Haleon after spin-off from GSK
09:53 , Simon Hunt
Consumer healthcare giant Haleon showed tentative signs of success after its blockbuster spin-off from pharma firm GSK as revenues rose by more than half a billion pounds.
Sales at the Sensodyne and Panadol maker grew by 10.6% to £5.7 billion for the first six months of the year, while pre-tax profits rose 11.1% to £960 million after the firm put prices up by 7.5% on average.
Turnover in Haleon’s respiratory health division was especially strong, up 22.8% which it said was due to a surge in cold and flu infections in China following the lifting of Covid lockdown restrictions. Pain relief product sales were also strong, up by 12.6% to £1.4 billion.
Haleon shares fell 1.7% to 324p. They remain around 3% above their IPO price a year ago.
CEO Brian McNamara said he remained “confident that Haleon is well positioned for the rest of the year, as well as over the longer term.” However, Haleon warned of uncertainty on whether it would take a knock from tax changes introduced in the UK Finance Bill in June.
The Bill ushered in fresh rules on multinationals by the OECD under which firms are subject to a 15% effective minimum tax rate tax in each jurisdiction, regardless of where they operate.
Haleon said it was “currently evaluating the future impact of this legislation.”
BAE shares jump but FTSE 100 struggles, Taylor Wimpey rallies
08:41 , Graeme Evans
European markets are under pressure after Fitch’s AAA downgrade, with the FTSE 100 index down by 0.9% or 68.01 points at 7598.26. The flight from risk left stocks including Rio Tinto, Diageo and JD Sports Fashion about 2% lower.
Among those reporting results, packaging firm Smurfit Kappa fell 14p to 3046p and the West Africa-focused gold explorer Endeavour Mining lost 7% or 121.84p at 1708.2p.
BAE Systems led the FTSE 100 index after its strong results, with shares up 42p to 975.4p and back near the record of 1037p seen in April.
Half-year figures also lifted demand for housebuilder Taylor Wimpey, which jumped 4.6p to 118.7p, and for medical devices group Convatec. The latter improved 7.6p to 213.4p after upgrading its full-year guidance.
The FTSE 250 index lost 127.53 points to 18,938.13, led by a result-day decline of 6% or 9.9p to 158.1p for Spirent Communications.
Taylor Wimpey revenues hit by soaring mortgage costs
08:38 , Joanna Bourke
Taylor Wimpey has seen soaring mortgage rates “inevitably” impact the first half, with the housebuilder recording a slide in profits and revenue tumbling by 21%.
Chief executive Jennie Daly said there were “variable” market conditions during the six months to June 2, with an encouraging start. That was before a weaker second quarter when the Bank of England responded to higher than expected inflation by raising interest rates by a half point to 5%.
The FTSE 100 company has seen 27% of its first time buyers try and adapt by taking out longer mortgages- over 36 years. The figure was 7% a year earlier.
Read more HERE.
Key market data as FTSE 100 falls
08:19 , Daniel O'Boyle
Take a look at all the key market data as the FTSE 100 lost more than 60 points on the back of Fitch downgrading US bonds.
Nuclear submarines, jet fighters and electric plane batteries send BAE Systems orders to a record over £66 billion
07:38 , Michael Hunter
Defence multinational BAE Systems has reported a record order backlog, sending its half-year profit and dividend for shareholders up by over 10% each.
Its chief executive, Charles Woodburn, called it “an increasingly uncertain world”, and said the FTSE 100 company’s “global footprint” and “leading technologies” meant it could “effectively support the national security requirements and multi-domain ambitions of our government customers.”
Order intake in the six months to the end of June hit £21.1 billion, taking the backlog to £66.2 billion. Sales in the period were up 11% to £12 billion and underlying earnings were £1.3 billion, up 10%.
BAE will help Australia acquire its first nuclear-powered submarines as part of the new “Aukus” defence pact between the Antipodean nation, the UK and the US. It also received orders for UK’s next generation of fighter jets an is working on the battery system for an electric plane, the Heary ES-30.
It lifted its dividend by 11% to 11.5p and announced plans to return a further £1.5 billion to investors via a share buyback.
Ryanair flies record 18.7 million passengers in July
07:33 , Daniel O'Boyle
Ryanair flew 18.7 million passengers in July, shattering previous records, as Brits sought to escape the rain atr home despite dangerous heat in much of Europe.
The total was up 11% from July 2022 and marked the first time the Irish carrier has flown 18 million passengers in a month. Its flights remained 96% full.
Ryanair operated 102,000 flights in the month, while 800 were cancelled, mostly because of strikes.
Fellow low-cost airline Wizz Air’s passenger numbers also increased, to just over 6 million, 20% more than in July 2022. Its CO2 emissions per passenger were down for the month.
Brent Crude rally continues, highest in three months
07:32 , Graeme Evans
The rise in oil prices continued today after Brent Crude traded above $85 a barrel at its highest level in more than three months.
The latest increase came after figures showed a bigger-than-expected decline in US crude inventories. Recent gains for the oil benchmark have followed a voluntary production cut by Saudi Arabia and signs of improving global demand.
Brent has risen for five weeks in a row, registering its strongest month in over a year during July following a jump in price of 14%. It fell as far as $70 a barrel in June, from near to $100 last August.
US credit rating downgrade hits shares
07:17 , Graeme Evans
Asia markets have fallen and benchmarks in London and New York are facing weaker sessions after Fitch downgraded its US credit rating.
The agency said its move from the top-notch AAA to AA+ reflected the expected fiscal deterioration over the next three years, as well as a high and growing general government debt burden and the “erosion of governance".
Last night’s downgrade, which was heavily criticised by White House officials, follows a similar move by S&P during 2011’s debt ceiling impasse.
Deutsche Bank strategist Jim Reid said: “S&P being the first to downgrade 12 years ago was far bigger news and has allowed investors to adjust for the most important bond market in the world not being a pure AAA anymore, but it's still a big decision.”
Futures markets are showing the S&P 500 index down by 0.3% and the Nasdaq Composite off 0.6%, while CMC Markets expects the FTSE 100 index to open 30 points lower at 7636.
In Asia, markets have fallen sharply with Tokyo’s Nikkei 225 and Hang Seng in Hong Kong both down by more than 2%.
Recap: Yesterday’s top stories
06:49 , Simon Hunt
Good morning. Here’s a summary of our top stories from yesterday:
Nationwide said house prices fell by 3.8% in the year to July, the steepest drop in 14 years
HSBC first half profits more than doubled to $21.7 billion including $1.5 billion gain on purchase of SVB UK for £1
BP’s profits fell but the firm raised its dividend and launched new £1.5 bn buyback
Greggs said it was targeting more sites in airports as first half sales went up 21.5% to £844 million but margins slipped back.
