Yahoo Finance FTSE 100 Live: NatWest boss out, Ocado shares surge further, Fed ups rates but markets hope it’s last hike
The turmoil at NatWest, half-year figures by Lloyds and profit upgrades at GSK and Rolls-Royce are just some of today’s big blue-chip developments.
Rio Tinto, Reckitt Benckiser and British American Tobacco are also in the results spotlight, alongside Just Eat Takeaway and FTSE 250-listed Aston Martin Lagonda.
US interest rates are due to increase by another 0.25% to their highest level in 22 years, but with Wall Street traders hopeful tonight’s move will be the last in the cycle.
FTSE 100 Live Wednesday
Lloyds no longer predicts recession
Rolls-Royce shares surge after update
NatWest CEO Alison Rose quits
Fed raises rates
19:02 , Daniel O'Boyle
The US Federal Reserve has upped interest rates again, but traders hope that this will be the last rise before rates can come back down.
It said: “Recent indicators suggest that economic activity has been expanding at a moderate pace. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated.
“In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals.”
Fed decision an hour away
18:03 , Daniel O'Boyle
The US Federal Reserve will announce its rates decision in an hour, with a quarter-point rise widely expected.
However, traders also hope that this will be the last increase before rates can come down again early next year.
Matthew Ryan, Head of Market Strategy at global financial services firm Ebury, said: “At its June meeting, FOMC members unexpectedly indicated in the bank’s ‘dot plot’ that two more 25 basis point hikes could be on the way during the remainder of 2023, a view echoed in Powell’s communications. Market participants, however, have not necessarily bought into the Fed’s rhetoric, with investors particularly sceptical at the possibility of further tightening following the sizable June CPI miss.
“The Fed has somewhat backed itself into a corner, and another 25bp increase in rates still appears a done deal on Wednesday - this is indeed effectively fully priced in by futures markets. That said, we think that there is now enough evidence to limit the need for more hikes beyond then, and believe that Wednesday’s rate increase will transpire to be the last.
“For our money, Powell will stress this week that the Fed is taking a data-dependent approach, effectively punting its decision on when to end the hiking cycle to the following meeting in September, when updated projections will be released.”
Ocado shares in yet another dramatic surge
16:43 , Daniel O'Boyle
Ocado shares rocketed as high as 960.4p today, a 24.5% rise for the FTSE 100’s most volatile stock.
The delivery business has seen a regular among both risers’ and fallers’ lists this year. At one point, it seemed destined for relegation to the FTSE 250 as it fel as low as 343.4p. But rumours of an acquisition by Amazon, strong earnings and a legal settlement with Nordic rival Autostore prompted a rally that sent it into positive territory for the year.
But even by Ocado’s standards today’s surge stands out, as the business gained around £1 billion in market capitalisation in a matter of hours. It comes despite no news
FTSE closes slightly down after minor rally
16:38 , Daniel O'Boyle
The FTSE 100 finished the day at 7,676.89, after a late-afternoon rally.
The index had fallen as low as 7630, but picked up late in the day.
It was a tough day for banking shares though, with NatWest the biggest loser as Alison Rose stepped down as CEO.
Farage calls diversity and inclusion culture ‘divisive’ as governance row erupts
16:00 , Daniel O'Boyle
Nigel Farage said the NatWest culture around diversity and inclusion is actually “very divisive” as concerns grow that banks may be using ethics to cover for bad behaviour.
A major governance debate erupted after Dame Alison Rose, chief executive of NatWest which owns the private bank, resigned amid a row over the closure of the former Ukip leader’s Coutts account.
The bank said the decision to close Mr Farage’s account was taken partly due to him falling below Coutts’ “commercial criteria” and partly due to his political views.
The Brexit campaigner claims to have a 40-page document showing that the bank wanted him to leave given “his publicly stated views that were at odds with our position as an inclusive organisation”.
Amazon offers changes to Marketplace rules to appease competition watchdog
15:53 , Daniel O'Boyle
Amazon has offered changes to how it treats third-party sellers on its Marketplace business and how it uses their data in an effort to appease concerns from the UK’s competition regulator.
The Competition and Markets Authority (CMA) launched an investigation last year into whether the online retail giant had been giving its own brands and those which used its logistics services an unfair advantage over others on its online Marketplace.
The CMA has now said fresh commitments from Amazon are expected to ensure third-party sellers’ product offers have a fair chance of being prominently displayed to customers.
Data privacy watchdog looks into NatWest’s Farage leak
15:42 , Daniel O'Boyle
Data watchdog the Information Commissioners’ Office could fine NatWest for leaking information about Nigel Farage, as it wrote to banks on customer information.
The ICO said it was investigating whether NatWest breached confidentiality rules and that any suggestion banks could betray the trust of customers is a “concern”.
The watchdog has the power to fine companies up to 4% of their annual revenue.. For NatWest that would be half a billion pounds.
US market snapshot ahead of Fed call
15:12 , Daniel O'Boyle
Trading has been tentative on Wall Street as markets await the Federal Reserve’s latest interest rates decision.
Take a look at our key market data here.
‘Flexible’ space to increasingly feature in company office plans
14:08 , Daniel O'Boyle
Employers will increasingly seek a ‘flexible’ workspace option in their office portfolios within two years, a survey of property decision-makers has found.
In 2025 over half (54%) of occupiers expect their office footprint to have 10% or more of ‘flex’ space, up from 37% today, research from CBRE suggests.
The property consultancy spoke to heads of corporate real estate or the nearest equivalent from 136 companies across Europe (half of which have a presence in the UK), about plans as hybrid working continues to be popular.
Wall Street awaits Fed decision
12:50 , Daniel O'Boyle
US shares dipped slightly lower today as Wall Street awaits what is widely expected to be a final Federal Reserve rate hike before it can start lowering rates again.
Dow Jones futures are down 0.1% to 35575 and S&P 500 futures by 0.2% to 4588. The more rate-sensitive Nasdaq futures were down 0.3% to 15623.
Snap was among the biggest fallers, with its shares set to drop by more than 17% when markets open after disappointing results today.
Puma steps up sales growth as footwear demand leaps
12:29 , Daniel O'Boyle
Puma has said it is “well on track” to meet full year targets during its 75th anniversary, after surging footwear demand boosted the sportswear brand’s second quarter sales to €2.1 billion (£1.9billion).
It saw good demand for football boots and running trainers, and the group 5.9% sales gain (or 11.1% on a currency adjusted basis) was driven by growth in Asia and Europe, the Middle East and Africa. That helped to offset a weaker US performance.
The German firm, known for its jumping cat logo, pointed to a host of marketing highlights during the period such as a deal producing F1 licensed products including accessories.
Market snapshot with FTSE 100 down 0.7%
12:11 , Daniel O'Boyle
The FTSE 100 slid as the morning went on, and is now down 0.7% for the day, with banking shares among the fallers.
Take a look at our key market snapshot.
Rental growth for Primary Health Properties
11:47 , Joanna Bourke
GP surgeries landlord Primary Health Properties has recorded rental growth and expects demand for space from the NHS to climb.
The FTSE 250 company, which has a portfolio of health centres and surgeries, said net rental income in the six months to June rose 6.2% to £75.5 million.
Chief executive Harry Hyman added that the firm expects to deliver over £4 million of extra income during 2023, marking “another record and continuing the trend seen in recent years”.
In the group’s update it said the need for additional space “is driven by a population that is growing, aging and suffering from increased chronic illnesses, which are placing a greater burden on healthcare systems in both the UK and Ireland”.
That will see more demand for modern purpose built centres where patients that don’t require hospital treatment can be helped.
The value of the Primary Health Properties portfolio slipped to £2.78 billion from £2.8 billion.
The shares improved 1.45p to 96.5p.
The Government must now hasten the sale of its stake in NatWest
11:23 , Daniel O'Boyle
It is a cold, hard, and yes unfair fact of life that Alison Rose will be remembered for the chaotic manner of her departure from NatWest rather than the many achievements over her long, trail-blazing career at the bank.
She will never have to worry about paying the gas bill, but it is a tough and bruising reality nonetheless. Her exit means that only one of the last four chief executives at NatWest, or its predecessor Royal Bank of Scotland, have left on their own terms.
Fred “the Shred” Goodwin stood down as part of the terms of the Government rescue of RBS — and was later stripped of his knighthood. His successor Stephen Hester quit in 2013 after then Chancellor George Osborne grew tired of endless rows over bonus payments.
Miners struggle as Rio cuts dividend, FTSE 100 lower
10:31 , Graeme Evans
Rio Tinto today cut its half-year dividend by 34% as the iron ore giant revealed the earnings impact of softer market conditions.
Shareholders of the Anglo-Australian company can expect the September payment of 177 US cents a share, equivalent to $2.9 billion.
Two years ago, they got a bumper interim dividend of 376 US cents after the rebound of commodity prices led to 2021’s overall record-breaking payout worth $16.8 billion.
Today’s dividend is in line with the company’s target to pay 50% of underlying earnings but shares still fell 116p to 5278p near the top of the FTSE 100 fallers board today.
Rio’s post-tax profit fell 43% to $5.1 billion after further momentum in the company’s Pilbara iron ore business was offset by a 14% fall in average monthly prices.
The slide for Rio shares was matched by other mining stocks after Anglo American lost 33p to 2473p and Glencore fell 8.85p to 473.2p.
The FTSE 100 index dropped 18.08 points to 7673.72 as traders opted to stay on the sidelines until after tonight’s US Federal Reserve policy announcement.
Interest rates are set to increase by 0.25% to a target range of 5.25% and 5.5%, the highest level since 2001. The bigger issue for traders though is whether Fed chair Jerome Powell signals the need for further interest rate hikes later in the year.
In the FTSE 250, shares in Egypt-based gold miner Centamin bucked the selling trend by rising 4% or 3.35p to 96.9p thanks to unchanged guidance in interim results.
The rally for building products firm Tyman also continued, with the mid-cap stock following yesterday’s 5% results-day improvement with a gain of 12p to 310p.
Among the small caps, Motorpoint shares jumped 6p to 108p after the car retailer said it had been encouraged by trends during the first quarter of its financial year.
Even though demand for used cars continues to be impacted by cost of living pressures, it has seen a growing number of vehicle supply options.Its increased use of data to determine selling prices has also resulted in an improvement in retail margin.
No recession and lower rates on way, predicts mortgage giant Lloyds Bank
10:17 , Simon English
Britain’s biggest mortgage lender offered hope to the nation’s homeowners today and predicted the UK will no longer fall into recession next year.
Lloyds Banking Group said Bank of England interest rates should peak at 5.5% -- far below the 7% some in the City were fearing just weeks ago.
It also predicts the economy will grow slightly this year, and that unemployment will stay low, a helpful view from an organisation with as much financial data as any company in the country.
Just Eat boss: We’re ready to take drivers off the street amid sweltering heat
09:51 , Simon Hunt
The boss of Just Eat has said the food delivery firm is braced to take drivers off the street as heatwaves and wildfires sweep across southern Europe.
Temperatures soared past 40 degrees Celsius in parts of Greece yesterday, as thousands were evacuated from their homes amid raging fires. Temperatures have reached as high as 47 degrees in in Italy and 39 degrees in Spain recent days.
Just Eat boss Jitse Groen said: “If weather conditions are dangerous to our staff we don’t send them out on the streets.
“We have the regular labour inspection rules to think about [and] we take these cues from government.”
Just Eat posted a 18% slump in sales in southern Europe in the first six months of the year, which the firm said was part of a “return to pre-pandemic seasonal ordering patterns.” Sales in northern Europe faired better, with turnover up 10% and a jump in profitability to 191 million euros (£164 million).
Orders in the UK fell 9% to 121 million, while revenues slipped 4% to 629 million, which it put down to targeted promotional campaigns offering reduced delivery fees.
But the firm said the UK and Ireland showed signs of being able to hit the same level of profitability as northern Europe. Just Eat shares rose 7.3% to 1,480p.
Groen said food inflation at restaurants in the UK had been significantly lower than supermarket price rises, and was broadly in line with the rest of northern Europe.
Market snapshot as shares slip
09:44 , Daniel O'Boyle
Blue-chip shares have dipped slightly after a steady opening. Take a look at our market snapshot below.
Mortgage rates rise again as lenders put products back on market
09:24 , Daniel O'Boyle
Mortgage rates have risen further, as two-year deals get closer to 7%, following a week of easing.
Increases in rates had largely stopped over the past week, following long-awaited good news on inflation. However, rates appeared to be on their way back up today..
That coes despite HSBC yesterday being the first major lender to lower its mortgage rates.
The average 2-year fixed residential mortgage rate is now 6.86%, up from 6.83% yesterday.
The average 5-year fixed residential mortgage rate today is 6.36%, up from 6.34%.
The increase comes thanks to a flood of products being brought back onto the market, with 250 more products available today than yesterday.
Sun shines on Marstons as sales grow 11%
09:19 , Simon Hunt
The boss of Marstons has said that Brits are increasingly looking to the premium end of the menu when they do out for a drink.
Like-for-like sales rose 10.9% in the 16 weeks to 22 July compared to the previous year, spurred by warm June weather helping pack beer gardens, a trend which trailed off heading into a cooler, wetter July.
Marston’s boss Andrew Andrea said: “The key thing that’s surprising us is that when people go out they want a good experience and they are not trading down to the cheapest options.
“The sunshine lagers like San Miguel and Birra Moretti continue to perform very well and we are seeing a bit more trading up into the premium burgers.”
Marstons shares rose 3.2% to 33p.
Tottenham owner Joe Lewis indicted in the US over alleged insider trading
09:09 , Daniel O'Boyle
Tottenham owner Joe Lewis has been indicted in the US for “orchestrating a brazen insider training scheme”.
US Attorney Damian Williams announced the charges late on Tuesday night via a video posted on Twitter.
The Southern District of New York have indicted Lewis and accused the 86-year-old billionaire of “classic corporate corruption”.
Rolls-Royce shares surge, NatWest down 3%
08:29 , Graeme Evans
Rolls-Royce shares have jumped 24%, up 36.5p to 189.1p, after a huge upgrade to City forecasts. The stock was 66p last October.
GSK also increased 2023 guidance but the reaction in the City was measured as shares in the drugs giant only rose 1% or 16.2p to 1409.2p.
In the banking sector, Lloyds Banking Group dropped 2% or 1.25p to 44.8p after its results and NatWest fell 3% or 7.4p to 243.8p following last night’s departure of CEO Alison Rose.
The FTSE 100 index dipped 10.63 points to 7681.17, with Rio Tinto down 2% after its interim results. Among other companies reporting today, British American Tobacco rose 42.5p to 26767.5p but Reckitt Benckiser dropped 140p to 5802p.
The FTSE 250 index lifted 8.33 points at 19,158.21, with Aston Martin Lagonda up another 6% or 20.4p to 360.6p after half-year results.
City AM set to announce new buyer today
08:18 , Daniel O'Boyle
City AM is set to announce a sale today to an unnamed UK-based group, with new buyers coming in just in time to fend off administration for the London freesheet, managing director Lawson Muncaster confirmed to the Standard today.
According to Sky News, the new buyer could be ecommerce business THG, whose founder Matthew Moulding has been openly critical of press coverage of his business in the past.
Reports emerged last night that the newspaper - distributed across the City and Canary Wharf, as well as major transport hubs - was preparing to appoint BDO as administrator, weeks after putting itself up for sale.
But managing director and co-founder Lawson Muncaster told the Standard that a buyer was found in time to prevent administration. The new group is UK-based and not a direct part of the media sector, but does already have some involvement in the space.
Rio Tinto earning down by a quarter to $12 billion in the first half
07:59 , Michael Hunter
Global mining giant Rio Tinto – closely watched for the insight it can offer into the health of the global economy through the metals it produced – reported a sharp drop in earnings today, as metal prices stayed lower year-on-year.
Earnings fell 25% to almost £12 billion for the first half of the year, as higher iron ore volumes offset a 14% fall in average average monthly prices.
It also reported weaker demand for aluminium, which was “partly offset” by “a recovery in demand in China”.
Copper output also fell, and revenue from the metal dropped 2% to just under $3.5 billion.
New Rolls-Royce boss hikes profit guidance
07:43 , Graeme Evans
The rebuilding of Rolls-Royce under new boss Tufan Erginbilgic is making faster than expected progress after the engines giant delivered a big boost to profit guidance today.
It said first-half underlying operating profit will be between £660 million and £680 million, much higher than the City’s consensus estimate of £328 million. This includes a return to profit in civil aerospace, with a surplus in the region of £400 million.
The company’s key metric of free cash flow is due to be £340 million to £360 million, much better than the £50 million forecast. Rolls said this reflected continued growth in its end-markets and a focus on commercial optimisation and cost efficiencies.
Full year guidance has been raised, with Rolls now expecting an operating profit of £1.2 billion to £1.4 billion compared with the consensus £934 million. Free cash flow will be as much as £1 billion.
Erginbilgic said the early impact of the transformation programme had been seen in all divisions, despite a challenging external environment and supply chain constraints.
He added: “Better profit and cash generation reflects greater productivity, efficiency and improved commercial outcomes."
Reckitt Benckiser revenue nears £8 billion as it passes on increased costs
07:40 , Michael Hunter
The maker of a range of big-name products from Cillit Bang cleaner to Dettol disinfectant said it has been able to pass higher costs onto consumers today, helping revenue and profit rise.
Reckitt Benckiser reported revenue of almost £7.5 billion in the first half of 2023, up over 8%, generating operating profit of £1.8 billion, up 0.5%. Higher costs did hit its overall perating profit margin, which fell by 170 basis points to 23.6%.
But it also said that its gross profit margin rose, by 130 basis points, “with high single digit inflation more than offset by carry over pricing, mix benefits and further productivity efficiencies.”
Nicandro Durante, serving as interim chief executive officer, called the results “strong” saying it “gives us confidence in our full year targets, despite some tough comparatives”.
Kris Licht will take over running the Slough-based multinational at the end of the year, succeeding Durante and Laxman Narasimhan, a former PepsiCo executive, who was poached from Reckitt by Starbucks to run the global coffee chain.
GSK ups guidance after strong HIV drug sales
07:37 , Daniel O'Boyle
Pharmaceuticals giant GSK has upped its guidance for the year, thanks to the success of HIV treatment and prevention drugs such as Apretude, which was approved in EU earlier this week.
The group now sees profit this year growing by 11-13% from last year’s £6.4 billion, after bringing in £2.1 billion in profit for the first half of the year.
It noted that its HIV treatment and prevention products had performed especially well, with revenue from prevention drugs up by more than 150%. It said most of the jump was due to patients switching from products made by other companies..
GSK CEO Emma Walmsley said: “We have delivered another excellent quarter of performance, with strong sales and earnings growth, notably in HIV and Vaccines, and continued strengthening of the R&D pipeline and product portfolio.
“Our momentum supports the upgrade we have made to our financial guidance for 2023 and further increases our confidence in delivering longer-term profitable growth for shareholders.”
US traders bet on one last rate hike, Microsoft shares fall
07:19 , Graeme Evans
US markets are showing few signs of nerves ahead of tonight’s US interest rates decision, with the tech-focused Nasdaq Composite up by 0.6% at yesterday’s close.
Traders fully expect the Federal Reserve to increase rates by 0.25% to a target range of 5.25% and 5.5%, the highest level since 2001.
The bigger issue is whether Fed chair Jerome Powell signals the need for further interest rate hikes later in the year. Deutsche Bank said futures markets are currently pricing a 44% chance of a further hike after today’s.
Strategist Henry Allen said: “In other words, the central expectation is that this will be the last hike of the current cycle.
“But it’s worth remembering that we’ve been here before. In fact, after the two most recent hikes in March and May, market pricing by the close that day was that the Fed was most likely done hiking.”
Ahead of the meeting, the S&P 500 index closed last night at a 15-month high while the Dow Jones Industrial Average extended its best run since 2017 by finishing in positive territory for the 12th session in a row.
After the closing bell, updates from Microsoft and Alphabet drew a mixed response despite both beating earnings estimates. Microsoft shares fell 4% on worries over slowing growth in cloud computing, but Alphabet rose 6% on the strength of Google search revenues.
The FTSE 100 index, which closed 13 points higher at 7692 last night, is expected by CMC Markets to open 10 points lower at 7681.
NatWest CEO Dame Alison Rose quits
06:14 , Simon Hunt
Overnight, the boss of NatWest has quit the company after admitting a “serious error of judgement” over the handling of the storm around the closure of Nigel Farage’s bank account.
Rose yesterday apologised after she admitted discussing the closure of Frage’s account at NatWest’s private banking arm Coutts with BBC business journalist Simon Jack.
Rose said: “I recognise that I left Mr Jack with the impression that the decision to close Mr Farage’s accounts was solely a commercial one,” she said.
“I was wrong to respond to any question raised by the BBC about this case. I want to extend my sincere apologies to Mr Farage for the personal hurt this has caused him and I have written to him today.”
NatWest Group chairman Sir Howard Davies said: “The Board and Alison Rose have agreed, by mutual consent, that she will step down as CEO of the NatWest Group. It is a sad moment.
“She has dedicated all her working life so far to NatWest and will leave many colleagues who respect and admire her.”
Morning Refresh: Everything you need to start the day
Tuesday 25 July 2023 20:33 , Simon Hunt
Good morning from the City desk of the Evening Standard.
Yesterday was a jam-packed day of results and company trading updates, shedding light on the health of the economy from inflation to the threat of AI.
Here’s a summary of our top headlines from yesterday:
The boss of Natwest has admitted she made a serious error in discussing the accounts of Nigel Farage with BBC business editor Simon Jack.
The founders of scandal-hit tech firm WANdisco, who once had a combined wealth of nearly £100 million, have seen their fortunes evaporate after the stock fell 96%.
HSBC has become the first major lender to cut interest rates
Jaguar Land Rover profits top £400 million in the first quarter.
Lastly, here’s a piece by our Finance editor Simon English on how Labour are wooing the City, which made yesterday’s front page.
Today is set to be another bumper results today. We’re expecting results or trading updates from:
Heathrow Airport
Consumer goods business Reckitt
Mining giant Rio Tinto
Lloyds Bank
Pharma giant GSK
Delivery app Just Eat
Pub chain Marstons
Construction company Breedon
Real Estate business New River
