Yahoo Finance FTSE 100 Live: ‘Bank of England has been bold’, Rupert Murdoch quits, FTSE closes down 0.7%
The Bank of England held interest rates at 5.25% today, ending a run of 14 consecutive hikes.
The decision was finely balanced after yesterday’s surprise drop in August’s inflation rate to 6.7%. Five members of the Monetary Policy Committee voted to hold and four to hike.
The FTSE 100 index, meanwhile, is under pressure after the Federal Reserve signalled US rates will stay high for longer in 2024.
Jeremy Batstone-Carr, European Strategist at Raymond James Investment Services, said: “The Bank of England’s Monetary Policy Committee has surprised the financial markets and delivered some relief to hard-pressed households by maintaining the base rate of interest at 5.25%.
“Undoubtedly, the overriding factor behind the Bank’s decision has been the fall in the UK’s inflation rate in August, particularly the sharp drop in underlying price pressures which indicate that earlier rate increases are beginning to work.
“Moreover, the economy’s weakness in July means that activity over the third quarter has been revised downwards, below the Bank’s previous expectation. This is a clear sign that inflationary pressures, including wage pressures, will continue to abate over the autumn months.
“In addition, recent data points to a slight easing in the labour market, confirming a slight increase in the unemployment rate which now stands above the Bank’s forecast.
“Also serving to sway policymakers, recent business surveys point to further weakness in coming months. The MPC is likely to have had early sight of tomorrow’s purchasing managers’ survey, thought likely to confirm subdued activity across both the manufacturing and service sectors.”
FTSE 100 Live Thursday
BoE rates pause
JD Sports backs £1bn profits target
US rates outlook hits stocks
Who is Lachlan Murdoch? New Fox chairman as Rupert Murdoch steps down
16:52 , Daniel O'Boyle
Rupert Murdoch, the 92-year-old media mogul, has confirmed that he’s stepping down as the chairman of Fox Corp and News Corp.
As well as announcing his departure from the role, Murdoch confirmed that he was handing over leadership to his son Lachlan Murdoch.
In his departing message, Rupert said: “Our companies are in robust health, as am I. We have every reason to be optimistic about the coming years — I certainly am, and plan to be here to participate in them. But the battle for the freedom of speech and, ultimately, the freedom of thought, has never been more intense.”
FTSE closes down 0.7%
16:36 , Daniel O'Boyle
The FTSE 100 closed at 7,678.62, down 0.7%, despite the Bank of England’s interest rate pause.
The decision not to raise interest rates initially boosted stocks, but the effect was short-lived, with the index finishing close to where it was before the decision was announced.
JD and Next were the top risers as the high street giants both reported strong demand. Ocado was by far the biggest faller after a target price downgrade from Exane.
Aquis on the up with ambitious growth plans
16:29 , Daniel O'Boyle
Aquis, the challenger stock exchange with ambitious plans to become a serious competitor to larger rivals, gave evidence today it is on track for strong growth.
With some of the City in the doldrums due to a lack of new flotations and lower share trading, it saw revenues jump 17% to £9.7 million in the half year to June.
Profit before tax is up 64% to £1.1 million.
It saw five new listings on its exchange in the last six months, despite what it admitted are “tough market conditions”.
West End Final: Have we finally reached peak interest rates?
16:14 , Daniel O'Boyle
“Had the prime minister not spent Wednesday preparing to roll back Britain’s climate policies, the big story of the day would have been a good news one for the government: inflation continues to fall,” Jack Kessler writes.
“The Consumer Prices Index (CPI) dropped to 6.7 per cent last month, down from 6.8 per cent in July. Not a gigantic change, and still well above the 2 per cent target, but far better than City predictions of a rise to 7.1 per cent. Meanwhile, core inflation fell from 6.8 per cent to 6.2 per cent.
“And it was this set of data that may well have been the difference between another interest rate rise and what actually took place today – holding steady at 5.25 per cent. This represents the first time the Bank of England has declined to raise rates since late 2021. Happy days are here again.”
Read the full West End Final newsletter here
Dynamic pricing for pints ‘just wrong’ says City Pub Group boss
16:02 , Daniel O'Boyle
The boss of City Pub Group today took aim at dynamic pint pricing after it emerged some pub chains were raising prices at peak trading hours to boost their margins.
“I just think it’s wrong,” Clive Watson told the Standard.
“We sometimes change the booking fees for events depending on how far out people book. But on the actual night, when you’re having a good time, changing the drinks prices is not transparent.”
Slug & Lettuce and Yates’s owner Stonegate last week said it planned to ramp up prices by as much as 20p per pint during its busiest times.
Martin Lewis issues ‘urgent savers warning’ as Bank of England base rate is held
15:24 , Daniel O'Boyle
Savers may see some rates being shaved down after the Bank of England paused its run of base rate rises, according to consumer champion Martin Lewis.
But he suggested that those considering locking into a top fixed-rate account could use a tactic to help them wait and see what happens to rates.
Writing on social media platform X, formerly known as Twitter, the MoneySavingExpert.com founder issued an “urgent savers warning”.
He said: “The Bank of England minutes ago voted to maintain interest rates at 5.25% – not increase as many predicted. It’s therefore possible fixed-rate savings may shave down their rates at speed (as they’re based on longer term predictions of interest rates).”
Key market data
15:19 , Daniel O'Boyle
Take a look at the latest market snapshot
News Corp shares steady after Murdoch quits
15:08 , Daniel O'Boyle
There’s been little movemment in News Corp shares so far on Wall Street after Rupert Murdoch announced his decision to step down.
Shares initially fell by around 1% to $19.50, but quickly picked up and are currently up slightly for the day at $19.71. That’s up by about 8% for the year to date, and vallues the media giant at more than $11 billion.
Arm falls bellow IPO price
15:00 , Daniel O'Boyle
Arm’s shares have lost 3.7% since opening, and are now below the chip-maker’s $512 IPO price.
The price of the IPO was seen as low, and Arm shares quickly rocketed above $60. But within a week, they have fallen back down, valuing the firm at less than $50 billion.
Profits slide at DFS as demand wanes in ‘tough’ economic climate
14:29 , Daniel O'Boyle
Furniture retailer DFS saw its profits cut by almost half over the past year in the face of “very weak” demand.
However, the London-listed firm saw shares make gains in early trading on Thursday after bosses said they are “confident the market will recover”.
The sofa specialist also told shareholders it expects a “modest” rise in profits next year as inflationary pressures ease.
Rupert Murdoch stepping down as chairman of News Corp and Fox
14:22 , Daniel O'Boyle
Rupert Murdoch is stepping down as chairman of News Corp and Fox.
The 92-year-old informed colleagues of the move in a letter on Thursday.
“I am writing to let you all know that I have decided to transition to the role of Chairman Emeritus at Fox and News,” Mr Murdoch wrote. “For my entire professional life, I have been engaged daily with news and ideas, and that will not change.”
Markets still expect one more hike
14:04 , Daniel O'Boyle
Markets are still pricing in one more interest rate hike from the Bank of England, though they also see a strong possibility that rates remain where they are.
Chief UK Economist at Pantheon Macroeconomics, thinks the implied probability of one more hike might be too high.
Most impact of tightening still to come
13:49 , Daniel O'Boyle
Panmure Gordon economist Simon French said the majority of the impact of teh Bank of England’s recent monetary tightening is still to come.
‘The big red pause button'
13:24 , Daniel O'Boyle
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “’The Bank of England has finally pushed the big red pause button, prompting a rush of relief for companies and consumers bearing the brunt of higher borrowing costs. Although this is likely to be the last hike in the cycle, the bank is still keeping the door open to another rate hike, if inflationary pressures persist, although with signs that demand is being squeezed out of the economy, the hold button is set to stay in place for a considerable time.
“The surprise drop in inflation over the year to August, despite the upwards march in oil prices, saw the bank fast forward its decision to halt the relentless rise in interest rates. The sharp fall in core inflation, stripping out volatile food and fuel prices, clearly took policymakers by surprise given that last month only one policymaker had voted for a pause. This time the decision was made to keep rates on hold by a majority of 5 to 4, signaling the growing strength of feeling that the economy is slowing fast and previous rate hikes, once left to work their medicine will be enough to push prices lower.”
Market reaction to rate pause
12:59 , Daniel O'Boyle
Stocks rallied on the back of the rate pause, but are still down for the day.
Take a look at our full market snapshot.
‘The Bank’s job is done'
12:37 , Daniel O'Boyle
Capital Economics’ UK team believes “the Bank’s job is done”, and it may start cutting sooner than many expect.
“The surprise decision by the Bank of England to leave interest rates unchanged at 5.25% today probably means that rates are already at their peak,” they said. “We think rates will stay at this peak of 5.25% for longer than the Fed, the ECB and investors expect, but that when rates are cut in late 2024 they will be reduced further and faster than widely expected.
“We and almost all other analysts had expected another 25 basis point rate hike to 5.50%, but yesterday’s soft August CPI inflation release, the recent loosening in the labour market and the recent weakening in activity appear to have convinced the Bank that it has already raised rates far enough.”
‘Extremely premature’ to talk peak rates
12:26 , Daniel O'Boyle
George Lagarias, Chief Economist at Mazars, doesn’t think we should be thinking about peak rates yet.
HJe says “With rates kept the same, there’s only one question: Is the Bank of England backing down from the inflation fight to avoid a growth crunch? The news will certainly be welcomed by millions of homeowners in the country who find their finances stretched.
“But make no mistake. With no evidence that inflation has been definitely tamed, talk of the end of the rate hike cycle is extremely premature.”
Insiders join dove Dhingra in 5-4 vote
12:24 , Daniel O'Boyle
Most of the MPC’s insider members joined longtime dove Swati Dhingra in the five-four decision in favour of a pause.
Dhingra, Governor Andrew Bailey, deputy governor for Monetary Policy Ben Broadbent, chief economist Huw Pill and deputy governor for markets and banking Dave Ramsden voted to keep rates where they are.
Deputy governor for financial stability Jon Cunliffe, Jonathan Haskel, Catherine L Mann and new member Megan Greene voted for a hike.
Bank of England has been ‘bold'
12:15 , Daniel O'Boyle
Marcus Brookes, chief investment officer at Quilter Investors, said: “While it may return to raising rates later in the year or into next year, the Bank of England has been bold and is signalling that its job is nearly done for now. Inflation surprised to the downside yesterday and with economic data rolling over, the BoE clearly feels it now has enough cover to hit the pause button and assess things as we go.
“Market expectations of rates at or above 6% always appeared a little toppy, and clearly the data is trending in the right direction for the BoE to take this decision. With an election around the corner next year, it will be playing on the minds of the decision makers not to overcorrect and instead begin to assess what impact the action to date has had.”
“Hopefully it’s the peak"
12:05 , Daniel O'Boyle
The Bank said that further tightening could still be required if inflation persists.
Gordon Milnes at Investec Real Estate said: “Boosted by yesterday’s surprising inflation figures, this is the absolutely the right decision in the face of recent economic data. Hopefully the Bank of England can hold their nerve and this is the peak, which will be a welcome boon for investors, developers and lenders. Now we need some further visibility on potential interest rate cuts, which should act as a catalyst for a rapid bounceback in real estate activity levels.”
Bank of England pauses rate hikes
12:00 , Simon Hunt
The Bank of England has kept interest rates at 5.25%, in its first pause after a cycle of 14 consecutive interest rate hikes.
A hike had seemed almost certain at the start of the week, but a surprise decline in inflation announced yesterday put a pause on the table.
It remains to be seen whether interest rates have now peaked, or if the Bank still has one more hike in store. Either way, it may still be some time before the Bank starts to bring interest rates down.
Market snapshot ahead of key rates call
11:20 , Daniel O'Boyle
London shares are lower today as the Bank of England prepares to announce its latest interest rates decision.
Take a look at our full market snapshot below.
City ups rate hike bets, but still strong chance of pause
11:09 , Daniel O'Boyle
City bets on an interest rate hike today increased, but markets still see today’s decision as an extremely close one less than an hour out.
Swap markets suggest a 60% chance of a hike, having slightly favoured a pause when markets closed yesterday. Hawkish comments from the US Federal Reserve led to increased expectation that the Bank of England will still raise rates one more time.
The decision from Threadneedle Street will be announced at noon.
City Comment: The City suit is back
10:28 , Simon English
Men in the City are dressing much more smartly than they were a year ago, noticeably.
This is more than just an anecdote. Next boss Simon Wolfson today confirms what I’d spotted in City restaurants and bars in the last few months in particular.
The return of the simple suit signals several things, not all of them good.
In some ways it is just folk following suit (forgive the pun). If everyone around you looks traditionally smart, the pressure is on for you to do the same.
For a certain sort of bloke that takes little interest in clothes really (that’s most of us) wearing a suit is just easier. A broker said to me the other day: “Smart casual is a real effort, I have to think about it. If I’ve got a hangover (he usually does), just a clean shirt and this week’s suit and I’m good to go.”
It’s not just laziness, it is also part of the shift back to the office. City job cuts are happening and more are probably coming. Some bankers look like they are already dressing for their next job interview.
These cycles came and went long before Covid. Back in 2016 JP Morgan, one of the most buttoned up of the big banks, told staff that its new dress code was business casual.
This lasted for a while. If you meet a JP Morgan guy now, he will almost certainly have a suit on (ties remain optional).
During the dotcom boom there was briefly a trend for bankers to wear hoodies and trainers to look like their clients, albeit in a ridiculous way for any who were over 40.
When that boom bust, the bankers were relieved to return to suits that, if nothing else, cover up all manner of physical failings. Some of us have discovered that suits not worn for some time appear to have shrunk. This is good news for Next, M&S, Ted Baker and everyone on Saville Row.
Gambling stocks fall amid US worries, FTSE 100 down 0.5%
09:40 , Graeme Evans
London’s big gambling stocks came under pressure today after the Federal Reserve signalled US interest rates will stay high next year.
Flutter Entertainment, whose FanDuel brand has enjoyed huge success in America’s online sports betting market, lost 2% or 340p to 14,275p. Ladbrokes rival Entain also dropped 22p to 1087.5p on fears of a tougher outlook for its BetMGM joint venture.
The weakness came as the Federal Reserve indicated one more rate rise this year and scaled back projections for rate cuts in 2024 from four to two.
Wall Street’s technology sector fell sharply after the update, triggering a weak session for London-listed Scottish Mortgage Investment Trust. Shares in the Nvidia backer fell 10p to 670p as the FTSE 100 index retreated 0.5% or 38.36 points to 7693.29.
In the FTSE 250, food-on-the-go firm SSP slid 7% despite nudging up 2023 guidance. The Upper Crust owner’s slump of 18.2p to 226.4p reflected jitters over its fast-growing US market and the impact of a stronger pound on next year’s performance.
CVS vet group to continue buying spree despite CMA review
09:39 , Daniel O'Boyle
The boss of vet group CVS says the firm will keep acquiring smaller practices, despite the monopolies watchdog launching a review into the rapid pace of consolidation in the sector.
Earlier this month, the Competition and Markets Authority opened a review into the vet sector to learn whether the sudden rise of large corporate vet groups was driving higher prices.
But CEO Richard Fairman told the Standard CVS would keep buying smaller practices. It announced two more UK acquisitions today, both green-lit by the CMA, in what Fairman called “a very clear signal that we can continue” making purchases.
Though he added that it was “far too early to tell” what the overall outcome of the CMA review will be.
The group also has a £350 million war chest. Some of that cash will be used for more deals, though most will be spent improving existing facilities.
It comes as first-half profits leapt by 50% to £53.9 million.
The shares are up 57p to 1,566p today, but still 25% below their price before the CMA launched its review.
No dynamic pricing here, says City Pub Group boss
09:23 , Simon Hunt
The boss of City Pub Group today took aim at dynamic pint pricing after it emerged some pub chains were raising prices at peak trading hours to boost their margins.
“I just think it’s wrong,” Clive Watson told the Standard.
“We sometimes change the booking fees for events depending on how far our people book. But on the actual night, when you’re having a good time, changing the prices is not transparent.”
Slug & Lettuce and Yates’s owner Stonegate last week said it planned to ramp up prices by as much as 20p per pint during its busiest times.
City Pub Group today reported a 14% rise in like-for-like sales to £31.7 million for the first six months of the year, as the owner of the Bow Street Tavern in Covent Garden and the Cock & Bottle in Notting Hill hailed resilient demand despite poor summer weather and continued strikes.
The firm said it was in talks to acquire several new sites and was on course to hit its target of reaching a 60-strong pub estate, but Watson refused to say where they were located. “I don’t want Fuller’s or Young’s to nab them,” he said.
FTSE 100 lower despite retail boost. SSP drops 7%
08:30 , Graeme Evans
JD Sports Fashion and Next are today’s bright spots in a session when the FTSE 100 index has fallen 0.6% or 49.75 points to7681.90.
The latest upgrade to guidance by Next pushed its shares up by 102p to 7208p, while JD Sports jumped 5% or 7p to 140p following a 26% rise in half-year profits to £375.2 million.
On the fallers board, Rio Tinto and silver miner Fresnillo dropped by about 1.5% while US-focused gambling group Flutter Entertainment lost 215p to 14,400p after the Federal Reserve cooled Wall Street’s rate cut expectations.
Grocery stock Ocado led the blue-chip fallers board with a decline of 6% or 46.8p to 761.1p, reversing strong gains earlier in the week.
In the FTSE 250 index, food-on-the-go firm SSP fell 7% or 16.4p to 228.2p despite forecasting annual results towards the top end of previous guidance. The wider FTSE 250 followed yesterday’s strong session by retreating 111.76 points to 18,600.61.
Co-op to spend £70m on member-only discounts after slashing debt
07:51 , Daniel O'Boyle
The Co-operative Group says it will spend £70 million more on member-exclusive price cuts after slashing debts and losses with the sale of its petrol forecourts to Asda.
The member-owned group follows rival supermarkets in rolling out an increasingly two-tiered system for food shopping.
It comes as losses tumbled from £68 million to £9 million, while net debt plunged by £600 million to the “historically low level” of £123 million,, helped by the sale of petrol station forecourrts to Asda.
Revenue ticked down to £5.4 million, but when the forecourts are excluded, it was up by 4%.
JD Sports eyes £1 billion profit as CEO shrugs off concerns on consumer spending
07:50 , Simon Hunt
JD Sports today said it was on track to deliver pre-tax profits of more than £1 billion after it posted double-digit growth.
Sales in Europe were particularly strong, with 27%, while North America sales growth stood at 15% and the UK was a more modest 8%. The retailer added that it plans to open more than 200 new stores by the end of the year.
CEO Regis Schultz, who said he believed JD Sports was now the biggest Nike retailer in the world, shrugged off concerns that consumers were paring back spending, adding: “If you have the right product, the customer is still buying.”
US rates outlook dents tech stocks, FTSE 100 seen lower
07:16 , Graeme Evans
The FTSE 100 index is forecast to surrender yesterday’s big gains as investors react to last night’s “hawkish pause” on US interest rates.
The Federal Reserve signalled one more rate rise this year and scaled back projections for the number of rate cuts in 2024. However, new growth expectations for this year and next boosted hopes that the US economy can avoid recession.
The higher-for-longer rates commentary rattled technology stocks, with Apple and Microsoft 2% lower as the Nasdaq declined 1.5%.
The S&P 500 index fell 0.9% and the Dow Jones Industrial Average by 0.2%, setting the tone for a poor session in Asia and Europe.
IG Index says future trading points to the FTSE 100 index opening 0.9% or 72 points lower, wiping out yesterday’s improvement of 71.45 points to 7731.65 after UK inflation figures fuelled hopes of a interest rates pause by the Bank of England later today.
Government had to borrow almost £2 billion more than City experts expected in August
07:13 , Michael Hunter
The UK had to borrow £2 billion more than City experts expected last month, but less than anticipated by official forecasts.
The public sector new borrowing requirement for the month hit £11.6 billion according to the Office for National Statistics, higher than the £9.8 billion identified in economists’ forecasts compiled by Bloomberg.
But it was less than the £13 billion expected by the Office of Budget responsibility, thanks in part to higher than anticipated revenue from self-assessment tax returns.
It was also £3.5 billion higher year-on-year and the fourth-highest figure for August since records began in 1983. Nontheless, it remained way off all-time highs. It was also less than half of the record August figure for 2020, during the Coronavirus pandemic, when the furlough scheme lifted borrowing.
The interest payable on central government debt was £5.6 billion, £3.1 billion less than in August 2022, and £2.2 billion below the Office for Budget Responsibility’s forecast of £7.8 billion
Morning refresh: What you need to know to start the day
Wednesday 20 September 2023 23:25 , Simon Hunt
Good morning from the City desk of the Evening Standard.
All eyes are on the Bank of England today as its Monetary Policy Committee decides whether to raise interests rates for what might prove to be the last time this year.
Before yesterday’s inflation data, most analysts bets were leaning towards a 25 basis point rise by the BoE, according to Reuters estimates.
But then August CPI inflation fell to 6.7%, ONS data suggested, despite expectations of a rise to 7% or more. So as of last night, a slim majority now think there will be no change to interest rates.
Does that better-than-expected drop persuade the MPC it has done enough? Economists are already beginning to warn of the pain caused by further rate rises.
Any action will lift the cost of tracker-rate mortgages straight away, limiting consumers’s spending power. and the higher base rate also feeds through to the cost of millions of personal and corporate loans over time.
Here’s a summary of our top headlines from yesterday:
Earnings slip at bowling firm Ten Entertainment.
Losses widen at brewer Adnams as it bemoans higher costs, poor weather and low consumer confidence
Cake maker Finsbury recommends accepting a £143m takeover offer from private equity firm
Dunelm full year sales up 5.5% to record £1.6bn, helped by value prices to entice shoppers and thermal curtains demand to trim energy costs as it defies high st gloom.
