FTSE 100 Live: US regional bank shares tumble further; ECB signals further rate hikes to come; FTSE down 1.2%
Next, Shell and BAE Systems have posted updates today in a session when another major central bank is expected to hike interest rates.
Following on from last night’s 0.25% tightening by the Federal Reserve, the European Central Bank is poised to follow suit with an increase of the same size.
Oil prices steadied this morning, with Brent crude at $73 a barrel after falling yesterday on fears that a sustained period of high borrowing costs will slow global demand.
FTSE 100 Live Thursday
Shell posts £7.7bn Q1 profit
Private sector growth beats April hopes
ECB to hike interest rates to 3.75%
City Comment: British banks are boring — that’s how it should be
17:20 , Daniel O'Boyle
The bank reporting season finally caught alight today when investors baulked at the £144 million bad debt provisions made at Virgin Money. Otherwise it has been a dreadfully dull affair.
All the big-name lenders came in with first-quarter profits around or ahead of expectations with little in the way of warnings to frighten the horses about the rest of the year.
Considering that quarter included a prolonged cost of living crisis, two rate rises and the collapse of major banks in America and Switzerland that some rune readers thought could trigger global financial meltdown 2.0, that is pretty encouraging.
FTSE closes at 7702.64
17:05 , Daniel O'Boyle
The FTSE 100 closed at 7702.64 today, after its second fall of more than 1% in three days.
The idnex of London blue-chips is now down cllose to 2% this week.
St. James’s place was the biggest faller, with shares down 6.4%.
Next bucked the trend as the biggest riser, despite sales dipping.
Virgin tycoon Branson ‘feared losing everything’ during Covid pandemic
15:50 , Daniel O'Boyle
Sir Richard Branson has revealed his Virgin empire lost £1.5 billion during the coronavirus pandemic as he feared he would “lose everything”.
The British entrepreneur, who is thought to be worth £4.2 billion and lives on a private Caribbean island, defended his decision to ask the Government for a Covid loan.
Spring bounce as home-buyer mortgage approvals rise in March
15:42 , Daniel O'Boyle
The number of mortgage approvals being made to home-buyers bounced upwards in March, according to Bank of England figures.
The Bank’s Money and Credit report said mortgage approvals for house purchases “rose significantly”, to 52,000 in March from 44,100 in February.
FTSE down almost 100 points
15:35 , Daniel O'Boyle
The FTSE 100 is set for the second decline of close to 100 points in three days, as London shares dipped further after US markets opened.
The London blue-chip index is now down 1.2% to 7692, the lowest it has reached in close to a month.
Miner Glencore is the biggest loser,, down more than 6%.
More declines for US shares as regional banking questions remain
15:16 , Daniel O'Boyle
US shares fell further today, as concerns about regional banks linger.
The S&P 500 is down 0.6% to 4064, while the Dow Jones was down 0.7% to 33179. The Nasdaq fared better, but still fell by 0.4% to 11,979.
The S&P Regional Banking ETF is down 6.3% so far today, showcasing widespread declines in that sector.
California-based lender PacWest was among the big falllers, with shares down 45%. Arizona-based Western Alliance, meanwhile, saw its shares fall by more than 30% amid reports it was considering options including a sale.
Holland & Barrett diversifies from retail with fitness app acquisition
15:14 , Daniel O'Boyle
Holland & Barrett has acquired fitness app Avie, in a plan to expand beyond retail to become a general ‘health and wellness’ firm.
The health foods giant said it planned to integrate the app, which is designed to help users hit their fitness goals, into its existing digital offering.
Avie’s co-founders, 28-year-old Charlie Leggate and 26-year-old Kit Logan, will work on the integration.
City voices: Watchdog was right to block Microsoft’s £55bn Activision takeover
15:01 , Daniel O'Boyle
Last week, the UK Competition and Markets Authority (CMA) blocked Microsoft’s £55 billion takeover of Activision, a video game publisher and cloud gaming company. Cloud gaming is a service where you can stream titles in real time, replacing the need for physical console games.
There has been a lot of angry kvetching by Microsoft and others since the announcement, but not much of substance relating to the deal.
Virgin Money sees shrinking profits as debt provisions multiply
14:48 , Daniel O'Boyle
Challenger bank Virgin Money has reported shrinking profits as it cautioned over a jump in borrowers defaulting on their loans.
The lender, which was founded by entrepreneur Sir Richard Branson, said its underlying pre-tax profit fell by 23% to £312 million in the six months to March 31, compared to the same period a year ago.
ECB “not pausing"
14:07 , Daniel O'Boyle
ECB boss Christine Lagarde said the European Central Bank is “not pausing” interest rates yet, after today’s 25 basis point hike.
“We know we have more ground to cover,” she said.
Eyes on PacWest as US stocks seen lower
14:03 , Daniel O'Boyle
Shares in US companies are set to open lower tomorrow, as California-based PacWest becomes the latest bank under heavy pressure.
According to futures markets, the Dow Jones is set to opn 0.2% lower at 33,418.00, while the S&P 500 is set to open 0.3% lower at 4,097.00. The Nasdaq is set to open down at 13,086.00.
PacWest shares are down almost 50% premarket, and is set to have fallen 90% since March, as investors worry it will become the latest US regional bank to collapse.
European Central Bank offers little guidance on whether the end is in sight
13:43 , Daniel O'Boyle
The European Central Bank has raised rates by a quarter of a percentage point, but left investors reading its tea leaves with little in the way of a signal on whether this hike might be the last.
The ECB followed the US Federal Reserve, which raised interest rates by a quarter point yesterday. But while Fed chair Jerome Powell’s comments suggested the US central bank planned to pause its hikes amid the threat of banking instability, investors in Europe did not get the same relief, as the ECB did little to signal its next move.
ECB raises rates by 25bps
13:16 , Daniel O'Boyle
The European Central Bank has raised interest rates by a quarter of a percentage point, as was widely expected.
“The inflation continues to be too high for too long,” it said.
Norway hikes by 25bp ahead of ECB decision
12:46 , Daniel O'Boyle
Norway’s central bank has raised interest rates by a quarter of a percentage point, just before the ECb is expected to do the same.
The rise to 3.25% was widely predicted, and a further rise next month is likely.
The ECB will announce its own decision at 1:15pm.
“Why didn’t stock markets rally” after US rate pause signal?
12:07 , Daniel O'Boyle
Russ Mould, investment director at AJ Bell, said the Federal Reserve’s signals yesterday that it was set to pause its rate hikes woould seemingly set the stage for a stock market rally, yet it failed to deliver one.
“Investors have been praying for central banks to stop raising interest rates for some time, but the strongest possible hint yet from the Federal Reserve that it will stop increasing the cost of borrowing doesn’t seem enough to put them in a good mood,” Mould said.
“The Fed’s 0.25 percentage point hike last night was widely expected, so that won’t have been the cause of putting markets in a bad mood. However, the central bank did send signals that it may pause further increases in rates against uncertainties regarding the state of the economy and the banking sector.
“So why didn’t stock markets rally? Many investors thought falling inflation would be the principal reason why the Fed would pivot. That’s not the case now. Under the current circumstances, the Fed is more likely to pause rate hikes because the US faces the prospect of a recession and in light of more banks struggling. Therefore, not a reason to celebrate.”
Electric car growth forecasts downgraded
12:05 , Daniel O'Boyle
Expectations for the growth in demand of pure electric new cars have been downgraded.
An automotive industry body said it predicts the vehicles will make up 18.4% of new car registrations this year, down from 19.7% in a forecast issued in January.
This is due to “high energy costs and insufficient charging infrastructure” which is “anticipated to soften demand”, according to the Society of Motor Manufacturers and Traders (SMMT).
Next cautions over tougher summer trading after sales surprise
11:41 , Daniel O'Boyle
High street chain Next has said spring sales were better than it first feared but cautioned that trading will get tougher over the next few months.
The retail giant reported a 0.7% fall in full-price sales for the 13 weeks to April 29, which it said was ahead of its guidance for a drop of 2%, thanks to a rush for Easter holiday clothing.
Shell’s £8 billion profit stokes calls for more taxes as it makes £58,000 a minute
11:19 , Daniel O'Boyle
Shell today revealed profit of almost £8 billion for the first quarter of the year, putting the spotlight back on the sheer scale of earnings at energy companies during a cost-of-living crisis driven by high fuel prices.
It meant the Anglo-Dutch giant made money at a dizzying pace – £58,000 per minute or nearly £1,000 a second – even with oil prices off the peaks touched after Russia’s invasion of Ukraine, at an average of around $81 in the period, down from over $100 a year earlier.
FTSE 100 lower on rates outlook, Virgin Money shares fall
10:19 , Graeme Evans
Virgin Money shares are 6% lower after the challenger bank revealed a bigger-than-expected provision to cover potential bad debts.
The impairment charge of £144 million, which compared with £21 million a year earlier, contributed to the FTSE 250-listed lender’s half-year profits falling 16% to £312 million.
The caution has been driven by the economic outlook, with credit quality stable aside from a modest increase in card arrears from abnormally low pandemic levels.
Virgin Money shares fell 11% before improving to stand 9.15p lower at 144p, marking the end of a largely uneventful results season for UK lenders.
Shares in Lloyds and NatWest were today broadly unmoved at 46.1p and 255.9p respectively as Virgin Money’s results also highlighted a better-than-expected revenues performance and a strong capital position.
The FTSE 100 index fell 0.4% or 32.35 points to 7756.02, reflecting the weaker outlook for the global economy as US interest rates look set to stay elevated for longer after the Federal Reserve dashed Wall Street hopes for a cut later this year.
This fuelled safe haven demand for gold, with the yellow metal near $2030 an ounce to help Endeavour Mining shares up by 44p to 2126p on the day of its trading update.
The biggest FTSE 100 rise came from investment platform Hargreaves Lansdown, with its shares up 4% or 32.6p to 824.4p after reporting a 14% increase in net new business to £1.6 billion for the third quarter.
On the fallers board, BAE Systems shares fell back from recent record levels despite its AGM trading update restating 2023 guidance. The stock fell 11.5p to 1008p.
Vodafone also dipped 0.6p to 95.6p as the Financial Times reported that the mobile phone giant is close to a deal with Three owner CK Hutchison to merge their UK operations.
The FTSE 250 index lost 81.13 points to 19,284.47, with retailers ASOS and Currys among those priced more than 2% lower.
Private sector grows more quickly than expected in April
10:00 , Daniel O'Boyle
The UK service sector grew rapidly in April, easily offsetting a manufacturing decline to drive an overall increase in private sector output.
The S&P Global / CIPS UK Services PMI was 55.9, ahead of the expected 54.9. This led to an increase in the composite PMI figure to 54.9. Any figure above 50 represents growth.
"A strong rate of service sector growth meant that the UK economy started the second quarter of 2023 in positive fashion,” Tim Moore, economics director at S&P Global Market Intelligence, said. “Overall private sector output expanded at the fastest pace for one year, despite another fall in manufacturing production during April.”
Price rises for services were also up after hitting a 19-month low in March.
CMA probes how to regulate AI use
09:48 , Jonathan Prynn
The competition watchdog today kick-started a “review” process aimed at developing a robust framework of consumer protection rules governing companies’ use of artificial intelligence.
The Competition and Markets Authority (CMA) said it had been asked by the Government to launch a “fact-finding” mission in a fast-moving and underregulated area of technology that has the potential for massive changes to business, lifestyles and society.
Its review will focus on the software “foundation models” behind chatbots such as ChatGPT.
Rail strikes slow the Trainline, but profits still gain steam
09:35 , Daniel O'Boyle
Rail strikes cost the Trainline as much as £6 million per strike day, but annual UK profits still almost doubled to £71 million.
For the year to 28 February, the company sold £4.3 billion worth of train tickets, of which £2.8 billion were in the UK, despite the impact of strikes. Total profit, including international sales and its tech arm, was £86 million.
The ticket seller’s international presence has grown rapidly in recent years, especially in Spain and Italy. It plans to target American tourists to grow further, calling in David Hasselhoff as an ambassador
“He’s kind of teaching Americans how to use rail,” CEO Jody Ford said.
Ford expects the Coronation to provide a boost, with US bookings up 73% on the same week of 2022.
New Leyland store London boosts Grafton, but bad weather bites
09:13 , Daniel O'Boyle
New store openings for Grafton’s London-focused brand Leyland helped the FTSE 250 builders’ merchant report a 2.8% increase in revenue, despite the impact of bad weather in March.
The firm said that March trading was weaker than expected, However, the impact of a new Leyland SDM store in Hammersmith meant that revenue still rose.
“Our resilient Q1 performance reflects the strength of Grafton’s diversified businesses and proximity to customers through its federated structure,” CEO Eric Born said.
Shares are down 1.2% to 850.1p.
Shell rallies but FTSE 100 under pressure, Trainline up 8%
08:33 , Graeme Evans
The FTSE 100 index has fallen 0.5%, down 42.04 points to 7746.33, after global stock market sentiment was hit by the prospect of US interest rates staying elevated.
Despite the Brent crude price falling to $72 barrel last night, Shell shares rallied 3% or 66.5p to 2392p after its first quarter profits figure beat City expectations.
Funds platform Hargreaves Lansdown and high street retailer Next also rose on the back of their latest updates, improving 28.2p to 820p and 58p to 6572p respectively.
Vodafone shares were 0.4p higher at 96.6p after the Financial Times reported that the mobile phone giant is close to a deal with Three owner CK Hutchison about merging their UK operations.
Glencore led the FTSE 100 fallers board after its shares went ex-dividend, leaving the stock 19.4p lower at 442.9p.
The FTSE 250 index fell 134.83 to 19,230.77, with Trainline shares up 8% or 19.2p to 258.2p after its annual results but Virgin Money off 16.05p to 137.1p following a big increase in impairment provisions in its first quarter results.
Domino’s turns to collections to ease impact of pay rises
08:28 , Daniel O'Boyle
Pizza chain Domino’s said it was increasing its focus on collection orders in order to limit the impact of rising wages for delivery drivers.
The business said collections grew by 23% in the first quarter of this year, much faster than its general 10.7% increase in sales.
“Collection represents the most efficient labour channel, with delivery effectively outsourced to the customer,” the firm said. “This is particularly important in an environment where there are pressures on labour availability and wage inflation.”
While Domino’s took a larger slice of the UK takeaway market in Q1, it said that the sector as a whole was “challenging”.
BAE reports good operational performance
08:04 , Graeme Evans
Defence giant BAE Systems today left guidance unchanged for 2023, including for sales growth of between 3% and 5% and for earnings per share to rise by as much as 7%.
In an update ahead of the company’s AGM, chief executive Charles Woodburn said: "Trading so far this year has been in line with expectations with continued good operational performance.”
He said the order flow on new programmes and renewals and progress on developing its pipeline of opportunities remains strong.
Woodburn added: “In the current elevated global threat environment, we’re continuing to deliver mission critical requirements to our customers, and our global presence and diverse portfolio of products and services provide a high visibility for top line growth, margin expansion and cash generation in the coming years.”
Shares, which have been at a record level after rising by a third over the past year, opened 4p higher but later faded 15p to 1004p.
Oil prices fall on Fed rates guidance, FTSE 100 seen lower
07:35 , Graeme Evans
The US Federal Reserve last night delivered the expected quarter point rates hike to take the upper level for its target policy rate to 5.25%, the highest since 2007.
The central bank dropped the phrase “some additional policy firming may be appropriate” in their commentary, but concerns over lingering inflation pressures mean chair Jerome Powell dashed hopes for rates to be cut later this year.
The prospect of monetary policy staying tighter for longer put further pressure on oil prices, with Brent crude futures trading near $72 a barrel at its lowest level since December 2021 last night. The benchmark has since rallied by $1.
US markets sold off in the afternoon session to leave the Dow Jones Industrial Average 0.8% lower and the S&P 500 index down 0.7% at the close. Investors sought safety in gold as the yellow metal neared a record high at $2037 an ounce today.
The focus now turns to the European Central Bank, which is expected to hike interest rates by at least a quarter percentage point to 3.75%.
The developments mean CMC Markets sees the FTSE 100 index opening 20 points lower at 7768, having risen 0.2% in yesterday’s session.
Royal Dutch Shell profit nears £8 billion for the first quarter, beating forecasts
07:27 , Michael Hunter
Anglo-Dutch oil major Royal Dutch Shell has reported profit of $9.65 billion (£7.7 billion) for the first quarter of 2023, ahead of City forecasts but easing back from the previous quarter’s $9.8 billion.
It was forecast to make $8 billion.
The sheer scale of the earnings are likely to add to calls for further windfall taxes on the sector, with high energy prices since Russia’s invasion of Ukraine the main cause of the cost-of-living crisis and the driver of blockbuster profits for energy majors.
Shell left its dividend on hold, but will start a $4 billion share buyback to return cash to investors.
Wael Sawan, Shell’s CEO, said: ““In Q1 Shell delivered strong results and robust operational performance, against a backdrop of ongoing volatility, while continuing to provide vital supplies of secure energy.”
Scandal-hit WANdisco to lay off 30% of staff
07:22 , Daniel O'Boyle
WANdisco will lay off around 30% of its staff as it continues to deal with the fallout of the major accounting scandal that turned the firm from a UK tech darling into a business struggling to stay alive.
The firm, which had 159 when its last annual report was published just over a year ago, will cut jobs across all regions and business areas. Its headquarters are in Sheffield and San Francisco, while it also has offices in Newcastle, Belfast, China, South Korea, Japan and Australia.
In March, WANdisco revealed it had undercovered potentially fraudulent sales, and as a result its bookings would be much lower than previously reported. It later revealed that its bookings should have been $11.4 million rather than $127 million.