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FTSE 100 Live: Pay squeeze highlighted, S&P 500 in bear market

·8-min read
 (Evening Standard)
(Evening Standard)

Pay in real terms is falling at its fastest rate in over a decade as the squeeze on household spending power intensifies.

The Office for National Statistics said pay excluding bonuses fell by 2.2% between February and April, although the overall figure was still 0.4% higher in real terms due to some workers receiving large bonuses.

The update, which was published alongside a slightly higher jobless rate of 3.8% for the three months to April, comes as rampant inflation causes more pain for financial markets. Last night, the S&P 500 stood in bear market territory after falling almost 4%.

Read more on latest pay and jobs figures

FTSE 100 Live Tuesday

  • Job vacancies at record 1.3 million

  • FTSE 100 steadies after Monday’s slide

  • ITV strikes £103m deal for Plimsoll Productions

ITV swoops on natural history TV maker

10:47 , Simon English

TV is paying £103.5 million to buy Plimsoll Productions, the natural history TV producer behind such hits as Tiny World, Hostile Planet and Animal.

That deal gives the broadcaster a 79.5% stake, with the rest held by founder Grant Mansfield, other senior management and private equity firm LDC.

Mansfield already made a fortune from an earlier deal with LDC and gets another payout now, but ITV wasn’t saying how much.

Plimsoll made profit of £10 million last year. The deal continues ITV’s strategy under CEO Carolyn McCall of buying up independent studios in search of compelling content.

Mansfield said: “The significant opportunities in the international premium unscripted market make this the perfect time for Plimsoll to join ITV Studios. There is a quite special strategic and cultural fit that will enable us to achieve our, now shared, creative and commercial ambitions for Plimsoll.”

McCall said: “Growing ITV Studios with an exciting pipeline of premium programmes is core to our strategy as we further diversify the business by genre, by geography, by customer and grow ahead of the market.”

Pay crunch gives Bank tough call on rates

10:30 , Simon English

THE UK jobs market remains strong but pay is falling at the fastest rate for 20 years official figures today suggest, putting intense pressure on the Bank of England as it ponders the next rise in interest rates due on Thursday.

GDP numbers yesterday suggested the economy is heading for recession and today there was “grim news” on pay, giving the Bank a serious dilemma.

With inflation spiralling, some say out of control, central banks are ratcheting up borrowing costs.

The Federal Reserve may even raise US rates by 0.75 percentage points tomorrow to control inflation shocks.

Read more here

FTSE 100 steady, gaming firm Frontier up 17%

10:24 , Graeme Evans

A rebound for the FTSE 100 index ran out of steam today as inflation-rattled investors showed little appetite for cheaper stocks after Monday’s global rout.

London’s top flight index initially recouped 0.9% or 62.04 points, only to later stand 17.17 points higher at 7222.98 amid speculation that US policymakers might tomorrow raise interest rates by more than the 0.5% economists are expecting.

Fears that much steeper rates in the fight against rampant inflation will stall the global economy yesterday triggered a sharp sell-off as the S&P 500 entered bear market territory on the back of a 3.9% slide.

Only five stocks in the S&P 500 finished higher and the tech-focused Nasdaq lost 4.7% in a bruising session.

The flight from riskier assets also yesterday left the Bitcoin price at its lowest level in 18-months, with the cryptocurrency down a further 2.5% at $22,600 today.

The pound, however, showed some fight after dipping to its weakest level in two years against the US dollar yesterday.

The steadier session came as a robust jobs market update also benefited housebuilders and lenders reliant on the UK economy. Blue-chip risers included Lloyds Banking Group and Persimmon after gains of 2%.

Heading in the opposite direction, US-focused plant hire business Ashtead lost 3% despite a record full-year performance and 28% jump in fourth quarter profits.

Chief executive Brendan Horgan said the Sunbelt owner had demonstrated its ability to perform in “both good times and more challenging ones”. However, shares retreated 146p to 3658p at the top of the FTSE 100 fallers board.

On AIM, Frontier Developments surged 17% after the success of Jurassic World Evolution 2 helped the video game developer to report record revenues 26% higher at £114 million.

It has also started the new financial year in “excellent shape” thanks to a portfolio that includes Elite Dangerous and Planet Zoo. Shares rose 184p to 1262p.

Job vacancies hit new record

08:37 , Graeme Evans

Today’s unemployment data showed the number of job vacancies in March to May rising to a new record of 1.3 million.

Deloitte senior economist Debapratim De said: “Despite the contraction in economic activity over March and April, employment and job vacancies rose and the unemployment rate fell to a new multi-decade low.

“This is an exceptionally strong labour market, making it easier for people to change jobs and secure higher pay.

“With bonus payments helping incomes outpace soaring inflation, there will be greater pressure on the Bank of England to raise interest rates and ensure inflation doesn't become the primary factor driving wage negotiations.”

FTSE 100 rallies, Whitbread 2% higher

08:30 , Graeme Evans

The FTSE 100 index is up 0.9% or 62.04 points to 7267.85, with InterContinental Hotels and Whitbread among those putting back some of yesterday’s losses after gains of more than 2%. The FTSE 250 is up 147.75 points to 19,331.

Having outperformed its global peers so far this year, the FTSE 100 started today’s session 1.6% lower across the year to date after losing 1.5% in yesterday’s global rout.

The strength of the US dollar as a haven investment has weakened sterling, which in turn has slightly underpinned the FTSE 100, whose constituents are largely dollar-facing in terms of earnings and exposure.

Richard Hunter, head of markets at Interactive Investor, said it would be no surprise for the volatility being seen across most asset classes to persist for the time being.

He added: “Today’s respite could yet prove to be brief, especially if there are any further shocks to come on the scale of central bank tightening.”

ITV strikes deal for natural history producer

08:12 , Graeme Evans

ITV today announced it has bought a majority stake in natural history-focused Plimsoll Productions in a deal worth £103.5 million.

Bristol-based Plimsoll makes Tiny World and Giant World for Apple+, Hostile Planet and Supernatural Planet for Disney, Night on Earth and Animal for Netflix and the upcoming series, A Year on Planet Earth for ITV.

The acquisition boosts ITV's strategy of expanding its international content business and will enable it to take advantage of strong demand for content in the natural history and factual genres.

ITV has acquired 79.5% of Plimsoll from private equity firm LDC, founder Grant Mansfield and other shareholders.

Mansfield, who will continue to have a stake in the business, said: “There is a quite special strategic and cultural fit that will enable us to achieve our, now shared, creative and commercial ambitions for Plimsoll.”

European markets steady after US sell-off

07:44 , Graeme Evans

European markets are poised for a steadier session after Monday’s global sell-off left the S&P 500 index in bear market territory and at its lowest level this year.

The S&P closed 3.9% down last night for a fall of 21.8% from its January high, while the tech-focused Nasdaq lost 4.7% in a bruising session caused by fears over inflation and the impact that rising interest rates will have on the global economy.

Only five shares in the S&P 500 finished higher, which was the lowest figure since summer 2020. The mood wasn’t helped by a report that a 0.75% rise in US rates may be on the table when Federal Reserve policymakers meet tomorrow.

Asian markets continued the selling story this morning, although there is hope for better performances in Europe and on Wall Street later today.

Futures markets are pointing to a 1% rebound for the leading US indices, while CMC Markets has called the FTSE 100 index to open 40 points higher at 7245.

London’s top flight yesterday lost 1.5% and the FTSE 250 index fell by 2.5%, with the latter not helped by figures showing an unexpected contraction in the UK economy in April.

Sterling dropped to a two-year low against the US dollar but showed signs of resilience today after improving 0.5% to back above $1.22.

Bitcoin, which fell 15% yesterday to its lowest level since December 2020, was down another 2% at $22,690 as investors continue to offload riskier assets.

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