Elon Musk’s Twitter deal has set the tone for a stronger European session as sentiment recovers after hefty China-driven losses.
The FTSE 100 index fell almost 2% last night, but Wall Street closed higher as the Twitter board backed a $44 billion bid from the Tesla chief executive and bond yields eased.
The recovery will be tested by a busy week for quarterly earnings, with Alphabet and Microsoft among tech giants reporting in the US later.
FTSE 100 Live 26 April
Surprise at swift Elon Musk Twitter deal
FTSE 100 recovers on China monetary support
HSBC profits beat hopes, shares fall
FTSE hanging on to positive finish
16:35 , Oscar Williams-Grut
It’s closing time for the stock market and the FTSE 100 is hanging on to slim gains, having seen its earlier strength evaportate.
The bluechip index is up just 7 points, or 0.1%, after a slide on Wall Street sparked by disappointing earnings from US goliath General Electric. It adds to growing pessimism about the state of the global economy.
That’s all from us on the blog today, join us again tomorrow.
US stocks down ahead of slew of tech company results
15:09 , Rhiannon Curry
The Dow Jones opened almost 142 points lower on Wall Street this morning, and has continued to drop since the opening bell.
The Nasdaq shows a similar picture, down 289 points in the first half an hour of trading.
Meanwhile the S&P 500 opened 18 points lower, but is now more than 48 points down.
Investors are eagerly awaiting a wave of corporate earnings from key tech companies including Microsoft and Google parent company Alphabet, which will report later today, plus Meta, formerly Facebook, which reports on Wednesday, and Amazon and Twitter which report on Thursday.
Stocks had staged a big rebound to close higher yesterday, led by tech shares, before reversing their gains this morning.
In London, the FTSE 100 is currently up 42 points at 7,422.96.
Miners push FTSE higher at lunch
13:14 , Rhiannon Curry
The FTSE 100 is up more than 68 points at 7,448.6 this lunchtime, while the FTSE 250 is 151 points higher at 20,750.
The miners are up, with Glencore trading 3.42% higher and Antofagasta 3.29% up. Fresnillo, Anglo American and Endeavor were also among the top risers.
Ocado was the biggest faller at lunchtime, losing 5.31% of its value after a choppy few days.
Here are today’s main stories:
Government borrowing more than halved last year as Covid-19 support schemes and health investments wound down, but interest payments on the UK’s debt pile are rising fast, the latest ONS figures show. Read more here.
New data shows sales of sunflower oil have leapt 27% since the beginning of the month due to shortages of the cooking oil caused by the war in Ukraine, the world’s largest producer. You can read the full story here.
Heathrow has warned of a “winter freeze” on the horizon as the soaring cost of living, rising fuel costs for airlines and slowing growth dent demand for getaways, this story explains.
Members of the public could cash in on Lidl’s latest plan to offer a finder’s fee to anyone who successfully finds them a site for a new store.
Meanwhile, HSBC today reported a plunge in profits, defended its Russian business and said rising interest rates should enable it to retain returns to investors.
And here’s the latest twist in the tale of Elon Musk’s bid to buy Twitter, with speculation that former CEO Jack Dorsey could return.
Analysts warn likelihood of a recession this year is increasing
11:44 , Rhiannon Curry
The probability of a recession in the next year is rising, with the odds of an economic downturn close to a third, according to Deutsche Bank.
The cost of living crisis, exacerbated by inflation heading to near double digits this year, as well as April tax rises means consumer confidence is already at recessionary levels, according to Sanjay Raja, analyst at Deutsche Bank.
And real wages are likely to shrink by 4% this year, equivalent to one of the worst real term cuts to pay packets since the Second World War. Business confidence has also taken a hit.
“We continue to think that the UK economy will avoid a technical recession at this stage, however. But the risks are increasingly tilted to one, particularly with our household consumption growth projections driven entirely by a drop in the household savings rate over the course of the year,” Raja said.
“Should the expected drop in savings fail to materialise, the risk of an even deeper slowdown, or indeed a recession, may be unavoidable.”
Musk’s Twitter takeover not a done deal
10:26 , Graeme Evans
The fact that Twitter’s share price is trading below Elon Musk’s offer price shows that parts of the market remain sceptical over whether this deal will complete, AJ Bell investment director Russ Mould said today.
The social media platform is currently trading at $51.92 despite the board agreeing to sell the company for $54.20 a share.
Mould said this approximate 4% gap is the market’s way of saying there is still some risk to the deal.
He added: “After all, Musk is one of the most unpredictable characters in business today and while his offer to buy the company came out of the blue and was recommended by the board in only a matter of weeks, this is not a done deal until he’s secured all the necessary support from shareholders and the money has been wired from his account.
Mould continued: “Twitter has a lot of passionate users and the company will have to work hard to try and retain them and attract new users if Musk lays out a regime that changes the way the platform operates.
“Suggestions there will be a clamp down on bot accounts would be beneficial to users, but not everyone likes the idea of complete freedom of speech. An unmoderated platform could foster a toxic environment and see users leave in droves.”
FTSE 100 recovers, National Express up 9%
10:22 , Graeme Evans
Buyers returned to European markets today as China’s pledge to support its Covid-hit economy provided some relief alongside positive corporate earnings.
The FTSE 100 index tumbled 1.9% yesterday on the potential economic impact of China’s zero Covid policy, particularly with fresh lockdowns looming in Beijing.
Expanded virus testing in the capital ensured several Asian indices remained in the red, although the promise made by the country’s central bank to step up monetary policy support at least provided some reassurance for global markets.
The FTSE 100 index improved 42.88 points to 7423.42, with financial stocks the driving force after lenders UBS and Santander produced encouraging first quarter figures. Lloyds and NatWest shares rose 3%, even though their UK-listed rival HSBC fell 3% on disappointment at a likely pause in share buybacks.
Housebuilders also featured on the blue-chip risers board after a reassuring update by Taylor Wimpey, while mining stocks were back on their feet following a bruising few sessions caused by weak production figures.
Glencore, which delivers its update on Thursday as London’s quarterly earnings season picks up pace, rallied 9.6p to 458.95p and Anglo American improved 52.5p to 3276p.
Schroders dropped 3% in the top flight after the asset manager confirmed plans to simplify its dual share class structure. The conversion of non-voting shares will mean holders of the FTSE 100-listed stock get a bonus issue of three shares for every 17 held to compensate for the dilution of their voting rights. The shares fell 94p to 2872p.
The FTSE 250 index gained 104.31 points to 20,703.53, led by a surge of 9% for National Express after the bus and coach operator’s first quarter revenues returned to 2019 levels. It highlighted strong demand over the Easter period, with its London to airport routes approaching pre-pandemic levels on Good Friday.
Shares rose 21p to 245.2p but analysts at Liberum have a target price of 290p.
China pledge aids FTSE 100 recovery
08:50 , Graeme Evans
European stock markets are higher after China’s pledge to boost support for its Covid-hit economy reversed some of yesterday’s sell-off.
The FTSE 100 index slumped 1.9% in its previous session on fears over the impact that China’s zero Covid policy will have on the global economy. A steadier session for Asian markets following the central bank reassurance triggered a recovery in London today, with the top flight 0.6% or 42.42 points higher at 7422.96.
Lloyds Banking Group and NatWest were more than 2% higher after HSBC posted a smaller-than-expected drop in first quarter profits. However, HSBC fell 2% after it said further share buybacks were unlikely this year.
Housebuilders also dominated the risers board, led by Taylor Wimpey after it said rising interest rates had not dented demand. Shares jumped 4% or 4.7p to 132.75p, ahead of 2% gains for rivals Barratt Developments and Persimmon.
The FTSE 250 index stood 91.75 points higher at 20,690.97, led by National Express after recent contract wins helped first quarter revenues to return to 2019 levels. Shares gained 13.2p to 238.2p, a rise of 6%.
Provisions hit HSBC profits, buybacks on hold
08:24 , Graeme Evans
HSBC has launched the UK bank sector reporting season in downbeat fashion, with pre-tax profits down by $1.6 billion (£1.3 billion) in the first quarter following an increase in its loss provisions.
After the effects of the pandemic were less severe than forecast, HSBC last year released $435 million of impairments. This year the bank has taken a charge of $642 million (£505 million), with this $1 billion swing being the major factor for the lower profits.
The charge relates to deteriorating economic situations in both Russia and China, with general inflationary pressures leading the bank to caution on the likelihood of defaults.
While the overall profits figure of $4.2 billion (£3.3 billion) is ahead of expectations, shares fell 2% as the company reported a reduced capital cushion and said this meant further share buybacks may not be possible this year.
Richard Hunter, head of markets at Interactive Investor, said: “Given the sheer size and scale of the bank, the old market adage that elephants don’t gallop is reflective of the measured but uninspiring progress.
“Even so, the numbers follow a strong performance of late, with the share price having risen by 20% over the last year, as compared to a gain of 6% for the wider FTSE 100.
“With the interest rate environment playing into the hands of the banks, the market consensus for prospects remains positive, with the general view being that HSBC remains a buy for the longer term.”
Surprise at Elon Musk’s swift Twitter deal
08:04 , Graeme Evans
Elon Musk is stumping up $21 billion in cash and has secured $25.5 billion of debt and margin loan financing as part of his deal to buy Twitter at a price of $54.20 a share.
The price tag is about 30% higher than before Musk’s interest became known, but sharply below the stock’s peak from February last year.
Interactive Investor’s head of investment Victoria Scholar believes the broader shaky market backdrop played into Musk’s hands, given the recent sharp sell-off in US tech stocks and Netflix and Facebook nursing heavy losses.
She added: “It has been surprising to see the sheer pace at which this story has developed, given the initial resistance from Twitter with Musk getting exactly what he wanted in a matter of days.
“It was just eleven days ago that Musk tabled what he described as his ‘best and final’ offer for the company. It was assumed that this rhetoric was purely part of his negotiation tactics with reports that he would need to sweeten the deal possibility with private equity backing in order to get approval from Twitter.
“However the company swiftly U-turned on initial resistance by accepting Musk’s very first offer, an unusual situation within such high level negotiations.”
Tesla shares were under pressure last night on investor nervousness that its chief executive may be distracted by his social media interests.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, added: “Given that Musk has time and time again deflected blows of criticism aimed at his perceived over ambition, he is likely to emerge bruised but in fighting form whatever obstacles are thrown at him.”
Wall Street rallies, oil higher
07:49 , Graeme Evans
A rally for US markets has steadied nerves after European shares slumped on fears over the economic impact of China’s zero Covid policy.
The stronger session on Wall Street was led by major tech stocks as US bond yields eased from recent highs and Twitter shares jumped 6% on the back of its decision to back a $44 billion bid from billionaire Elon Musk.
Attention is also focused on this week’s flurry of quarterly announcements, with Google owner Alphabet and Microsoft among those reporting after tonight’s closing bell.
The Nasdaq finished more than 1% higher, alongside solid gains for the S&P 500 and Dow Jones Industrial Average. The FTSE 100 index, which lost almost 2% yesterday, is poised to recover more than half its losses after CMC Markets forecast a rebound of 95 points to 7475.
Asian markets held steady this morning, having triggered yesterday’s global sell-off in response to fears that Beijing will be the next city to face Covid restrictions following this month’s shutdown of Shanghai.
The zero tolerance approach has cast doubt on whether China’s government will achieve its 5.5% GDP target for this year. However, the weaker outlook has benefited consumers after Brent crude briefly dipped below $100 a barrel yesterday. It was at $104 this morning.