Yahoo Finance FTSE 100 Live: UK GDP down by 0.1% as sterling tops $1.30, shares climb
Shares in the housebuilding sector fell again today after Barratt Developments revealed a drop in its average sale price.
The update amid the impact of higher mortgage costs came as it emerged that the UK GDP declined 0.1% during May.
Sterling still rose above $1.30 for the first time since April 2022, however, as the dollar continues to weaken on expectations of an imminent pause in US rate hikes.
FTSE 100 Live
Economy flatlines as GDP dips 0.1% in May
Sterling breaks $1.30 on US rates outlook
Barratt reveals drop in average selling price
FTSE 100 closes at 7,440.21
Thursday 13 July 2023 16:40 , Daniel O'Boyle
The FTSE 100 closed up 0.3% at 7,440.21 today after a smaller-thsan-expected decline in GDP.
Convatec, Glencore and Ocado were the top risers, while British American Tobacco and Barratt were the biggest fallers.
OBR warns UK public finances in ‘very risky’ position after economic shocks
Thursday 13 July 2023 14:47 , Daniel O'Boyle
The UK’s public finances are in a “very risky” period after a series of shocks left it in a “vulnerable position” to tackle challenges such as an ageing population, the UK fiscal watchdog has warned.
In its latest fiscal risks report, the Office for Budget Responsibility said state finances have been shaken and public debt increased by a triple shock from the pandemic, the war in Ukraine and the cost-of-living crisis.
As a result, the Government’s debt pile grew to more than 100% of annual GDP (Gross Domestic Product) for the first time since 1961 in May.
Overseas-owned London homes forecast to climb over coming year
Thursday 13 July 2023 14:29 , Daniel O'Boyle
Overseas buyer appetite for London’s housing market is set to climb this year despite the mortgage crisis, offering a boost to prices as figures revealed the estimated value of foreign-owned homes in the capital stands at £55.2 billion.
There are 103,425 homes in the capital, including houses and flats, that are currently registered with an overseas correspondence address or to an overseas company.
The total value is based on current average prices and calculated by estate agent Benham & Reeves.
Octopus Energy’s Kraken strikes deal to expand into broadband
Thursday 13 July 2023 13:04 , Daniel O'Boyle
Octopus Energy’s Kraken Utiilities arm will expand into broadband thanks to a licensing deal with internet service provider Cuckoo.
Deepak Ravindran, CEO of Kraken Utilities, said: “We're absolutely thrilled to sign Cuckoo as our first licensee in the Telecom industry. We see a lot of similarities in Octopus and Cuckoo - one has disrupted its sector, the other is about to - and both thanks to Kraken. Cuckoo customers are about to experience first class service.”
Tommy Toner, Co-Founder and Chief Experience Officer of Cuckoo, said: “We set up Cuckoo in the depths of the pandemic because we had the burning drive to make the broadband experience better. We’ve grown quickly, but to drive real change, we need the tech prowess and operational expertise that Kraken will unlock. We’re delighted to be their first broadband client.”
City comment: The leeches aren’t healing our sick economy, so Hunt and Bailey will only prescribe more
Thursday 13 July 2023 13:00 , Daniel O'Boyle
Sad news from the ailing body that is the UK economy. GDP fell by 0.1% in May, which means growth has been flat for the last quarter.
The economy is “listless”, says Samuel Tombs at Pantheon Macroeconomics. Every sector of the economy is either flat or shrinking, while inflation of nearly 9% is more than four times what it is supposed to be.
The reason this is sad, according to policymakers, is that these numbers are nothing like bad enough. Like doctors in the Middle Ages, they think the leeches they have been applying are not working sufficiently and are ordering up an extra dose.
Market snapshot as FTSE 100 climbs
Thursday 13 July 2023 12:08 , Daniel O'Boyle
Take a look at today’s market snapshot as the FTSE 100 rose further today.
Domino’s UK ends hunt for boss as it names Andrew Rennie in top role
Thursday 13 July 2023 11:14 , Daniel O'Boyle
UK takeaway chain Domino’s Pizza Group has ended its search for a permanent chief executive after revealing Andrew Rennie will take over at the helm next month.
Mr Rennie will start in the post on August 7, having previously acted as the European boss for Sydney-listed Domino’s Pizza Enterprises – a major franchise operator of the pizza group.
He takes over from interim chief executive Elias Diaz Sese, who has led the group since October last year after former boss Dominic Paul announced plans to depart in December to head up Premier Inn owner Whitbread.
BP higher as FTSE 100 holds gains, Trustpilot up 19%
Thursday 13 July 2023 10:25 , Graeme Evans
Trustpilot shares jumped 19% today after the consumer reviews platform nudged up its earnings guidance. However, the rise of 12.8p to 80.9p is still way short of the 2021 debut price of 265p when the Copenhagen-based firm was valued at more than £1 billion.
Concerns over investment costs and the weaker economic outlook recently pushed the shares to a record low, although the downbeat mood shifted today as a trading update revealed a 15% rise in first half revenues.
The UK, which accounts for about 40% of business activity, achieved bookings growth of 15% as Trustpilot forecast underlying earnings above the top end of City estimates.
The FTSE 100 index, meanwhile, consolidated yesterday’s rise of 1.8% by adding another 15.68 points to 7,431.79 in a performance led by stronger commodity stocks.
Risers included BP, whose shares improved 5.9p to 472.65p after Brent Crude futures topped $80 a barrel on the back of a weaker dollar and expectations for further stimulus measures in support of China’s economic recovery.
Asia-focused stocks also benefited as Prudential cheered 13p to 1072.5p and luxury goods group Burberry rallied 22p to 2112p.
The FTSE 250 index rose 16.08 points to 18,595.62, with Domino’s Pizza up 5% or 14p to 306.6p as investors welcomed the appointment of Andrew Rennie as chief executive.
The UK company’s chair Matt Shattock called Rennie an “energetic and entrepreneurial leader”, having spent over two decades with Sydney-listed Domino's Pizza Enterprises in roles that included running operations in Europe and Australia.
He added: “Andrew understands the power and potential of the Domino's brand as well as anyone in the business globally.”
Other second tier risers included the seals and controls business Diploma, which lifted 5% or 136p to 3100p as investors cheered another strategic acquisition in Europe alongside figures showing 9% revenues growth.
Soaring luxury demand brings sales and profit record for Watches of Switzerland
Thursday 13 July 2023 09:51 , Daniel O'Boyle
Demand for luxury timepieces “continues to outpace supply”, retailer Watches of Switzerland said, as years-long waiting lists for its most in-demand timepieces got even longer, despite it raising prices.
Higher prices, alongside a continued rise in sales volumes, helped the business report revenue of £1.5 billion and profit of £155 million for the year.
CEO Brian Duffy told the Standard that watch makers had avoided hiking prices too drastically, citing lengthening waiting lists for ‘grail’ watches like the Rolex Submariner..
“The brands have been very responsible,” he said.
But the retailer is also running behind schedule on opening a new Rolex shop on Old Bond Street. Duffy said the design of the shop, which Rolex and Watches of Switzerland are working together on, “is taking a bit longer than we had hoped”.
Sales slide at Music Magpie
Thursday 13 July 2023 09:50 , Simon Hunt
Sales slumped at Music Magpie as the pre-owned consumer tech business said it wrestled with the fallout from postal strikes and low consumer confidence.
Revenues fell 13% to £61.9 million in the six months to the end of May, led by a 17% fall in sales of disc media and books to £20.9 million.
But gross profits from its consumer technology sales rose 13.5% to £10.9 million and there were signs of green shoots in its device rental business, which saw subscription numbers rise from 24,000 to 39,000.
CEO Steve Oliver said Brits on squeezed incomes had been using Music Magpie more than ever as a means to raise cash from their used devices, but that the company was prioritising a shift away from using platforms like Amazon and eBay in favour of its own website in a bid to protect margins.
“It’s about looking at those lower margin transactions and saying, let’s protect that stock, let’s save it, let’s make sure we maximise the margin and that’s paid dividends in terms of gross profits,” he said.
Music Magpie shares fell 12.8% to 16.3p. The stock is down 62% over the past 12 months.
Market data with FTSE flat
Thursday 13 July 2023 09:05 , Daniel O'Boyle
The FTSE 100 is flat while gilt yields ease slightly, as the City processes the latest GDp data this morning.
The Gym Group flexes its muscles as memberships soar
Thursday 13 July 2023 09:03 , Simon Hunt
The Gym Group showed tentative signs of a post-Covid recovery in memberships as Brits flocked in their tens of thousands to join the low-cost gym operator.
The Croydon-based business reported an 18.5% rise in sales to touch £100 million in the first six months of the year, while membership numbers rose by over 75,000 to hit 867,000, in signs fitness fans on squeezed incomes are trading down from luxury health clubs to its cheaper £18-a-month no-frills sites. Membership numbers stood at 891,000 before the onset of Covid in 2020, after which they had plummeted.
Chair John Treharne said: “We have continued to grow our membership and yield, whilst controlling our costs and generating cash…bringing a high quality health and fitness proposition at an affordable price point to the communities in which we operate.”
Shares rose 5.4% to 95p.
Mortgage price rises continue
Thursday 13 July 2023 09:01 , Daniel O'Boyle
Two-year fixed mortgage prices hit 6.75% today as the upward march of rates continues.
The average two-year rate was up from 6.70% yesterday. Five-year rates rose significantly, from 6.20% to 6.27%.
The average two-year buy-to-et mortgage got even closer to 7%, ticking up slightly to 6.97%.
The number of products on the market declined further to 4,335.
Housebuilders struggle but FTSE 100 holds firm
Thursday 13 July 2023 08:27 , Graeme Evans
The FTSE 100 index has consolidated the 1.8% rise seen yesterday, despite weaker housebuilding stocks in the wake of today’s update by Barratt Developments.
Barratt shares are down 4% or 18.7p to 399.3p, while Persimmon is 19p cheaper at 1032p and Taylor Wimpey 3.1p lower at 101.7p.
The top flight is up 1.31 points at 7417.42, with Prudential the best performing stock after a gain of 1.5% or 15.5p to 1075p.
In the FTSE 250 index, which is broadly unchanged at 18,580.33, shares in Watches of Switzerland rose 6% and Diploma lifted 4% after their respective trading updates.
Relief at unchanged guidance in the AGM trading update of Dr Martens meant the bootmaker’s shares rallied 4.5p to 131p.
Rate hikes hit construction sector
Thursday 13 July 2023 08:25 , Daniel O'Boyle
Today’s GDP figures showed the impact of interest rate hikes on the construction sector, which declined by 0.2%, though part of the impact may be explained by the bank holiday.
Clive Docwra, managing director of property and construction consultancy McBains, said: “After the construction industry experienced a decrease in output in the two previous months, today’s statistics confirm that many work sectors are struggling to attract new orders.
“Private housebuilding in particular is still in the doldrums and the low activity is having a big impact on overall confidence within the construction sector, especially in the capital.
“The fall in output in May should be kept in perspective as estimates show growth is increasing over the medium term, but given this is the weakest growth since August last year, the industry is still a fair way from recovery.”
Brent Crude back above $80 a barrel
Thursday 13 July 2023 08:11 , Graeme Evans
Brent Crude oil futures are trading above $80 a barrel today, the first time the contract has been over this level since early May and up from $71.50 in late June.
The momentum reflects hopes that disinflation trends in the US economy will enable the Federal Reserve to pause interest rate hikes.
The demand outlook has also been boosted by expectations that China will unveil stimulus measures in support of the country’s falteirng economic recovery.
A weaker dollar has also assisted Brent Crude’s recovery, while on the supply side traders have noted declining levels of Russian output.
Sterling breaks $1.30 on US rates outlook
Thursday 13 July 2023 07:58 , Graeme Evans
The contrasting outlook for interest rates in the UK and US today pushed sterling above $1.30 for the first time since April 2022.
Expectations that the Federal Reserve will pause interest rate hikes after this month’s meeting were fuelled yesterday by better-than-expected inflation figures.
The developments led to the dollar index falling 1.2% to a 14-month low during its worst session for eight months.
Based on expectations that the Bank of England will hike interest rates by as much as another 0.5% next month, the pound has broken through the $1.30 threshold and is up by around 7% this year.
The euro has also strengthened, reaching its highest level against the dollar since March 2022 at over $1.11.
‘Economic game of chicken'
Thursday 13 July 2023 07:56 , Daniel O'Boyle
The latest GDP data shows some impact of interest rates slowing the economy, but a much bigger hit is likely to come as the Bank of England continues to hike interest rates.
Mark Grant of business finance broker The Business Finance Branch, said: "Stubbornly high inflation and rising interest rates are clearly dampening the economy based on May's GDP data. Business confidence, for starters, is on its knees. In May, both the production and construction sectors shrank, with construction also revised lower in the previous month's data for April.
“Even the usually reliable services sector stayed level with no growth in May. The services sector has been hit for six, as consumers rein in their spending.
“Experts predict an economic game of 'chicken' between the Bank of England's inflation and interest rate policy and the UK economy, but it doesn't feel like it's a game where there will be any winners. The UK economy is facing an extremely challenging second half of the year."
House prices down at Barratt Developments as rate hikes hit first time buyers
Thursday 13 July 2023 07:37 , Michael Hunter
Barratt Developments revealed a drop in the average price of its houses at the end of June, in the latest sign of the impact of interest rate hikes.
The company’s average selling price fell to £342,900, a drop of almost 9%. It came, in part, due to a lower proportion of sales from London.
It said the rising interest rates and the end of the government Help to Buy scheme meant first-time buyer reservations were down by 49% and accounted for “more than half the decline in our total reservation rate.”
The builder of over 17,200 homes last year said it was increasing its reservations into the private rental sector.
Asia markets rally despite weak China data, Meta shares up 4%
Thursday 13 July 2023 07:21 , Graeme Evans
Asia markets have posted big gains today as the positive reaction to yesterday’s better-than-expected US inflation figures continues.
The Hang Seng index in Hong Kong is up by more than 2%, while the Nikkei 225 and Shanghai’s SSE Composite are trading 1% higher.
The improvement also reflect expectations of stronger stimulus by Chinese authorities after today’s latest trade figures showed that economic activity slowed further in June.
Exports missed forecasts by a wide margin after a fall of 12.4% on a year ago and imports also declined more than expected by 6.8%.
US markets closed in positive territory last night, led by a 1.1% rise for the tech-focused Nasdaq Composite as June’s inflation reading fuelled hopes that the Federal Reserve will pause interest rate hikes after this month’s meeting.
Strong performers included semiconductor firm Nvidia and Facebook owner Meta Platforms after their shares rose by just under 4%.
More evidence of the disinflation trends in the US economy are due later, with factory gate prices set to show another sharp drop in annual growth from 1.1% in May to 0.4% in June.
This comes after the headline inflation rate dropped from 4% to 3% and core prices also fell by more than expected from 5.3% to 4.8%.
The FTSE 100 index closed 1.8% higher yesterday, with CMC Markets expecting London’s top flight to open broadly unchanged at 7420 this morning.
Chancellor keeps focus on inflation as GDP dips
Thursday 13 July 2023 07:20 , Daniel O'Boyle
The Chancellor, Jeremy Hunt, reiterated his focus on inflation, which policy makers have struggled to bring down this year, after figures today showed a decline in GDP.
“While an extra Bank Holiday had an impact on growth in May, high inflation remains a drag anchor on economic growth,” he said.
"The best way to get growth going again and ease the pressure on families is to bring inflation down as quickly as possible. Our plan will work, but we must stick to it.”
UK economy declines by smaller-than-expected 0.1%
Thursday 13 July 2023 07:04 , Daniel O'Boyle
Official figures today revealed the UK economy shrank by 0.1% in May.
However, the extra bank holiday for the King’s coronation meant a decline in GDP was widely expected, with the figures announced by the ONS today being better than the 0.3% contraction economists projected.
Given that the decline can be explained by the third bank holiday, it still seems unclear whether the Bank of England’s 13 consecutive interest rate hikes are slowing the economy down. Some experts have warned that inflation has become so embedded in the UK economy that the only way to bring prices under control is for the Bank of England to force a recession.
ONS Director of Economic Statistics Darren Morgan said: “GDP fell slightly as manufacturing, energy generation and construction all fell back with some industries impacted by one fewer working day than normal. Meanwhile, despite the Coronation Bank Holiday, pubs and bars saw sales fall after a strong April. Employment agencies also saw another poor month.
“However, services were flat overall with health recovering, with less impact from strikes than in the previous month, and IT also had a strong month.
“Across the last three months as a whole the economy showed no growth.”
Morning refresh: what you need to know to start the day
Wednesday 12 July 2023 17:59 , Simon Hunt
Good morning from the City desk of the Evening Standard.
City eyes are on UK GDP numbers this morning as we find out whether rising interest rates are having a cooling effect on the economy. According to OECD forecasts, GDP growth is expected to be modest at 0.3% in 2023 and to improve moderately to 1.0% in 2024.
Here’s a look at our top stories from yesterday:
The rental market is in danger of being in crisis, the Bank of England said, as landlords hit by surging mortgage rates choose between forcing renters to pay more or sell up and drive down house prices.
London fintechs are eyeing major expansion into Europe. Monzo is reportedly looking to acquire its Nordic rival Lunar, while the Bank of London has formally applied for an EU banking license and is seeking to recruit 300 new employees at a new base in Luxembourg.
Today we’re expecting result and updates from e-commerce firm Music Magpie, property company Barratt Developments and recruitment firmHays.
