Yahoo Finance FTSE 100 Live: BT shares fall on Ofcom ruling, wages update boosts interest rate outlook, US inflation at 3.1%
Regulatory scrutiny heaped pressure on the share prices of BT Group and Hargreaves Lansdown in the FTSE 100 index today.
The selling came as Ofcom proposed a ban on inflation-linked mid-contract price rises and the FCA sent a warning to investment platforms about interest on cash balances.
The focus on interest rates also continued after jobs and wages numbers avoided any nasty surprises ahead of Thursday’s Bank of England policy decision.
FTSE 100 Live Tuesday
Earnings figures fuel rate cuts hope
Ofcom to ban inflation-linked mid-contract price rises
CMA launches Unilever 'greenwashing' probe
Online fashion brand Sosandar targets 'affluent market towns' for first high-street stores
Tuesday 12 December 2023 15:03 , Daniel O'Boyle
Online fashion retailer Sosandar is targeting “affluent market towns” for its first brick-and-mortar shops, after a record November for sales.
The firm - founded by Ali Hall, a former editor of Look magazine, and Julie Lavington, the magazine’s former publishing director - reported 6% revenue growth to £22.2 million in the six months to 30 September, though the business swung to a £1.3 million loss amid higher commission payments.
But in the two months since that period ended, sales have boomed. Revenue for October and November combined was above the £10 million mark, with November’s total being a monthly record.
London Designer Outlet reveals boost from bumper Black Friday trade
Tuesday 12 December 2023 14:28 , Daniel O'Boyle
Bargain hunters enjoying Black Friday discounts helped the London Designer Outlet experience its best performing November in the Wembley Park site's 10-year history, it has emerged.
The shopping centre, where brands such as Converse and Calvin Klein have a presence, as well as casual dining chains including Nando's and Wagamama, said sales last month surpassed £9 million.
That performance was boosted by the highest ever sales generated there during a Black Friday week.
At LDO between November 17-26 there was a 8.1% rise in visitors compared to the same period when the shopping extravaganza took place in 2022.
Train passengers buying food at stations hit by 10% price premium – regulator
Tuesday 12 December 2023 13:59 , Daniel O'Boyle
Train passengers buying refreshments at railway stations are being charged an average 10% premium compared with high street prices, according to a regulator.
An investigation by the Office of Rail and Road (ORR) found that the lack of competition for the sale of food and drink at stations may contribute to higher prices.
It stated in a report that many outlets “stay in the same hands for extended periods”.
This is due to a combination of reasons, such as some retailers’ leases being protected meaning they are generally renewed, limited space, set-up costs and uncertainty from industrial action.
When will US Fed cut rates?
Tuesday 12 December 2023 13:43 , Daniel O'Boyle
Richard Garland, Chief Investment Strategist at Omnis Investments comments on today’s US inflation figures.
He says: “US inflation is on a clear and sustained downward trend, which absent unforeseen shocks should be within shouting distance of the Fed’s target by the end of 2024.
"Before that time, the Fed should be able to determine that policy is tighter than the economy requires. Concern about lingering inflation expectations and their own reputation may prevent them from easing as fast as markets currently expect, but nonetheless the direction of travel is fairly clear. Certainly there is no danger of an increase in interest rates on Wednesday."
US inflation at 3.1%, core at 4.0%
Tuesday 12 December 2023 13:39 , Daniel O'Boyle
The US inflation rate fell to 3.1%, but core inflation rose to 4.0%.
Both figures were in line with economists' expectations.
Combined with strong jobs data last week, the figures suggest the US is still well on course for a 'soft landing' from the high inflation seen last year, getting price rises back to the target level without putting large swathes of the workforce out of a job.
Proportion of mortgage balances in arrears at highest level since 2017
Tuesday 12 December 2023 13:32 , Daniel O'Boyle
The proportion of mortgage balances in arrears increased to the highest level in six years in the third quarter of this year.
The Bank of England said the proportion of the total loan balances with arrears, relative to all outstanding mortgage balances, increased on the quarter from 1.02% to 1.14% – the highest level since the second quarter of 2017.
According to the Mortgage Lenders and Administrators statistics, the value of outstanding mortgage balances with arrears increased by 11.4% from the previous quarter to £18.8 billion. This was 44.0% higher than a year earlier.
City Voices: Andrew Bailey is wrong. The Bank of England must cut interest rates now
Tuesday 12 December 2023 12:42 , Simon Hunt
The Monetary Policy Committee (MPC) of the Bank of England meets this week to vote on interest rates. It is widely expected that the MPC will keep Bank Rate at 5.25% and will keep it at this for at least several months. The Bank’s Governor Andrew Bailey has said that it is far too early to talk about lowering interest rates. Bailey is wrong.
While inflation is still over double the Bank’s target, the Bank’s cautious approach might seem the right one. However, the MPC is in fact being overly cautious and needs to take the bold step of cutting interest rates, starting this week.
The Bank’s restrictive monetary policy is doing what it’s supposed to: it has quashed demand in the economy and has tamed inflation. Although inflation is still higher than it should be, it continues to fall and is forecast to return to target in the medium term. What is more, pay growth has begun to slow and money supply growth has all but collapsed. All of this means that core inflation will continue to fall.
The Bank was too complacent and slow to act in allowing inflation to get far too high. It was rightly cautious about starting to raise rates in case it triggered a recession and so waited too long. It risks being too cautious once again by ruling out lowering interest rates any time soon. This is a mistake.
Poundland group ‘cautiously optimistic’ despite profits slump
Tuesday 12 December 2023 11:16 , Daniel O'Boyle
Poundland’s owner has revealed annual profits slumped by more than a third as expansion and higher costs took their toll, but said it was “cautiously optimistic” for the year ahead.
Pepco Group, which owns the Pepco and Dealz brands in Europe and Poundland in the UK, posted a 35.8% constant currency drop in reported pre-tax profits to 147 million euros (£126 million) for the year to September 30.
Chief executive Andy Bond said the result was “disappointing” as the cost of opening another 668 stores across the group, as well as inflation and interest rate pressures, offset record sales of 5.6 billion euros (£4.8 billion), up 17.7%.
Rio Tinto leads FTSE 100, defence firm Chemring consolidates gains
Tuesday 12 December 2023 10:18 , Graeme Evans
The out-of-favour FTSE 100 index put on a rare session of outperformance today as mining heavyweights rallied thanks to City support for Rio Tinto.
London’s top flight outgunned European peers with a gain of 0.7% or 54.25 points to 7559.14, with Rio 3% or 137p higher 5621p after JP Morgan lifted its target to 7000p.
Today’s upturn leaves the FTSE 100 index 1.5% higher for 2023, a sharp contrast to the 20-month high and year-to-date rise of 20% for Wall Street’s S&P 500 index.
The blue-chip benchmark has also underperformed the broader European market by about 8%, partly due to pressure from lower prices in the commodities sector.
It’s been a similar story for the FTSE 250 index, which today edged up 48.48 points to 18,798.87 after wage-sensitive stocks benefited from signs of a downward trend in UK earnings.
Big risers included Royal Mail owner International Distributions Services, which rallied 6% or 14.9p to 257.1p.
Defence products firm Chemring was broadly unchanged at 326.2p following its annual results, having risen 25% since October.
The specialist in sensors, countermeasures and energetics reported a 17% rise in underlying profits to £67.9 million and highlighted a record order intake amid “increasingly robust” defence markets.
Toy designer and distributor Character, whose ranges include Goo Jit Zu and Teenage Mutant Ninja Turtles, fell 5p to 280p on the back of full-year results.
Profits more than halved to £5.2 million but AIM-listed Character expects an improved performance in its current year, although it added that Christmas demand has been later than usual and is “clearly very sensitive to discounting”.
Are markets right to price in rate cut by June?
Tuesday 12 December 2023 09:26 , Daniel O'Boyle
While markets now see rate cuts coming by June, Investec economist Ellie Henderson is less optimistic.
She says: "Working with what we have got, we do not think there is anything in today's report that will alter the collective thinking on the MPC ahead of the decision on Thursday (we expect the MPC to keep the Bank rate on hold at 5.25%), or anything to dissuade us from our own view that the first rate cut in this cycle will be slightly later than markets are expecting, starting next August."
Jobs data brings rate cuts closer
Tuesday 12 December 2023 08:59 , Daniel O'Boyle
Economists and investors believe the latest employment and wages data may push forward the timeline for Bank of England interest rate cuts.
Interest rate swap markets now see rate cuts as more likely than not by June, and gilt yields have fallen dramatically.
"The sharp fall in wage growth in October will probably further fuel investors’ expectations that interest rates could be cut as soon as the middle of next year, and leaves our forecast for rate cuts to start late in 2024 looking a bit more challenging," Ashley Webb, UK economist at Capital Economics, said.
Market snapshot - shares higher, gilt yields lower
Tuesday 12 December 2023 08:35 , Daniel O'Boyle
Shares are higher and gilt yields have eased further on the back of the latest employment and wages data
Take a look at today's full market snapshot
Telcos and share platforms under pressure, Royal Mail shares jump
Tuesday 12 December 2023 08:29 , Graeme Evans
London’s FTSE 100 index has risen 0.4% or 29.82 points higher at 7574.71, with AstraZeneca among the risers after it announced plans to buy clinical-stage vaccine business Icosavax in a $1.1 billion deal.
Astra shares rose 76p to 10,712p, alongside strong performances in the mining sector after Rio Tinto lifted 102p to 5583p and Antofagasta by 21.5p to 1557.5p.
Telecoms stocks came under pressure after Ofcom proposed a ban on inflation-linked mid-contract price rises. Shares in Vodafone fell a penny to a fresh record low of 67.5p, while EE owner BT Group lost 4% or 5p to 126.3p.
Meanwhile, shares in FTSE 100-listed Hargreaves Lansdown fell by around 8% after Financial Conduct Authority warned pension providers and stockbroking platforms over how they deal with the interest earned by customers on cash balances on their accounts,
The FTSE 250 index was broadly unchanged, with AJ Bell down 6% or 18.7p to 292.9p and Interactive Investor owner Abrdn off 5p to 176p.
One of the best performing mid-caps was Royal Mail owner International Distributions Services, which jumped 6% or 13.7p to 255.9p.
Watchdog eyes 'double dipping' at brokers of interest on customers' cash balances
Tuesday 12 December 2023 07:56 , Michael Hunter
The Financial Conduct Authority has warned pension providers and stockbroking platforms over how they deal with the interest earned by customers on cash balances on their accounts,
After the end of the era of low interest rates, cash balances left on self-invested pension plans (SIPPs) and other platforms run by brokers have become potential earners.
The FCA found that of 42 firms it surveyed, a majority retained some of the interest earned on cash balances, "which may not reasonably reflect the cost to firms of managing the cash."
And since some also charge a fee to customers for the cash being held, the practice is known as "double dipping".
It was highlighted last month in research by The Standard and SCM Direct, which found that brokers were raking in £1.3 billion a year from paying zero or derisory rates of interest on the cash those investors hold on account.
Sheldon Mills, Executive Director of Consumers and Competition at the FCA said:
"Rising rates mean greater returns on cash. Investment platforms and SIPP operators need now to ensure how much of the interest they retain and, for those who are double dipping, how much they're charging customers holding cash, results in fair value. If they cannot make that case, they need to make changes.
"If they don't, we'll intervene."
CMA launches Unilever 'greenwashing' probe
Tuesday 12 December 2023 07:45 , Daniel O'Boyle
The competition watchdog is to launch a probe into consumer goods giant Unilever, to find out whether some of its claims are “greenwashing”.
The Competition and Markets Authority (CMA) began looking into potential greenwashing in the fast-moving consumer goods sector, worth £140 billion, in January.
Today, it said the Marmite-to-Lynx giant has made a number of claims that “appear vague and broad, and may mislead shoppers regarding the environmental impact of those products”. In addition, it said some of Unilever’s claims are “ presented in a way that may exaggerate how 'natural' the product is, and so may create an inaccurate or misleading impression”.
The CMA also highlighted the use of imagery like green leaves, which it said could mislead consumers about the environmental impact of certain goods.
Ofcom to ban inflation-linked mid-contract price rises
Tuesday 12 December 2023 07:34 , Simon Hunt
Ofcom is proposing a ban on inflation-linked telecoms contract rises.
The Media regulator is set to introduce a new rule requiring that any price written into a customer’s contract would need to be set out in pounds and pence, prominently and transparently, at the point of sale, instead of an inflation-linked percentage increase.
Ofcom said: "Inflation-linked mid-contract price rise terms can cause substantial amounts of consumer harm by complicating the process of shopping for a deal, limiting consumer engagement, and making competition less effective as a result.
"These terms also require customers to unfairly assume the risk and burden of financial uncertainty from inflation, with tangible impacts on their ability to manage costs at a time when household budgets are already stretched to the limit."
AstraZeneca buys Icosavax in $1.1 billion deal
Tuesday 12 December 2023 07:24 , Simon Hunt
AstraZeneca has entered into an agreement to acquire US-based clinical-stage vaccine business Icosavax in a $1.1 billion deal.
The British pharma giant is particularly interested in Icosavax's IVX-A12 vaccine, which targets major causes of severe respiratory infection and hospitalisation in adults 60 years of age and older and those with chronic conditions such as cardiovascular, renal and respiratory disease.
The deal represents a 43% premium to Icosavax's closing share price on the Nasdaq yesterday.
Iskra Reic, Executive Vice President, Vaccines & Immune Therapies, AstraZeneca, said: "With the addition of Icosavax's Phase III-ready lead asset to our late-stage pipeline, we will have a differentiated, advanced investigational vaccine, and a platform for further development of combination vaccines against respiratory viruses."
AstraZeneca buys Icosavax in $1.1 billion deal
Tuesday 12 December 2023 07:23 , Simon Hunt
AstraZeneca has entered into an agreement to acquire US-based clinical-stage vaccine business Icosavax in a $1.1 billion deal.
The British pharma giant is particularly interested in Icosavax's IVX-A12 vaccine, which targets major causes of severe respiratory infection and hospitalisation in adults 60 years of age and older and those with chronic conditions such as cardiovascular, renal and respiratory disease.
The deal represents a 43% premium to Icosavax's closing share price on the Nasdaq yesterday.
Iskra Reic, Executive Vice President, Vaccines & Immune Therapies, AstraZeneca, said: "With the addition of Icosavax's Phase III-ready lead asset to our late-stage pipeline, we will have a differentiated, advanced investigational vaccine, and a platform for further development of combination vaccines against respiratory viruses."
Jobs and wages numbers avoid nasty surprises into last Bank of England interest rate meeting of 2023
Tuesday 12 December 2023 07:21 , Michael Hunter
Economic data that will help shape the Bank of England's looming decision on interest rates this week have landed in line with expectations today.
Average earnings for October rose by 7.3%, a tad under the 7.4% expected, which will make welcome reading among policy makers, especially due to the direction of the move: it was down from the 8% reading last time.
The Monetary Policy Committee is poised to leave rates on hold at 5.25% for the third consecutive meeting on Thursday, amid a growing sense that the next move, sometime next year, will be a cut.
That outlook comes with the City on watch for signs that the long fight against inflation – which at 4.6% is still above the BOE's official 2% target – could give way to moves to stimulate growth in the UK's stuttering economy.
While the number of people claiming jobless benefits in November rose by 16,000, more than the 15,000 expected, the unemployment rate held steady at 4.2%, as expected.
US inflation in focus, FTSE 100 seen higher
Tuesday 12 December 2023 07:16 , Graeme Evans
US inflation figures are set to be released this afternoon, providing a major test to speculation that interest rates have peaked and are set to fall in 2024.
Economists expect a reading of 3.1% for November, which compares with 3.2% the previous month. The core inflation rate is set to remain unchanged at 4%.
On Wall Street last night, traders were in a relaxed mood ahead of the figures and tomorrow’s Federal Reserve policy announcement.
Amid hopes of a soft landing in the US economy, the S&P 500 index edged up 0.4% to set a new 20-month high and take gains for the year to over 20%.
That’s in sharp contrast to the performance of the FTSE 100 index, which finished slightly lower last night and is broadly unchanged for the year. CMC Markets expects London’s top flight to open 13 points higher at 7558 today.
Asia markets are all in positive territory, led by a rise of 1.2% for the Hang Seng index in Hong Kong.
Recap: Yesterday's top stories
Monday 11 December 2023 22:35 , Simon Hunt
Good morning from the City desk of the Evening Standard.
It seems bizarre that the City has boots on the ground in Shanghai, Beijing and Mumbai — as well as Brussels — but not in America. Its transatlantic relations have until now been conducted by policy chief Chris Hayward getting on a plane and gladhanding in the corridors of wealth and power in New York and Washington DC.
Now finally, as we revealed yesterday, there will be a permanent Square Mile presence stateside, in the shape of former trade official Ed Price.
The appointment comes at a challenging time for the City. It has still not found its feet after Brexit, with European capitals and regulators intent on wresting key areas of business such as clearing away from London.
But the bigger long-term threat comes from across the Pond, where rapid economic growth and far higher stock market valuations are turning the heads of investors and company bosses who would once seen London as their natural home.
No more. The steady drip drip of quoted companies leaving the London market, mainly through private equity acquisitions but also switching listings to New York, and the alarming dearth of “fresh meat” new issues to replace them, is a serious concern.
Mr Price will have his work cut out.
Here's a summary of our other top headlines from yesterday:
Govt launches new Office of Trade Sanctions Implementation to strengthen enforcement and clamp down on companies dodging Russian sanctions
Goldman Sachs says 'Stop shorting UK real estate' as interest rates to ease
Insolvency practioners Begbies Traynors’ revenue grows to £65.9m as companies going bust soars to highest level since global financial crisis
Heathrow airport boosted by Thanksgiving and Diwali with traffic up 10% in November
Sales of Quality Street and other chocolate Christmas collections boom as shoppers look for cheap gifts
Hipgnosis sells 20,000 “non-core songs” for less than anticipated - $23.1m price is below the expected $25m figure
And...Lord Byron’s Piccadilly mansion put up for sale with £29.5 million price tag and planning permission to turn it back into a family residence worth up to £70 million
