FTSE closed lower as BoE policymaker warned that rate cuts 'should be a way off' (Alexander Spatari via Getty Images)
The FTSE (^FTSE) and European stocks finished in a lacklustre manner on Thursday as the European Central Bank (ECB) held interest rates across the eurozone as expected. Across the pond, Wall Street echoed the muted mood, with a mixed but muted open after the bell.
Unlike the US, the Eurozone's inflation rate is much closer to the 2% target, and the region's weaker economic fabric tends to support hopes of a quicker dovish switch from the ECB than the Fed.
It came as a Bank of England (BoE) policymaker said UK interest rate cuts should be "a way off".
Megan Greene, an external member of the monetary policy committee, said there is a greater threat of inflation persistence in Britain than in the US, where prices rose faster than expected in the year to March.
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She said: "There has been encouraging news on UK wage growth and services inflation in recent months. The risk of inflation persistence is diminishing as these indicators come down in line with the MPC’s forecast. But they remain higher than in other advanced economies, particularly the US.
"Momentum in the markets has been towards pricing in later rate cuts by the Fed as economic growth remains robust. In my view, rate cuts in the UK should still be a way off as well."
London’s benchmark index closed 0.6% lower after a choppy session
Germany's DAX (^GDAXI) dipped 0.9% and the CAC (^FCHI) in Paris finished 0.4% in the red
The pan-European STOXX 600 (^STOXX) lost 0.5% during the session
Wall Street was mixed with the S&P 500 (^GSPC) down 0.12%, and the tech-heavy Nasdaq (^IXIC) pushing 0.3% higher. The Dow Jones (^DJI) dipped 0.5%.
Well that's all from us today — thanks for following along as always. Be sure to join us again tomorrow when we'll be back for more.
Here's a quick recap of some of the top stories we've covered:
ECB holds interest rates
BoE policymaker says UK rate cuts should be "a way off"
US PPI inflation beats expectations
Darktrace soars after raising forecasts
UK spending on credit and debit cards declines 1%
RICS: UK housing recovery gains more ground
Lok'nStore bought by Shurgard for £378m
Have a good evening all!
Pedro Goncalves
Central banks must resist pressure for early rate cuts, says IMF
Central banks should resist the temptation to lower their key interest rates too early and risk a resurgence of inflation, International Monetary Fund (IMF) managing director Kristalina Georgieva warned.
“On this final stretch, it is doubly important that central banks uphold their independence,” Georgieva said, urging policymakers to resist calls for early rate cuts when necessary.
“Premature easing could see new inflation surprises that may even necessitate a further bout of monetary tightening. On the other side, delaying too long could pour cold water on economic activity,” she added.
Best UK mortgage deals of the week
Average mortgage rates are unchanged from the previous week but overall homeowners are still struggling to find a decent mortgage rate.
The average rate on a two-year fixed deal this week stood at 5.74%, while for a five-year deal, rates came in at 5.24%, according to figures from Uswitch.
The market appears to be volatile, as the higher costs providers are paying to fund mortgage lending have pushed many lenders to axe some of the cheaper deals.
“This week we’ve seen very little movement in the average fixed rates across both two-year fixed and five-year fixed rate deals among both residential and buy-to-let mortgages. This is despite some lenders having increased their rates slightly.
“The average Standard Variable Rate (SVR) remains high, at 8.54%, so if you’re coming to the end of your current fix, it’s absolutely worth speaking to a broker now. Big six lender, HSBC, has announced that they will be cutting a number of their fixed rate deals this morning, which may stir the already growing competition in the market.
Bitcoin (BTC-USD) climbed back above the $71,000 (£56,506) mark on Thursday, despite stock markets closing lower after a disappointing US inflation report.
The world's largest digital asset by market capitalisation increased by almost 4% in the past 24 hours, reaching a daily high of over $71,300. The uptick follows a downturn in early trading on Wednesday, that saw bitcoin reach a daily low of around $68,000.
It also comes as Bitcoin has an upcoming event that could act as a major price catalyst. The consensus among analysts is that the upcoming 'bitcoin halving' could continue to drive inflows into the bitcoin market. This event is anticipated to occur on or around Saturday, 20 April.
The bitcoin halving is an event that happens about every four years. The halving will reduce the reward that miners receive for validating blocks on the blockchain from the current 6.25 BTC to 3.125 BTC. This could act as a supply crunch for the digital asset, potentially leading to a price appreciation.
US PPI inflation beats expectations
US producers raised their prices more slowly than expected last month, the Labour Department said, with the US PPI index increasing just 2.1%. This came in below the 2.2% expected.
The data suggests inflationary pressures in America may be lower than thought.
Core PPI, which excludes volatile food and energy categories, rose 2.4% from March last year, and 0.2% from the prior month.
Eurozone interest rate hold was not unanimous
Christine Lagarde, President of the European Central Bank (ECB), addresses the media during a press conference at the ECB headquarters in Frankfurt, Germany, Thursday, April 11, 2024. The European Central Bank is leaving its key interest rate benchmark unchanged, choosing to wait for confirmation that rapidly receding inflation is firmly under control before cutting rates to support an economy that’s struggling to grow. (Arne Dedert/dpa via AP) (Arne Dedert, Associated Press)
Christine Lagarde has revealed during the ECB press conference that “a few members” of the governing council felt sufficiently confident from the data we have in April to make rate cuts today.
However she said they agreed to rally around the consensus of waiting until there is more evidence.
Inflation has continued to fall, led by lower food and goods price inflation. Most measures of underlying inflation are easing, wage growth is gradually moderating, and firms are absorbing part of the rise in labour costs in their profits.
Financing conditions remain restrictive and the past interest rate increases continue to weigh on demand, which is helping to push down inflation. But domestic price pressures are strong and are keeping services price inflation high.
LaToya Harding
Euro falls as ECB likely to hike before Fed and BoE
The euro has fallen against the dollar on the back of the news.
Richard Carter, head of fixed interest research at Quilter Cheviot, said:
“Inflation appears to be better behaved and less sticky in the Eurozone than it has been elsewhere, particularly when compared to the US where just yesterday we saw another unwanted uptick which took headline inflation to 3.5%.
"Given the Federal Reserve is now expected to resist making any cuts for some time yet, and the Bank of England faces a difficult balancing act, the ECB could well be the first to make a move.
“The ECB was criticised for being a rate hike laggard when the central banks first began their respective hiking cycles, but time will tell whether it will be the first to switch stance and start bringing rates back down.”
LaToya Harding
ECB holds interest rates
As expected the European Central Bank (ECB) has held interest rates across the eurozone.
This means that the rate on the ECB’s main refinancing operations, which is the rate banks pay when they borrow money from the ECB for one week, remains at 4.5%
The rate on the deposit facility, which banks can use to make overnight deposits with the Eurosystem, sticks at 4%.
The rate on the marginal lending facility, which offers overnight credit to banks from the Eurosystem, remains at 4.75%.
However, it did signal that its first cut could come soon.
It will be keeping a close eye on key data between now and its 6 June meeting, particularly the crucial wage data which has been running well above the 3% target.
LaToya Harding
Inflation in Ireland falls
As we wait for the latest from the European Central Bank, here's news in from Ireland on inflation...
The Consumer Price Index (CPI) across the Republic rose by 2.9% in the year to March, down from 3.4% in the 12 months to February.
The Central Statistics Office said this was the fifth month running where the inflation rate was lower than 5%.
— Central Statistics Office Ireland (@CSOIreland) April 11, 2024
LaToya Harding
London, England, UK - April 4th 2024: Arrivals area at Heathrow Airport Terminal 4 (Peter Fleming via Getty Images)
Heathrow has reported that nearly seven million passengers passed through the airport in March.
It cited the earlier-than normal Easter weekend and school holidays for the welcomed boost.
Victoria Scholar, head of investment at interactive investor, said:
"It was the busiest Easter weekend ever for Heathrow, and Good Friday was the busiest ever direct departure day with 118,000 travellers passing through. Despite pressures from inflation and a weak economic backdrop, individuals and families clearly continue to prioritise their travel plans at the expense of other spending.
"Plus with cost-of-living pressure easing and wage growth still strong, the economic dynamics in the UK have been improving at the start of 2024 following last year’s recession, encouraging greater spending in the economy, including on air travel.”
It comes as Heathrow also warned that UK airports are being put at a “competitive disadvantage” thanks to the electronic travel authorisation (ETA) scheme which requires transit passengers to pay a £10 fee.
Currently, only nationals of Qatar, Bahrain, Kuwait, Oman, the United Arab Emirates, Saudi Arabia and Jordan fall under the scheme, but it will be extended to the EU and the rest of the world.
LaToya Harding
Dollar continues to rise
The US dollar surged on the back of yesterday's US inflation report, reaching heights not seen since last November.
Ricardo Evangelista, senior analyst at ActivTrades, said:
“This development effectively quashed speculation of a rate cut in June and cast doubt on the likelihood of any monetary easing by the US central bank this year.”
“With September emerging as the probable timeframe for the inaugural rate reduction and analysts predicting only two such cuts in 2024, treasury yields climbed, and the US dollar recorded gains against other major currencies.”
“Moreover, there exists the potential for further appreciation, particularly if today's release of Producer Price Index figures confirms the entrenched nature of price inflation in the US.”
LaToya Harding
UK spending on credit and debit cards declines 1%
New economic activity and social change data shows mixed activity in the latest week:
UK spending on credit and debit cards decreased 1% compared with the previous week
This was 4% lower than a year ago
UK spending on credit and debit cards decreased by 1%UK retail footfall increased to 103% of the level seen in the previous week
Shopping centre footfall saw the largest week-on-week increase across the three location categories, rising to 105% of the level seen in the previous week.
Retail park footfall increased to 104%, while high street footfall increased to 102%.
When compared with the same period of 2023, retail park and shopping centre footfall increased to 104% and 101%, respectively, while high street footfall decreased, falling to 94% of the level seen in the equivalent week of 2023.
LaToya Harding
UK jobs fall
The number of online jobs advertised in the UK has fallen, new data has found.
According to the Office for National Statistics (ONS) on Thursday, online job ads fell 1% last week, and was 19% below the level recorded a year ago.
Figures from @Adzuna show the total number of online job adverts on 5 April 2024 decreased by 1% when compared with the previous week 💻
This was 19% below the level seen in the equivalent period of 2023.
— Office for National Statistics (ONS) (@ONS) April 11, 2024
LaToya Harding
Darktrace soars after raising forecasts
In this photo illustration a Darktrace logo seen displayed on a smartphone with stock market percentages in the background. (Photo by Omar Marques / SOPA Images/Sipa USA) (Sipa US, Sipa US)
Darktrace (DARK.L) surged as much as 7% after it raised its annual revenue and margin forecasts for the third time this year.
The British cybersecurity company's third-quarter revenue jumped 26.5%, driven by demand for its services due to an increase in digital attacks. It also benefitted from a boom in artificial intelligence.
It marks the second quarter in a row that the company has seen an increase in new revenue.
Cathy Graham, chief financial officer, said:
"We believe the markets in which we operate are emerging from a period of relative economic uncertainty and moving to an environment where organisations can prioritise proactive cyber defense."
Darktrace's revenue for the year ending June is now expected to grow at least 25.5%, compared with its previous forecast range of increasing 23.5% to 25%.
The company raised its annual revenue and core profit margins forecast in January, and again in March. Annual core profit margin is now expected to be at least 23%, from an earlier forecast of at least 21%.
The company added 170 customers in the third quarter, with almost 1,000 added since March 2023, taking its client base to a total of 9,402.
LaToya Harding
BoE policymaker says rate cuts should be "a way off"
Megan Greene, an external member of the Bank of England's (BoE) monetary policy committee, has said that there is a greater threat of inflation persistence in the UK than in the US, the latter of which saw prices rise faster than expected in the year to March.
Writing in the Financial Times this morning she said the UK economy has faced a “double whammy” of a very tight labour market and a terms of trade shock from energy prices.
She said:
"There has been encouraging news on UK wage growth and services inflation in recent months. The risk of inflation persistence is diminishing as these indicators come down in line with the MPC’s forecast. But they remain higher than in other advanced economies, particularly the US.
"Momentum in the markets has been towards pricing in later rate cuts by the Fed as economic growth remains robust. In my view, rate cuts in the UK should still be a way off as well."
LaToya Harding
Lidl most popular supermarket bakery says Kantar
Lidl has been crowned as the most popular supermarket bakery, according to official data from Kantar.
The supermarket has the biggest bakery market share in the country, beating rivals such as Tesco and Sainsburys, with its most popular product, the all butter croissant, selling an average of 122 a minute.
It comes after the German discounter was named Bakery Industry Awards Bakery Retailer of the Year in 2023.
Scott Davey, senior buying director at Lidl said:
“At Lidl, we’re always offering customers a taste of the best products possible, for a fraction of the price – and nowhere is this clearer than in our industry-leading bakery.
Whether customers are popping in for a croissant or trying out one of our innovative Special Guests, it’s clear our bakery offering is winning over the nation’s bakery popularity contest.”
LaToya Harding
ECB expected to leave rates on hold
This afternoon we will get the latest decision on interest rates from the European Central Bank (ECB).
It is widely expected to leave borrowing costs unchanged, but president Christine Lagarde may be pressed about how close her governing council is to cutting interest rates.
Inflation in the eurozone has now dropped to 2.4%, close to their 2% target.
She may hint at a rate cut in June.
LaToya Harding
RICS: UK housing recovery gains more ground
The UK housing market saw the best levels of interest among buyers in more than two years in March, according to a new survey.
Figures from the Royal Institution of Chartered Surveyors (RICS) said house prices also touched their highest since 2022 as a recovery gathered more momentum.
This was driven by cooling inflation and falling mortgage costs after their rise hit demand.
RICS' gauge of buyer enquiries showed a net balance of +8 last month, the strongest reading since February 2022 and up from +4 in February.
Its measure of house prices, while still showing more expectations of price falls than rises, hit its highest since October 2022 at -4, up from -10 in February and a low of 67 in September last year.
A Reuters poll of economists had pointed to a reading of -6.
LaToya Harding
Asia and US stocks
Stocks in Asia were mainly lower overnight with the Nikkei (^N225) falling 0.35% on the day in Japan, and the Hang Seng (^HSI) down 0.25% in Hong Kong.
The Shanghai Composite (000001.SS) was 0.2% up by the end of the session. It came after data showed consumer prices in the world’s second-largest economy rose by a muted 0.1% in March, missing expectations.
Across the pond on Wall Street, the Dow Jones Industrial Average (^DJI) fell 1.1% to 38,461.51 and the S&P 500 (^GSPC) dropped 0.95% to 5,160.64. The tech-heavy Nasdaq Composite (^IXIC) lost 0.84%, ending at 16,170.36.
The yield on benchmark US 10-year Treasury bonds rose to 4.546%, from 4.366% late on Tuesday.
LaToya Harding
Lok'nStore bought by Shurgard for £378 m
Belgian self-storage firm Shurgard is set to buy the UK’s Lok’nStore for £378m.
The 1110p per share offer represents a 16% premium to the company's closing price on Wednesday and was backed by its board.
Shurgard, which saw shares jump as much as 17% to a record high, said the deal will accelerate its growth strategy;
Lok’nStore began in 1995 in Horsham and listed in May 2000. Shurgard started in the same year and is now Europe’s biggest self storage firm, with 270 sites in seven European countries used by 190,000 customers.
Marc Oursin, chief executive of Shurgard, said:
“I am excited to disclose this new acquisition in the UK, which doubles our presence in the country, and accelerates our growth and expansion strategy.
“The acquisition brings with it a strong pipeline and development team, which can be leveraged to accelerate new opportunities in London, the South East and Manchester.”
Andrew Jacobs, chair of Lok'nStore, said:
"Lok'nStore's board believes the offer represents significant value for Lok'nStore's shareholders.
“We believe that integrating Lok'nStore's assets and operations into Shurgard is highly complementary considering Lok'nStore's asset locations and positioning in its markets.”
LaToya Harding
Coming up...
Good morning, and welcome back to our markets live blog.
Here's a quick look at what's on the agenda for today:
12:01am: RICS Housing Market Survey
7am: Trading updates: Darktrace, Mears
7am: Norway’s GDP report for February
9.30am: UK economic activity and social change data
1.15pm: European Central Bank interest rate decision
1.30pm: US Producer Price Index (PPI) index
1.30pm: US weekly jobless claims
1.45pm: European Central Bank press conference
Watch: How does inflation affect interest rates?
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