- FTSE 100 up 49 points to 8,128
- NatWest nearing 5 yr high
- US inflation comes in hot
13.37pm: Wall Street teetering as inflation data comes in hot
Wall Street stocks are positioned to open relatively flat after key inflation data came in hotter than expected during March.
The PCE Price Index, a key measure of inflation in the US, came in at 2.7% last month, increasing from February’s 2.5% and higher than the 2.6% forecast.
Core PCE figures, which outstrip volatile energy and food prices, reached 2.8% for March, keeping flat compared to the month prior but failing to slow to 2.7% like analysts had forecast.
The Dow Jones is set to begin trading around 53 points higher at 38,332, while the S&P 500 and Nasdaq jumped 36 and 164 points respectively.
Concerns of elevated interest rates for longer have been a thorn in the side of the market for some months now, and today may be no different, with it likely going to offset strong gains from tech giants Microsoft and Google owner Alphabet.
Shares in Microsoft are scheduled to open around 4% higher after it surpassed expectations on both the earnings per share (EPS) and revenue fronts in the first quarter.
It leaves the tech giant nearing a return to a US$3 trillion valuation when the markets open.
13.19pm: Bitcoin holds flat despite strong big tech earnings
Bitcoin is holding relatively flat today at around US$64,355, with the latest round of big tech earnings failing to stimulate any upward momentum.
Microsoft delivered an artificial intelligence-led profit beat, while Google-parent Alphabet surged after announcing a first-quarter earnings beat and debut dividend.
But if bitcoin has correlated with Big Tech in the past, the same cannot be said this time around.
The BTC/USD pair closed flat on Thursday, following a 3% nosedive on Wednesday, leaving it down around 1.2% week-on-week.
A poor showing in the bitcoin exchange-traded funds space has not helped matters. BlackRock’s iShares Bitcoin Trust (IBIT) broke its 71-day winning streak by posting its first-ever day of zero net inflows on Wednesday.
13.03pm: Cava prices at risk as vineyards suffer worst drought recorded
Brits could be set to suffer from a shortage of Cava as drought continues to hit the Spanish heartlands where the vineyards are located.
Catalonia’s Penedes area is suffering from its worst drought ever recorded, with some vineyards so barren the roots of 30-year-old vines have died.
Britain is the fourth largest buyer of sparkling wine, behind only the US, Belgium and Germany.
More than 17.8 million bottles sold in 2023, representing a 5% jump year-on-year.
Industry sources have warned the drought may push prices higher next year and could keep them high for an extended time if the woes persist.
Spanish companies which produce Cava such as Freixenet have been forced to cut workforces temporarily to deal with the reduced output.
12.41pm: Shein to face tighter regulations under EU legislation
Shein, the fast fashion giant, will have to up its efforts to fight harmful content and counterfeit items due to the EU enacting tighter trade rules for the Chinese retailer.
Changes to Shein‘s regulation in Europe come as it was named a very large online platform (VLOP), joining Facebook, YouTube and TikTok among others.
The purpose of identifying organisations as VLOPs comes in relation to the launch of the EU’s Digital Services Act, which forces the platforms to provide additional information and take steps to avoid users being at risk.
The European Commission said measures are implemented to “protect consumers from purchasing unsafe or illegal goods, with particular focus on preventing the sale and distribution of products that could be harmful to minors.”
Shein was added to the list of sixteen tech companies after its monthly active user base reached 108 million.
12.19pm: Government sells more NatWest shares
NatWest revealed the government’s stake in it has dropped below 28% as part of the ongoing sale strategy which was launched in August 2021.
Britain’s Treasury now holds a 27.93% stake in the lender, down from 28.9%.
It comes around sixteen years after the government was forced to rescue the group formerly known as Royal Bank of Scotland during the 2008 financial crisis and to build an 84% stake.
Plans for a public sale of the government’s NatWest shares are scheduled for this summer.
Chief executive Paul Thwaite said:“Returning NatWest Group to private ownership is a shared ambition and one that we believe is in the best interests of the bank and all our shareholders.”
11.56am: Trump plans to take tighter control of interest rate decisions
Donald Trump and his Republican allies have been developing plans to mute the Federal Reserve’s impact on interest rate setting and instead give themselves more control over the decision, reports revealed.
Supporters of the former president and likely Republican nominee for the upcoming election drafted a document which outlined how Trump should interact with the central bank should he assume power.
Recommendations include putting the Fed’s decisions under review by the White House and asking its chair to discuss with interest rate policy with the president before enacting it.
Trump is believed to be frustrated with the current policy of the Fed and is said to have complained to Fed chair Jerome Powell about rates being kept at 23-year highs for an extended period.
Jerome Powell was chosen as the Federal Reserve’s chief by Trump back when he was president in 2017.
11.35am: FTSE 100’s strong performance to continue, says analyst
London’s top stocks are continuing to have one of their best weeks in recent times.
The FTSE 100 is up around 26 points at 8,105, having broken intraday all-time highs and is on track to close at a record peak for the fourth time in five days.
Much of today’s gains have been helped by a 5% jump in NatWest shares after the group maintained its forecasts in its first quarter update.
Other risers include Pershing Square, up 3.5%, Ashtead, up 3%, and Hikma Pharma, up 2.5%.
While the FTSE 100 looks to close at a new high, analysts are confident there is scope for further upside.
Kathleen Brooks at XTB said: “There is a dual boom going on in the global economy right now: AI/ tech and commodities. The UK index may be light on tech, but it has a lot of exposure to miners and energy companies.
“Commodity prices are likely to remain elevated for some time. This could lead to more analyst earnings upgrades for the UK, and this may signal a continued strong flow of dividends in the future, which also makes the UK index attractive.
“This could be the beginning for the FTSE 100’s long-awaited comeback.”
11.17am: Oil prices rise as gas prices become volatile
Oil prices have lifted higher ahead of US inflation data at 1.30pm, while gas prices have suffered some volatility due to cold weather and supply disruptions.
Brent crude oil lifted around 0.1% to over US$89 a barrel, meaning it is up more than 2% this week.
Much of the oil price rises have stemmed from the growing conflict in the Middle East and cuts to supplies by the Opec cartel.
Oil prices along with rises in wages in the US have contributed to inflation keeping high in the States.
Should today’s inflation reading come in hotter-than-expected, the markets could suffer on the prospect of higher interest rates for longer.
Across the pond, the benchmark contract for gas prices slipped around 0.4% before jumping 1.9% today.
Dutch front-month futures are now trading around €30 per megawatt hour, representing a nearly 5% jump in the last two days.
10.57am: Insolvencies fall in surprise boost for economy
Insolvencies in England and Wales improved in March, coming in 17% lower than in February and the same month a year ago.
Total insolvencies during the last month came in at 1,815, made up of 261 compulsory liquidations, 1,437 CVLs, 108 administrations and 9 CVAs.
Today’s have come as a surprise to some analysts, who had been expecting high interest rates, increased business costs, weak economic growth and lower consumer spend would have hampered businesses.
Trevor Wood at law firm Vedder Price said: “Today’s figures are extraordinary. I don’t think anyone will have been expecting a fall in insolvencies.
“The reality seems to be that businesses and investors have managed to adjust, cutting their cloth successfully to match the economic climate. This is a real bolt from the blue – but a welcome one.”
Simon Edel at EY-Parthenon added that beyond today’s official data he has seen an increase in companies restructuring, “including more balance sheet restructurings, asset sales and a rising focus on working capital.”
“Although inflation is easing, companies should act now and focus on protecting their balance sheets by improving liquidity and access to working capital ahead of refinancing events, rather than waiting for interest rates to come down,” he added.
10.32am: Copper prices breach US$10,000
Anglo American’s rejection of a proposed takeover by BHP has come just after copper prices soared to two-year highs.
The price of the metal lifted above US$10,000 for the first time in around 24 months, having risen by 1.4% on the London Metal Exchange since April 2022.
It means copper prices now sit 17% higher than at the start of 2024, with the commodity a vital metal used in the production of EVs and renewable tech.
Anglo American rejected BHP’s ‘opportunistic’ £31 billion all-stock bid on Friday morning, saying it significantly undervalues its business, condemning the transaction as ‘complex’ and ‘uncertain’.
10.10am: CVC sees strong debut in Amsterdam float
Meanwhile, in Europe, newly debuted private equity firm CVC Capital Partnership has debuted on the Amsterdam stock exchange to an extremely positive reception.
Shares in the company surged 25% to €17.55 on its first day of trading, well above its IPO of €14 per share.
It leaves the company with a market capitalisation of around €14 billion (£12 billion).
Some €250 million in fresh capital has been raised from the sale of shares, while the rest of the proceeds have gone to existing stakeholders.
Co-founder Donald Mackenzie is selling up to 10 million shares, which is worth around €140 million based on the offering price.
9.48am: Darktrace takes swing at LSE
Darktrace has taken a hit at the London Stock Exchange following its plans to be taken private, adding more pressure regarding the exodus currently occurring in the market.
In a statement, the cybersecurity firm said: “The Board believes that Darktrace’s operating and financial achievements have not been reflected commensurately in its valuation with shares trading at a significant discount to its global peer group.”
Neil Wilson at Markets.com added: “Something has come loose in the UK market, like a hose pipe that was blocked up suddenly gushing forth.
He added that City stock picker Nick Train had claimed a “transformative deal could unleash pent-up demand for UK stocks” and hoped that BHP’s move on Anglo America could be such a deal.
9.27am: London Underground suffers last-minute strikes
Londoners have been caught out by a last-minute set of underground tube strikes set to take place today and tomorrow.
Earlier this week, the TSSA rail union said its members who work as customer service managers would be walking out today.
TfL predicted the strikes could lead to some stations having “to close at short notice” and could cause disruption on Saturday morning also.
TSSA members are planning to avoid working any shift which starts of Friday between 12.01am and 11.59pm, meaning staff will not attend any overnight shifts.
9.09am: Darktrace rallies on takeover by Thoma Bravo
Darktrace, the FTSE 250 cybersecurity firm, saw its shares jump close to 20% after it was revealed it had approved a purchase offer from private equity firm Thoma Bravo.
Shares at the company are now hovering around 617p, with Thoma Bravo having offered to buy the company for 620p per share, or £4.25 billion.
This represents around a 44% premium to the group’s share price average over the last three months.
Another one gone…
*THOMA BRAVO AGREES TO BUY DARKTRACE FOR $7.75/SHARE IN CASH
— Baron Investments (@baroninvestment) April 26, 2024
Thoma Bravo walked away from takeover discussions with Darktrace back in September 2022, but continued to pursue Darktrace as a means to ” increase its exposure to the large and growing cybersecurity market.”
8.51am:The morning so far
The FTSE 100 smashed yet another all-time high this morning, setting the stage for the fourth closing record if the gains can be sustained throughout the day.
Stocks have been lifted by a string of outstanding big-cap financial results throughout the week, both in the UK and across the pond.
Overnight, Microsoft beat earnings and revenue expectations, sending shares higher in post-market trades.
NatWest led today’s domestic results cycle. The group saw a 47% year-on-year decline in mortgage lending in the first quarter of 2024, with total lending down from £9.9 billion to £5.2 billion.
But with forecasts maintained, shareholders rallied around the bank, sending the stock 3.3% higher in the opening hour, making NatWest the top mover of the morning.
Asset managers Pershing Square and St James’s Place were also among the top risers, as were Ashtead, Persimmon (following yesterday’s buoyant results) and Centrica.
Pearson was one of the biggest fallers among the FTSE 100 set, with shares dipping 1.5%.
Regardless, the online learning and exams group said it’s on track to hit forecasts this year with momentum expected to be stronger in the second half.
But the biggest piece of company news was surely, London-listed miner Anglo American rejecting the shock takeover bid from Australian mining megacap BHP.
In a statement, Anglo’s board said the proposal “significantly undervalues Anglo American and its future prospects”. Anglo’s shares dipped 0.3%.
On the macro calendar, the GfK Consumer Confidence indicator rose to -19 in April 2024 from -21 in March, improving for the first time in three months and coming in above the -20 forecast.
The blue-chip index was 45 points higher at 8,124 at last count.
8.30am: Pearson sent lower following results
Pearson was one of the biggest fallers among the FTSE 100 set this morning, with shares dipping 1.5%.
Regardless, the online learning and exams group said it’s on track to hit forecasts this year with momentum expected to be stronger in the second half.
Revenues edged up 2% in the three months to end March 2024, with English learning (+22%) and workforce skills (+9%) the standouts.
Assessment and qualifications rose by 2% while virtual learning and workforce skills each dropped 4%.
Pearson added it was continuing to integrate AI features into its products with more than 40 Higher Education titles using AI for the Autumn term.
Shares were swapping for 976.2p as of 8.30am.
8.26am: Blue chips hit a new high
The FTSE 100 soared more than 50 points in the opening 30 minutes on Friday trades, bringing the index up to another record high of 8,129.
NatWest, Pershing Square, Scottish Mortgage and Fresnillio were at the top of the risers list, while Barclays, Pearson and Anglo American led the fallers (the latter due to rejecting BHP’s takeover bid).
8.07am: Microsoft hits it out of the ballpark
Microsoft Corp (NASDAQ:MSFT) is tipped to rally when US markets open later today.
The Redmont tech titan surpassed expectations on both the earnings per share (EPS) and revenue fronts in the first quarter.
It announced an EPS of $2.94, outpacing analysts’ expectations of $2.84 and revenue of $61.9 billion, exceeding the anticipated $60.9 billion.
Quarterly profit for Microsoft surged by 20%, propelled by robust demand for its AI products.
The stock added 4.3% in the post market, meaning its valuation should reclaim $3 trillion this Friday.
8.00am: GfK consumer confidence improves
The UK GfK Consumer Confidence indicator rose to -19 in April 2024 from -21 in March, improving for the first time in three months and coming in above the -20 forecast.
It marks a vast improvement compared to last year when the overall index score stood at -30.
Joe Staton, client strategy director at GfK, said: “Consumer confidence can be a very slow-moving creature and the past six months underline that.
At least there’s an air of forgiveness with consumers delivering softer verdicts on how they look back at the past year regarding their personal finances and the wider economy.”
The recovery in consumer confidence has stalled this year as markets delay Bank of England rate cuts.
But Rob Wood, chief UK economist at Pantheon Macro, took “encouragement from the GfK despite little change in the headline reading this year”.
“If real income growth continues, which we expect, consumers’ confidence in their personal finances and their spending will keep trending up,” he said.
“But consumers remain reluctant to splash out on a major purchase until the Bank of England starts cutting interest rates. We still expect the MPC’s first cut in June, with two more following this year in September and December.
7.44am: NatWest mortgage lending nearly halves in first quarter
NatWest Group PLC (LSE:NWG) saw a 47% year-on-year decline in mortgage lending in the first quarter of 2024, with total lending down from £9.9 billion to £5.2 billion.
Net interest margins fell from 2.25% in the same period last year to 2.05%, while lower deposit balances additionally caused a fall in net interest income from £2.9 billion to £2.65 billion.
Profit attributable to shareholders fell 28% to £918 million and return on tangible equity (RoTE) dipped 560 basis points to 14.2%.
NatWest blamed “increased mortgage margin pressure” for the 10% year-on-year fall in total income.
The CET1 capital ratio matched expectations 13.5%.
Retail Banking saw a 7.1% reduction in headcount, contributing to lower operating expenses in some areas despite overall increases in expenses due to severance costs and the Bank of England Levy.
As part of an ongoing share buyback programme, NatWest repurchased and cancelled £42.4 million of shares on 31 March.
NatWest maintained its full-year outlook except for group operating costs, which are expected to be £100 million higher than in 2023 due to an increase in bank levies.
7.17am: Anglo American rejects BHP bid
London-listed miner Anglo American has rejected a surprise advance from Australian mining megacap BHP.
In a statement, Anglo’s board said the proposal “significantly undervalues Anglo American and its future prospects”.
Anglo said the structure of the deal “is highly unattractive for Anglo American’s shareholders, given the uncertainty and complexity inherent in the Proposal, and significant execution risks”.
Stuart Chambers, chairman of Anglo American, called the offer “opportunistic” and advised shareholders to take no action in relation to the proposal
7.10am: Stocks to hit another record
FTSE 100 futures contracts have the index swimming to another record high this Friday in what has been a resoundingly strong week for equity and company earnings.
The index closed at the third record peak for the week of 8,079 yesterday, and it is tipped to open another 71 points higher to 8,150 today.
A string of stellar big-cap financial results from the likes of Barclays, AstraZeneca, Unilever and London Stock Exchange Group support the index on Thursday; today, NatWest Group could continue the trends with its trading update.
It has also emerged that Anglo American has rejected the bombshell takeover bid from Aussie megacap BHP as it “significantly undervalues Anglo American and its future prospects”.
A profit beat from Microsoft in the US will surely support domestic equities even further.
On today’s macroeconomic calendar, The GfK Consumer Confidence indicator rose to -19 in April 2024 from -21 in March, improving for the first time in three months and beating market expectations of -20.
