FTSE 100 outperforms against European peers as UK inflation slows to 2% for first time since 2021

LIVE COVERAGE IS OVER22 updates

• Wed 19 June 2024 at 9:31 am GMT-6

  Market close

  Well that’s all from us today, thanks for following along. Be sure to join us again tomorrow when we will be back for more market news and updates on what’s happening across the global economy.

  Tomorrow the US markets will be back up and running, and of course we have the Bank of England interest rate decision, so it’ll be sure to be a busy day.

  Have a good evening!

• Wed 19 June 2024 at 9:17 am GMT-6

  EasyJet and Ryanair criticise EU emissions crackdown

  

  Ryanair and easyJet have lashed out at an EU decision to exclude long-haul flights from its crackdown on jet emissions.

  The budget airlines have said the move will make a mockery of Europe’s efforts to combat climate change.

  The region’s two largest low-cost airlines, together with Hungary’s Wizz Air, said the move will exclude 75pc of European emissions that come from long-distance flights.

  The EU crackdown will pave the way for financial penalties, which will weigh far less on carriers that derive most of their earnings from lucrative long-haul journeys.

• Wed 19 June 2024 at 8:43 am GMT-6

  Only 13% of top roles at listed UK firms held by women

  Just 13% of top roles at listed UK companies are held by women, while less than 1% are held by women of colour. This is according to the annual Women on Boards report which looked at top jobs including chief executive, chair, chief financial officer and senior independent director.

  The report found that there were just 25 women of colour, 0.7% of the total. At Britain’s biggest listed companies on the FTSE 100, the proportion of senior roles held by women of colour is 1.5%. This compares with 0.3% at the smaller businesses listed on AIM.

  This is despite the FTSE Women Leaders Review introducing a focus on these four roles and the Financial Conduct Authority going further to set a target for firms to have at least one woman in these positions.

  Fiona Hathorn, chief executive of WB Directors, said:

  “Targets and scrutiny have resulted in hard-fought gains at FTSE 350 level. However, it’s time to extend focus to the smaller listed companies and ensure that efforts to monitor board diversity are intersectional across gender and ethnicity.

  “There is a persistent underrepresentation of women and especially women of colour in positions of power.

  “We need firms across the FTSE SmallCap and AIM to urgently act on creating greater diversity at all levels. Measure it, report it, make it public – or the laggards will continue to simply opt out.”

• Wed 19 June 2024 at 8:26 am GMT-6

  NatWest first major mortgage lender to cut rates

  NatWest is the first major mortgage lender to cut its rates ahead of tomorrow’s Bank of England’s interest rate decision.

  It is set to lower fixed-rate deals by as much 0.17 percentage points from tomorrow, with its largest cuts for people who are remortgaging and opting for a five-year fix, with the leading rate at 4.41%.

  Smaller lenders have also cut their rates this week, with the Co-operative Bank lowering the cost of mortgage loans by up to 0.22 percentage points and Nottingham Building Society reducing deals by 0.24 points.

  Threadneedle Street is widely expected to leave borrowing costs unchanged at 5.25% on Thursday.

• Wed 19 June 2024 at 6:54 am GMT-6

  Market movers this Wednesday

  If you want to find out what stocks are trending, read more here.

  Other market movers today are as follows:

  • Precision instrumentation and controls group Spectris tanked as it warned full-year profits will be at the bottom end of market forecasts as a result of weaker-than-expected demand at its lab equipment division in the first half. The news came as the company announced the appointment of Royal Mail’s chief financial officer Angela Noon as its new CFO.

  • Helios Towers was under the cosh after Newlight and RIT sold a combined 37.6m shares in the company in placing at 115p each, raising about £43.2m. This marked their first sale since the company’s IPO in 2019.

  • JTC advanced after saying late on Tuesday that it had agreed to buy FFP, a provider of specialist fiduciary services, for up to $110m.

• Wed 19 June 2024 at 6:33 am GMT-6

  Home and away footy spend soars as Euro’s kick off

  

  As football fever grips the nation, supporters are showing their passion not just through enthusiastic support but through increased spending at home and abroad.

  Data from Nationwide’s Spending Report, which analyses current account and credit card spending, highlights customers spent £420,341 in Germany at the weekend (15/16 June) – a 140 per cent increase when compared to the same weekend a month earlier. This equates to an average of £29.35 per transaction.

  Many England fans choose to watch the game at home, with spend at bars and pubs down one per cent at the weekend compared to the same weekend last month. A hattrick of events likely played a role in this formation, including the cost of living, the fact England’s first game was on a Sunday and that the weather was nice in most parts of the UK.

  The fact many stayed indoors coincided with Nationwide customers spending £7m more upfront at supermarkets over the weekend compared to the same weekend the previous month. The £87 million total equated to a nine per cent month-on-month increase.

  Mark Nalder, Director of Payment Strategy at Nationwide Building Society, said:

  “Despite mixed fortunes in the first England and Scotland games, fans still want to get behind the home nations teams. Many will use the tournament as a way of gathering friends and family together giving a boost in spending for businesses up and down the country.

  “The rising cost of living and timing of the England game meant many fans chose to watch the game from the comfort of their own home rather than go to the pub, but this may change as the tournament progresses and the nation becomes more invested.

  “Whether they have tickets to the games or not, many fans have headed to Germany to soak up the atmosphere of Euro 2024. We would encourage fans to make sure they know about any fees their debit or credit card charges for overseas usage, otherwise they could find their trip ends up costing them more than they think.”

• Wed 19 June 2024 at 6:02 am GMT-6

  TSMC nears $1trn valuation

  Taiwan Semiconductor Manufacturing Co is continuing to grow as a stellar rally puts its market capitalisation closer to the $1 trillion milestone.

  A flurry of Wall Street brokerages have lifted their price targets for TSMC this week, citing surging AI-related demand and potential price hikes in 2025 to drive up earnings.

  Goldman Sachs is the most bullish of all, increasing its price target by 19% to NT$1,160 as it sees three- and five-nanometer chip manufacturing prices advancing by a “low single digit percentage.”

  JPMorgan Chase & Co. says TSMC may “lift its 2024 revenue guidance and potentially move up its capex to the higher end of the guidance range,” and expects AI to contribute 35% of total sales by 2028.

  Citigroup and Morgan Stanley also raised their price targets on a stronger earnings outlook.

• Wed 19 June 2024 at 5:38 am GMT-6

  NIESR: Inflation will most likely rise again in second half of this year

  While the fall in the annual CPI inflation rate to the Bank of England target in May is positive news, inflation will most likely rise again in the second half of this year due to base effects, says NIESR.

  “It is important to keep an eye on month-on-month inflation figures (‘new’ inflation) to determine to what extent we will see inflation rebound in the second half of 2024.

  “In fact, the fall in May was consistent with my colleague Huw Dixon’s projection in his blog last month, due to higher than projected month-on-month inflation.

  “So, even though headline CPI inflation reached 2%, we’re not out of the woods yet.”

• Wed 19 June 2024 at 5:11 am GMT-6

  What are Labour and the Conservatives promising on housing?

  The Conservative and Labour manifestos seem to align when it comes to boosting support for first-time buyers and the need to build more homes in the UK. However, a critical shortfall in funding for affordable housing will make these targets hard to hit, according to new Resolution Foundation research.

  Both major parties have pledged significant initiatives aimed at supporting first-time buyers. Labour plans to extend the Mortgage Guarantee Scheme permanently. Introduced by the previous government, this allows lenders to pay a fee in return for the government underwriting the riskiest part of a mortgage.

  Meanwhile, the Conservatives have set a target of delivering 1.6 million new homes by 2029, surpassing Labour’s commitment of 1.5 million over the same period. Achieving these targets, which require an annual delivery of at least 300,000 new homes in England alone, hinges on substantial reforms to the planning system.

  Find out more here

• Wed 19 June 2024 at 4:52 am GMT-6

  Why are a growing number of investors now piling into gold?

  And sticking with commodities, why are more people investing in gold?

  Gold is up around 12% year-to-date, with many investors saying they plan to continue to pile into the precious metal.

  DeVere Group’s Nigel Green said:

  “Decision-making process to invest in gold is not merely based on its historical significance, but on several current and compelling factors that could collectively signal a steady rise in its price over the long term.

  “One of the most persuasive reasons they cite to invest in gold is the increasing demand from advanced economies.

  ​“Despite elevated prices, it’s been widely reported that central banks in developed countries are ramping up their gold purchases.

  “The long-term value of gold, its robust performance during crises, and its effectiveness as a portfolio diversifier appear to be the main reasons given by these central banks for this pivot.​

  “Emerging market central banks have historically held gold for similar reasons, especially since the 2008 financial crash. Now it seems richer countries are, too, increasingly adopting the same strategy.”

• Wed 19 June 2024 at 4:31 am GMT-6

  Oil prices hold onto gains

  

  Oil prices held steady on Wednesday after closing at a seven-week high. Brent crude, the international benchmark, traded above $85 a barrel after posting the highest close since 30 April, while West Texas Intermediate was near $81.

  It comes as oil has recovered from a loss at the beginning of the month, when OPEC+ said it would bring barrels back to the market, with the group clarifying that such a plan was conditional.

  Key timespreads have ballooned, indicating stronger near-term demand, while refiners in Asia are restoring some capacity following maintenance despite weak margins, boosting crude consumption.

  “There are implicit signs that refiners are getting ready for the summer season,” said Tamas Varga, an analyst at brokerage PVM. “Front-month Brent is more than $8 a barrel above the post-OPEC+ meeting trough. It shows genuine optimism that the global oil balance will eventually tighten.”

• Wed 19 June 2024 at 4:15 am GMT-6

  Cost of living crisis far from over, warns Unite

  Commenting on the latest inflation figures, Unite general secretary Sharon Graham said:

  “Falling inflation doesn’t mean falling prices. The worst cost of living crisis in generations is still dragging on.

  “We need action from the Bank of England on Thursday to begin lowering interest rates and relieve the pressure on hard pressed homeowners.

  “And we need a new government to get to tackling the corporate profiteering that has driven this crisis.”

• Wed 19 June 2024 at 4:03 am GMT-6

  Berkeley slips despite raising outlook

  Housebuilder Berkeley (BKG.L) is in the red this morning despite lifting its earnings outlook for the current financial year by 5% to £525m.

  It was the biggest loser on the FTSE 100 index as it reported a pre-tax profit of £557m for the year to 30 April, down from £604m last year.

  The company said that it would plunge back into the private rental market for the first time in a decade by launching a build-to rent arm to tackle the “severe shortage” of properties in and around London.

  Berkeley, which built 3,500 homes for private sale last year, will establish a build-to-rent business, which aims to create 4,000 homes in London and the south-east over the next decade.

  It plans to develop the properties across 17 brownfield sites and launch a dedicated online platform to manage them.

• Wed 19 June 2024 at 3:44 am GMT-6

  UK house prices rise

  

  Average UK house prices rose by 1.1% in the 12 months to April, up from 0.9% in March.

  It came as the Office for National Statistics (ONS) also revealed that private rents climbed by 8.7% in May, down from 8.9% in April.

  Rents increased to £1,301 (8.6%) in England, £736 (8.5%) in Wales, and £957 (9.3%) in Scotland, in the 12 months to May. In Northern Ireland, average rents increased by 10.3% year-on-year in March.

  In England, rents inflation was highest in London (10.1%) and lowest in the North East (6.1%).

  Across Great Britain, average rent was highest in Kensington and Chelsea (£3,397) and lowest in Dumfries and Galloway (£480).

• Wed 19 June 2024 at 3:26 am GMT-6

  Markets expect first rate cut by September

  Money markets have changed the odds of the first BoE interest rate cut following the drop in UK inflation this morning.

  The probability of a cut tomorrow is estimated at just over 5% with boosted hopes of a rate cut in August.

  Markets are fully pricing in a move by September, and are expecting another cut by December.

• Wed 19 June 2024 at 3:00 am GMT-6

  Unsecured household debts set to rise by 9.4% this year

  Unsecured household debt is set to rise by more than £1,600 this year as families continue to struggle with the cost of living crisis.

  This is according to new TUC analysis, which showed that unsecured debt (loans, credit cards, purchase hire agreements) is on course to increase by 9.4% in real terms on average, per household this year.

  Over a quarter of people said they have taken out loans or borrowed on credit cards to cover unexpected bills since the start of the year.

  The TUC said this was the largest annual rise in cash terms since records began in 1987. The union body says the findings make a mockery of government claims that “their plan is working”.

  The TUC said it used official debt data and Office for Budget Responsibility forecasts to produce its analysis. The analysis excludes student loans.

• Wed 19 June 2024 at 2:47 am GMT-6

  Reeves: ‘People still worse off’

  

  Rachel Reeves, Labour’s shadow chancellor, has said that Brits are still “worse off” despite the decline in inflation.

  She said:

  After 14 years of economic chaos under the Conservatives, working people are worse off. Prices have risen in the shops, mortgage bills are higher and taxes are at a 70-year high.

  Labour has a plan to make people better off bringing stability back to our economy, unlocking investment and delivering reform. All the Conservatives are offering is a desperate wish list of unfunded spending promises that will mean £4,800 more on people’s mortgages.

  The choice at the election is simple: stability with Labour that will make Britain better off or five more years of chaos with the Conservatives that will mean higher mortgages.

• Wed 19 June 2024 at 2:29 am GMT-6

  BoE not expected to cut rates tomorrow

  The Bank of England (BoE) is not expected to begin cutting interest rates at its next meeting tomorrow but the latest data will likely be a boost to hopes of a reduction in borrowing costs at its next meeting in August.

  The Confederation of British Industry (CBI) said the stage was now set for the Bank of England to cautiously cut interest rates.

  CBI principal economist Martin Sartorius said:

  “Another fall in inflation in May will come as welcome news to households as we move towards a more benign inflationary environment.

  “However, many will still be feeling the pinch due to the level of prices being far higher than in previous years, particularly for food and energy bills.

  “Today’s data sets the stage for the Monetary Policy Committee to cut interest rates in August, in line with our latest forecast’s expectations.

  “However, rate-setters will still need to weigh the fall in headline inflation against signs that domestic price pressures, such as elevated pay growth, are proving slower to come down.

  “This means that they are likely to move cautiously beyond August to avoid putting further upward pressure on inflation, especially as the growth outlook improves at home and geopolitical tensions remain heightened.

• Wed 19 June 2024 at 2:13 am GMT-6

  What drove down inflation?

  The easing in the inflation rate was driven by a slowdown in price rises for food and soft drinks, recreation and culture, and furniture and household goods.

  Prices of food and soft drinks rose by 1.7% in the year to May, down from 2.9% in April, and the lowest rate since October 2021.

  The main downward effects on the inflation rate came from bread and cereals, vegetables, and sugar, jam, syrups, chocolate and confectionery. In each case, prices fell between April and May this year, compared with a monthly rise a year ago.

• Wed 19 June 2024 at 2:02 am GMT-6

  UK inflation drops to Bank of England’s 2% target

  

  Inflation has fallen back to the Bank of England’s 2% target for the first time in nearly three years, increasing the prospect of an interest rate cut this summer.

  The Office for National Statistics figures show the Consumer Prices Index (CPI) dropped to 2% in May, down from 2.3% in April. On a month-on-month basis, inflation held constant compared to a 0.3% rise last month.

  The figure indicates that prices are still rising, but at the slowest pace since July 2021. It comes following a sustained period of high inflation in the UK, which peaked at 11.1% in October 2022 – the highest level since 1981.

  Core inflation which excludes food, energy, alcohol and tobacco, as they tend to be volatile, is forecast to have fallen to 3.5% from 3.9%, also as expected.

  In the 12 months to May 2024:

  · Consumer Prices Index (CPI) rose by 2.0%, down from 2.3% in April
  · Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 2.8%, down from 3.0% in April

  Read Consumer price inflation ➡️ https://t.co/fDtPVw0dL1 pic.twitter.com/nJcbUU41AQ

  — Office for National Statistics (ONS) (@ONS) June 19, 2024