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FTSE 100 Live 1 May: US Fed notes ‘lack of further progress’ on inflation as it holds interest rates

FTSE 100 Live (Evening Standard)
FTSE 100 Live (Evening Standard)

The US Federal Reserve has held interest rates again, citing a ‘lack of further progress’ on inflation.

Upgraded profit guidance by GSK stood out today in a session featuring updates by Next, Smith & Nephew and Sensodyne business Haleon.

The quartet all signalled robust trading at the start of 2024, helping the FTSE 100 index to begin May in resilient fashion.

Traders are also looking ahead to tonight’s US Federal Reserve decision and whether September is still the most likely month for the first cut.

FTSE 100 Live Wednesday

  • Next retail momentum continues

  • Aston Martin shares fall after update

  • Mulberry sales struggle in UK

Fed cites 'lack of further progress' on inflation

Wednesday 1 May 2024 19:04 , Daniel O'Boyle

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The Federal Reserve said: “Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated. In recent months, there has been a lack of further progress toward the Committee's 2 percent inflation objective.”

 (AFP/Getty Images)
(AFP/Getty Images)

Federal Reserve holds

Wednesday 1 May 2024 19:01 , Daniel O'Boyle

The US Fed has held its interest rates at 5.25%-5.5%, as expected.

It comes after new fears of inflation rearing its head again in the US.

Fed call in 15 minutes - hold near certain

Wednesday 1 May 2024 18:43 , Daniel O'Boyle

With just over 15 minutes until the US Federal Reserve’s latest interest rate call, markets see a hold as close to certain.

Markets are pricing in only a one-in-two-hundred chance of a cut.

That’s about the same as the odds most bookies are currently giving on Liverpool winning the Premier League.

HSBC Innovation Banking chair departs

Wednesday 1 May 2024 17:11 , Simon Hunt

The chair of HSBC Innovation Banking has stepped down in the latest sign of a boardroom reshuffle at the firm formerly known as Silicon Vally Bank UK.

Darren Pope, who had been a director of the bank since 2021, formally resigned at the beginning of last week, according to company filings.

The 58-year-old, who also serves as a board member of Virgin Money and previously worked at Lloyds, is to be replaced by Mridul Hegde, is an existing independent non-executive director at HSBC Innovation Banking UK and its parent HSBC UK, where she chairs the risk committee.

HSBC Innovation Banking said Darren “stepped down to focus on his existing board commitments and to pursue other opportunities.”

Read more here

FTSE closes down 0.3%

Wednesday 1 May 2024 16:42 , Daniel O'Boyle

The FTE 100 closed down 0.3% at 8,121.24 today, drifting further from record territory.

It’s the second straight decline after a strong run to new highs.

Top risers included Unite and GSK. Ashtead and JD Sports were among the big fallers.

Major UK banks see income more than double from cash held with Bank of England

Wednesday 1 May 2024 16:19 , Daniel O'Boyle

Four of the UK’s biggest banks have received more than £9 billion in interest on cash held at the Bank of England, more than double the amount the previous year, according to new data.

The UK’s Treasury Committee said the data showed a “staggering scale of unanticipated income high street banks are bringing in” thanks to higher interest rates.

The Bank of England bought £895 billion worth of bonds, similar to a loan, as part of efforts to boost the economy after the global 2008 financial crisis.

Read more here

Virgin Money offers 10% bonus rate for current account switchers

Wednesday 1 May 2024 15:44 , Daniel O'Boyle

Virgin Money has launched a new current account switching offer, at a time when several cash sweeteners for people to move their bank have vanished.

The new current account offer gives switchers to Virgin Money’s current accounts – the Virgin Money M Account, M Plus Account and Club M Account – a bonus interest rate of 10% gross fixed on current account balances up to £1,000 for a year from July 1 2024 to June 30 2025.

Both the Virgin Money M Plus Account and Club M Account already offer an interest rate of 2.00% gross (variable) on current account balances up to £1,000.

Read more here

City Comment: Why is twice as much pension cash invested in seven US firms than the entire UK stock market?

Wednesday 1 May 2024 13:48 , Jonathan Prynn

The UK stock market has had a spring in its step over recent weeks thank goodness. And not before time.

Investors seem to have finally woken up to the value that can be found in the unloved FTSE 100.

But the bigger problem has not gone away.

UK listed equities are all too frequently overlooked, even, or perhaps particularly, by UK pension funds — for a whole variety of reasons that go back to Brexit and beyond.

Read more here

Why is twice as much pension cash invested in seven US firms than the entire UK stock market?

Wednesday 1 May 2024 13:05 , Daniel O'Boyle

The UK stock market has had a spring in its step over recent weeks thank goodness. And not before time.

Investors seem to have finally woken up to the value that can be found in the unloved FTSE 100.

But the bigger problem has not gone away.

UK listed equities are all too frequently overlooked, even, or perhaps particularly, by UK pension funds — for a whole variety of reasons that go back to Brexit and beyond.

Read more here

Financial complaints have jumped by around a fifth, says ombudsman service

Wednesday 1 May 2024 12:41 , Daniel O'Boyle

Banking and credit complaints have helped to drive a rise in customer gripes received by an ombudsman service.

Overall, the number of financial complaints received in the second half of 2023 rose by nearly a fifth compared with the same period a year earlier, the Financial Ombudsman Service (FOS) said.

The free-to-use service, which was set up to resolve disputes between consumers and financial businesses, received a total of 95,349 complaints between July 1 and December 31 2023, which was 19.3% higher than the 79,921 complaints received in the same period in 2022.

Read more here

Domino’s reports spike in app use and eyes sales boost from Euro 2024

Wednesday 1 May 2024 12:27 , Daniel O'Boyle

Domino’s Pizza has seen a surge in customers using its app as the food delivery chain eyes more store openings in 2024, despite sales slowing over the start of the year.

The company said its sales dipped 0.4% to £385.1 million in the first three months of the year, compared with the same period last year.

The total number of orders slipped by 1.8% to 17.7 million.

Read more here

Flutter shareholders approve US primary listing

Wednesday 1 May 2024 11:52 , Daniel O'Boyle

Paddy Power owner Flutter Entertainment is to officially ditch its London primary listing for the US, as shareholders voted to approve the switch today.

The business began its secondary listing on the New York Stock Exchange earlier this year, but announced plans the same day to move its primary listing there.

The change means that Flutter will leave the FTSE 100, and will be eligible for inclusion in the S&P 500, which boss Peter Jackson said was a major reason behind the plan.

Johnson Service Group shares soar as energy prices ease

Wednesday 1 May 2024 11:02 , Daniel O'Boyle

Shares in hotel linens business Johnson Service Group surged this morning as it revealed revenue grew to £114 million in the first three months of 2024 and margins are set to return to 2019 levels.

High energy costs had hit margins, but JSG said these expenses “have continued a general trend downwards since the end of 2023”. Those declines will lead to £3 million in savings this year, increasing to £9 million by 2026.

The business expects to see margins of 14% by 2026.

Analysts at Investec said: “In our view, the shares continue to represent compelling value, both relatively speaking and vs. direct peers.”

The shares climbed by 8.6% to 140.8p, valuing the business at £583 million.The surge means the shares are now up slightly for the year after a slow start.

FTSE 100 higher despite US weakness, Haleon shares fall

Wednesday 1 May 2024 10:19 , Graeme Evans

Robust updates by Smith & Nephew and the Panadol maker Haleon got contrasting treatment in the FTSE 100 index today.

Both firms reiterated full-year sales targets, but the hip and knee replacement business fared better among investors as its shares jumped 3% or 33.5p to 1012.5p.

The rally reflected relief over margin progress as chief executive Deepak Nath carries out his 12-point plan to make Smith & Nephew a “consistently higher growth company”.

Haleon, meanwhile, reversed 2% or 5.6p to 333.9p as shares in the GSK spin-off company behind brands including Sensodyne continued their mixed performance.

Price rises led to quarterly organic sales growth of 3%, a result held back by comparisons with last year’s cold and flu season and destocking by some US retailers.

Hargreaves Lansdown head of equity funds Steve Clayton called the results “a decent enough quarter” amid progress at the margin level. He added: “The rest of the year gets easier on paper as the comparatives improve for Haleon.”

Today’s blue-chip updates, which also included those by GSK and Next, helped the FTSE 100 index make a steady start to May with a gain of 27.21 points to 8171.34.

The prospect of tonight’s Federal Reserve interest rates decision had a bearing on risk appetite, particularly after Tuesday’s heavy losses on Wall Street.

US-exposed stocks including Sunbelt equipment hire firm Ashtead, JD Sports Fashion and Scottish Mortgage Investment Trust joined Haleon at the top of the fallers board.

September is seen as the most likely month for the US Federal Reserve to begin easing monetary policy, with rates certain to remain in the range of 5.25% and 5.5% tonight.

The FTSE 250 index dipped 3.40 points to 19,961.99, with IT services firm Computacenter down 3% or 70p to 2512p amid continued challenging UK conditions.

Domino’s Pizza UK fell 0.6p to 325.2p after its in-line update reported a return to order growth in February and March as it faces up to “uncertain” trading conditions.

Manufacturing sector in decline, but at a slower pace than thought

Wednesday 1 May 2024 09:39 , Daniel O'Boyle

The UK manufacturing sector’s decline in April was slower than initially thought, according to the S&P Global UK Manufacturing PMI survey.

The April manufacturing PMI for the UK came to 49.1, ahead of the “flash” figure of 48.7. However, with the reading remaining below 50, that still puts  the sector in decline.

The manufacturing sector had been in decline for 19 consecutive months before a recovery in March.

Rob Dobson, director at S&P Global Market Intelligence, said: “The UK manufacturing sector suffered a renewed downturn in April, as output and new orders contracted  following short-lived rebounds in March.

“The sector is still besieged by weak market confidence, client destocking and disruptions caused by the ongoing Red Sea crisis, all of which are contributing to reduced inflows of new work from domestic and overseas customers, with specific reports of difficulty securing new contract wins from Europe, the US and Asia.”

GSK shares lift on upgraded earnings guidance

Wednesday 1 May 2024 09:35 , Simon Hunt

Pharma giant GSK today upped its profit forecast as it anticipated stronger sales in HIV, infectious diseases and respiratory drugs.

The Brentford-based business, which will shortly relocate to New Oxford Street, said it now expects full-year core earnings per share to rise between 8% and 10%, up from the previous range of 6-9%.

Total sales for the first three months of the year rose 10% to £7.4 billion.

GSK’s shingles vaccine was among its best-sellers, with sales growth of 18%, but its new respiratory vaccine Arexvy sold below expectations which it put down to “seasonality patterns.”

CEO Emma Walmsley said: “We have strengthened prospects for growth in all of our key therapeutic areas this quarter.”

GSK shares rose 2.2% to 1710p.

Market snapshot: Shares edge up

Wednesday 1 May 2024 09:11 , Daniel O'Boyle

The FTSE 100 is very slightly higher so far today.

Take a look at our market snapshot:

Mulberry continues to struggle with 'tourist tax'' impact

Wednesday 1 May 2024 08:46 , Daniel O'Boyle

The slowdown in luxury spending continues to hit high-end handbag brand Mulberry, as the business reported another 4% decline in sales in the three months to 30 March.

Mulberry has struggled in the UK in particular, as the end of VAT-free shopping hit the luxury segment, and in Asia, where spend on top-end fashion items has flowed dramatically in recent months.

CEO Thierry Andretta said: "While we achieved positive revenue growth in the first half, Mulberry has not been immune to the broader downturn in luxury spending experienced in recent months, particularly in the UK and Asia. This decline was partially offset by positive trading in the US, where we have benefitted from increased brand awareness."

Shares lost another 2.3% to 105p, valuing the business at £63 million. At one point in 2012, the business was worth £1.2 billion.

 (Mulberry)
(Mulberry)

Smith & Nephew leads flat FTSE 100, Aston Martin struggles

Wednesday 1 May 2024 08:32 , Graeme Evans

Improved profits guidance by GSK failed to kickstart its shares today, with the wider FTSE 100 index also struggling to make headway.

With most European markets closed for a public holiday and the focus on this evening’s US interest rates decision, London’s top flight edged 8.07 points higher to 8152.20.

GSK added 0.2% or 3.5p to 1676.5p, continuing the sideways trend since February. That’s despite a robust start to 2024 resulting in improved full-year guidance for operating profits growth of between 9% and 11%.

Shares in GSK’s former consumer healthcare arm Haleon fell 6.6p to 332.9p after its in-line trading update, while Next fell 110p to 8898p despite reporting robust sales growth in the first quarter.

Medical devices group Smith & Nephew was the best performing stock, up 27p to 1007p after it reiterated full-year guidance in its AGM statement.

The FTSE 250 index fell 37.85 points to 19,927.54, led by Aston Martin Lagonda after its latest update sent shares 6% or 9.2p lower to 139p.

Aston Martin Lagonda pledges 'transformation' with launch of four new models after first-quarter loss

Wednesday 1 May 2024 07:58 , Michael Hunter

World-famous luxury sports car maker Aston Martin Lagonda today pointed to a series of new model launches later in the year, after its first-quarter loss widened by more than expected.

In the first three-months of the year, the firm lost £111 million, up from £57 million a year ago. It sold 945 cars in terms of “wholesale volumes”, down over a quarter.

But it said four new models woulds be launched later this year, weighting 2024to the second half. That will include its V12 car, the company confirmed.

Lawrence Stroll, CEO, said: “2024 is a year of immense product transformation at Aston Martin, with the introduction of four new models to the market before the end of the year.

“Our first quarter performance reflects this expected period of transition, as we ceased production and delivery of our outgoing core models ahead of the ramp up in production of the new Vantage, upgraded DBX707 and our upcoming V12 flagship sports car”

Aston Martin DBX707 (Aston Martin Lagonda)
Aston Martin DBX707 (Aston Martin Lagonda)

Currency hits Haleon revenue in first quarter

Wednesday 1 May 2024 07:44 , Daniel O'Boyle

Revenue declined at Sensodyne maker Haleon in the first quarter, as the business was hit by foreign currency changes.

The business spun off from GSK in said revenue was down to £2.92 billion. It would have been up if not for currency changes and the impact of selling certain brands like Chapstick, but even this growth was driven only by price rises, as volumes fell.

For the year, it expects revenue growth, excluding the impact of currency changes and M&A, to be between 4% and 6%.

The business announced 435 job cuts yesterday as it closed a factory in Maidenhead.

CEO Brian McNamara said: “First quarter trading was solid and in line with guidance shared when we reported FY 2023 results. Organic revenue growth of 3.0% was impacted by lapping tough comparatives in the prior year particularly in Respiratory Health and Pain Relief.

“Despite this, strong innovation combined with successful execution of our go-to-market strategy underpinned performance in our Power Brands which grew 5.2% with particularly strong performance in our Oral Health and VMS portfolio.”

Next on the up

Wednesday 1 May 2024 07:35 , Simon English

Next is on track to make profits of £1 billion in 2025 as it continues to dominate the high street.

It saw sales up 5.7% in the quarter to April 27 and should make profit for the full year of £960 million.

That leaves it set to smash the £1 billion profit mark next year.

It did issue a weather warning, saying: “We expect the sales performance in the second quarter to be weaker than the first quarter because last year benefited from particularly warm weather from late May through to the end of June..”Next has lately taken stakes in FatFace and Reiss, deals which sees it take on the back office work while the brands are maintained.

Online sales in the quarter were especially strong, up 8.8%.

Wickes' design and installation sales slide 18%

Wednesday 1 May 2024 07:33 , Simon Hunt

There were signs Brits are paring back on their home improvement spend after Wickes said it had seen an 18% slide in design & installation sales since the start of the year.

The kitchen, bathroom and DIY retailer said it would “deliver cost savings in Design & Installation as a result of, and to help offset, the lower sales volumes currently being experienced.”“Customers continue to be enthusiastic about home improvement but are focusing on smaller projects,” Wickes said, adding that sales of smaller items like paint had seen a moderate increase in sales.

Overall sales fell by 4.2% during the period.

 (Wickes)
(Wickes)

Nationwide: UK house price rebound ends in April

Wednesday 1 May 2024 07:26 , Daniel O'Boyle

UK house prices fell month-on-month in April, according to the country’s biggest building society Nationwide, reversing the recent rebound.

The average price across the UK was £261,962.

House prices were up 0.6% year-on-year.

Sam Mitchell, CEO of Purplebricks, said: “There is still positive sentiment from buyers and we are seeing viewing activity increase, signalling stability in the housing market. While several banks have slightly increased mortgage rates, there has also been an increase in new market offerings, both have sparked buyers into action which has resulted in more sales. The Bank of England has just announced mortgage rate approvals are at an all time high and people will want to capitalise on this.

, Robert Gardner, Nationwide's Chief Economist, said: “The slowdown likely reflects ongoing affordability pressures, with longer term interest rates rising in recent months, reversing the steep fall seen around the turn of the year. House prices are now around 4% below the all-time highs recorded in the summer of 2022, after taking account of seasonal effects.”

FTSE 100 steady ahead of US rates update, Brent Crude below $86

Wednesday 1 May 2024 07:22 , Graeme Evans

The FTSE 100 is expected to hold firm, even though Wall Street struggled last night ahead of today’s Federal Reserve interest rates announcement.

Weaker consumer confidence figures fuelled the sell-off to leave the Dow Jones Industrial Average and S&P 500 index down 1.5% and the Nasdaq off 2%.

Amazon shares were 3% lower but fared better in extended hours after a big jump in first quarter profit and forecast-beating sales in cloud services.

US interest rates will stay on hold tonight, with the focus on whether September is the most likely date for an easing in monetary policy.

Wall Street futures are mixed ahead of the meeting, with the FTSE 100 index set to open flat after yesterday’s subdued performance.

Brent Crude, meanwhile, retreated to $85.60 a barrel after figures showed a sharp increase in US stockpiles.

Recap: Yesterday's top stories

Wednesday 1 May 2024 06:48 , Simon Hunt

Good morning from the Standard City desk.

It is only in the City of London — for unique historical reasons — that businesses can vote for their elected representatives.

If that bizarre democratic franchise was extended across the rest of the capital, it seems that Sadiq Khan would be the preferred choice of London’s wealth creators.

A poll yesterday showed Labour holding a 15% lead over the Conservatives among business leaders.

That is less that the gap among the actual electorate, but still significant given the traditionally closer links between business and the Tories.

The lead may not reflect any great love for the Mayor, despite his protestations that he would lead the most pro-business City Hall administration in history.

We sit through too many moans about levels of crime and London’s sclerotic planning regime, among other complaints, to be under any illusion about that.

But the Tories have not done themselves any favours with a relentlessly anti-London tone to their policy and speech making since Brexit.

~

Here’s a summary of our top stories from yesterday: