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FTSE 100 Live 11 July: GDP recovery continues, index higher but lags global progress

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

Better-than-expected GDP figures today gave an early boost to new Chancellor Rachel Reeves.

The 0.4% reading for May is the fourth increase in the past five months.

The economic optimism is not matched in the recruitment sector, however, after global player Hays said quarterly fees were down by almost a fifth.

FTSE 100 Live Thursday

  • GDP recovery continues

  • Hays recruitment fees down sharply

  • Stock market listing reforms unveiled

FTSE 100 higher in late trade as water firms run higher on bills news

16:12 , Michael Hunter

London’s FTSE 100 was continuing to push higher in late trade, with the mood helped by better looking numbers on economic growth.

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Utility firms were at the top of the leaderboard as investors reacted to news that water bills would be allowed to rise by over a fifth.

The industry hit out saying it was not enough while consumer groups were complaining bill payers were being rinsed to pay for overdue upgrades to infrastructure.

Whatever the ebb and flow of the debate, shares in the sector were in demand on the market. Severn Trent topped the leaderboard, up 123p at 2740. United Utilities was up 36p at 1102p.

Overall in the last half hour of trade the FTSE 100 was up 30 points at 8,223.37  a gain of 0.36%.

Wall Street on course for steady start as traders absorb inflation data

14:10 , Michael Hunter

Wall Street stocks are expected to slip in opening trade, after inflation data for June showed slowed down, but stayed clearly above official targets.

The readout came anid a sense of unease over the timing of an interest rate cut in the US.

The US Consumer Price Index rose 3% in June, down from May’s 3.3%, and lower than the 3.1% expected.

But that still left it a full percentage point above the Federal Reserve’s 2% target level.

Traders are watch for when the central bank will cut interest rates after two days of testimony this week from its chairman, Jerome Powell, this week.

According to futures trade, the S&P 500 will slip by 6 points in opening trade.

City Comment

13:04 , Simon English

A year ago Severn Trent boss Liv Garfield sent her fellow utility bosses a chirpy Friday night email.

In her self-described “sensitive” and “highly confidential” note, she suggested the other bosses – supposedly, remember, in deep competition with each other – gang up to fend off the threat of nationalisation from a new Labour government.

Raw sewage was already leaking everywhere at this point, but Garfield’s focus was plainly on protecting the status quo than cleaning up her own mess.

You can see why. Last month it emerged she was paid £3.18 million for her work for her shareholders. The rest of us? Innocent bystanders in a shower of sludge.

In the past five years, Garfield has pocketed nearly £16 million, an amount that suggests business genius, or caprice. One or the other.

Even her fellow utility bosses were so appalled by her stance that they leaked the email, along with some fairly dirty remarks, to the Evening Standard. We printed it. She was not amused.

That her musings were taken badly even by her peers suggests a level of tone-deafness that belongs in Hollywood, not in British public life. She might do well in Tinseltown, the land of make believe.

Today, Severn Trent reported that “storm overflows remain a area of significant focus for our industry”. It aims to halve spills by 2030, a target which, if it even makes it will likely happen after Garfield has left anyway.

Water bills will go up, of course, to pay for what the water sector was supposed to have been doing anyway.

It doesn’t look like Labour is going to nationalise the water companies, since it is still in bending-over-backwards to be pro-business mode.

It is very hard to see what the rational case is – on any level, financial or otherwise – for not doing just that.

No one outside of the £3 million a year utility CEO class would think it an unfair reward for shoddy performance.

Pound hits 4-month peak as economic growth reading provides some cheer

12:16 , Michael Hunter

Sterling hit a four-month high today, helped by a warm reception in the market to better-than-expected economic growth in May.

The Office for National Statistics said gross domestic product rose 0.4% in May, a return to expansion after growth in April was washed out by rain, which left the economy on the flatline.

The pound neared $1.29, up 0.2% at $1.2874, having touched $1.2882 at its best for the day.

Russ Mould, investment director at AJ Bell. said: “The new government has placed economic growth at the heart of its policies and it will be pleased to have inherited positive momentum with GDP”.

FTSE 100 fails to match global gains, Galliford Try up 7%

10:24 , Graeme Evans

The mood around UK shares was today out of step with risk appetite seen elsewhere as the FTSE 100 index edged 18.68 points higher at 8212.19.

In contrast, all three of Wall Street’s major benchmarks last night jumped by 1% and Asia markets were led by a 2% advance for Hong Kong’s Hang Seng index.

Some of today’s best performances in London came from defensive-positioned stocks after water companies Severn Trent and United Utilities rose 2% and the supermarkets Sainsbury’s and Tesco lifted 3.4p to 264.2p and 1.7p to 312.3p.

On the fallers board, Next shares gave up 34p to 8858p and credit checking firm Experian retreated 14p to 3621p.

The FTSE 250 index was barely changed after a rise of 4.33 points to 20,932.09.

It was boosted by components distribution firm RS Group, which rose 4% or 29p to 749.6p after its first quarter sales suggested that trading conditions have stabilised.

Big mid-cap fallers included Trustpilot, even though the consumer reviews platform forecast 18% growth in half-year revenues to $100 million. The shares were 5% or 11.5p lower at 224p, having surged more than 60% this year.

In the FTSE All-Share, the strong run for construction firm Galliford Try continued after its year-end update sent shares up another 7% or 20p to 292p.

The group, whose operations are predominantly in the public and regulated sectors. forecast revenues and underlying profits above the top end of City forecasts.

It added that its “high-quality” order book had grown to £3.8 billion, fuelled by local and national commitments to improve the UK's economic and social infrastructure.

The shares have risen 29% this year but Panmure Liberum analysts today lifted their price target to 415p.

Heathrow faces 6% cut to landing fees

09:44 , Michael Hunter

Heathrow Airport will have to cut the landing fees it charges airlines if proposals made today by regulators go through, in the latest twist in a long-running row over fees at the West London hub.

The Civil Aviation Authority announced a new price cap for the amount the UK’s busiest airport can charge per-passenger, at £23.73 for 2025 and £23.71 for 2026. That would be a reduction of about 6%.

Heathrow has previously said that it should be allowed to charge up to £40, in order to invest in the airport’s future.

It disputed the CAA’s price cap proposals when they were announced in March, appealing to the Competition and Markets Authority.

Today’s revised cap reflects the CAA’s response to some of the finer detail of the CMA’s oversight, which also found that the CAA “had struck broadly the right balance between ensuring prices for passengers are not too high and encouraging investors to maintain and improve the airport.”

Airlines have claimed that fees are too high.

Heathrow’s consultation on fees for 2025 is due later this summer.

09:43 , MJ Gleeson shares fall following 'less vigorous' home sales

Shares in affordable homes specialist MJ Gleeson are taking a hit after it said sales were “less vigorous than expected” in the last six months.

The trend came as buyers were deferring decisions as expectations of interest rate cuts moved back.

It expects demand to come back when the Bank of England starts to bring the benchmark cost of borrowing down. City experts think action will come from Threadneedle Street this summer.

Gleeson also added its voice today to the chorus of approval among developers for Labour’s plans to get Britain building.

Graham Prothero, its CEO, said: “We welcome the Chancellor's comments regarding mandatory housing targets, planning reform and other measures,” adding:

“There is much to do if aspiration is to become reality, but the determination that we have seen since the election to get things done marks a positive change in approach.”

Gleeson has been listed in London since the 1960s and builds mainly in the north of England and the Midlands. Its shares fell by over 13p to 577p.

Labour has pledged to build 1.5 million new homes within its current five-year term.

Dr Martens looking for boost in US sales

09:08 , Simon English

DR MARTENS offered some solace to shareholders today when it said it had started the year on solid footing.

The company has struggled lately to meet expectations – the shares have crashed 40% this year.

The shoe brand said sales are now in line with previous guidance, while the results for the year “will be very second-half weighted, particularly from a profit perspective”.

It sells fewer boots and shoes in the summer period.

Today the shares rose 1p to 75p which leaves the business valued at £720 million.

The company is facing competition from rivals including Amazon, whose Chunky Lace-up Ankle Boots promise no blisters and cost notably less.

It aims to boost sales in the US. The statement said: “Work on our cost action plan is ongoing and we will provide a detailed update at our first half results in November.”

Record numbers at Jet2

08:58 , Simon English

Britons are booking their summer holidays later than ever, but still regard a family trip abroad as vital, says a leading travel firm

Jet2 today unveiled record profits and passenger numbers for the year to March, as its slightly upmarket brand attracted attention away from Easyjet and TUI.

Sales rose 24% to £6.5 billion, with profits up 43% to £529 million.

Jet2 says competition is strong.

“Passengers are currently booking much closer to departure and therefore, pricing for our flight-only and package holiday products must remain attractive,” it said.

Despite a cost of living crisis, “we continue to believe that the end-to-end package holiday is a resilient and popular product which remains high on the priority list for our Customers, even during uncertain economic times”.

Passenger numbers rose by 9% to 17.7 million. It will start flying from Bournemouth Airport next February.

CEO Steven Heapy said: “A holiday for most UK consumers is an experience that is eagerly anticipated and, if provided in the right way, fondly remembered.”

Jet2 shares rose 9p to 1295p.

Shares in water companies rise after Ofwat update, FTSE 100 flat

08:31 , Graeme Evans

Shares in Severn Trent and United Utilities have risen by more than 1% and Pennon Group by 6% in the FTSE 250 after today’s Ofwat draft determination.

The watchdog has proposed that average water bills in England and Wales will rise by £19 a year over five years, alongside a spending package of £88 billion by water companies.

The utility firms topped an otherwise subdued FTSE 100 index, which failed to benefit from record performance elsewhere to stand 2.61 points higher at 8196.12.

Hays shares fell 0.6p to 89.1p after it reported a drop in fees of about a fifth, in line with the challenging conditions reported this week by PageGroup.

Recruitment firm Hays reports drop of almost fifth in fees

07:48 , Michael Hunter

Hays, the recruitment giant, has said “challenging” market conditions meant fees were down by almost a fifth in the quarter to the end of June.

The global company said “we continued to see longer-than-normal 'time-to-hire',” amid “low levels of confidence”, and it warned it expected more of the same.

“Given ongoing global uncertainties, in the near-term we expect our key markets will remain challenging”, said Dirk Hahn, chief executive.

Group fees fell 17% and they were down by the same margin in the UK, with fees for filling permanent roles lower by 22% and temporary ones down 14%.

Hays said it made annualised cost savings of around £60 million during the full year.

S&P 500 record momentum continues

07:47 , Graeme Evans

The S&P 500 index last night rose 1% to set its 37th record this year, closing above 5600 for the first time.

Nvidia shares rose another 3% as the Magnificent Seven group of mega cap stocks lifted another 1.3% to take their gains for the year over 50%.

The performance means the S&P 500 has risen for seven days in a row, the first time this has happened since November.

Deutsche Bank points out this morning that the current run of 10 out of 11 gains in a row is the best since late 2021. Another positive session today will make it the best since April 2019.

London stock market overhaul eases listing rules including on shareholder votes

07:38 , Michael Hunter

Reforms designed to boost London’s struggling stock market have been announced this morning, in a bid to keep the City competitive with international rivals, especially New York.

The changes will cut requirements over shareholder votes and allow founders and venture capitalists to hold the kind of shares that give them more control of companies for longer.

Outlined by the Financial Conduct Authority this morning, the changes have been resisted by investors but backed by companies.

The FCA says it has “been clear that the new rules involve allowing greater risk”, but the changes “better reflect the risk appetite the economy needs to achieve growth.”

It added:

“The overhaul of listing rules better aligns the UK’s regime with international market standards.

“It also ensures investors will have the information they need to make decisions about their money, while maintaining appropriate investor protections to hold the management of the companies they co-own to account.”

Early boost for Chancellor as GDP recovery continues

07:36 , Graeme Evans

Today’s 0.4% rise in GDP in May is the fourth increase in the past five months.

Capital Economics said the result suggests that the dual drag on activity from higher interest rates and higher inflation is starting to fade.

UK economist Ashley Webb added: “The stronger-than-expected rise in May will be welcomed by the new Chancellor after announcing earlier this week that she will make kickstarting economic growth a “national mission”.

“Indeed, the improving economic outlook suggests the government may benefit from the economic recovery being stronger than most forecasters anticipate.”

The consultancy thinks that the Bank of England will cut interest rates from 5.25% to 5% at the next policy meeting in August, although the timing of the first cut will be heavily influenced by June’s inflation and May’s labour market data releases next week.

US inflation update set to test rate cut hopes

07:30 , Graeme Evans

US inflation figures due later are expected to show the headline annual rate has dropped from 3.3% to 3.1%, with the core figure unchanged at 3.4%.

A soft print will reinforce expectations that the Federal Reserve might deliver two rate cuts this year, with September and December the most likely dates.

Julien Lafargue, chief market strategist at Barclays Private Bank, said ahead of this afternoon’s release: “We expect to see continued albeit slow disinflation.

“In particular, price pressures should have stayed relatively elevated within services. Similarly, our view is that any normalisation in housing-related costs is likely to take time.

“That said, the direction of travel remains unchanged and we continue to expect lower inflation ahead. As such and with increasing signs that the US economy is slowing down, we believe that the Fed could be in a position to lower interest rates in September.”

GDP figures for May beat hopes

07:20 , Graeme Evans

Momentum in the UK economy continues to build after figures today showed a 0.4% month-on-month GDP improvement in May.

The performance beat City forecasts of a 0.2% increase and included service sector growth of 0.3%.

The quarterly result also exceeded expectations, with the 0.9% growth in the three months to May better than the 0.7% forecast.

It is the strongest three-monthly growth rate since January 2022.

FTSE 100 seen higher as global markets rally, US inflation reading due

07:12 , Graeme Evans

The FTSE 100 index is pointing higher after Wall Street’s three leading benchmarks all rose 1% yesterday.

The S&P 500 index topped 5600 for the first time, with the technology sector again the driving force amid hopes for a September cut in US interest rates.

The rates optimism will be tested later with the release of US inflation figures, which economists expect will show a decline in the annual rate to 3.1%.

London’s FTSE 100 index bucked a three-day losing streak yesterday by rising 0.7%, with the top flight forecast to add another 26 points at 8220.

In Asia, the Hang Seng index in Hong Kong is up by 1.9% while Tokyo’s Nikkei 225 has risen 1.2% to record level above 42,000.