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FTSE 100 Live 19 September: Index higher after deep US rates cut, Next and Ocado Retail upgrade guidance

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

Markets rally after 0.5% US rates cut, Rolls-Royce up another 2%

10:15 , Graeme Evans

A surge in risk appetite swept the FTSE 100 index higher today as traders cheered last night’s super-sized interest rate cut by the US Federal Reserve.

The message from central bank chief Jerome Powell that the 0.5% reduction was about protecting growth rather than fear of an imminent recession boosted sentiment.

London’s top flight rose 0.9% or 75.20 points to 8328.88 and the FTSE 250 by 1% or 208.32 points to 21,043.63.

IG chief market analyst Chris Beauchamp said: "With the Fed out of the way, markets may well have some room to rally, confident that the US economy is in a good place. Perhaps we will get that soft landing after all."

Mining stocks benefited the most from the US economic support, particularly as pressure on the dollar from lower rates tends to help commodity prices. Anglo American surged 4% or 82p to 2205.5p, followed by a 3% or 158p rise to 4923.5p for Rio Tinto.

The improved outlook for US growth stocks fired up the London-listed Alphabet backer Pershing Square Holdings, which rallied 4% or 134p to 3756p.

There was also a big gain of 174p to 5714p for the Sunbelt plant hire business Ashtead, which generates most of its revenues in North America.

Other stocks on the front foot included Burberry, up 19.8p to 628p, and Rolls-Royce as the engine maker moved deeper into record territory with a 2% or 11p rise to 507p.

On a shortened FTSE 100 fallers board, defensive plays were out of favour as SSE eased 28.5p to 1968p and consumer healthcare business Haleon dipped 1.9p to 394.9p.

IT-focused stocks featured among the biggest FTSE 250 risers, including Bytes Technology Group after it reported a strong first half performance in line with expectations. Shares jumped 7% or 31.4p to 506p, while Computacenter put on 102p to 2570p.

Retailers and miners rally in strong FTSE 100 session

08:23 , Graeme Evans

The FTSE 100 index is 0.8% or 70.17 points higher at 8323.85, with Next among the strong performers after its latest upgrade to profit guidance.

The retailer’s rise of 3% or 330p to a fresh record of 10,665p extends the improvement for this year to more than 30%.

Marks & Spencer also fared well, continuing its strong run with a rise of 4.1p to 371.5p after food joint venture partner Ocado raised revenues guidance.

Ocado shares jumped 7% or 25.8p to 375.4p in the FTSE 250.

The read-across from the Next update helped the shares of Primark owner Associated British Foods to improve 26p to 2261p.

Dollar weakness following last night’s big US interest rate cut benefited mining stocks in the FTSE 100 as Anglo American jumped 4% and Rio Tinto by 3%.

Martin Sorrell's S4 Capital warns of bigger annual revenue drop

07:58 , Michael Hunter

Martin Sorrell’s digital advertising agency S4 Capital pointed today to a bigger drop in annual revenue as it reported a half-year operating loss.

Net revenue in the first half fell 13.5% on a like-for-like basis to £376.1 million. Its operating loss was £3.7 million.

The firm said: “We target like-for-like net revenue to be down on the prior year, but to a greater extent than that assumed in May 2024 in our last trading update.”

Sorrell added:

“Trading in the first half reflects the continuing impact of both challenging global macroeconomic conditions and high interest rates.

“This particularly impacted marketing spend by some technology clients and our Technology Services practice was affected by a reduction in one of our larger relationships”, and:

“We maintain our profit target for the full year and, as in prior years, financial performance will be significantly second half weighted.”

Wall Street seen higher after US rates cut, gold near $2600

07:56 , Graeme Evans

Futures markets are pointing to strong gains on Wall Street later as traders digest the Federal Reserve’s supersized half point cut in interest rates.

Two more rate cuts are expected this year but Federal Reserve chair Jerome Powell insists the central bank is in no rush as projections for the US economy remain healthy.

The boost to risk appetite means S&P 500 and Nasdaq Composite futures are up by 1.1% and 1.7% respectively. The Nikkei and Hang Seng index both rose by more than 2% this morning.

Gold briefly touched a record $2600 following the Federal Reserve decision before settling at $2575 this morning.

UK interest rates on hold amid focus on November cut

07:44 , Graeme Evans

The Bank of England’s monetary policy committee is set to leave interest rates at 5% today, having voted 5-4 for a first cut in the cycle at its meeting on 1 August.

With this month’s decision seen as 7-2 in favour of no change, the main focus is likely to be the pace of quantitative tightening for the next 12 months.

The next cut in base rate is seen in November, with this week’s services inflation reading of 5.6% putting paid to hopes of an earlier move.

Deutsche Bank expects the Bank to retain its language around the need for sufficiently restrictive policy.

“However, we see dovish risks too, with the MPC signalling more confidence in the wage and price outlook, setting the stage for a November rate cut.”

The City firm expects quarterly rate cuts over the next couple of years, before interest rates settle at 3% around summer 2026.

Close Brothers to sell wealth management business for £200 million as car loan payouts loom

07:43 , Michael Hunter

Close Brothers, the historic City bank, is selling its wealth management arm to Oaktree Capital in a deal worth £200 million, it said today.

The announcement came alongside the 150-year-old’s firm’s annual results. Profit before tax rose 27% to £142 million and its loan book was up 6% to £10.1 billion.

But the company is braced for the potential impact of a wave of claims over the way car loans were sold. The main City regulator, the Financial Conduct Authority, announced this year that it was investigating the way dealerships were incentivised to sell more expensive loans to customers who could have qualified for cheaper rates.

Close Brothers has been preparing its own finances for a potential wave of compensation, in what could be the biggest series of payouts since the payment protection insurance scandal.

The firm announced this week that its CEO, Adrian Sainsbury, was taking a leave of absence for medical reasons.

He said today: “Our top priority has been to further strengthen our capital position and protect our valuable franchise, whilst continuing to support our nearly three million customers.

“The FCA's review of historical motor finance commission arrangements announced in January introduced significant uncertainty for the group.”

Sainsbury also said: “This year's performance demonstrates the group's resilience” and that it was “making significant progress against the capital actions previously outlined”.

Close Brothers said this week that its finance director, Mike Morgan, will assume Sainsbury’s “principal responsibilities”, supported by its chairman, Mike Biggs.

Ocado and M&S joint venture ups revenues estimate

07:27 , Graeme Evans

Ocado Retail, the grocery technology company’s joint venture with Marks & Spencer, today lifted its full year revenue guidance.

The new forecast for low double-digit growth comes after retail revenues rose by 15.5% to £658 million in the 13 weeks to 1 September.

Volumes improved 15.4% year-on-year and average orders per week by 14.7% to 437,000.

All other guidance is unchanged, including for an adjusted margin of about 2.5%.

Ocado Retail chief executive Hannah Gibson said: “We're pleased with the progress we're making and excited about how much more there is to deliver."

Next forecasts £995m profit after another lift to guidance

07:19 , Graeme Evans

Next continues to trade ahead of City expectations after the retailer lifted its full-year pre-tax profit guidance by another £15 million to £995 million.

The forecast for annual profits growth of 8.4% comes after sales lifted 6.9% in the first six weeks of the second half-year, materially ahead of expectations.

Full-price sales are set to be 4% higher across the year, having risen by 4.4% in today’s half-year results. Pre-tax profits for the six months to July lifted 7.1% to £452 million.

The retailer increased its profit guidance by £20 million on Thursday (Ian West/PA) (PA Archive)
The retailer increased its profit guidance by £20 million on Thursday (Ian West/PA) (PA Archive)

FTSE 100 seen higher after big US rates move

07:01 , Graeme Evans

The Federal Reserve’s 0.5% cut to interest rates has given a lift to global markets, with the FTSE 100 index forecast to open 68 points higher at 8322.

Pressure on the dollar means Asia markets are also in positive territory after the Nikkei 225 improved 2.3% and the Hang Seng index by 1.8%.

Wall Street finished slightly lower last night, having initially risen after the Federal Reserve announcement.