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FTSE 100 Live 20 March: US Fed holds interest rates ahead of Bank of England decision tomorrow

FTSE 100 Live 20 March: US Fed holds interest rates ahead of Bank of England decision tomorrow

Inflation’s retreat to its lowest level in two years today fuelled hopes of a first cut in interest rates by the summer.

The lower-than-expected 3.4% reading comes ahead of tomorrow’s Bank of England meeting and tonight’s rates outlook guidance by the US Federal Reserve.

In corporate developments, Asia-focused insurer Prudential has beaten City forecasts with 2023 results that included a 45% rise in new business profits.

FTSE 100 Live Wednesday

  • Food prices drive inflation fall

  • Federal Reserve to update rates outlook

  • FCA fires retirement advice warning

Plenty of earnings before Bank of England decision tomorrow

Wednesday 20 March 2024 18:05 , Daniel O'Boyle

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The Bank of England’s interest rate decision will be the biggest evet tomorrow, even though a hold seems all-but certain.

But there are plenty of corporate announcements expected as well. Here’s how tomorrow looks.

ResultsNext, Direct Line, Aquis Exchange, Gulf Keystone Petroleum, M&G, Gatwick Airport, Centamin

US Results

FedEx, Nike

Economics

12pm: Bank of England rate callPublic sector finances

Fed holds rates

Wednesday 20 March 2024 18:02 , Daniel O'Boyle

The US Federal Reserve has held its interest rates as expected.

It’s the fifth consecutive hold for the US central bank.

City Voices: Central bank independence could be under threat. Here’s why that matters

Wednesday 20 March 2024 17:48

The US election cycle is focusing on all the usual issues: personalities, inflation, identity, the environment, foreign relations and geopolitics. Yet the one subject that could affect the global economy and the finances of everyone on the planet has completely escaped discussion: will the Fed remain independent? Or will it be shanghaied into lowering rates to absorb the massive debt build-up?

Monetarism is a system whose core values may befuddle a mortal’s understanding of a national economy. The way a country works is very different to that of households and businesses. There the rule is simple: earn more than you spend. One may borrow to acquire an asset or stay afloat, but within strict limits.

Read more here

'99% chance' Fed holds rates

Wednesday 20 March 2024 17:03 , Daniel O'Boyle

Markets see today’s Federal Reserve decision as a foregone conclusion, pricing in a 99% chance that Jerome Powell & co hold interest rates.

The remaining 1% is for a cut.

Today’s meeting had been circled on calendars as a possible first-cut date late last year, but this year the US is showing signs of stickier-than-expected inflation. That seems certain to be enough to convince the Fed to hold.

US Federal Reserve boss Jerome Powell (REUTERS)
US Federal Reserve boss Jerome Powell (REUTERS)

FTSE 100 closes flat at 7,737.38

Wednesday 20 March 2024 16:38 , Daniel O'Boyle

The FTSE 100 closed within a point of where it started the day at 7,737.38, as markets await the latest Federal Reserve interest rates decision.

China-exposed stocks, such as Prudential and Burberry, were among the big fallers. They helped drag down the index while rate-sensitive stocks were boosted by today’s inflation figures.

Major UK banks shut down more accounts last year amid debanking row, bosses say

Wednesday 20 March 2024 16:14 , Daniel O'Boyle

Some of the UK’s biggest banks have said they closed more accounts last year than in 2022, but that in most cases it was not because of concerns about a customer’s reputation.

BarclaysSantanderLloyds and NatWest also called on social media platforms to do more to tackle fraud.

Bosses of the four high street lenders were quizzed by a group of MPs on the Treasury Committee on a range of issues facing the banking sector.

Read more here

Market snapshot: FTSE rallies before Fed call

Wednesday 20 March 2024 15:36 , Daniel O'Boyle

Take a look at the latest market snapshot with the FTSE 100 now up for the day before the Federal Reserve’s latest decision.

The Banking-as-a-Service bubble is about to burst - and fintechs will feel the effects

Wednesday 20 March 2024 14:53 , Daniel O'Boyle

The past five years have seen the Banking-as-a-Service (BaaS) space explode. At their core, BaaS providers allow companies - namely fintech and tech companies - to piggyback on their banking or e-money licence to easily offer financial products to their own customers through application programming interfaces.

These products include everything from physical and virtual bank accounts, access to key payment schemes, compliance checks and direct debit to trading platforms and cryptocurrency services. Research suggests that up to 82% of Europe’s fintechs rely on these BaaS providers and many, including the likes of neobank Revolut, have built their business models on them.

Despite recent economic headwinds, significant deals have continued to be made in this area and, according to McKinsey, TAM for the European BaaS market is expected to reach a value between €90 billion and €105 billion by the year 2030.

Read more here

City Comment: The UK's EV sector is rapidly unravelling

Wednesday 20 March 2024 13:44 , Daniel O'Boyle

The wheels have come off the British EV sector in the past few months.

It began in October with the collapse of electric lorry maker Volta, wiping out 600 engineering jobs in the UK. Next came electric bus manufacturer Arrival, which entered administration in February after cutting more than 800 UK jobs. And just this week we saw the failure of the commercial arm of Silverstone-based electric ‘upcycler’ Lunaz, which will likely take another couple of hundred jobs with it.

These were all nascent startups that were low on cash and lacked clear business models. But only a couple of years ago, investors were prepared to throw bags of money at them at heady valuations. Lunaz was once reportedly worth $200 million, Volta had raised 300 million euros at a 600 million valuation and Arrival once hit a giddy $13 billion market cap on the Nasdaq.

Read more here

What does the steep fall in inflation mean for UK households?

Wednesday 20 March 2024 13:25 , Daniel O'Boyle

Cash-strapped households have been given a boost after inflation eased back by more than expected last month and raised hopes interest rates may soon start to come down.

The Office for National Statistics (ONS) said Consumer Prices Index (CPI) inflation fell to 3.4% in February from 4% in January – the lowest level since September 2021.

Here we look at what is behind the fall and what it means for families and borrowers:

HMRC halts plans for helpline shake-up following criticism

Wednesday 20 March 2024 13:04 , Daniel O'Boyle

Plans to shake up HM Revenue & Customs’ (HMRC) helpline services, which would have seen the self-assessment helpline closed for some of the year, have been halted following an outcry.

On Tuesday, HMRC announced “permanent” changes to the self-assessment, VAT and PAYE helplines, drawing criticism from a range of sectors in doing so.

By Wednesday morning, the revenue body said is halting the plans in response to feedback.

Read more here

City Voices: Why the world needs sustainable pizza

Wednesday 20 March 2024 12:47

Some businesses are trying to save the world more than others.

All credit to them. It’s much easier to focus on profits today rather than worry about the future. Neither is it so simple if you give your customers no say in the matter, that they must join you in your quest. That’s an especially brave call - requiring them to have an eco-friendly version, come what may.

It’s even tougher if you’re a restaurant chain and your trade is food. One group that is determined to set new standards, seemingly, is Azzurri, owners of the Zizzi, ASK Italian and Coco di Mama brands.

Read more here

Johnson Matthey agrees £550m deal to sell business unit

Wednesday 20 March 2024 12:14 , Daniel O'Boyle

Johnson Matthey has agreed to sell its medical device components (MDC) unit in a half-billion pound deal which completes a plan to slim down parts of its business that was announced two years ago.

The chemicals and technologies company said on Wednesday that private equity company Montagu would buy the unit, which has factories in three countries, for 700 million US dollars (£550 million).

The unit produces components that it sells to the manufacturers of medical devices.

Read more here

Late-morning market snapshot

Wednesday 20 March 2024 11:28 , Daniel O'Boyle

Check out our latest market snapshot with the FTSE 100 a little lower

‘Too early for Bank of England to cut interest rates’, City experts say, despite inflation falling

Wednesday 20 March 2024 11:11 , Daniel O'Boyle

City experts stuck with predictions that tomorrow is still too early for a Bank of England interest rate cut, even figures today shows the rate of inflation has fallen at its fastest pace in 50 years over the last 12 months.

That slide put the BoE’s official 2% target within reach, possibly as soon as next month, according to respected forecasters.

Economists at ING predicted that the headline consumer price index inflation will “be below 2% from May and for much of 2024”. Official data confirmed CPI hit 3.4% for February, down from 4% the month before, to a two-year low. It had been forecast to read 3.5%.

Read more here

Average UK house price £2,000 lower in January than a year earlier

Wednesday 20 March 2024 10:55 , Daniel O'Boyle

The average UK house price fell by an estimated 0.6% in the year to January 2024, according to an index.

This took the average price of a home in the UK to £282,000, which was £2,000 lower than 12 months earlier.

It followed a decrease of 2.2% in the 12 months to December 2023, the Office for National Statistics (ONS) said.

Read more here

Equals Group pops on takeover offer

Wednesday 20 March 2024 10:37 , Simon Hunt

Shares in London fintech Equals Group jumped 10% late this morning after the company revealed it had received a takeover offer from rival Railsr.

Railsr, which last month recruited ex-Chancellor Philip Hammond as its new chairman, swerved collapse a year ago after an eleventh-hour rescue deal from a group including D Squared Capital, Moneta VC and Ventura Capital. It is now eyeing using the fresh capital injection to get back on the M&A trail.

In 2020, Railsr acquired the UK assets of now defunct Munich-based payments business Wirecard, which collapsed in dramatic form after the company fessed up that almost €2 billion was missing from its accounts.

Details of the offer were not disclosed.

Burberry leads FTSE 100 lower, Computacenter under pressure

Wednesday 20 March 2024 10:16 , Graeme Evans

Burberry shares are down another 6% or 71p to 1159p after disappointing sales figures by Gucci owner Kering fuelled concerns about demand in the luxury goods sector.

The worries over Asia consumer confidence were also reflected in the results-day performance of Prudential, which dropped 2% or 15.2p to a fresh multi-year low of 765.4p.

The Pru, which is focused on the insurance and savings markets of Asia and Africa, reported new business profit growth of 45% and said it was “increasingly confident” of meeting its 2027 strategy goals.

Asia-focused lender Standard Chartered also fell 8.4p to 650.4p as the FTSE 100 drifted 26.69 points to 7711.61 ahead of tonight’s Federal Reserve policy decision, when traders will get a steer on summer rates cut speculation.

In the FTSE 250, chemicals company Johnson Matthey rose 99.5p to 1807p after pledging to buy back shares with some of the £550 million proceeds from the sale of its medical devices division to private equity.

Computacenter shares slid 202p to 2740p despite the IT services firm’s 19th consecutive year of earnings growth. It expects 2024 will be another year of progress, but investors were spooked by a slower UK revenues performance.

The FTSE 250 fell 10.35 points to 19,422.46, with Watches of Switzerland down another 5%.

Investec confident in 2024, but puts money aside for car loans

Wednesday 20 March 2024 10:09 , Daniel O'Boyle

Anglo-South African bank Investec’s shares rose on an optimistic 2024 outlook, though it also became the latest company to put money aside so it can reimburse customers for the car loan mis-selling scandal.

The FCA is probing whether drivers were sold higher-interest loans because salespeople could make more commission on them.

Investec did not reveal how much money it expected to pay, but its Mann Island Finance arm had a £555 million loan book before a 2021 rule change. That’s almost 4% of the loan book for Lloyds, which put aside £450 million for compensation.

Investec’s guidance - which includes the car loan hit - still shows UK profits rising by 15% to around £435 million. The business said the growth was down to “continued client acquisition, improved client activity levels and higher trading income”.

The shares are up 3.3% to 507p, valuing the company at £4.7 billion.

'Think back to this time last year' on inflation

Wednesday 20 March 2024 09:30 , Daniel O'Boyle

Danni Hewson, head of financial analysis at AJ Bell, noted that today’s inflation figures look impressive when put in the context of how fast prices were rising a year ago.

Hewson said: “There is no doubt inflation is moving in the right direction. Just think back to this time last year when CPI was in double digits and food inflation hit a tortuous 18% as peppers, cucumbers and salad leaves vanished from supermarket shelves.

“A much more manageable 3.4%, cooler than had been expected, has already impacted market expectation of how many rate cuts the Bank of England might be able to push through by the end of the year. Money markets are once again pricing in four or even the off chance of five cuts by the end of the year, where yesterday just three seemed possible.”

Prudential and FTSE 100 struggle for direction, Johnson Matthey up 7%

Wednesday 20 March 2024 08:40 , Graeme Evans

Robust annual results by Prudential failed to revive its FTSE 100 shares today, with the Asia-focused insurer down 4.4p near a multi-year low at 775.4p.

The performance reflected the wider London market as the FTSE 100 drifted 13.34 points to 7724.96, led by Burberry after a decline of 48p to 1182p.

Next also retreated 36p to 8442p ahead of annual results tomorrow, while Unilever gave up some of yesterday’s rise with a decline of 22.5p to 3906.5p.

The FTSE 250 index lifted 13.33 points to 19,446.14, with Johnson Matthey up 7% or 99.5p to 1807p after pledging to use some of the proceeds from the £550 million sale of its medical devices division for a buyback.

Computacenter shares moved the other way, down 202p to 2740p despite the IT services firm’s 19th consecutive year of earnings growth. It expects 2024 will be another year of progress, but weighted to the second half of the year.

Market snapshot: FTSE 100 steady

Wednesday 20 March 2024 08:31 , Daniel O'Boyle

Take a look at today’s market snapshot with the FTSE 100 roughly steady, while oil and bitcoin dip

Service inflation 'may give MPS pause for thought'

Wednesday 20 March 2024 08:29 , Daniel O'Boyle

Stephen Payne, Portfolio Manager at Janus Henderson, noted that while headline and core inflation came in lower than expected, services inflation - which the Bank of England has been watching closely - came in above.

Payne said: “This morning's UK inflation print is a mixed picture. Headline and core CPI have come in below expectations, but services inflation came in slightly above. This is the lowest print since the autumn of 2021; the slowing inflation trend continues, led by food and goods inflation moderating. Sticky services inflation may give the MPC pause for thought though, so I expect market reaction to be muted, with the timing expectation for rate cuts most likely little changed.”

'We've been freed from grip of inflation'

Wednesday 20 March 2024 08:12 , Daniel O'Boyle

Sarah Coles, head of personal finance, Hargreaves Lansdown, said: “We’ve been released from the grip of inflation, and the squeeze has finally eased a little. After falling to 3.9% last November, inflation briefly tightened its grip on our finances again, so it’s a relief to see it ease in February.

“Unfortunately, this doesn’t mean life is getting any less expensive, it’s just getting more expensive at a slower pace, and while we expect to see inflation keep falling – it isn’t letting go of us just yet.”

FCA warns of retirement advice firms 'putting customers' futures at risk'

Wednesday 20 March 2024 07:56 , Daniel O'Boyle

City watchdog the FCA has warned that some firms offering retirement advice are "not even getting the basics right and putting their customers' futures at risk".

The FCA said that while many firms are doing things properly, some are not considering a sustainable level of income to support retirement or not providing the right information to customers.

As a result, it has called on all regulated firms offering financial advice to review their processes when providing retirement income advice.

Sarah Pritchard, Executive Director of Markets and International, at the FCA said: ”Financial advisers have a vital role in helping consumers to make the right decisions now to support them long into the future. Decisions for consumers approaching retirement are complex, with the potential for risk. We want to support a sector that can help consumers access pension benefits, invest with confidence and have a sustainable income when they retire.

“Some firms are getting this right and making a real difference to their customers. However, others are not even getting the basics right and putting their customers' futures at risk. We urge all firms to take on board our findings and review their own processes. Where they do not, we will act.”

FTSE 100 flat ahead of Federal Reserve update, Asia markets higher

Wednesday 20 March 2024 07:19 , Graeme Evans

Caution ahead of tonight’s Federal Reserve policy update is set to diminish risk appetite in Europe, with the FTSE 100 index poised for a broadly flat start.

The US central bank’s comments will be scrutinised for guidance on whether Wall Street is right to bet on the first cut in US interest rates in June.

US markets found positive territory yesterday as the S&P 500 index rose 0.6% to a fresh record of 5178 and the Dow Jones Industrial Average lifted 0.8%.

The gains came despite speculation that the Federal Reserve’s dot plot projections might signal fewer than the three rate cuts seen in 2024.

The uncertainty has been fuelled by the recent rise in oil prices, although Brent Crude fell slightly today to stand at just above $87 a barrel.

In Asia, the Hang Seng index and Shanghai Composite both posted modest gains while Tokyo’s Nikkei 225 was closed for a public holiday.

Inflation falls again in February hitting 2-year low

Wednesday 20 March 2024 07:14 , Daniel O'Boyle

Today’s inflation reading was a narrowly bigger drop than the reading of 3.5% expected. And it was the the first fall since November after inflation unexpectedly rose in December and stayed steady in January.

It is also the lowest level in two years.

Read more here

Bank of England hawks in focus

Wednesday 20 March 2024 07:12 , Daniel O'Boyle

Steve Matthews, Investment Director, Liquidity at Canada Life Asset Management, said the Bank of England’s two hawks will be in focus now as inflation fell to 3.4%.

“After today’s decrease in inflation data, attention now turns to the Bank of England committee’s remaining two hawks - Jonathan Haskel and Catherine Mann - who voted for a rate hike in February. The fall to 3.4% might alleviate some concerns, leading Haskel or Mann to shift to hold at tomorrow’s committee meeting and signalling that a June cut could be on the cards. They will, however, still be wary of the 9.8% National Living Wage rise coming into force in April and the potential of this feeding inflation.”

But he added that he did not think the first rate cut will be soon.

He said: “Our view remains that a first cut of 25bps in August is still the most likely scenario.”

First rate cut in early summer?

Wednesday 20 March 2024 07:09 , Daniel O'Boyle

Jeremy Batstone-Carr, European Strategist, Raymond James Investment Services, says the Bank of England’s next cut is unlikely to be tomorrow, but could in the early summer.

“Underlying price pressures are also easing gradually and should continue to do so over spring, providing additional encouragement ahead of the Bank’s base rate decision tomorrow. The Bank’s rate-setters will likely want more evidence of falling inflationary pressures before cutting interest rates. But, as it stands, there is nothing to dissuade the Monetary Policy Committee from cutting the base rate in the early summer.”

Food prices drive inflation fall

Wednesday 20 March 2024 07:06 , Daniel O'Boyle

ONS Chief Economist Grant Fitzner said food prices, which had soared in February of 2023, were the biggest reason why inflation fell.

He said: “Inflation eased in February to its lowest rate for nearly two and half years.

“Food prices were the main driver of the fall, with prices almost unchanged this year compared with a large rise last year, while restaurant and café price rises also slowed.

“These falls were only partially offset by price rises at the pump and a further increase in rental costs.”

 (Shutterstock / eugenegurkov)
(Shutterstock / eugenegurkov)

Inflation falls to 3.4%

Wednesday 20 March 2024 07:01 , Daniel O'Boyle

The UK inflation rate fell to 3.4%, a slightly larger decline than expected.

Economists had expected the rate to fall to 3.5%, from 4% in January.

Core inflation fell from 5.1% to 4.5%.

But it’s unlikely to convince the Bank of England to cut interest rates tomorrow

Recap: Yesterday's top stories

Wednesday 20 March 2024 06:42 , Simon Hunt

Good morning from the Standard City desk.

How much are investors entitled to know about the mental health/medication issues of the CEOs in whom they place so much trust?

The question arises after Elon Musk, the genius inventor and bored billionaire, told a reporter he uses ketamine.

Musk says: “There are times when I have sort of a … negative chemical state in my brain...or depression that’s not linked to any negative news, and ketamine is helpful for getting one out of the negative frame of mind.”

He isn’t picking up the stuff from a dude in a Tesla with blacked out windows, he assured.

He has a prescription from “an actual, real doctor” and uses “a small amount once every other week or something like that”.

Musk is an outlier in every way, and whatever you might think of him in general, it is possible that he manages to save humanity from itself by inventing new energy sources or colonising Mars, or similar.

As such, he can have a bang on whatever he fancies. Investors have always understood that he isn’t a normal fellow and that genius comes at a price.

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

Marmite-to-Dove maker Unilever to cut 7500 jobs under £14m CEO's shake-up

Close Brothers reveals plans to bolster finances by £400m amid car finance probe

Tesco loses Court of Appeal bid over Lidl yellow circle logo

Telegraph takeover by Abu Dhabi-backed fund set for in-depth review - culture secretary

Ted Baker calls in administrators in latest UK fashion collapse