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FTSE 100 Live: US regulator continues to crack down on crypto; FTSE closes at 7628 after late-day climb

 (Evening Standard)
(Evening Standard)

Worries over interest rate hikes into an already slowing global economy today held back blue-chip stocks and left oil prices lower.

Earlier today, Australia’s central bank hiked rates by 0.25% to 4.1% and said further action may be needed given the upside risks to inflation.

In the UK, stronger-than-expected construction figures for May were offset by the weakest performance in housebuilding in three years.

FTSE 100 Live Tuesday

  • Construction output stronger than expected in May

  • SSE fined £9.8m for overcharging National Grid.

  • Blue-chip stocks struggle, oil prices lower

Key data as markets close

16:55 , Daniel O'Boyle

Take a look at the key market data as a strong afternoon session helped the FTSE 100 close at its highest level in two weeks.

FTSE 100 closes at 7,628.10

16:39 , Daniel O'Boyle

The FTSE 100 closed at 7,628.10 tday after a rally late in the day.

While the index started flat and fell as low as 7557, it picked up momentum late in the day.

Abrdn and Ocado were the top risers, while Vodafone and Centrica were the biggest fallers.

FSTE rises late in day

16:19 , Daniel O'Boyle

The FTSE 100 gained steam late in the day after an early decline.

Click through the tabs to see all the key data

Poundland owner posts sales hike but cautions over tougher trading

15:43 , Daniel O'Boyle

The owner of Poundland has reported higher half-year sales helped by store openings, but warned that tougher recent trading has continued as consumer spending comes under pressure.

Pepco Group, which also owns the Pepco and Dealz brands, reported a 23% jump in revenues at constant currency to 2.8 billion euro (£2.4 billion) in the six months to March 31, with turnover in the UK up 3% at 896.3 million euro (£771.5 million)

Like-for-like sales lifted 11.1% across the group, up 15.8% at Pepco and 4.9% higher for Poundland.

Read more here

US shares flat, Coinbase loses 16%

15:08 , Daniel O'Boyle

US shares are roughly flat this morning, but crypto-related stocks are under as the SEC’s crackdown continues.

The S&P 500 is down by less than four points to 4270, while the Dow Jones is 0.1% lower at 33522. The Nasdaq is down 0.2% to 13201.

However, shares in Coinbase are down by 15.9% to $49.35 after the SEC sued the crypto exchange.

Competition watchdog increases reward to £250,000 to help crack down on cartels

14:46 , Daniel O'Boyle

The UK competition watchdog has more than doubled its reward to potential informants who can help it clamp down on illegal cartels.

The Competition and Markets Authority (CMA) has said the reward will increase from £100,000 to £250,000.

Illegal cartels involve businesses agreeing not to compete in order to keep prices higher for customers.

Read more here

US crypto crackdown heats up as watchdog sues Coinbase for breaching securities laws

13:41 , Daniel O'Boyle

US financial watchdog the SEC continues to crack down on the crypto sector, accusing exchange Coinbase of breaching securities laws just a day after suing its rival Binance.

In a filing with a federal court in New York, the SEC sued the exchange for breaching securities laws. It said Coinbase - the biggest crypto exchange in the US - has taken on the role of a broker, exchange and clearing house, despite failing to register for permission for any of these roles.

Read more here

“UK economy’s underperformance to continue"

13:01 , Daniel O'Boyle

Ruth Gregory, deputy chief UK economist at Capital Economics, says she expects the UK economy’s weakness to continue for some time.

Growth here lags behind the US and Eurozone, which Gregory puts down to wea k consumer spending, weak government spending and the effects of Brexit.

“In short, a combination of the UK’s higher and longer lasting inflation problem, its shrinking workforce, lower government consumption and low export growth has driven the underperformance of the UK economy since 2020,” she said.

Gregory added that it was unlikely the UK would catch up in the next two years.

“Many of the factors that explain the UK’s chronically weak GDP growth since the pandemic, such as the shrinking of the UK’s workforce and low export growth, won’t disappear any time soon,” she said.

Interest rate fears drive housebuilding down at pace only seen during pandemic and financial crisis

12:16 , Daniel O'Boyle

Fears of higher interest rates drove housebuilding down at a pace only seen during the heights of the pandemic and global financial crisis, though strong commercial building meant that the construction sector as a whole grew.

According to the S&P Global / CIPS UK Construction PMI, residential construction has now fallen for six straight months, with the current decline the sharpest since May 2020. The residential PMI reading for the month was 42.7, with any figure below 50 representing a decline.

Besides the spring of 2020, the last time housebuilding fell this quickly was in early 2009.

Read more here

Rising interest rates keep the pressure on real estate investment trusts

11:50 , Daniel O'Boyle

The impact of rising interest rates on real estate investment trusts hit portfolio valuations at two London-listed REITs today, revealing that the industry-wide dip in investment demand is continuing.

As central banks lift interest rates, the yields on offer from safer investments rise, drawing money out of other parts of the market. This has knocked portfolio valuations for property companies, even as rents on shops and offices have rebounded as commuters and consumers return to the office and the high street after the pandemic.

Read more here

Mortgage mayhem: More lenders up interest rates on fixed deals

11:26 , Daniel O'Boyle

The cost of mortgages continued their inexorable rise on Tuesday as more lenders upped the interest rates on their fixed-rate deals.

Latest data from analysts Moneyfacts showed the average rate on a two-year fix was up from 5.72 per cent to 5.75 per cent this morning. On a five-year fix they were up from 5.41 per cent to 5.44 per cent.

Coventry Building Society on Tuesday became the latest lender to launch a range of new deals at higher rates to replace those that were pulled from the market last week.

Read more here

Bank holidays fail to boost sales growth amid ongoing inflation worries

10:32 , Daniel O'Boyle

May’s trio of bank holidays failed to get shoppers spending as sales growth slowed to its lowest level in six months, latest figures show.

Total UK retail sales increased by 3.9% last month, against a decline of 1.1% in May 2022 and below the three-month average growth of 4.7%, according to the BRC-KPMG Retail Sales Monitor.

Food sales were up 9.6% on a year ago, boosted by the coronation but still not sustained across the month.

Read more here

Oil stocks pressure FTSE 100, BAT shares flat after update

10:17 , Graeme Evans

British American Tobacco shares are broadly flat after the company’s new boss laid out the challenges facing the Dunhill and Vuse maker.

Tadeu Marroco, who took over last month after the sudden departure of Jack Bowles, told investors that 2023 will be “complex and exciting in equal measure”.

He stuck to guidance for underlying revenues growth between 3% and 5%, but also revealed a disappointing performance in the US combustibles business and a poor start to the year for BAT’s Glo tobacco heating product.

Shares were 2.5p higher at 2573p, keeping the FTSE 100-listed income stock near an 18-month low after a 25% fall in value over the past six months.

Despite the selling pressure, Marocco said the strategy created in 2019 and built around a portfolio of reduced-risk products was the right one. He added: “Put simply, smokers must have access to better choices.”

The BAT performance reflected a lacklustre session for the wider London market after yesterday’s poor figures from the US services sector fuelled recession worries.

Casualties included BP and Shell, with the energy pair down 6.1p to 466.85p and 40.5p to 2244.5p respectively, after Brent Crude gave up the gains seen following Saudi Arabia’s move to slash production by one million barrels a day in July.

The FTSE 100 index slipped 0.4% or 29.82 points to 7570.17, with Vodafone back among the laggards with a decline of 0.8p to 77.1p. The mood wasn’t helped by more signs that central banks are far from finished when it comes to raising interest rates.

The Reserve Bank of Australia hiked by another 0.25% to 4.1%, a level not seen since early 2012, and said further action may be required given the upside risks to inflation.

The move comes as attention turns to next week’s decision by the US Federal Reserve and the Bank of England on 22 June.

Harbour Energy and oil well services firm Hunting were the biggest fallers in the FTSE 250 index, but the results-day support of Paragon Banking Group and Chemring meant the UK-focused benchmark still rose 10.63 points to 19,124.18.

UK construction output up, but housebuilding falls again

09:47 , Daniel O'Boyle

UK construction output grew more quickly than expected in May, as new orders grew at the fastest pace in more than a year.

The S&P Global / CIPS UK Construction PMI for the month came to 51.6, ahead of the expected 50.8 and April’s 51.1. Any figure above 50 represents growth.

The growth was driven by commercial construction, as housebuilding fell at the fastest pace in three years.

Tim Moore, Economics Director at S&P Global Market Intelligence, which compiles the survey said: "May data highlighted a mixed picture across the UK construction sector as solid growth rates in commercial and civil engineering activity contrasted with a steeper downturn in house building.

“Rising demand among corporate clients and contract awards on infrastructure projects meanwhile underpinned the fastest rise in new orders since April 2022.”

Argo highlights further woes facing crypto industry

09:15 , Simon Hunt

There were further signs of the woes facing the crypto industry today after crypto mining business Argo Blockchain plunged to a $9 million loss for the first quarter of 2023 compared to a $2 million profit the previous year, while sales slumped 40% to $11 million.

The firm continues to fight for its survival after it warned last year it was running out of cash.

CEO Seif El-Bakly said: “We are taking a much more critical view of all operating expenses, and we’ve implemented a robust internal process aimed at reducing non-mining operating expenses. We are also evaluating options to strengthen our balance sheet.”

Argo shares fell 5% to 8.7p.

It comes after the world’s largest crypto exchange, Binance, was yesterday dealt a blow by the US securities regulator which said it was suing the firm and its boss Chanpeng Zhao on grounds of securities violations, including the sale of unregistered assets.

SEC chair Gary Gensler said: “We allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.

“As alleged, Zhao and Binance misled investors about their risk controls and corrupted trading volumes while actively concealing who was operating the platform.”

“We intend to defend our platform vigorously,” Binance said in response.

Key market data as FTSE opens

09:04 , Daniel O'Boyle

As the FTSE 100 opens roughly flat, take a look at the key market data from early trading.

Click through the tabs to see all of the graphs.

FTSE 100 struggles for momentum, Vodafone shares down

08:21 , Graeme Evans

The FTSE 100 index stands 6.11 points lower at 7593.88, with mobile phone giant Vodafone back among the fallers following a decline of a penny to 76.95p. Rolls-Royce also surrendered 1p to 146.3p, while Lloyds Banking Group is down 0.2p to 44.53p.

British American Tobacco rose 17p to 2587.5p after today’s reassuring trading update, with new boss Tadeu Marroco sticking to guidance for revenues growth in the current year of between 3% and 5% at constant currency.

The FTSE 250 index edged 11.53 points higher to 19,125.08, with defence products supplier Chemring up 5% or 12.75p to 281.25p on the back of interim results.

Ofgem fines SSE £9.8 million

08:18 , Daniel O'Boyle

Energy watchdog Ofgem fined SSE £9.8 million today for overcharging the National Grid.

The fine concerns “transmission constraint”, when the National Grid aims to decrease the amount of power produced in a certain area. Ofgem said SSE charged the National Grid too much to reduce the energy output from the Foyers pumped storage power station in Scotland during these periods.

“This change was made to bring Foyers in line with what it believed was the market practice of other pumped storage operators, and to increase profit,” Ofgem said.

Ofgem said it did not see any evidence that suggested SSE deliberately broke the rules around transmission constraint charges, but it “should have been clear” that it was violating these licence conditions.

Cathryn Scott, Director of Enforcement and Emerging Issues at Ofgem said:

“Protecting consumers is a priority for Ofgem, and we will continue to monitor the wholesale energy markets in Great Britain and ensure their integrity on behalf of energy users.

“This enforcement action sends another strong signal to all generators that they must put in place controls to ensure that their bid prices are set in a way that ensures that they do not obtain excessive benefits during transmission constraint periods. If they fail to do so, they will face significant consequences.”

Australia hikes interest rate to 4.1%, warning over more rises

07:46 , Graeme Evans

Australia’s central bank today lifted its interest rate by another quarter percentage point to 4.1%, a level not seen since early 2012.

The Reserve Bank of Australia said the increase, which follows a similar move in May, was needed because recent data suggests the upside risks to inflation have picked up. It warned that some further tightening of monetary policy may be required.

While goods price inflation is slowing, the Bank’s governor Philip Lowe pointed out that services price inflation is still very high and is proving to be very persistent overseas.

He added: “Inflation in Australia has passed its peak, but at 7% is still too high and it will be some time yet before it is back in the target range.

“This further increase in interest rates is to provide greater confidence that inflation will return to target within a reasonable timeframe.”

The next rates decision by the US Federal Reserve is 14 June, with the Bank of England following on 22 June.

New BAT boss: Strategy will not change

07:30 , Daniel O'Boyle

New BAT boss Tadeu Marroco says there will not be a change in strategy for the smoking giant after Jack Bowles’ abrupt exit, despite a ‘disappointing’ performance in the US and for its Glo vaping arm.

Morocco, who took over last month, said he would maintain the strategy set out in 2019 to pivot the Lucky Strike owner towards vaping. However, he said there were certain areas that needed improvement.

“Our performance in U.S. combustibles has been disappointing. Returning combustibles to consistent value creation is critical to our multi-category strategy in the US.

“We are taking action, and while it will take some time to carefully and thoroughly implement our plans, our volume share has grown sequentially since the start of the year.”

BAT expects 3-5% revenue growth for this year.

US economy worries hit markets, oil price lower

07:19 , Graeme Evans

Wall Street markets finished lower last night as disappointing figures from the US services sector ended a two-day run of positive trading.

The Dow Jones Industrial Average lost 0.6% and the S&P 500 index fell by 0.2%, with the tech-focused Nasdaq Composite unchanged in another sign of its outperformance.

The FTSE 100 index also surrendered a positive start to finish 0.1% lower after the afternoon release of the US services PMI came in below expectations.

A 50.3 reading only just above the 50-mark that separates expansion from contraction compared with forecasts of 52.4 and was the second lowest since the pandemic.

The recession jitters concerning the world’s largest economy meant Brent Crude futures were back at $76.42 a barrel this morning, having rallied yesterday on the back of Saudi Arabia’s plans to cut production by one million barrels in July.

Ahead of London’s opening bell, CMC Markets expects the FTSE 100 index to open unchanged at 7600.

AB Foods to buy National Milk Records for £48 million

07:18 , Daniel O'Boyle

Primark owner AB Foods has agreed to buy agri-ech business National Milk Records for £48 million.

AB Foods will pay 215p per share of National Milk Records, which offers data on milk quality, cow fertility and genomics. That is 87% more than NMR’s closing share price yesterday.

“NMR's business is well aligned with AB Agri's objective of supporting customers across the dairy industry, helping to drive efficiency and increase productivity,” AB Foods said.

Recap: Yesterday’s top stories

06:58 , Simon Hunt

Good morning. Here’s a summary of our top stories from yesterday.

  1. The boss of spiritmaker Diageo has unexpectedly quit after suffering complications from an emergency operation.

  2. UBS says its takeover of Credit Suisse will be completed by next week.

  3. MPs have called for urgent action on crypto regulation to avoid the UK becoming uncompetitive.

  4. London-based VC IQ Capital has raised $400 million in new funds to invest in deep tech.