Yahoo Finance FTSE 100 Live 14 May: Wage growth dents rate cut hopes, Vodafone shares rally
Hotter-than-expected wage growth figures today dealt a blow to hopes of a June interest rate cut.
The earnings update came as it emerged that the UK jobless rate crept up to its highest level for nearly a year.
Vodafone, Flutter Entertainment, Currys and Greggs have also published results or trading statements today.
FTSE closes just under record
Tuesday 14 May 2024 17:47 , Simon Hunt
The FTSE 100 returned to making gains on Tuesday but finished just short of a record close price.
The index’s soaring increases from last week have mellowed significantly but trading was still positive despite concerns over stubborn UK wage inflation data from the Office for National Statistics.
London’s top index finished 13.14 points, or 0.16%, higher to end the day at 8,428.13.
The German Dax index was down 0.09% at the close and the Cac 40 in France ended up 0.2%.
Joshua Mahoney, chief market analyst at Scope Markets, said: “The FTSE 100 provides one bright spot within an otherwise downbeat session in Europe, with Vodafone and Ocado the two dominant gainers.
“European markets have also had to contend with the latest UK jobs report, with the Bank of England likely concerned at the combination of stubbornly high wages and the joint highest unemployment rate in over two years.”
New York markets stuck in neutral
Tuesday 14 May 2024 14:39 , Michael Hunter
Wall Street stock markets made a steady start to trade, with investors only halfway through a two-day run of inflation data likely to determine direction in the near term.
The producer price index came in with a hotter-than-forecast monthly rise.
Attention is already on tomorrow’s consumer price index.
Both readings will influence the timing of an interest rate cut from the Federal Reserve.
The likelihood of action has moved further back into the year and the jury remains out on when it may come.
In the meantime, the broad-based S&P 500 ticked up by just under three points to 5,244.53.
US inflation may prompt investors to walk away for the summer
Tuesday 14 May 2024 14:31 , Michael Hunter
After US producer price inflation data was higher than expected for April, attention is turning to the reading of the consumer price index due tomorrow.
With Wall Street indices holding steady today, there was some speculation that after Wednesday’s CPI, investors may take a long summer pause.
David Morrison at Trade Nation said: ““If there’s no improvement in this week’s inflation numbers, then investors may feel it’s a good time to cut their exposure and come back in early September.”
That is when the chairman of the US Federal Reserve hosts a meeting of fellow central bankers at a famous beauty spot called Jackson Hole.
There is usually a set-piece speech, and this year’s event is seen as the likely venue for a major signal on the timing of a Fed rate cut.
Month-on-month rise in US inflation hotter than forecast for April
Tuesday 14 May 2024 13:37 , Michael Hunter
The month-on-month rise in US inflation for April has come in higher than expected, feeding into the debate on the timing of an interest rate cut in the US.
The core producer prices index rose 0.5% from March, stronger than the 0.2% expected.
On an annual basis, it came in bang in line with forecasts at 2.4%.
The hotter-than-forecast monthly reading will play into speculation on the timing of the the first US rate cut of the current monetary policy cycle.
It is one of the main themes over global markets at the moment.
Futures markets took the data in their stride, pointing to a modest opening rise of four points for the S&P 500.
Gold gleams while Bitcoin gets bruised
Tuesday 14 May 2024 12:13 , Michael Hunter
Here’s a snapshot of the main action on global markets in the middle of the London trading day.
There is a cautious mood at work, boosting gold and keeping the lid on stocks and the pound.
Greggs to expand franchise partnerships as sales rise
Tuesday 14 May 2024 11:49 , Simon Hunt
Greggs is poised to deepen ties with its biggest franchise partners after Britain’s best-known baker said it planned to open dozens more sites in key transport locations such as rail and petrol stations.
The London-listed business said it had opened 64 new stores since the start of the year, of which around a quarter were with franchisees, and planned to open up to 160 in total by the end of the year. Like-for-like sales rose 7.4% to £693 million.
Greggs boss Roisin Currie said Asda had been the firm’s biggest franchise partner to date, with kiosks in its supermarkets and petrol forecourts, alongside EG Group and Rontec’s forecourts.
“Our strategy is to be available to customers wherever they want to shop with us,” she told the Standard.
“What [on-the-go] customers purchase is the same as they purchase on the High Street.
“We currently have 16 franchise partners and hope to have a pipeline of more for the next couple of years.”
Transatlantic tech sector bid worth £333 million to take IQGeo private
Tuesday 14 May 2024 11:02 , Michael Hunter
Another fast-growing firm from London’s tech sector is being taken private in a multi-million pound transatlantic private equity bid.
IQGeo, which provides the software used to power next-generation telecoms networks, is being bought by legendary US private equity house KKR for £333 million.
The all-cash takeout bid is priced at 480p per share. The stock closed at 405p yesterday. It leapt 65p, or over 16%, to 463p this morning.
The offer premium is of around 48% compared to the stock’s twelve-month volume weighted average price of 325p, according to the bid announcement.
“KKR sees an opportunity to accelerate IQGeo's transition towards a recurring software centric business model and the development of IQGeo's future product roadmap under private ownership”, it said today.
“IQGeo's sector is developing rapidly, as fibre and grid infrastructure are undergoing major transformation and upgrades to deliver against national connectivity and sustainability goals”, it added.
Anglo American reveals radical overhaul, FTSE 100 steady
Tuesday 14 May 2024 10:25 , Graeme Evans
Bid target Anglo American today revealed it will exit diamond, platinum and coal mining as part of its most radical overhaul in decades.
The shock plan comes as Anglo battles to convince shareholders of its standalone future, having yesterday rejected an improved £34 billion approach by Australia’s BHP.
Anglo believes it can unlock significant value by focusing on a simplified portfolio of “world-class assets” in copper and premium iron ore.
The strategy will see Anglo offload its interest in the De Beers diamonds business and also seek a partner for the vast Woodsmith potash development in North Yorkshire.
Anglo shares were 2% or 60.5p lower at 2646.5p, representing a slight easing of the bid premium since BHP disclosed its interest last month.
The decline for Anglo came in a robust session for the FTSE 100 index, with the support of heavyweights HSBC and BP helping the top flight to rise 14.20 points to 8429.19.
DCC shares posted the biggest fall after the Dublin-based owner of operations in healthcare, energy and technology reported a slight drop in annual profit to £423.7 million.
It hiked its dividend by 5% to mark 30 consecutive years of growth but shares retreated 5% or 285p to 5620p, a decline that erased the strong gains of the past month.
The FTSE 250 index lifted 8.80 points to 20,569.14, with Hochschild Mining up 2p to 159.8p after achieving the first commercial production at its Mara Rosa gold mine in Brazil.
Among the minnows, Angling Direct jumped 2.3p to 37p as the fishing tackle retailer reported a resilient start to the financial year alongside a surge in annual profit to £1.5 million.
Vodafone prepares to lose more than 4 million customers
Tuesday 14 May 2024 09:53 , Simon Hunt
Vodafone today said it was set to lose more than 4 million customers in Germany as the telecoms giant prepared for a 400 million euro knock from regulatory change in its biggest market.
The Paddington-based business said it anticipated it would only retain about half of its 8.5 million TV customers based in multi-dwelling units following new laws on those contracts which come into effect in July. The customers are currently worth around 800 million euros annually to the business.
Vodafone CEO Margherita Della Valle said the regulatory changes had been long-anticipated and the business was prepared to adapt.
“This year is going to be a year of transition because of this,” she told the Standard, adding that the German business, which accounts for around two-fifths of the group’s revenue, would be in growth excluding the TV contract losses.
“We have a team in Germany focused on driving growth in other segments.”
FTSE flat as Bitcoin slides
Tuesday 14 May 2024 08:59 , Simon Hunt
One hour into the day’s trading session in London, the FTSE is flat while Bitcoin is down almost 2% on yesterday.
Here’s a look at your key market data.
Vodafone shares rally 3% after results, FTSE 100 flat
Tuesday 14 May 2024 08:57 , Graeme Evans
Vodafone is the best performer in the FTSE 100 index, with London’s former biggest company up 3% or 2p at 72p for its highest level since December.
Chief executive Margherita Della Valle said the group performed slightly ahead of expectations in the financial year, including service revenue growth of 6.3%.
BT Group shares rose 1.3p to 110.25p ahead of its own results on Thursday, with HSBC, Centrica and BP among the other blue-chip risers.
On the fallers board, Flutter Entertainment dropped 3% after its first quarter update and Dublin-based conglomerate DCC retreated after annual results. The latter hiked its dividend by 5%, marking 30 consecutive years of growth.
The FTSE 100 index and FTSE 250 are both close to their opening marks at 8415 and 20,561 respectively.
Pub operating profit up at Marston's as sales rebound
Tuesday 14 May 2024 07:57 , Michael Hunter
Marston’s reported a rebound in sales across its 1,400-strong pub chain today, as operating profit rose, helped by its “predominantly freehold pub estate”.
Operating profit from the pub chain was up to £52.7 million from £43.1 million in the half-year to March 30. It said there was “good momentum across food and drink sales” with like-for-like sales up over 7%, “outperforming the broader market”.
Underlying margins up to 12.3% from 10.6% at the operator of over 1,000 pubs..
Justin Platt, CEO called the outlook for the second half “encouraging”, adding: “With a number of 'must not miss' major sporting events, our massively upgraded pub gardens and much-loved food menus, we expect our pubs to be very popular this summer."
Wage growth update dents rate cut optimism
Tuesday 14 May 2024 07:47 , Graeme Evans
Capital Economics said today’s wage growth update is probably still a bit too strong for the Bank of England’s liking, adding that it may make policymakers a bit more uneasy about cutting interest rates in June.
Despite the loosening in the labour market, the three-month year-on-year rate of average earnings stayed at 5.7% in March compared with the 5.5% forecast,
The consultancy added: “The Bank will be paying close attention to April’s pay settlement figures (due later this month) for further signs that wage growth will continue to moderate in the coming months.”
Today’s 178,000 fall in employment in the three months to March was a bit smaller than many expected but the unemployment rate still rose in line with forecasts from 4.2% to 4.3%.
Vodafone profit sinks on Europe right-sizing
Tuesday 14 May 2024 07:27 , Simon Hunt
Vodafone’s profits fell by 75% in the 12 months to the end of March amid a series of transactions as the telco giant adjusts its presence in Europe.
The firm, which in recent months has sold its Spain and Italy divisions and plans a merger with Three in the UK, said its operating profit decrease of 74.6% to €3.7 billion primarily reflects business disposals in the prior financial year, in particular the €8.6 billion gain on disposal of Vantage Towers.
But the firm said it had seen good organic service revenue growth of 6.3% and its business division – a key growth driver – achieved 5.4% revenue growth in the fourth quarter.
CEO Margherita Della Valle said: “A year ago, I set out my plans to transform Vodafone, including the need to right-size Europe for growth. Since then, we have announced a series of transactions and we are now delivering growth in all of our markets across Europe and Africa.“Much more still needs to be done in the year ahead. We will step-up investment in our customer experience, improve our underlying performance in Germany and accelerate our momentum in Business, whilst also continuing to simplify our operations throughout the group. We are fundamentally transforming Vodafone for growth.”
Jobless rate up, wages grow more than forecast
Tuesday 14 May 2024 07:24 , Graeme Evans
The UK unemployment rate continues to edge up after the Office for National Statistics today reported a level of 4.3% for January to March.
The economic inactivity rate for people aged 16 to 64 years was estimated at 22.1%, representing an increase in the latest quarter.
Annual growth in employees' average regular earnings was 6%, or 5.7% when including bonuses. Both figures were higher than City estimates.
Flutter falls to loss in 4th quarter
Tuesday 14 May 2024 07:21 , Simon English
Flutter, the owner of Paddy Power, fell to a loss of $177 million in the fourth quarter after accounting related hits of $356 million.
It said the US arm remains strong despite “unfavourable sports results in the second half of March”.
Revenue in the three months to March were up 16% to $3.4 billion for the New York listed business.
Chief executive Peter Jackson said: “We have had an excellent start to the year. In the US, FanDuel's top line momentum is translating into strong growth… in US and market share gains. We are focused on continuing to expand our player base, market share, and embedding future profits within our business through disciplined investment. Outside of the US, our focus on delivering the best products for our players is driving good momentum in key markets such as the UK.”
Flutter moved its main stock listing to the US this month, in what was seen as a blow to London.
Jackson added: “We believe a US primary listing is the natural home for the Group and we look forward to this becoming effective on May 31. With a greater proportion of the Group's future profits expected to be generated in the US, we have moved our operational headquarters to New York reflecting the importance of the US sports betting and iGaming market to our business."
FTSE 100 seen lower ahead of key US data, copper rise continues
Tuesday 14 May 2024 07:15 , Graeme Evans
The cautious mood is set to continue after Wall Street markets closed barely changed and futures pointed to a lower start for the FTSE 100 index.
London’s top flight fell 0.2% yesterday and is forecast by IG Index to lose another 12 points towards 8400, having set a series of record highs last week.
The prospect of tomorrow’s US inflation reading and today’s producer price data meant US investors stayed on the sidelines to leave the S&P 500 index barely changed.
One of the biggest moves was by Walgreens Boots Alliance, which rose 5% after Bloomberg reported the company is looking for buyers for its UK pharmacy and beauty chain.
On commodity markets, Brent Crude is slightly higher at $83.50 a barrel while copper continues to move higher after yesterday’s latest two-year record.
Recap: Yesterday's top stories
Tuesday 14 May 2024 06:47 , Simon Hunt
Good morning from the Standard City desk.
The FTSE 100 stepped back from its recent record-breaking spell on Monday, finishing in the red following a broadly cautious trading session.
The index opened slightly higher but dipped as traders saw an opportunity to sell stocks and take profit after hitting a fresh all-time high at the end of last week.
London’s top index finished 18.77 points, or 0.22%, lower to end the day at 8,446.46.
Elsewhere in Europe, the picture was broadly similar across the other major indexes, with weaker commodity prices and below-par Chinese economic data from the weekend acting as drags.
The German Dax index was down 0.18% at the close and the Cac 40 in France ended down 0.12%.
In the US, the main markets were higher on the opening bell as analysts look ahead to Wednesday’s key consumer price index inflation data, amid hopes it will provide more clarity over the US interest rate outlook.
Here’s a summary of our top headlines from yesterday:
London office construction roars back with 2.5m sq ft started in first quarter, more than 50% above the 10 year average, as confidence floods back. Comes after UK construction starts fell to 22 year low in 2023
Ad agency Mission Group rejects £322 million bid from Brave Bison, a rival backed by Lord Ashcroft
Asda enters London property market with plans for huge mixed-use development
Pizza Pilgrims eyes expansion to Scotland and Wales amid strong growth
