Wall Street pushed higher amid interest rate cut hopes (Spencer Platt via Getty Images)
Wall Street pushed higher on Wednesday, with the FTSE 100 (^FTSE) and European stocks closing higher as US inflation slowed to 3.4%.
The US consumer price index rose by 3.4% in the year to April, down from 3.5% in March, in line with forecasts.
In April alone, prices rose by 0.3%, a slowdown on March when they increased by 0.4%. Core US inflation also eased last month.
Elsewhere, the eurozone economy grew 0.3% in the first three months of the year, new data has shown.
The single currency’s gross domestic product (GDP) expanded during the period, although half as fast as the UK, exiting a recession at the end of last year.
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London’s benchmark index finished 0.2% higher after hitting a new intraday high earlier in the session
Germany's DAX (^GDAXI) climbed 0.8% and the CAC (^FCHI) in Paris finished 0.2% higher
The pan-European STOXX 600 (^STOXX) was up 0.6% — a record high
Wall Street pushed higher on the back of the inflation data and after news that US retail sales were flat in April
The pound (GBPUSD=X) was against up 0.5% the dollar at 1.2656
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "The feel-good factor is still washing through London markets as investors spy interest rate cuts on the horizon, despite signs prices are proving sticky.
"Although wage growth is staying stubborn in the UK and producer prices came in hotter than expected in the US, investors are staying pretty sanguine. Markets still expecting painful borrowing costs to ease this year, even though cuts are now expected to come later than hoped.
"The key CPI reading in the United States later will be crucial as far as sentiment is concerned, as it looks set to indicate that patience will be needed, before the Fed will feel comfortable about lowering rates. The risk is that if interest rates linger for a lot longer, it will push the economy into a much tougher position, with weaker growth prospects, which could erase some of the recent gains on markets."
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Well that's all folks, another busy day, thanks for following along. Be sure to join us again tomorrow when we will be back for more market news and all things happening across the global economy.
Have a good evening!
LaToya Harding
IDS shares jump as Daniel Křetínský raises takeover offer
IDS shares have jumped to a two-year high, after the company announced that Daniel Křetínský has raised his takeover offer to £3.5bn.
They reached as much as 20% higher, their highest since May 2022.
The new takeover bid is a 72.7% premium to IDS’s share price on 16 April, the day before his first offer was revealed.
LaToya Harding
Are markets indulging in wishful thinking on Fed rate cuts?
Markets are busy wishful thinking about the Federal Reserve cutting interest rates and they are ignoring the facts, warns the CEO of one an independent financial advisory and asset management firm.
The warning from Nigel Green of deVere Group comes as the April print sees monthly core US CPI gains slowing to a 0.3% pace from 0.4% in March. The headline rate slipped back to 3.4% from 3.5%.
He said:
“The latest data will fuel market optimism that the Fed will cut rates this year. The markets are extremely keen to hang this hope on anything, it seems – and April’s CPI print will do just nicely for that.
“However, we believe that this could be a masterclass in wishful thinking and ignoring the reality of the situation.”
“Super cautious Fed officials will need to see several consecutive months of evidence showing inflation – which is proving far stickier that had been hoped - is really heading back to the 2% target before they consider a pivot on monetary policy.
“As such, we still expect there’s a considerable risk that they will not feel comfortable about cutting rates before 2025."
LaToya Harding
Odds of BoE June rate cut increase
On the back of the US inflation news, money markets are now saying that there is a 58% chance of interest rate cuts from the Bank of England.
This is up from about 50% last night.
LaToya Harding
Core inflation also falls
Core US inflation also eased in the year to April with the index rising 3.6%, down from 3.8% in the year to March.
On a monthly basis, core inflation slowed to 0.3% in April alone, having risen by 0.4% in the three months prior.
LaToya Harding
US inflation slows to 3.4%
U.S. Federal Reserve Chair Jerome Powell attends a press conference, following a meeting of the Federal Open Markets Committee, in Washington on May 1, 2024. ( The Yomiuri Shimbun via AP Images ) (Hiroyuki Tanaka, Associated Press)
US inflation slowed to 3.4%. The consumer price index rose by 3.4% in the year to April, down from 3.5% in March, in line with forecasts.
In April alone, prices rose by 0.3%, a slowdown on March when they increased by 0.4%. Core US inflation also eased last month.
The Bureau of Labour Statistics said:
"The index for shelter rose in April, as did the index for gasoline. Combined, these two indexes contributed over seventy percent of the monthly increase in the index for all items.
"The energy index rose 1.1% over the month. The food index was unchanged in April. The food at home index declined 0.2 , while the food away from home index rose 0.3% over the month.
LaToya Harding
US retail sales flat
US retail sales came in unexpectedly flat in April, in a sign that American consumer spending is weakening.
Economists expected a 0.4% rise however data on Wednesday revealed that spending was “virtually unchanged”. It was also 3% higher than a year ago.
Spending on gasoline was up 3.1% month-on-month, and 4% higher than a year ago, while spending at motor vehicle and parts dealers fell by 0.8% in the month. Spending at furniture stores was down 0.5%.
Neil Birrell, chief investment officer at Premier Miton Investors, said:
“The usual excitement over US inflation ended up being a damp squib, as it came in exactly as expected.
"However, retail sales were weaker than expected and the core rate is back to levels not seen for quite some time, which might well see optimists calling for rate cuts and markets rallying.”
LaToya Harding
Banks expecting US inflation drop
It looks like Wall Street banks are expecting a small drop in US inflation today, with a slowdown to around 3.4% from 3.5% in March.
Jens Magnusson, chief economist at SEB, said:
"For three months in a row, we have had US inflation disappointments. Combined with continued strong growth and an almost overheated labour market, this has led to a dramatic shift in the view of the Fed and the possibility of US interest rate cuts.
"At the beginning of the year, market pricing was leaning towards as many as seven interest rate cuts in 2024; now the expectation is a maximum of two.
"Many experts are asking if today’s figures confirm inflation is stuck at too high levels or will they provide hope, that Q1 was a temporary delay on the road to a permanently lower inflation.
How to claim expenses at work without breaking the rules
Last week marked the 15-year anniversary of the breaking of the MP’s expenses scandal, which alerted us all to the fact that our taxes had somehow been spent on moat clearing and a duck house.
We were gripped for weeks by expenses that had been claimed for everything from a toilet seat and a trouser press to a packet of Hobnobs. Since then, the system has been reformed and the issue of expenses dropped out of sight.
It’s something millions of people barely think about, except when they’re arm-wrestling with the finance department at work over the cost of a sandwich — or staring at an enormous pile of receipts as they brace themselves for a tax return.
However, it’s worth spending some time getting your head around the rules, because a better knowledge of how they work can save you money.
Shares in Boeing (BA) slipped during pre-market trading amid reports that the company could face prosecution in the US over the 737 MAX plane crashes which killed 346 people.
The US Department of Justice (DOJ) had filed a case accusing the aircraft maker of breaching its obligations in a 2021 agreement that shielded Boeing from criminal prosecution over the crashes.
The crashes - one in Indonesia in 2018, and another in Ethiopia in 2019 – killed a total of 346 people.
US officials said in their letter that Boeing breached its obligations under a deferred prosecution agreement (DFA) by "failing to design, implement, and enforce a compliance and ethics programme to prevent and detect violations of the US fraud laws throughout its operations."
Prosecutors will tell the court no later than 7 July how they plan to proceed, the justice department said.
Boeing has continued to face intense scrutiny over the safety of its aircraft after an unused door came off a new 737 Max shortly after take-off in January, leaving a gaping hole in the side of the plane.
Chancellor Jeremy Hunt has commented on the decision of computer company Raspberry Pi to list in London.
He tweeted on Wednesday:
"Excellent news today that Raspberry Pi are planning to list in London. They’re a fantastic British tech company – part of the UK’s trillion-dollar tech sector.
"With strong GDP growth and inflation dropping significantly, the UK is open for business and we continue to attract the most promising, global businesses."
LaToya Harding
BoE warns banks to prepare for shocks
Bank of England exterior façade with cloudy grey sky. London. UK (Bailey-Cooper Photography)
The Bank of England has issued a warning to UK banks and building societies after a review found firms were ill-prepared for a severe shock that could put their finances at risk.
A letter sent by the Bank’s Prudential Regulation Authority said firms had failed to create severe enough stress tests and as a result, did not have sufficient recovery plans.
It said:
“Our review found that a number of firms did not use scenarios of sufficient severity, which will limit the effectiveness and value of the testing.”
“...although many firms understand the basics of recovery planning, there are significant areas for improvement, most notably related to the development of recovery scenarios and the calculation of recovery capacity.”
LaToya Harding
Oil advances as IEA trims 2024 growth forecast
Oil continued to trade in a narrow range on Wednesday as the International Energy Agency (IEA) cut its 2024 forecast for demand growth by 140,000 barrels per day.
The Paris-based company said world fuel consumption will increase by 1.1 million barrels per day this year, which is around 140,000 barrels less than it expected a month ago.
Trimming its projections for a second consecutive month, it said:
“Poor industrial activity and another mild winter have sapped gasoil consumption this year, particularly in Europe where a declining share of diesel cars in the fleet were already undercutting consumption.”
Brent futures inched toward $83 a barrel, while WTI hovered above $78.
LaToya Harding
EU predicts lower eurozone inflation
The European Commission has predicted lower inflation than previously forecast in the eurozone this year, leaving its growth estimate unchanged.
It said inflation would slow to 2.5% this year, down from the February prediction of 2.7%, while it expects the single currency area to grow by 0.8%.
The EU’s economy commissioner, Paolo Gentiloni, said the “forecast remains subject to high uncertainty”, pointing to wars in Ukraine and Gaza.
LaToya Harding
Eurozone economy grows 0.3%
The eurozone economy grew 0.3% in the first three months of the year, new data has shown.
The single currency’s gross domestic product (GDP) expanded during the period, although half as fast as the UK, exiting a recession at the end of last year.
Britain’s GDP grew by 0.6% in the first quarter of 2024 after two consecutive periods of decline in the second half of 2023.
Tui revealed better than expected results, with good demand for the upcoming summer season despite rising prices for trips abroad.
The group, which is switching its listing from London to Frankfurt next month, reported pre-tax losses of €403.1m (£346.6m) for the six months to the end of March, against €648.8m a year earlier. Its group loss stood at €330.5m, against losses of €558m.
"Travelling is very popular with people. We see trends that will further strengthen this in the future," CEO Sebastian Ebel said in a statement.
But the company said its average prices were around 4% higher for the summer season than a year ago.
Meanwhile, the group’s summer programme is 60% sold, in line with the previous year's level, with nine million bookings for the upcoming peak season, up 5% year-on-year.
LaToya Harding
Global deal activity down by 19.5%
A total of 15,561 mergers & acquisitions, private equity and venture financing deals were announced globally during January-April 2024.
This is a year-on-year decline of 19.5% compared to the 19,321 deals announced during January-April 2023, according to GlobalData
All the deal types under the coverage witnessed year-on-year decline in volume during January-April 2024. The number of M&A deals declined by 13.7%, whereas private equity and venture financing deals volume were down by 19.3% and 27.9%, respectively.
Aurojyoti Bose, lead analyst at GlobalData, said:
“The decline is driven by a dent in deal-making sentiment, which is felt across regions. In fact, all regions experienced fall in deals volume during January-April 2024 compared to January-April 2023.”
The number of deals announced in North America fell by 26.1% while deals volume for Europe, Asia-Pacific, Middle East and Africa and South and Central America regions declined by 19.9%, 9.3%, 11.3%, and 29.3%, respectively.
The US and China, which are the top two markets globally in terms of deal volume, registered falls of 25% and 15.8% during the period, respectively.
Similarly, other key markets such as the UK, Japan, Canada, Germany, Australia and France saw respective deals volume fall by 14.9%, 1.2%, 34.9%, 20%, 7.9%, and 37% during the compared to the same period in previous year.
LaToya Harding
Experian top FTSE gainer
Credit data company Experian is the top gainer on the FTSE 100 today with a jump of more than 8% after it forecast annual organic revenue growth of between 6% and 8pc for fiscal year 2025.
LaToya Harding
Gold gains ahead of US inflation data
Gold prices (GC=F) edged higher on Wednesday, supported by lower Treasury yields and a softer US dollar, ahead of inflation data that may shed light on the Federal Reserve’s path for interest rates.
The precious metal added to Tuesday’s gain of almost 1%, gaining around 0.6% to $2,374 an ounce. The Bloomberg Dollar Spot Index edged lower for a second day, which can also make bullion more attractive.
Silver and palladium gained, while platinum climbed as much as 2.2% to the highest in about a year.
Gold prices are up 15% this year, with gains underpinned by central bank buying, heightened geopolitical risks and consumer demand in China. Bullion has gained despite the anticipated timing of the Fed’s pivot being pushed back.
LaToya Harding
Imperial Brands rises after reiterating outlook
Tobacco company Imperial Brands (IMB.L) rose almost 5% on Wednesday after it reiterated its full-year outlook, despite a fall in interim profits and sales.
Sales of Imperial's NGP brands, which include Pulze heated tobacco and blu e-cigarettes, were up 16.8%. The company also raised its interim dividend by 4% to 44.90 pence.
Reported revenues fell 2.3% in the six months to 31 March, to £15.1bn, while operating profits fell 2.6% to £1.5bn.
The group said tobacco prices had risen by 8.6%, more than offsetting declining volumes.
Next-generation products (NGPs) like vaping and heat-not-burn saw an 16.8% increase in revenue amid strong growth in Europe, Africa and Asia-Pacific. Volumes in the US plunged by 10.3%.
CEO Stefan Bomhard said:
"Pricing actions in tobacco taken in the first half and good momentum in NGP gives us confidence in our ability to deliver full-year results in line with our guidance."
LaToya Harding
Meme stocks continue rally
GameStop stock (GME) rose nearly 60% on Tuesday, adding to a meme-fueled rally that sent shares of the video game retailer up 74% in the prior session.
The rise in GameStop was also accompanied by a spike in AMC (AMC) stock. Shares of the theatre chain operator rose about 30% after gaining as much as 120% earlier on Tuesday.
Naeem Aslam chief investment officer at Zaye Capital Markets, said:
"It seems that the meme stock saga is back in full swing, as retail traders have not only shown their enthusiasm towards mainstream names like AMC and GameStop, but in fact, now the focus is also on other heavily shorted stocks among hedge funds.
"Again, there are no specific fundamentals that can support the current investment thesis, other than FOMO. When retail traders see a headline that a stock is up 20%, they want to throw their money in with the hope that it will do at least five times more.
"We've seen this practice among speculators before, and we're seeing it again now."
LaToya Harding
Traders await US inflation report
Investors across the globe are poised for April’s US CPI report, hoping to see signs that inflationary pressures are easing.
Figures are expected to show that prices rose at a slightly slower pace in April, down from 3.5% to from 3.4%. On a monthly basis, prices are expected to have risen by 0.3%, a slowdown on March’s 0.4%
Core inflation, a key measure of underlying price trends, is forecast to slow to 3.6% per year, down from 3.8%.
US Federal Reserve chairman, Jerome Powell told a conference in Amsterdam yesterday:
“We did not expect this to be a smooth road. But these [inflation readings] were higher than I think anybody expected.
“What that has told us is that we’ll need to be patient and let restrictive policy do its work.”
LaToya Harding
Burberry profits slump as demand slows
Burberry (BRBY.L) profits plunged as Chinese consumers turned away from the luxury retail industry at the start of this year.
The fashion brand saw its pre-tax profit tumble by 40% last year, closing at £383m ($483m) for the year ending March 30, with underlying earnings also down by 34%.
In the year to the end of March, its operating profit dropped by 36% to £418m.
Like-for-like sales fell 12% in the final quarter, while revenue tumbled by 4% to £2.9bn.
Sales in its important Asia Pacific region were down 17% in its financial fourth quarter, while its number of Chinese customers was down 12% compared to the same period a year earlier.
Burberry warned that it expects wholesale revenue to drop by about 25% in the first half of this year.
It also said that due to changes in foreign exchange rates, it expects a currency headwind of about £30m to revenue and £20m to profit next year.
LaToya Harding
Raspberry Pi listing to 'open the flood gates for more tech firms'
The Raspberry Pi listing has raised hopes for a recovery in the London stock market after an exodus of businesses seeking higher valuations elsewhere.
The London Stock Exchange has fallen out of the top 20 global IPO destinations of 2024, having raised only as much money as Kazakhstan's stock market.
Data compiled by Mergermarket for the Standard shows the LSE’s main market languishing in joint-20th position for money raised by new floats in the first four months of the year. It has only completed one float, raising just $119m (£95m).
Several London-based business including tourism business The London Tunnels and fintechs Zilch and Zopa have mooted plans for IPOs but have so far not laid out a timeline amid challenging market conditions.
E-commerce giant Shein has also discussed plans for a London IPO, but New York remains its preferred listing destination.
AJ Bell investment director Russ Mould said:
"The addition of an established, profitable technology company is exactly what the UK market needs to hopefully open the flood gates for more tech firms to list in London.
“While Raspberry Pi is only a tiny player when pitched against the mega-cap tech names in the US, there are still plenty of characteristics which might pique someone’s interest. It has a large community of users [and] it makes money rather than simply being a bright idea that is not yet commercialised.”
LaToya Harding
Raspberry Pi confirms London Stock Exchange plans
Computer maker Raspberry Pi has confirmed plans for an initial public offering (IPO) in London in a much-needed boost to the capital’s stock exchange.
The British business, which makes small single-board computers, said it aims to use funds raised to invest in its sales arm to take products into more markets, and build market share in design consultancy.
It said it had a current total addressable market of approximately $21.2bn, “reflecting a substantial opportunity for it to capitalise on and sustain its strong growth trajectory.”
Raspberry Pi is thought to be seeking a valuation of £500m in a float.
The firm reported revenues were $266m last year, with gross profit of $66m, and operating profit of $38m.
CEO Eben Upton said:
“A remarkable ecosystem of individuals and businesses has grown around Raspberry Pi, supporting both the enthusiast and industrial markets to innovate and succeed with our products.
“In an ever more connected world, the market for Raspberry Pi's high-performance, low-cost computing platforms continues to expand. We have the technology roadmap to play an increasingly significant role, and we are excited to embark on the next stage of our growth."
LaToya Harding
Taylor Swift's UK fans to spend £848 on average to see Eras Tour
Taylor Swift’s Eras Tour is predicted to provide a £997m boost to the UK economy, according to a report.
The average amount spent on an Eras tour ticket is £206, although 14% of fans, including those who bought VIP ticket packages with premium seating and exclusive merchandise, spent more than £400.
After tickets, fans will spend the most on accommodation (£121), travel (£111), and merchandise (£79), while almost a fifth of concert-goers (18%) will buy a new outfit especially for the event.
Fans will spend an average of £59 on a pre-concert meal at restaurants near the tour’s venues in London, Liverpool, Edinburgh and Cardiff.
One in four fans (26%) say they will have to travel to a different city in order to get to the concert.
However one in five UK fans (19%) with Eras Tour tickets will see Swift perform in mainland Europe instead, possibly due to ticket availability, cheaper travel and accommodation costs, or simply so that they can combine the concert with a holiday or city break, Barclays said.
LaToya Harding
Asia and US stocks overnight
Asian stocks were mixed overnight with the Nikkei (^N225) up 0.1% on the day in Japan, while the Hang Seng (^HSI) was closed for a holiday.
The Shanghai Composite (000001.SS) was 0.8% down by the end of the session after the central bank kept a key lending rate unchanged, signalling Beijing’s focus on maintaining monetary stability.
Stocks rose on Wall Street yesterday, pushing the Nasdaq Composite (^IXIC) to another record high, climbing 0.8% 16,511.18. The S&P 500 (^GSPC) closed just shy of its record, up 0.5% at 5,246.68.
The Dow Jones Industrial Average (^DJI) rose 0.3% to 39,558.11.
Traders were reassured by comments from Federal Reserve chairman Jerome Powell, who said policymakers will not likely raise interest rates to respond to stubborn inflation. It comes as US consumer prices data is released later this afternoon.
Elsewhere, the yield on the benchmark 10-year US Treasury bonds slipped to 4.45% from 4.49% late Monday.
LaToya Harding
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Good morning, and welcome back to our live markets blog. Here we will be covering what's moving markets, and what's happening across the global economy. Stay tuned for all the latest.
Here's a quick look at what's on the agenda for today:
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TORONTO — Fitch Ratings Inc. says it has downgraded its outlook on TD Bank Group to negative from stable because of the potential fallout from anti-money laundering deficiencies at the bank. The credit rating agency, which at the same time affirmed its long-term credit rating of AA- for the bank, says the negative outlook reflects the uncertainty stemming from the multiple investigations the bank faces about its anti-money laundering practices in the U.S. Fitch says the outcomes could include bo
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