US inflation data is crucial to how markets see the Federal Reserve progressing on rate cuts. The FTSE was down on Monday. (Chip Somodevilla via Getty Images)
The FTSE 100 (^FTSE) and European stocks finished lower on Monday, ahead of another slew of major macro data from America and the EU this week, including US inflation figures.
US inflation as measured by the Consumer Price Index (CPI) rose to 3.5% in the year to March, the third hot reading in a row, forcing traders to slash bets on Federal Reserve interest rate cuts. Core US inflation also rose more than expected, rising to 2.8% year-on-year.
Neil Wilson at FinalTo said: "The data for April will be crucial to how markets see the Fed progressing. Goods inflation is expected to decline a bit, but core services inflation will likely remain a little too hot for the Fed’s liking.
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"CPI for April is seen at 0.3% month-on-month, ticking down to 3.4% YoY. Despite the resilience of US inflation, the message from the Fed remains one of easing to come — cuts are in the mail."
Meanwhile, UK workers are earning more while producing less, according to new data.
The Resolution Foundation said that falling pension costs and import prices have temporarily severed the link between productivity and wage growth in Britain, allowing real wages to rise without putting further pressure on inflation. However, it warned in its latest macroeconomic policy outlook that it will not last.
London’s benchmark index finished 0.2% lower, closing a session that was mostly in the red.
Germany's DAX (^GDAXI) closed 0.2% lower and the CAC (^FCHI) in Paris likewise slipped 0.1% into the red at the closing bell
Wall Street pushed higher as memestock shares surge on the back of "Roaring Kitty's" return to the social network X.
The pound (GBPUSD=X) was up 0.2% against the dollar at 1.2553.
Key companies reporting this week include: Burberry (BRBY.L), Vodafone (VOD.L), BT (BT-A.L) and Walmart (WMT).
Follow along for live updates throughout the day:
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Pedro Goncalves
That is all from us today but do follow our US blog to keep tabs on what is moving markets across the pond.
Hope you'll join us again tomorrow for everything that investors need to know to make the right decision when it comes to their money.
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LaToya Harding
GME: No clear driver aside from momentum and social media hype
The memestock craze today has seen GameStop shares temporarily halted after soaring 110%.
Kathleen Brooks, research director at XTB, said:
"Monday’s move in Game Stop rounds off a good month for the company, its stock price has surged more than 60% in the past month, fuelled mostly by demand from retail traders.
"There has been no direct catalyst for this move. Its first quarter results were horrible: net income was down by $27.7mn, while earnings per share was negative by $0.09, suggesting that the company is not profitable. Thus, the move in the stock price in recent weeks, is not driven by fundamentals.
"This is one of the key risks of trading meme stocks – there is no clear driver aside from momentum and social media hype, which can reverse very quickly. It is worth keeping in mind that Game Stop is lower by more than 16% so far this year.
LaToya Harding
Are the memstocks back? Gamestop and AMC shares soar
FILE - A GameStop store in New York is shown on Jan. 28, 2021. GameStop and AMC were considered to be somewhat antiquated when small investors latched onto them in late 2020 and early 2021. (AP Photo/John Minchillo, File) (John Minchillo, Associated Press)
Shares Gamestop have more than doubled at the start of trading, while fellow meme stock company AMC rises 20%.
GME surged as much as 110% thanks to the return of Keith Gill, better known as “Roaring Kitty,” to social media platform X.
He was the person behind the pandemic meme stock craze of 2021.
— Michael Burry Stock Tracker ♟ (@burrytracker) May 13, 2024
LaToya Harding
Treasury sells more NatWest shares
The government’s stake in NatWest has fallen to 26.95%, continuing the process of bringing the high street bank into private ownership.
Its stake dates back to the rescue of Royal Bank of Scotland, as NatWest was then called, in 2008 – which left the government owning 86% of the bank.
The government is hoping to sell its stake to the public this summer.
LaToya Harding
UK housebuilding slumps
UK housebuilding slumped in the first three months of the year thanks to high interest rates and wet weather.
According to the latest data from the National House Building Council (NHBC), a total of 21,967 new homes were registered to be built in the first, a 20% fall on the 27,619 registered in Q1 2023.
New house build in the UK, example of modern homes built in Britain (Richard O'Donoghue)
Moneyfacts has revealed that the average two- and five-year fixed mortgage rates rose in April.
The overall average two- and five-year fixed rates rose between the start of April and the start of May, to 5.91% and 5.48% respectively. The average two-year fixed rate stands 0.43% higher than the five-year equivalent, the biggest difference seen in six months (November 2023 – 0.43%).
The average ‘revert to’ rate or Standard Variable Rate (SVR) remained at 8.18%, just shy of the highest recorded (8.19%) during November and December 2023.
The average two-year tracker variable mortgage fell to 6.12%.
LaToya Harding
Jobcentre security guards on strike
Jobcentre security guards are on strike today in a dispute over pay.
Eamon O’Hearn, GMB national officer, said:
“Jobcentre security guards are eking out a living on just above the minimum wage, despite facing horrific violence and abuse while on the job.
“G4S can afford to pay these workers what they deserve, unless they do they are going to face a prolonged period of industrial action.”
A G4S spokesman said:
“We’re disappointed that the GMB have refused to take our improved pay offer to their members.“We are continuing to try to reach an amicable agreement, and have implemented contingency plans to minimise disruption to our customers.”
LaToya Harding
Will stock markets continue gains for the rest of this year?
Global stocks climbed for a third week last week amid strong earnings growth, particularly in AI-focused companies, and as investors await the US inflation report on Wednesday.
According to Nigel Green at deVeres Group, the US and European stock market rallies will continue despite the US central bank possibly not cutting rates at all until 2025.
He said:
"Despite ongoing geopolitical risks, elections, the impact of economies moving at different clips, and attention on central banks’ paths to begin rate-cutting, we currently expect the high stock valuations to continue for the rest of 2024.”
"First, is the expectation of sustained economic growth. The recent upward revisions in global economic forecasts by institutions such as the IMF and Bloomberg serve as additional fuel for the optimism fire.
“At the heart of the bullish sentiment pervading international markets lies the resilience of the US economy. Key indicators, including consumer spending, job creation, and corporate earnings, paint a picture of a nation on the path to continued growth. This robust performance serves as the backbone of confidence, instilling trust among investors in the stability and strength of the world’s largest economy.
“In parallel, signs of a rebound in China, the world’s second-largest economy, and Europe beginning to shine, further adds buoyancy to the global economic outlook.”
He continues: “The second narrative supporting the expectation of a continued stock market rally revolves around the anticipation of interest rate cuts in response to a potential economic slowdown.
“Should this happen, and central banks cut rates in response, this would also be expected to bolster equities.”
LaToya Harding
Amazon to invest $1.3bn in France and create 3,000 jobs
Amazon is planning to invest more than €1.2bn ($1.3 billion) in its French operations, creating more than 3,000 jobs in the country.
The French presidency said on Sunday that Amazon and other companies, including GSK and Accenture, would announce investments worth billions as part of the country's annual "Choose France" event, which begins today.
Amazon has invested more than 20 billion euros in its French operations since 2010 and employs more than 22,000 permanent employees across its cloud and online retail businesses.
"These jobs are in addition to the 2,000 jobs we announced for 2024," said Frédéric Duval, country manager at Amazon France.
LaToya Harding
US dollar consolidates against peers
Major currencies were steady on Monday as the US dollar consolidated against its peers.
The dollar index, which measures the greenback against a basket of currencies, was mostly flat at 105.34, following its first weekly gain last week after two successive weeks of decline.
Matt Simpson, senior market analyst at City Index, said:
"For the wheels to truly fall off of the US dollar, incoming data needs to point to disinflation, not just pockets of weakness here and there.
"If inflation data ticks higher again this month it will surely undo the work of softer growth and slightly weaker employment figures."
Sterling was firm at $1.2517, down 0.03% on the day while the euro was unchanged at $1.0769. Meanwhile, the yen weakened 0.11% to 155.91.
LaToya Harding
Phoenix slips as CFO to step down
Savings and retirement group Phoenix was out of favour, dropping 2% on the day after the announcement that its chief financial officer of four years is to step down later this year.
Phoenix will begin a formal process to find his successor and have hired former Aberdeen finance boss Stephanie Bruce as interim chief financial officer.
The company did not give a reason for his departure.
LaToya Harding
Alibaba climbs 4% ahead of quarterly earnings
Chinese e-commerce firm Alibaba (9988.HK) will report its quarterly earnings on Tuesday, with investors keen to see how a company that acts as a barometer for the mood of consumers in the world's second-largest economy performed.
For the March quarter this year, analysts, on average, expect the company to earn $1.41 per share on revenue of $30.42bn (£24.28bn). This compares to the last year’s $1.50 per share and $29.15bn.
Alibaba’s Taobao online shopping and Tmall B2C online retail platforms may have seen a strong sequential increase in gross merchandise value.
The platform has lowered costs as Chinese consumers seek discounts and lower-cost shopping but analysts are concerned this risks hitting margins.
It is also facing increasing competition from low-cost platforms, such as PDD Holding's (PDD) Pinduoduo and ByteDance-owned Douyin, Reuters reported.
Dubai, United Arab Emirates - February 17, 2024: An Emirates Airbus A380-800 Aircraft With The Registration Number A6-EVB At The Airport In Dubai, Uni (CHROMORANGE RM)
Emirates posted record profits of $4.7bn (£3.8bn) in 2023 on the back of $33bn revenues. Profit the year prior had been $2.9bn.
The airline, which is owned by Dubai’s government, carried 51.9 million passengers in its during the financial year, compared to 43.6 million the year prior.
Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive, said:
"Throughout the year, we saw high demand for air transport and travel related services around the world, and because we were able to move quickly to deliver what customers want, we achieved tremendous results.
"We are reaping the benefit of years of non-stop investments in our products and services, in building strong partnerships, and in the capabilities of our talented people."
LaToya Harding
Diploma surges to top of FTSE after revenue growth
Distribution group Diploma (DPLM.L) surged to the top of the FTSE 100 (^FTSE) after takeovers of US companies helped it report double digit revenue growth.
Adjusted pre-tax profit came in at £115.2m in the six months to 31 March, while revenue jumped 10% to £638.3m.
The specialist distribution business lifted annual guidance after a 17% rise in adjusted earnings. It now expects constant currency revenue growth of around 16%, up five percentage points from previous guidance.
The company acquired US-based Peerless Aerospace Fastener for £236m during the period, which it said would extend its strength in aerospace specialty fasteners. It also bought UK-based Plastic and Rubber Group for £38m.
LaToya Harding
Could Shein and Raspberry Pi start London IPO revival?
There has been increased speculation that Shein and Raspberry Pi will soon announce their initial public offerings (IPOs) in the UK.
It comes as there has only been six London stock market debut year-to-date, with 40% average share price gain. However, the FTSE 100’s recent success raises the chances of more companies choosing London as a listing venue.
Dan Coatsworth, investment analyst at AJ Bell, said:
“Speculation is rife that Chinese fashion group Shein is on the verge of confirming its intention to list in London, as well as electronics group Raspberry Pi in the coming days. Both names would bring some sparkle to the market and potentially encourage other companies to take advantage of the new-found oomph in UK equities.
“Key reasons why Shein might choose to list in London are the more relaxed rules and requirements versus other venues like the US, and there is a risk that the UK develops a reputation for admitting companies with more questionable qualities.
“Therein lies a key problem. London wants to find ways to attract more listings but it must not tarnish its reputation by letting in bad eggs. Approximately 10 years ago we had a wave of Chinese companies flood the AIM market and most ended in disaster or disappointment.
“Raspberry Pi will be a much smaller float if speculation proves correct it is about to list in London. However, its listing would still be significant as it brings a well-known name in the technology sector to the UK market – something of a rarity and hopefully the start of things to come.
“The UK is woefully under-represented in technology companies despite the country brimming with tech talent. We need a few more tech firms to list in the UK and give investors more domestic choice rather than them simply having to fish around the US market for tech opportunities."
LaToya Harding
Oil slips amid weak fuel demand and strong dollar
Greenpeace activists approach Equinor oil rig near Hammerfest, Norway April 29, 2019. Jani Sipila/Greenpeace/ Handout via REUTERS REUTERS ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY (REUTERS / Reuters)
Oil prices extended their declines on Monday amid signs of weak fuel demand and as comments from US Federal Reserve officials dampened hopes of interest rate cuts.
Brent crude futures slid seven cents, or 0.1%, while US West Texas Intermediate crude futures were at $78.21 a barrel, down cents.
independent analyst Tina Teng told Reuters:
"Oil markets shrugged off the impact of the Middle East conflicts and shifted attention to the world economic outlook again."
Earlier this month, OPEC+ called out Iraq for pumping over its output quota by a cumulative 602,000 barrels per day in the first three months of 2024. The group said that Baghdad had agreed to compensate with additional production cuts over the rest of the year.
LaToya Harding
Heathrow says govt curtailing UK’s global connectivity
Heathrow has accused the British government of curtailing the UK’s global connectivity through bad policies.
Europe's busiest airport said the government was failing to support UK aviation and help it compete globally.
"Initiatives like the introduction of unnecessary visas for transiting passengers, the absence of tax-free shopping and the recently proposed hike in business rates, underscore the need for Ministers to take a cross-Government approach to policymaking that supports UK aviation’s global competitiveness."
It follows Heathrow urging ministers last month to scrap a new £10 charge for overseas travellers using UK airports to connect to other flights. The government launched the electronic travel authorisation (ETA) scheme in November 2023 for people entering or transiting through the UK without legal residence or a visa.
The airport handled 6.7 million passengers in April, bringing the total for the year so far up to 25.2 million. This was a 4.8% rise on the 6.4 million is saw in the same month last year.
It said it “remains on-track” for a record-breaking number of passengers this year.
Heathrow CEO Thomas Woldbye said:
As we continue to grow, our focus is on making Heathrow fit for the future, delivering reliable journeys for all our customers today and getting ready for the challenges and opportunities of tomorrow.
But to unlock our full potential to help grow the country’s economy, we need the Government to implement policies that support UK aviation’s ability to compete globally, and thus make the UK more competitive overall.
LaToya Harding
UK business output and confidence rises in April
According to the latest BDO business trends report, output rose last month to its highest level in almost two years, gaining 2.09 points to 103.92, the highest level since May 2022.
UK business output and confidence increased as inflation pressures began to ease.
The UK’s services sector led the bounceback thanks to consumers having more money to spend at hospitality, retail and leisure companies, while energy bills fell.
Hopes of a cut to UK interest rates by the autumn also helped lift business confidence.
However, BDO’s employment index fell for the tenth consecutive month, hitting its lowest level since February 2013.
Kaley Crossthwaite, partner at BDO, said:
“Cautious optimism is the order of the day for UK businesses hoping for an interest rate cut this summer.
"It’s heartening to see a turning point begin to materialise for the economy, with the services sector driving the bounce back so far from last year’s technical recession.
"But businesses across the board need more certainty from the government and we urge them to provide a clear, stable and long-term tax roadmap as soon as they’re able to, alongside much needed reforms to the apprenticeship levy.
"Only once businesses have this will we start to see the more stable optimism, investment and hiring intentions needed for a robust recovery.”
LaToya Harding
Junior ISA subscriptions see 27% annual boom
ISA Savings, Individual Savings Accounts Saving in scrabble art deco letters, ISA concept (Leonora Oates)
EasyMoney has revealed that Junior ISA subscriptions have risen 26.9% in the past year, while total savings hit an all-time high, as parents look to provide for their children’s futures amid economic uncertainty.
The increase was largely driven by stocks and shares ISA subscriptions which rose 65.5% on the year, while cash ISAs increased by just 10.3%.
The latest subscription figures also mark a massive ten-year increase of 1,607% since the Junior ISA was first introduced in 2011/12.
Meanwhile, total Junior ISA savings totalled just under £1.5bn — the highest recorded. This marks an annual increase of 20.3% and a 10-year increase of 1,196%.
LaToya Harding
SoftBank profits rise amid AI boom
Technology investor SoftBank posted a quarterly profit of 231.1bn yen (£1.2bn) thanks to a boom spurred by the excitement around artificial intelligence.
The Tokyo-based company reported a second consecutive quarter of profitability ahead of analyst estimates, compared to a loss of 57.6bn yen (£295m) in the first three months of last year. However, full-year earnings remained in the red.
The group’s tech-heavy Vision-Funds saw a loss of 96.7bn yen, missing estimates for a profit of 185.1bn yen.
In February Yoshimitsu Goto, chief financial officer, had declared that SoftBank would to be returning to a "growth trajectory".
LaToya Harding
Real UK wages rise as output per worker falls
UK workers are earning more while producing less, new data has shown, however this is affordable thanks to falling import prices and pension deficits.
According to the Resolution Foundation, falling pension costs and import prices have temporarily severed the link between productivity and wage growth in the UK, allowing real wages to rise without putting further pressure on inflation.
However, the foundation warned in its latest Macroeconomic Policy Outlook that it will not last.
It comes as real average weekly regular earnings have grown by 2.1% in the year to February. This has helped to recover some of the ground lost from the sharp pay squeeze in recent years. For example, real average weekly earnings fell by 2.7% in the 12 months to October 2022.
Real wages have grown as much over the past 12 months as they have over the previous 16 years (2.1% between February 2008 and February 2024), highlighting the scale of Britain’s long-term pay depression.
Stocks in Asia were mixed overnight with the Nikkei (^N225) falling 0.1% on the day in Tokyo amid speculation that further losses for the yen could lead the Bank of Japan to raise rates in the next few months, while the Hang Seng (^HSI) rose 0.8% in Hong Kong.
The Shanghai Composite (000001.SS) was 0.2% down by the end of the session with some sectors pressured by reports that the White House was about to release details of new tariffs on Chinese goods.
It came as Chinese activity data later this week will test optimism about a sustained recovery in the world’s second largest economy.
Beijing has already reported a pickup in inflation to 0.3% in April, helping to soothe worries about a slide into prolonged deflation. Forecasts favour further gains in April retail sales and industrial output due on Friday.
Chinese authorities are also set to sell 1 trillion yuan (£110bn) in longer-dated bonds to help fund stimulus spending at home.
The improved sentiment has helped lift Chinese blue chips to a seven-month high.
LaToya Harding
Coming up...
Good morning, and welcome back to our first markets live blog of the week. Stay tuned as always for the latest news of what's moving markets, and happening across the global economy.
Here's a quick look at what's on the agenda for today:
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