Yahoo Finance FTSE 100 Live 15 February: Shares close higher despite UK in recession, Centrica surges, S&P 500 rises
The UK economy finished last year in recession after GDP declined by a bigger-than-expected 0.3% in the fourth quarter.
On the corporate front, British Gas owner Centrica has reported annual results and package holidays firm Jet2 nudged up guidance for the year.
Meanwhile, Close Brothers has ditched its dividend amid the potential impact of the Financial Conduct Authority’s investigation into the car loans market.
FTSE 100 Live Thursday
GDP fall puts UK in recession
Close Brothers axes dividend
British Gas Energy profits surge
FTSE 100 closes at 7,597.53
16:38 , Daniel O'Boyle
The FTSE 100 closed at 7,597.53 today, as investors were undeterred by the UK entering recession.
Centrica and RELX were among the big risers, while BP, Shell and Imperial Brands were among the fallers.
The UK is in recession, but the Government continues to stifle London's growth
16:22 , Jonathan Prynn
The elusive elixir of economic growth seems as far out of reach as ever, as today’s confirmation of recession shows.
Anecdotally, I am hearing the first six or seven weeks of the year have been tough for many retailers, suggesting that a bounce is still some way off.
It seems inexplicable then that the Government has persisted as long as it has with an anti-growth measure that it knows harms its GDP motor — London.
London Fashion Week marks its 40th anniversary with Erin O'Connor at the London Stock Exchange
15:49 , Daniel O'Boyle
The 40th anniversary celebrations for London Fashion Week began today, with one of its chief organisers opening the stock market. Caroline Rush, chief executive of the British Fashion Council, kicked off six days of events in the capital as she opened the market at the London Stock Exchange in Paternoster Square.
The move underscores the importance of the fashion industry, which contributes some £21 billion to the economy and employs about 900,000 people.
Market snapshot: FTSE higher again
15:15 , Daniel O'Boyle
Take a look at today’s market snapshot with the FSTE 100 higher again.
UK risks more persistent inflation than Europe or US, warns Bank rate setter
15:06 , Daniel O'Boyle
The threat of persistent inflation is bigger in the UK than in Europe and the US, a Bank of England rate setter has said.
Megan Greene warned that the UK had faced a “double whammy” in dealing with both a tight jobs market and a trade shock.
She said that the supply side of the market in the UK had been left weaker than in the US in recent years because of Brexit and the pandemic.
Profits and average house price down at MJ Gleeson as property market slowdown bites
12:12 , Daniel O'Boyle
MJ Gleeson provided fresh insight into the impact of the housing market slump on developers today, revealing a drop in profit of 55%.
The Sheffield-based firm made £7.2 million in group profit before tax for the six months to the end of December, down from £16.1 million a year ago.
It came as the number of homes sold in the period fell to 769 from 894, hit by the rise in mortgage costs in the period, after 14 consecutive rates rises from the Bank of England took interest rates to a 16-year peak of 5.25% by August.
The slowdown pulled the average selling price down to £185,000 from £186,400 after some discounting, “on multi-unit sales”, the company said.
Since interest rates peaked in the summer, Gleeson said there are now “encouraging signs of a recovery in demand”, and there are over 18,000 plots in its “land pipeline”, up from just over 17,300.
GDP per head barely moved since 2003
12:06 , Daniel O'Boyle
GDP per capita in the UK remains below 2019 levels and is little changed since 2003.
That’s a big difference from the preceding 40 years, as Simon French shows.
Recession 'confirms what many small firms have been saying'
12:04 , Daniel O'Boyle
Responding to Office for National Statistics figures showing that GDP fell by 0.3% in the final quarter of 2023, following a fall of 0.1% in the third quarter, Martin McTague, National Chair of the Federation of Small Businesses (FSB), said:
“The news that we’re in a recession will just confirm what many small firms have been saying for some time now – it’s very tough out there.
“Our research found that confidence among small firms has been in negative territory for seven straight quarters, due to the energy price crisis and the knock-on impact on the cost of doing business.
“There are big differences between sectors, with the hospitality sector recording by far the gloomiest confidence score, underlining that economic pain and strain are far from equally spread out.”
UK recession call 'unambigiously bad news'
11:48 , Daniel O'Boyle
Dr Luciano Rispoli, Senior Lecturer in Economics at the University of Surrey said: "Although economists often disagree about what constitutes a recession, we all agree that this is unambiguously bad news for the UK economy.
“In my view, this negative reading may not be a one-time event – in fact, since Brexit, the UK economy has been navigating multiple crises. The latest was an inflation crisis leaving behind a 'legacy' of significantly high-interest rates, which exacerbated the already fragile state of real estate and manufacturing sectors."
NatWest shares up ahead of results tomorrow
11:22 , Graeme Evans
The FTSE 100 index is two points lower at 7577.79 this morning, while the FTSE 250 index put on 58.81 points at 19,062.70.
Besides RELX’s surge, other top risers included NatWest, up 4.8p to 213.8p ahead of tomorrow’s results, and Coca-Cola HBC after adding another 69p to 2451p following yesterday’s results-day climb.
Imperial Brands and oil giants Shell and BP led the fallers board after their shares began trading without the right to their forthcoming dividend awards.
In the FTSE 250, animal genetics firm Genus slumped 26% or 5546p to 1578p after its forecast for 2024 profits of at least £58 million missed the City’s £78 million target. Ithaca Energy topped the risers board, up 5.2p to 134.6p after an in-line trading update.
RELX in AI boost
11:20 , Graeme Evans
London’s nearest stock to the likes of Microsoft and Nvidia traded at a fresh record today after rewarding shareholders with more bumper returns.
LexisNexis owner RELX may not be a household name but over 40 years it has generated the best performance of any FTSE 100 company.
Today’s annual results were no different as the tech-focused analytics and decision tools firm hiked its dividend by 8% and pledged to buy back £1 billion of its shares in 2024.
Revenues rose 8% to £9.2 billion as earnings for the last year beat City expectations, sending shares up 27p to 3363p as the ninth largest company in the FTSE 100.
RELX, whose exhibitions division hosts the MCM ComicCon event in London, continues to benefit from the rollout of AI to help customers make better decisions.
This includes providing banks, air lines or governments with AI-led ana lytics to help them assess risks such as fraud, cybercrime and corruption. The company employs about 11,000 “technologists”, spends about £1.3 billion a year on IT, and was recently the only UK entry on Bank of America’s top ten list of businesses most likely to benefit from generative AI.
Others on the list included Meta Platforms and Alphabet, whose return to form on Wall Street yesterday underpinned today’s robust session on the London market.
FTSE 100 close to flat as early surge fades
09:57 , Daniel O'Boyle
The FTSE 100’s early surge today appears short-lived, as it is now essentially flat for the day.
Having been as high as 7610, London’s top flight is now at 7,575.37, up only seven points, or less than 0.1%, today.
Big fallers include cigarettes giant Imperial Brands and oil supermajors BP and Shell.
'Low growth not a surprise," says Hunt
09:53 , Daniel O'Boyle
After figures showed the UK ended 2023 in recession, Chancellor Jeremy Hunt said: “High inflation is the single biggest barrier to growth which is why halving it has been our top priority. While interest rates are high - so the Bank of England can bring inflation down - low growth is not a surprise.
"But there are signs the British economy is turning a corner; forecasters agree that growth will strengthen over the next few years, wages are rising faster than prices, mortgage rates are down and unemployment remains low. Although times are still tough for many families, we must stick to the plan – cutting taxes on work and business to build a stronger economy.”
Barclays eyes SocGen's UK private bank: Reuters
09:28 , Simon Hunt
Barclays is considering acquiring SocGen’s UK private bank, according to a Reuters report.
SocGen has begun inviting bidders to take part in an auction for its Kleinwort Hambros unit, in addition to work on a sale of its private banking operations in Switzerland amid a strategy revamp.
London-based Kleinwort Hambros, which in 2022 had more than £12 billion in assets under management, could be worth up to £700 million in a sale, Reuters reported.
Lloyds, Rathbones and Raymond James were also invited to bid for the unit.
Vodafone Italy merger in doubt as only one interested party left
09:05 , Simon Hunt
Vodafone’s plans to sell or merge its Italian operations are at risk of derailing after it emerged the telecoms giant is now only in talks with a single operator over a deal.
At the end of January, Vodafone said it rejected a merger proposal by Iliad which would have valued its operations in the country at just over 10 billion euros but added it was still in discussions “with others.”
But in a trading update last week the firm dropped any reference to ‘others’, insisting it was still in “active discussions”. All hopes are now pinned on rival Swisscom, which according to Reuters is now the last remaining party still interested in a deal.
“There can be no certainty that any transaction will ultimately agreed,” Vodafone said.
Fierce competition in the Italian market has led to declining revenues and squeezed margins for Vodafone’s business, prompting it to explore " in-market consolidation in countries where it is not achieving appropriate returns.”
FTSE 100 higher as Centrica surges 6%, Close Brothers down 12%
08:47 , Graeme Evans
London shares have shrugged off the UK’s entry into recession after the FTSE 100 index today rose 41.02 points to 7609.42 and the FTSE 250 lifted 76.41 points to 19,080.30.
The annual results of British Gas owner Centrica and LexisNexis firm Relx lifted shares 6% or 7.45p to 141.85p and 2% or 78p to 3414p respectively.
Other risers included NatWest, up 3.2p to 212.2p ahead of tomorrow’s results, while bottling firm Coca-Cola HBC added another 56p to 2438p after yesterday’s strong performance.
Imperial Brands and oil giants Shell and BP led the fallers board as their shares traded without the right to forthcoming dividend awards.
In the FTSE 250, Close Brothers fell 12% or 49.6p to 348.6p after axing its dividend due to the potential impact of the FCA review into the car loans market. Animal genetics firm Genus fell 18% or 380p to 1744p following its trading update.
Pound down on GDP numbers
08:21 , Simon Hunt
A few minutes into the start of the day’s trading session in London, the pound is down on news UK GDP entered a technical recession, while blue-chip shares are up.
Here’s a look at your key market data.
RELX shares hit record high
08:10 , Simon Hunt
Shares in Relx hit a fresh high when markets opened, rising 2% after the British IT firm unveiled a £1 billion buyback programme.
The London-based business, which owns Elsevier and Lexis Nexis, reported a 9% rise in pre-tax profits for 2023 to £2.3 billion while revenues rose 8% to £9.2 billion.
Matt Britzman, equity analyst, Hargreaves Lansdown, said: “RELX continues to showcase its strengths. The analytics company is seeing growth across all business segments, led by a recovery (and more) in its exhibitions business. A significant increase in face-to-face activity has worked wonders for the exhibitions business. Event revenue is now growing ahead of pre-pandemic levels.
“But it’s the digital products that make up the bulk of the business. RELX has undergone a mighty transformation since the turn of the century to push electronic revenue sources from around 22% of the business back in the day, to 83% now.”
Technical recession definition 'arbitrary', but UK still flatlining
07:58 , Daniel O'Boyle
NIESR Economist Paula Bejarano Carbo said the technical definition of a recession is “arbitrary”, but that the wider picture is still one of a flatlining economy. “Today’s ONS data indicate that GDP fell by 0.3 per cent in the fourth quarter of 2023, marking two quarterly consecutive falls in GDP. By the standard metric, this means that the UK economy was in a shallow recession in the second half of last year.
“However, this metric is both arbitrary and not greatly informative: the state of the UK economy is better described by the fact that GDP fell between the first quarter of 2022 and the final quarter of 2023.
“Further, GDP per head remains lower than pre-Covid. The broader picture of flatlining growth and its adverse implications for living standards in the long-term should dominate today’s headlines, rather than technicalities.”
British Gas profits surge within overall drop in profitability at owner Centrica
07:53 , Michael Hunter
Annual profit at British Gas surged today, even as the overall earnings of its owner, Centrica, slipped back from record levels as wholesale commodity prices fell.
Profit at its British Gas Energy business surged to £751 million from £72 million. It made £726 million of that profit from supplying residential households, and £25 million from business customers.
Around £500 million of the British Gas earnings came from a one-off adjustment allowed by regulators to recoup losses made last year in the. aftermath of the invasion of Ukraine, when turmoil in the energy markets meant it was losing money when keeping gas flowing to households,
Centrica’s group-wide adjusted operating profit of £2.8 billion, down from £3.3 billion, as wholesale commodity prices retreated from record levels.
It also upped its payout to shareholders by a third, taking the total amount returned to investors to £800 million for 2023.
The company’s CEO, Chris O’Shea. said it committed a further £40 million in “voluntary support” to customers struggling to pay their bills, taking the total since the start of the “energy crisis” to £140 million.
Levels of bad debt at British Gas Energy’s bad debt rose to £541 million for 2023 from £297 million. There was “an underlying reduction in consumption per customer” as households took steps to control spending, although the company said it came “with customer bills remaining elevated compared to historic levels alongside the reduction of wider government support for both residential and small business customers.”
On the group-wide numbers, O’Shea added:
“As you would expect, sharply lower commodity prices and reduced volatility will naturally lower earnings in comparison to 2023 as we return to a more normalised environment. Our performance over the past year has reinforced our confidence in delivering against our medium-term sustainable profit ambitions and continuing to create value for shareholders.”
Airbus profits down
07:52 , Daniel O'Boyle
Airbus saw profits fall in 2023 despite record orders, the Paris-listed aviation giant revealed this morning.
Operating profits came to €4.6 billion as costs rose, offsetting a rise in revenue to €65.4 billion.
Airbus expects 2024 profits to fall between €6.5 billion and €7 billion.
Jarek Pominkiewicz, equity research analyst at Quilter Cheviot, said: “Despite the disappointing results, we remain optimistic about Airbus’ long-term prospects, as it continues to increase its deliveries, avoid costly new aircraft programmes, and benefit from Boeing’s ongoing troubles.”
Jet2 ups profit outlook on package holidays boost
07:35 , Daniel O'Boyle
Budget travel giant Jet2 said its profits for this year are set to be higher than previously thought, as people seek time away from “our rainy island”.
Profits are set to fall between £510 million and £520 million for the year to 31 March, up from the previous £480m-£520m range. Jet2 said a big reason for the change was that a larger portion of passengers on its flights had booked package deals, which typically means a higher margin for the business, this winter.
CEO Steve Heapy said: "We are pleased with how the 2024 financial year is ending and are encouraged by early bookings for Summer 2024. Whilst recognising that there are many demands on consumer discretionary incomes, we believe that our customers cherish their time away from our rainy island and want to be properly looked after throughout their holiday experience.
“As a customer focused and much trusted holiday provider, we remain confident they will continue to travel with us to the sun spots of the Mediterranean, the Canary Islands and to European Leisure Cities.”
Close Brothers axes divi over car loan probe
07:35 , Simon English
City investment bank Close Brothers warned the market today that the City watchdogs investigation into car loan deals could hit it hard.
It has ditched its dividend due to the inquiry and the shares are likely to come under pressure today.
The company said in a stock market statement: “There is significant uncertainty about the outcome of the FCA's review, and the timing, scope and quantum of any potential financial impact on the group cannot be reliably estimated at present. In accordance with the relevant accounting standards, the Board has concluded that it is currently not required or appropriate to recognise a provision in the group's Half-Year 2024 results in relation to this matter.”
Close Brothers said it could not be sure what the impact on its finances would be. But that it “recognises the need to plan for a range of possible outcomes”.
Close Brothers shares open today at 398p, but are likely to fall.
The financial watchdog announced in January that it is investigating the car loans market to see if commission payments to brokers were too high. If the Financial Conduct Authority (FCA) finds against the brokers, it could trigger payouts to potentially millions of car buyers.
'Today’s release is more politically significant than it is economically'
07:30 , Daniel O'Boyle
Ruth Gregory, deputy chief UK Economist at Capital Economics, said the latest GDP figures might matter politicially, but they would not be so significant economically.
She said: “This is clearly a blow for the Prime Minister who has pledged to ‘grow the economy’ in 2023 (whether he is referring to growth in 2023 as a whole (0.1% y/y) or in Q4 itself is not clear).
“But today’s release is more politically significant than it is economically. At the margin, it might nudge the Bank of England a little closer to cutting interest rates. But we doubt the Bank will be too worried about what is likely to be a mild and short recession.
“Overall, today’s release does not change much. We still think that the economy will contract by 0.1% q/q in Q1, but that a modest recovery will take hold in the second half of this year, as inflation falls, taxes are cut and the boost from lower interest rates starts to be felt.”
'Hunt must avoid giveaways and focus on growth'
07:26 , Daniel O'Boyle
Responding to the latest GDP figures, Muniya Barua, deputy chief executive at BusinessLDN said: “With the UK now in a technical recession, the Chancellor must resist the temptation of a pre-election giveaway for voters in his Spring Budget and instead focus on measures to boost the economy.
“Agreeing a long-term funding settlement for Transport for London would help to keep London moving and support supply chains across the UK. Restoring VAT-free shopping on goods for tourists will deliver a win-win for business and the Exchequer. And giving firms more flexibility on how to use their Apprenticeship Levy would free up more money to invest in skills.”
Lloyds Bank board shake-up
07:22 , Simon English
Lloyds Bank unveiled a shake-up to its board today,
It announced that Lord Lupton “has informed the Board that he intends to step down as a non-executive director of the Group at its 2024 annual general meeting having served almost seven years on the Board”.
Sir Robin Budenberg, Group Chair, said "I would like to thank James for the valuable contribution he has made to the Board since June 2017 and for his leadership as the inaugural Chair of Lloyds Bank Corporate Markets and for his personal support for me since I became Chair."
FTSE 100 seen higher after Wall Street rebound, Japan in recession
07:19 , Graeme Evans
The S&P 500 index last night closed 1% higher and the Nasdaq Composite up 1.3% as US markets resumed their upward trend.
The rebound, which left the S&P 500 back above 5000, included gains of about 1.5% for Magnificent Seven stocks as they put back losses after Tuesday’s strong inflation figure.
A 2.5% rise for semiconductor firm Nvidia meant it overtook the market value of Google owner Alphabet to become the third largest company on Wall Street at about $1.8 trillion (£1.4 trillion).
Asia markets are trading higher, with the Nikkei 225 up more than 1% despite Japan entering recession for the first time in five years.
The country’s preliminary estimate of GDP in the fourth quarter came in below expectations at 0.4% lower on an annualised basis.
The FTSE 100 index closed 0.75% higher following yesterday’s encouraging UK inflation figure, with IG Index forecasting a further rise of 39 points to 7584 in today’s session.
Pound lower as recession call slightly boosts rate cut hopes
07:16 , Daniel O'Boyle
The pound has fallen to $1.2557 on the news the UK entered a recession, as investors hope the figures will encourage the Bank of England to cut interest rates.
It had been trading at about $1.270 before the announcement. Sterling has been close to steady since November.
Martell cognac maker says sales flat
07:13 , Simon English
Sales are flatlining at the big booze companies.
French spirits maker Pernod Ricard today it now expected sales to be steady this year after a tough first six months, but is banking on improved demand in key Chinese and U.S. markets from the second half.
Pernod Ricard, which owns Martell cognac, Mumm champagne and Absolut vodka and had previously forecast a rise in annual sales, said strict control over costs would however drive margin expansion.
The cost of living issue is clearly affecting discretionary spending.
The world's second-largest spirits maker after Diageo said it would buy back 300 million euros worth of shares this year, having already repurchased 150 million euros of stock in the first half.
Profit from current operations in the first six months of its fiscal year to Dec. 31 reached 2.144 billion euros ($2.30 billion), an organic decline of 3%, but slightly better than analysts' expectations of a 5.1% decline.
Sales at Pernod amounted to 6.59 billion euros in the first half, down 3% organically and on par with analysts' expectations as an economic slowdown in China dampened demand while inventory adjustments in the United States continued after a post-COVID surge.
Recession call will be major blow to Rishi Sunak
07:13
The confirmation of a recession is another huge blow to the credibility of Rishi Sunak, who made “grow the economy” one of his five pledges to voters at the start of 2023.
The economy has been hit by high interest rates and the cost of living squeeze which has suppressed consumer spending.
Read more on the latest figures here
Health and education declined in December
07:11 , Daniel O'Boyle
ONS Director of Economic Statistics Liz McKeown said: “Our initial estimate shows the UK economy contracted in the fourth quarter of 2023. While it has now shrunk for two consecutive quarters, across 2023 as a whole the economy has been broadly flat.
“All the main sectors fell on the quarter, with manufacturing, construction and wholesale being the biggest drags on growth, partially offset by increases in hotels and rentals of vehicles and machinery.
“The latest data showed that health and education performed less well than initially estimated in both October and November. Early indications suggest they both contracted in December. Retail and wholesale were the biggest overall downwards pulls on the economy in December, partially offset by growth in computer programming and manufacturing.”
Do 'brighter times lie ahead'?
07:08 , Daniel O'Boyle
Jeremy Batstone-Carr, European strategist at Raymond James Investment Services, says that while the UK’s slip into a mild recession is disappointing, there are signs to be optimistic ahead.
“Today’s GDP figures confirm that the UK slipped into very mild economic contraction towards the end of 2023, with subdued economic activity dragging into the festive season.
“The data is evident of deflated activity across all key sectors of the economy, from manufacturing to service and retail, as well as construction activity, which was negatively impacted by inclement weather.”
“Nonetheless, while there is an impression of economic stagnation, brighter times surely lie ahead. As winter rolls away, the lagged impact of high inflation and interest rates will work its way through the economy and inflationary pressures will settle, allowing the Bank of England to lower the base rate come summertime.”
Construction and production drag GDP down
07:05 , Daniel O'Boyle
It was another weak month for the construction sector, as bad weather hindered projects, playing a part in Q4’s disappointing GDP reading.
UK in recession
07:01 , Daniel O'Boyle
The UK economy is officially in recession, after GDP declined in the fourth quarter.
Official statistics show a 0.3% decline,worse than economists expected.
It’s the second consecutive quarter of negative GDP growth, which is widely seen as the criteria for a recession.
However, if GDP improves this quarter, the mini-slump will go down as the shortest and shallowest recession in history.
In December, GDP was down by 0.1%.
The figures will be a blow to Rishi Sunak, who included “grow the economy” as one of his five pledges for the year.
Public set to find out if UK finished 2023 in recession
06:54 , Daniel O'Boyle
The ONS will release the UK’s December and fourth-quarter GDP figures within minutes, with the question of whether the UK entered a recession to end 2023 hanging in the balance.
Economists predict a 0.2% contraction in December, which would mean a decline of 0.1% in the fourth quarter of the year.
That would be the second consecutive quarter of decline, meeting the technical definition of a recession.
However, economists have noted that it makes little difference whether the UK economy ends up a tenth of a percentage point above or below the “zero growth” line, with the wider trend being stagnation.
Recap: Yesterday's top stories
06:50 , Simon Hunt
Good morning from the Standard City desk.
It is that bank reporting time of year. Things kick off on Friday when NatWest reveals its 2023 numbers, followed by Barclays, HSBC, Lloyds and Standard Chartered.
It has been a decent year for the “big five”. For once there were no scandals requiring multi-billion-pound writedowns, and bad debt impairments remained at remarkably low levels considering the state of the economy.
Lending margins were kept at healthy levels — until the sudden mortgage price-war scramble at the end of the year — and NatWest is finally generating the sort of profits it should be a decade and a half after the global financial crisis.
City scribes are pencilling in combined profits of around £51.6 billion, easily the highest on record, although about half is accounted for by one bank, HSBC.
If the big five UK banks were a country their combined “GDP” would be about the size of Serbia’s. But for all that, Britain’s banks remain as unloved by the stock market as ever. The FTSE All-Share banks index is barely back to where it was in the shattering Spring 2009 aftermath of the banking meltdown and 70% below its 2007 high, according to research from brokers AJ Bell.
Perhaps those memories of the 2009 trauma have poisoned the value investors place on bank profits to this day, despite major shoring of balance sheets since then.
Here’s a summary of our top stories from yesterday:
Inflation unchanged at 4% as food prices fall in a month for the first time since September 2021 in major boost for Bank of England
Homeware chain Dunelm sales up 4.5% as it declares a £71m special dividend of 35p per share but cautions consumer outlook remains uncertain
The UK arm of The Body Shop tumbling into administration could push Britain’s store vacancy rate up after a brief period of stability, analysis of data suggests.
London-based Fintech unicorn Checkout.com posts $100 million loss in 2022 as the e-commerce payments provider said it was hit by a return of shopping habits to physical stores after the pandemic
And...Ride hailing app Lyft shares go on wild ride after it releases wrong numbers to shareholders
