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FTSE 100 Live 22 February: Nvidia powers S&P 500 to new record, 'UK recession over', London index closes up

FTSE 100 Live (Evening Standard)
FTSE 100 Live (Evening Standard)

The latest blockbuster results by semiconductor giant Nvidia have given global markets a lift, with the Nikkei 225 at a record high early today.

The FTSE 100 index lagged gains elsewhere as traders reviewed more blue-chip results, including the latest encouragement for Rolls-Royce shares.

Profits of £7.8 billion by Lloyds Banking Group failed to lift shares after it set aside £450 million in relation to the City regulator’s car loans investigation.

Key Points

  • Nvidia excitement lifts global markets

  • Lloyds takes £450m car loans hit

  • UK may now be out of recession, PMIs suggest

FTSE 100 closes at 7,684.49

16:41 , Daniel O'Boyle

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the FTSE 100 closed higher at 7,684.49 today, with Rolls-Royce and Beazley leading the way.

That’s up 0.3% for the day.

UK tech stocks were boosted by Nvidia fever as the US-listed chips giant hit a new high.

The top risers were Rolls-Royce, Beazley and Lloyds Banking Group, boosted by strong results.

WPP was the biggest faller.

Drug maker Indivior considers ditching primary UK listing for US

16:20 , Daniel O'Boyle

Drugs firm Indivior has said it is considering moving its shares to the US public markets, in the latest blow to the UK’s position as a leading financial hub.

The company, which specialises in treatments for substance use disorders and serious mental illnesses, said it had kickstarted discussions with shareholders.

Chief executive Mark Crossley said: “We are also excited to announce that we are initiating consultations with shareholders on potentially transitioning to a primary listing in the US in 2024 while maintaining a secondary listing in the UK.”

Read more here

Britishvolt administrators in talks with potential new buyers for factory site

16:19 , Daniel O'Boyle

Administrators for collapsed battery factory project Britishvolt have said they are still chasing money from the Australian buyer of the site and are considering other potential deals.

EY said Recharge Industries is still “in default” a year after it agreed to sell the Cambois, Northumberland site where Britishvolt had said it wanted to build a factory.

The administrators said they have “held discussions” with some other potential buyers for the site. It comes as the BBC reported on Thursday that Northumberland Council will set aside money to potentially buy the site.

Read more here

Market snapshot: Nvidia at new high

15:24 , Daniel O'Boyle

Take a look at the latest market snapshot, as Nvidia surges to a new high

Trouble at Hargreaves Lansdown

15:23 , Simon English

A big read in the FT today on what it calls the “crisis” at Hargreaves Lansdown. Those are strong words for the FT.

A sample: “For many of its upstart rivals, HL has come to resemble the financial advisers it once derided -- clunky and expensive.”

It also notes how much HL relies on the cash held on its platform for deposits -- 37% of revenues and two-thirds of profits last year.

The Standard earlier made the point about how much these investment houses rake in from zero interest deals on cash deposits.

Its association with failed fund manager Neil Woodford can’t be helping its reputation either.A big job ahead then, for new CEO Dan Olley. It is hard to see how it reforms its IT and does everything else that needs to be done without slashing profits and dividend payments.

Something that will make founder Peter Hargreaves, who still owns 20% of the stock, very cross.

Mortgage rate rises branded 'March madness' by brokers as banks hike home loan costs

15:03 , Daniel O'Boyle

House hunters and mortgage brokers have reacted angrily to news that a string of big-name lenders are hiking the cost of home loans, even with Bank of England base rates expected to fall later this year.

The moves from the likes of HSBC, Santander and TSB have been described as a “handbrake turn” and “March madness” for hard-hit consumers, already struggling with the cost-of-living crisis and an economy that has tipped into recession.

From tomorrow, HSBC will lift the interest rate on its mortgages but has not revealed an exact figure. It gives brokers 24 hours notice that rates are going to move before the final decision on the level kicks in. Tomorrow’s rise is expected to apply across the high street lender’s fixed-term and loan-to-value mortgages and will affect new and existing customers who are not on a fixed-rate package.

Read more here

Friday office work could be coming back — London employers are increasingly keen

13:14 , Daniel O'Boyle

Are Fridays coming back? We’re approaching the fourth anniversary of the first Covid lockdown and numerous employers are looking at how their office use has changed, for better or worse, and considering what the next steps are on how their working week model should look.

First there was WFH (working from home) then we had the TWATs (people attending the office on Tuesdays, Wednesdays and Thursdays), a style which became flavour of the month, well flavour of the last three years. But could FOW (Friday Office Work) be the next big thing?

Ok, that acronym is an invention of mine — but it is no fiction that employers are thinking hard about it.

Read more here

Energy giant OVO hires veteran supermarket boss Justin King as chair

12:58 , Daniel O'Boyle

Energy group OVO has appointed former Sainsbury’s boss Justin King as its new chairman.

King takes up the non-executive role at Britain’s fourth biggest supplier in March after current chair Stephen Murphy steps down after nine years.

The 62 year old is one of Britain’s most respected retailers and has also worked at M&S, Asda, Haagen-Dazs, PepsiCo and Mars.

Read more here

City Voices: What did we learn about our banks this week?

12:08 , Daniel O'Boyle

David Buik looks over the banking sector’s results

Ever since the credit crisis of 2008, the UK banking sector has been infertile ground for investors. It has proved to be a debilitating laggard for the FTSE 100 over the past 15 years.

Why is this the case? The cost of bailing out UK banks and building societies to the taxpayer was north of £135 billion.

This crisis sent the country into recession with GDP down 2.6% in the first quarter of 2009.

Not only did RBS/NWG, Lloyds/Bank of Scotland require recapitalising, with Barclays accepting an injection of capital from Qatar, but these banks also needed to increase their working capital ten-fold to deliver the same level of business that they executed in 2008. This decision taken by the government was prudent to shore up their respective balance sheets.

Read more here

City Comment: The UK economy is in recovery, but I’m not sure it’ll last

11:38 , Jonathan Prynn

We had the so called “technical recession” at the back end of last year. Are we now at the start of a “technical recovery”?

Today’s decent UK PMI numbers for February provide the glimpse of a green shoot or two with the composite index at its highest level for nine months.

At face value they suggest that GDP is set for a return to growth of some sort in the first quarter. But as every gardener knows, those tender stems remain vulnerable until the last frost of spring.

Read more here

Rolls-Royce tops FTSE 100 as turnaround plan helps profits take off

11:18 , Daniel O'Boyle

Shares in Rolls-Royce topped the FTSE 100 today, after the world-famous engine maker’s annual profit more than doubled.

The rebound was powered by the return of jets to the skies and a strategy overhaul from its tough-talking chief executive, Tufan Erginbilgic.

He said the turnaround plan was behind the “record performance” as “we focused on commercial optimization and cost efficiencies across the group”.

Read more here

FTSE 100 flat despite big stock moves, photobooth firm ME up 5%

10:27 , Graeme Evans

The resurgent Nikkei 225 index today jumped to a new record after results by Nvidia triggered a fresh wave of buying of technology stocks.

The Tokyo benchmark is up by about 17% this year and lifted another 2% this morning to break 39,000 for the first time, beating a landmark set on the last trading day of 1989.

Wall Street’s semiconductor giant Nvidia provided the spark for the latest rally after another set of knockout earnings revealed no let-up in AI demand.

Its shares recovered from pre-results jitters to put back 9% in after-hours dealings, while Japan’s SoftBank jumped 5% on the read-across to its major stake in Arm Holdings.

Beneficiaries in London included Allianz Technology Trust, which has Nvidia as one of its largest holdings. Shares rose 3% or 9.2p to 334.2p in the FTSE 250.

The performance of the FTSE 100 was anything but headline grabbing, but the rise of 3.75 points to 7666.26 masked some big individual stock movements.

Alongside a jump of 7% for Rolls-Royce, cyber insurance firm Beazley surged 9% or 52p to 634p after promising an additional capital return of about $300 million (£236 million) in next month’s full-year results.

Mining giant Anglo American also rose 66p to 1788.2p and Hikma Pharmaceuticals surged 4% or 80.5p to 2078p following their annual figures.

The FTSE 250 lifted 71.74 points to 19,190.71, with photobooth and laundry services firm ME Group up 5% or 7.2p to 140p after profits rose 25.7% to £67.1 million during a record year.

Businesses report improving outlook

10:05 , Daniel O'Boyle

New stats from the ONS suggest businesses are becoming more optimistic

HL draws in £1bn despite investor stock caution

10:05 , Simon English

Hargreaves Lansdown’s new boss today insisted he has a good relationship with truculent co-founder Peter Hargreaves, who has lately been highly critical of the business.

The investment platform saw £1 billion of new business in the half-year and attracted another 20,000 clients, taking the total to 1.82 million.

Dan Olley, CEO for six months, said of Hargreaves: “I think we are building a good relationship. He has some great ideas and we listen -- we don’t always agree with them.”

Profit slipped 8% to £182 million, with the dividend up 4% to 13.2p. That’s worth a few million to Hargreaves and Stephen Lansdown, still big shareholders.

The cost of living crisis has seen many investors pull back from the stock market, either to put money in cash instead, or else to sell shares to pay for household expenses.

Olley said: “As markets pick up, people will move back into equities.”

HL took an impairment charge of £14.4 million on the write-down of some software tools.

'Inflation could fall to 0.0% this year'

09:54 , Daniel O'Boyle

Alex Kerr, UK economist at Capital Economics, looks at the PMI prices data.

Kerr says: “The shipping disruptions in the Red Sea led to a further lengthening in suppliers’ delivery times. But the manufacturing input prices balance actually decelerated from 52.5 to 52.3. This implies core goods CPI inflation will slow from 2.7% in January to around 0.0% later this year. However, the services output prices balance rose from 57.2 to 58.5, which survey respondents attributed to continued higher labour costs. This is consistent with services CPI inflation easing only gradually from 6.5% in January to just above 5.0% in six months’ time.

“This will add to the Bank of England’s unease about lingering domestic price pressures. At the margin this may mean the Bank won’t rush to cut interest rates. But we still think overall CPI inflation will fall below 2.0% in April and that the Bank will be in a position to start cutting rates this summer.”

PMIs dispel 'doom and gloom'

09:48 , Daniel O'Boyle

After the latest PMI figures, Michael Brown, market analyst at Pepperstone, said: “This morning's UK PMI figures further serve to dispel some of the 'doom and gloom' that has surrounded the UK economic narrative of late, particularly after Q4 GDP data this time last week confirmed the onset of technical recession at the tail end of 2023. Per the PMIs, it is likely that said recession is already over, with the composite output gauge once more printing comfortably north of the 50 handle, and above market expectations at 53.3.”

"UK recession already over"?

09:36 , Daniel O'Boyle

Fresh evidence emerged that the UK’s recession will be the shortest one possible, as the S&P Global Flash United Kingdom ‘Flash’ PMI hit a nine-month high in February.

The composite PMI reading rose to 53.3, comfortably ahead of the 50 mark that represents stagnation. That is slightly ahead of forecasts and up from a 52.9 reading in January.

The dominant services sector continued to grow with a 54.3 reading. Manufacturing remained in decline for the 12th straight month at 47.3.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said: “UK economic growth has accelerated in February, with the early PMI survey data pointing to the largest rise in business activity for nine months. This is by no means a one-off improvement, as faster growth has now been recorded for four straight months after a brief spell of decline late last year.

“The survey data point to the economy growing at a quarterly rate of 0.2-3% in the first quarter of 2024, allaying fears that last year's downturn will have spilled over into 2024 and suggesting that the UK’s ‘recession’ is already over.

'Glimmer of hope' for Eurozone as decline slows

09:09 , Daniel O'Boyle

The Eurozone private sector is still in decline, but at the slowest pace in eight months, according to the latest PMI survey.

The Eurozone ‘flash’ PMI for February came to 48.9, up  from January’s 47.5. However, that’s still below the 50 mark that separates growth from decline.

aNorman Liebke, Economist at Hamburg Commercial Bank, said: “There is a glimmer of hope as the eurozone inches towards recovery. This is particularly noticeable in the services sector. The corresponding HCOB PMI is now 50 points and has therefore stopped shrinking for the first time since July last year. The latest PMI print gives hope for a recovery in the eurozone, which is why we are sticking to our annual HCOB forecast of 0.8% for 2024. There is also a certain optimism in the latest employment figures, which rose at a faster pace than in the previous month.”

Profit slump at WPP as tech giants pull back

09:05 , Simon English

WPP saw a 70% slump in profits for the year as big tech pulled back on advertising amid a sluggish global market.

The ad giant behind agencies Grey, Ogilvy and Wunderman Thompson is betting £250 million on AI to drive future business.

CEO Mark Read said: “We don’t see AI replacing human creativity. But computers can write copy, take photos and create videos to help us produce work more efficiently.”

The company will need “different types of people” on staff, but not necessarily fewer, says Read.

Profits tumbled from £1.16 billion to £346 million, partly a retrenchment after two strong years as the world emerged from Covid.

WPP was behind four of the top five Superbowl ads, including one for Verizon featuring Beyonce.

The Superbowl – won by the Kansas City Chiefs – was the highest watch TV show ever since the moon landings.

WPP and Read in particular have come under fire from former CEO Sir Martin Sorrell, who said in November of his successor, “He's been at it for five years, so when is he going to take responsibility?"

Sorrell’s S4 Capital has got its own problems lately.

At WPP revenue for the year was up 2.9% to £14.8 billion

Tortilla boss wraps it up

09:04 , Daniel O'Boyle

The boss of Mexican restaurant chain Tortilla, Richard Morris, is leaving after 10 years with the business.

He will be replaced by current CFO Andy Naylor from the end of March.

Tortilla chair Emma Woods said: ““On behalf of everyone here at Tortilla I would like to thank Richard for his significant contribution to the business over the last 10 years. Under Richard’s leadership Tortilla has expanded from 14 to 89 restaurants, including franchises in the Middle East and UK travel locations, establishing itself as the nation’s largest fast casual Mexican brand with a strong and expanding portfolio of exciting growth opportunities both in the UK and overseas.”

Rolls-Royce shares surge continues, Beazley and Hikma rally

08:42 , Graeme Evans

Annual results by Rolls-Royce have given another boost to shares, up 9% or 28.8p to 358.3p as one of several strong performers in the FTSE 100.

Others included insurer Beazley, 9% or 53.95p higher to 635.95p after promising an additional capital return of about $300 million (£236 million) in results next month.

Anglo American added 4% or 70.4p to 1788.2p and Hikma Pharmaceuticals surged 6% or 119.5p to 2117p following their annual results, but Lloyds Banking Group weakened 0.8p to 42.5p after its figures.

The FTSE 100 index edged 11.09 points higher to 7673.60, while the FTSE 250 index improved 0.4% or 70.14 points to 19,189.11.

Strong mid-cap stocks included building firm Morgan Sindall, which added 4% or 79.8p to 2294.8p after lifting its total dividend by 13% alongside a 6% rise in annual profits to £144.6 million.

Market snapshot: Shares higher

08:37 , Daniel O'Boyle

Take a look at today’s market snapshot as America’s Nvidia fever has helped London shares rise

Hays makes 'difficult choices' as profits plunge

08:15 , Daniel O'Boyle

The boss of recruiter Hays says the business is making “difficult choices,” after profits fell by 70%.

Fees fell to £583.3 million as recruiting slowed, with businesses less keen to invest in a high-interest-rate environment. Profit was down to £60 million. Experts have warned that recruiters are often a “canary in the coal mine” for a wider slowdown.

CEO Dirk Hahn said: “While our markets today are challenging, and we are making some difficult decisions, Hays is a strong business with a great team of talented colleagues, and I am excited about what we can achieve together.”

Headcount is down by 9%, or 1,000 jobs, in the first-half, and will fall by another 3-4% in this quarter.

WPP sees more cost cuts to get back on track

07:41 , Daniel O'Boyle

WPP boss Mark Read is eyeing more cost cuts to get the business back on track after disappointing 2023 results.

The ads giant is targeting an extra £300 million in savings, having already made £475 million of savings since 2020.

That comes as profits fell by 5%, with revenue flat. Revenue is expected to be flat again next year, but a slight margin improvement will help profits.

The UK was somewhat of a bright spot, with 5% growth helping to offset decline from American tech giants.

Advertising giant WPP has cautioned over weaker spending by US tech firms (WPP/PA)
Advertising giant WPP has cautioned over weaker spending by US tech firms (WPP/PA)

The business is investing more in AI, with its WPP Open product.

Read said: "At our recent Capital Markets Day we detailed our strategy to capture the opportunities of AI, data and technology, while harnessing the full power of our offer to clients, building world-class agency brands, and driving strong financial returns through efficient execution.

"AI will be fundamental for our business and we are embracing the opportunities that it presents, putting it at the heart of our operations and our work for clients. Our AI-powered platform, WPP Open, is now being used by more than 30,000 people across WPP with growing adoption by our clients.”

Rolls-Royce profits more than double in 2023

07:32 , Michael Hunter

Profits at Rolls-Royce more than doubled in 2023 after the world-famous engine maker’s latest restructuring plan took off.

The FTSE 100 company earns revenue from the amount of hours its Trent branded engines are in the air. The rebound in tourism and business travel also drove the advance.

Group-wide underlying profit for the year reached £1.6 billion, up from £652 million in 2022 and ahead of its own forecasts of a range between £1.2 billion and £1.4 billion.

Tufan Erginbilgic, the CEO who took charge a year ago, said:

"Our transformation has delivered a record performance in 2023, driven by commercial optimisation, cost efficiencies and progress on our strategic initiatives.

“This step-change has been achieved across all our divisions, despite a volatile environment with geopolitical uncertainty, supply chain challenges and inflationary pressures.”

Lloyds Bank sets aside £450m for car loan probe

07:23 , Simon English

LLOYDS BANK offered a positive view of the UK economy this morning, with booming profits and low impairment charges on bad debts.

It made profits for the year of £7.8 billion a rise of 11%.Charges for debts not being repaid by customers fell sharply to £308 million and the dividend on a widely held share is up 15% to 2.76p.

Chief executive Charlie Nunn said: " With continued cost of living pressures we know that 2023 was challenging for many. We were proactive in providing support. By using data and insights to gain a deeper understanding of customer needs, we contacted 7.5 million customers and around 600,000 businesses to help withtheir financial resilience.”

Lloyds has set aside £450 million to deal with potential fines from the City regulator from its investigation into car loan commissions.

That suggests the bill across the whole banking sector could run into many billions of pounds.

The bank said: “There remains significant uncertainty as to the extent of any misconduct and customer loss, if any, the nature of any remediation action, if required, and its timing. Hence the impact could materially differ from the provision, both higher or lower.”

Lloyds is seen as a proxy for the UK economy so the results will be closely examined for signs of distress.

Customer deposits fell by £3.9 billion to £471.4 billion.

Nvidia cheer lifts Nikkei 225 to record level, FTSE 100 seen higher

07:22 , Graeme Evans

Japan’s Nikkei 225 today hit a record high after technology stocks surged on the back of last night’s strong results by AI-led semiconductors firm Nvidia.

The benchmark, which has also benefited from Japan’s ultra-loose monetary conditions, rallied another 2% to beat the previous all-time high set in 1989.

Other Asia markets fared well as the Shanghai Composite continued its strong week with a rise of 1.3% and the Hang Seng index improved 1%.

The gains came amid relief at more forecasting-beating results by Nvidia after the California-based company reported fourth quarter revenues of $22.1 billion (£17.5 billion) and a strong outlook for the current period.

Nvidia shares rose 9% in dealings after the closing bell, having fallen back from a record high in the week leading up to the results.

The performance has left futures markets pointing to a stronger start for Wall Street after yesterday’s lacklustre session, when Federal Reserve minutes showed policymakers in no hurry to cut interest rates.

IG Index expects the FTSE 100 index to open about 31 points higher after London’ top flight lost about 0.7% in Wednesday’s session.

Recap: Yesterday's top stories

07:01 , Daniel O'Boyle

There was a time not long ago when Heathrow very rarely delivered a pleasant surprise.

But the days of “Heathrow hell” when London’s biggest hub was rated one of the worst major airports are hopefully behind it forever.

Today it was the turn of the airport owner’s finances to perform better than expected.

A first post-pandemic profit has landed ahead of schedule with management until recently guiding that it would not arrive until the current year.

But the remarkable recovery in international travel and London’s rapid revival as one of the most popular tourist destinations set Heathrow on the runway to a surplus in 2023, rather than 2024.

However, new CEO Thomas Woldbye was only allowing himself a brief moment of satisfaction today, with multiple storm clouds on the horizon.

The CAA’s decision on the charges that Heathrow can levy airlines means that it has to find an extra £400 million over the next three years just to stand still on profitability.

It will mean cutting costs without any deterioration in the hard-won improvements in passenger service levels.

Somehow it also needs to find some cash to start paying dividends again. There will be no resumption of payouts until 2025 at the earliest.

At the same time, the bounce in passenger numbers brings an old problem back into view: capacity constraints.

At the forecast 81.4 million passengers this year, an all-time high, Heathrow will be bursting at the seams once again.

Woldbye also has to navigate turbulence in the boardroom with Ardian reportedly the latest major shareholder to bale out. It is apparently in talks with Abu Dhabi sovereign wealth fund Mubadala Investment about buying its stake.

It is of course to be welcomed that one of the UK’s most important pieces of infrastructure is finally making money again. But Heathrow still has a long way to travel before its finances are sustainably secure.

Take a look at our other top stories: