Oil prices fell sharply on Monday as geopolitical tensions eased slightly. (Scott Olson via Getty Images)
Wall Street stocks pushed higher on Monday, following gains from the FTSE 100 (^FTSE), which closed at a record high of 8,023.87, and Europe amid an easing of geopolitical tensions in the Middle East.
In an attempt to rebound from last week’s losses, traders are now focused on switches back to macro fundamentals and corporate results.
Oil prices (BZ=F) also fell sharply, easing investors' concerns about a threat to inflation which could have kept interest rates higher for longer.
"The market got over-sold on Friday because of Netflix earnings, it was primarily a tech-driven decline," Jay Hatfield, chief executive at InfraCap said.
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"We’re headed into megacap earnings and so people are starting to realize that Netflix is not very indicative of what’s going to happen with other megacap stocks.
London’s benchmark index was 1.6% up to close at 8,023.87, a record high
Germany's DAX (^GDAXI) rose 0.7% and the CAC (^FCHI) in Paris was 0.3% higher
Wall Street opened higher with the Dow Jones up 0.4%, S&P 500 gaining 0.5%, and Nasdaq 0.7%
The pound (GBPUSD=X) continued to fall against the dollar, now down over half a cent to a new five-month low amid expectations that US Federal Reserve will keep interest rates higher for longer
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "The FTSE 100 has a spring in its step at the start of the week, amid an easing of geopolitical tensions.
"The pulse of positivity comes in the absence of fresh retaliatory attacks by Israel or Iran and the US flexing its funding muscle and passing a crucial aid package for Ukraine."
Follow along for live updates throughout the day:
LIVE COVERAGE IS OVER22 updates
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Well that's all we have time for today, thanks for following along.
Be sure to join us again tomorrow when we'll be back for more, including UK public sector net borrowing data.
After an aggressive rally to all-time highs to start the year, the S&P 500 (^GSPC) has tumbled in April as rising bond yields and slimmed expectations for Federal Reserve interest rate cuts have put a damper on investors' enthusiasm.
And given the significant rise in share price of some of the market rally's darlings, even strong earnings aren't moving the needle for stocks.
"The broader market is having digestion problems in and around this earnings season," Julian Emanuel, who leads Evercore ISI's equity, derivatives, and quantitative strategy, told Yahoo Finance.
This has broadly been seen across stock reactions in the day following the release of quarterly results for the 65 S&P 500 companies that have reported results so far this season. Stocks that top Wall Street's estimates have risen 0.8% in the next trading session, slightly lower than the 0.9% average seen over the last few years, per Emanuel's research.
Meanwhile, companies that disappoint on both metrics are taking a bigger hit than normal, with the average stock falling 5.8% in the next trading action, compared to the usual 3.1% decline seen over the past five years.
Currency exchange rates, US Dollar, Euro, British pound Japanese yen. Currency exchange rates on the monitor, US dollar, Euro, British pound, Japanese yen. EUR drops against USD. 3D illustration currency054s05 exchange rates (IMAGO/Westlight, Imago)
The pound has fallen to its lowest level since November thanks to a growing speculation that the Bank of England could cut interest rates before the US Federal Reserve.
Sterling was last down 0.5% to just over $1.23, its lowest level since 14 November.
David Morrison, senior market analyst at FCA, said that sterling was under pressure again.
"Comments last week from Bank of England Governor Andrew Bailey, have encouraged some selling as he kept alive the prospect of an earlier-than-expected rate cut, thanks to the prospect of a sharp fall in inflation.
"Despite this, there’s still speculation that the Bank won’t move until November."
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FTSE flirts with record high
The FTSE 100 has around 30 mins of trading left and is close to closing at a all-time high.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said:
“London’s blue-chip index has had a surge of power as heightened geopolitical tensions have eased, and investors assessed the brighter prospects for the UK economy, with interest rate cuts spied on the horizon.
"It’s tantalisingly close to breaching the all-time intraday high of 8,047 and it’s been trading above its record closing value of 8,014.
"Gold, a safe haven asset, has slipped back slightly in the absence of fresh attacks by Iran or Israel. However, the precious metal is still hovering close to record highs. Brent Crude has also fallen back slightly as the focus turns to the prospects of weakening demand in the US if high interest rates linger for longer. However, it’s not had much effect on the share prices of the big energy giants.
"Tensions are still simmering in the Middle East and there are ongoing concerns about the potential that they could flare up again, causing fresh disruption to supplies."
LaToya Harding
Five eco-friendly homes for Earth Day
Any home listed for sale in the UK now has to have an Energy Performance Certificate (EPC), which tells you how energy-efficient the property is.
Properties are marked from A to G. Homes graded A are the most energy efficient and should have the lowest energy bills, those graded G are the least energy efficient.
Data from property website Rightmove (RMV.L) shows that the number of highly energy-efficient homes for sale is steadily growing.
Properties with an EPC rating of between A and C have risen 104% since 2019. A-grade EPC-rated homes are still few and far between, however, with less than 1% of homes on the site achieving that highest score.
Ricardo Evangelista, senior analyst at ActivTrades, said:
“Gold prices dipped in early Monday trading as concerns abated over the potential escalation of military confrontations between Israel and Iran into a full-scale war, which could unsettle the regional and broader geopolitical and economic stability.”
“The precious metal finds itself ensnared in a balancing act between the flight to safety on the one hand and the rise in treasury yields and a strengthening dollar on the other.”
“Despite remaining near the recent all-time high reached last week, bolstered by heightened haven demand, the bullion price faced downward pressure this morning.”
‘With tensions in the Middle East showing signs of easing, the market's attention shifted towards assessing the resilience of the US economy and the persistent grip of inflation.”
“As prospects for a near-term rate cut by the Federal Reserve diminish and optimism grows regarding the avoidance of an overt conflict between Israel and Iran, gold prices could be poised for a correction, as traders may start closing long positions and capitalizing on the profits accrued over the past month.”
LaToya Harding
Train drivers to go on fresh strikes
Train drivers at 16 rail companies will stage a series of fresh strikes in their long-running pay dispute.
The Aslef union has announced today that the latest action will take place after the spring bank holiday from Tuesday 7 May to Thursday 9 May.
Members of Aslef will walk out at different operators and ban overtime for six days from 6 May.
Drivers will strike at c2c, Greater Anglia, GTR Great Northern Thameslink, Southeastern, Southern, Gatwick Express and South Western Railway.
On 8 May there will be strikes at Avanti West Coast, Chiltern Railways, CrossCountry, East Midlands Railway, Great Western Railway and West Midlands Trains.
Aslef members at LNER, Northern Trains and TransPennine Express will strike on 9 May.
LaToya Harding
Trending tickers: Tesla stocks pull back
Tesla (TSLA) saw its stock pull back 1.9% on Friday, but looked set to stabilise on Monday as the price war for the electric car market intensifies.
Over the weekend, Elon Musk's company cut prices for its model Y, S and X in the US by $2,000 (£1,617). It also slashed prices in China for the Model S, X, 3 and Y and reduced prices in Europe.
The cuts come following reports of declining global deliveries in the first quarter of the year. Last week the company also said it would set out to reduce its headcount by 10% — or about $14,000 jobs, with staff cuts confirmed in China.
Natwest, Leeds Accord, and HSBC have announced rate increases today, according to Sky News.
This follows the rise in swap rates – used by lenders to price mortgages – last week, after inflation rates in the UK and the US came in higher than expected in March.
Responding to today's hikes, Elliott Culley, director at Switch Mortgage Finance, told Newspage:
"The rate rollercoaster rolls on. Just when the market appears to be picking up some momentum, there is a sharp change of direction.
"We are now seeing the spike in swap rates last week filtering through to the public as lenders raise their rates in response.
"The volatility we are experiencing currently really amplifies how important it is to secure a rate as soon as possible, as this could save you hundreds of pounds, especially for existing homeowners."
LaToya Harding
Wall Street set to open higher
Let's see how things are looking across the pond as stock markets prepare to open in around 90 minutes.
US futures are in the green this afternoon as investors await earnings updates from tech companies.
$SPX: Nasdaq, S&P, Dow futures rise as investor brace for heavy earnings this week
Tyman (TYMN.L) rose as much as 31% on Monday after its rival Quanex announced a £788m cash and shares takeover.
The deal is a 35% premium to Tyman’s share price at the close of trading on Friday, with the company's board recommending shareholders accept the Quanex offer.
Nicky Hartery, chair of Tyman, said:
"In the context of a rapidly evolving North American marketplace, our board ultimately determined that this transaction is the best path to maximising value for Tyman shareholders, who will be able to realise a meaningful portion of their holding in cash at a significant premium to the prevailing share price while also participating in the future upside of the enlarged group."
LaToya Harding
Oil prices slide to nearly one-month low
Oil prices have dipped to their lowest level in nearly four weeks this morning as concerns over Middle East tensions begin to ease.
Brent crude (BZ=F) was down more than 1% in early trading today to its lowest since 27 March.
Last Friday it jumped as high as $90.75 per barrel, before easing back after Tehran downplayed Israel’s missile attack on the Iranian city of Isfahan.
Antonio Ernesto Di Giacomo, market analyst Latam at XS.com, sa
In conclusion, Iran’s measured response to the alleged Israeli attack in Isfahan has underscored the importance of diplomacy in times of high tension in the Middle East. Although financial markets initially reacted with concern, the retreat in oil prices reflects the hope of avoiding conflict escalation.
However, the situation remains delicate and requires constant monitoring. Stability in the region and the security of the global oil supply largely depends on the ability of the parties involved to stay calm and seek diplomatic solutions to the challenges they face.
LaToya Harding
Tough week for tech: A golden opportunity?
Last week was a tough week for tech stocks. The 10% drop in Nvidia’s share price and a fall in the broader stock market triggered jitters across the globe, but also could be the opportunity investors might have been hoping for.
It comes as Microsoft, Meta Platforms, Google parent Alphabet and Tesla are all on deck to deliver earnings this week.
Nigel Green, the CEO of independent financial advisory and asset management firm deVere Group, said:
"It was a tough week for big tech last week – and, as such, the earnings will come under even greater scrutiny this week.
“However, the pull back in tech, which has been driving markets all year, gives savvy investors the chance to top up their portfolios at lower prices.
“Indeed, this dip will have been what many were hoping for a few weeks ago when stocks were on a tear.”
LaToya Harding
UK interest rate cut priced in for August
London, UK. 17 April 2024. A general view of the exterior of the Bank of England in the City of London. Inflation has fallen to its lowest level in two-and-a-half years, driven largely by slowing food price rises according to the Office of National Statistics. Prices rose by 3.2% in the year to March, down from 3.4% the month before. Credit: Stephen Chung / Alamy Live News (Stephen Chung)
Money markets have brought forward their forecast for the Bank of England’s first interest rate cut to August.
City investors are pricing in a more rapid easing from the BoE this morning, after deputy governor Sir Dave Ramsden said on Friday that UK inflation could be lower than expected over the next few years.
The first cut from 5.5% to 5% is now expected in August, rather than September, with a second cut to 4.75% priced in by December.
Last week, the markets briefly indicated the first cut might not come until November, after inflation fell by less than expected in March, to 3.2%.
Ramsden told an audience in Washington DC that he was confident that headline inflation will fall sharply in April, to close to the 2% target, from 3.2% in March.
LaToya Harding
Hornby cites Red Sea disruption for sales decline
Hornby said losses have widened at the company as sales were affected by disruption to shipments through the Middle East.
Underlying loss before tax weakened in the second half of its financial year, while sales only grew by 2%. Meanwhile, in the final quarter, from January to March, sales fell by 8% year-on-year.
It blamed an early Easter, as well as Red Sea delivery delays which meant some some high value containers failed to arrive until April.
Net debt rose to £14.3m on 31 March, up from £5.5m a year before, mainly due to the trading loss and capital expenditure. However, this was slightly better than the £14.6m reported halfway through the financial year.
Hornby added that it remains “cautious” in its outlook, due to “the natural challenges facing a business in turnaround, and the uncertainty of the wider economic and socio-political factors affecting all businesses at this time.”
LaToya Harding
Higher UK interest rates could add £29bn to energy bills by 2050
The cost of financing investment in Britain's green energy sector could amount to a bump of £29bn in household bills by 2050, due to the fact that low interest rates can no longer be counted on, according to new calculations by think tank the Resolution Foundation.
The UK needs to increase investment in its power sector four-fold over the next decade to deliver the next step in decarbonising the economy, but calculations made in a low interest rate environment don't account for how much of this cost might be passed on to consumers, the research claims.
By 2040, Britain’s homes will consume 45% more electricity than in 2025, while road transport electricity demand will increase 13-fold, as heat pumps and electric vehicles (EVs) become commonplace.
Jonathan Marshall, senior economist at the Resolution Foundation, said:
“Britain needs to massively increase its electricity supply, and ensure it can be efficiently moved around the country, as we move towards a decarbonised economy of renewable energy, heat pumps and EVs,"
“This will require tens of billions of pounds worth of investment each year — more over the next 15 years. Cleaner energy could be cheaper energy, if interest rates return to the low levels seen during the 2010s."
Small business shop front for an estate agent on 30th March 2024 in Stroud, United Kingdom. Housing in the UK is a very important contributing factor and measure in the economy as house prices and the property market continues to rise, pricing many people of lower incomes out of owning their own homes. Stroud is a market town and civil parish in Gloucestershire. (Michael Kemp)
The asking price for UK homes is edging closer to a record high, as demand for larger and more expensive houses picks up.
According to Rightmove, the average price of property coming to the market rose by 1.1% (or £4,207) this month to £372,324 — just £570 short of the record set in May 2023. It is the highest level for 12 months.
Some of the housing market’s largest “top-of-the-ladder” homes have reportedly been driving the growth, with the sector boasting its strongest start to a year in over a decade.
The number of sales agreed so far this year is 13% higher than at this stage in 2023, as activity rebounds from last year’s much more subdued Spring.
Tim Bannister, a director at Rightmove, said:
“Agents report that the market remains very price-sensitive, and despite the current optimism, these are not the conditions to support substantial price growth.
“Sellers who are keen to secure their sale will still need to price realistically for their local market and avoid being overambitious at the start of marketing to give themselves the best chance of finding a buyer.”
LaToya Harding
Ofwat on Thames Water plan
Ofwat has also issued a statement after Thames Water published its revised business plan. A spokesman from the regulator said:
Since October we have been in discussions with all companies, checking on their proposed plans and seeking further information.
There has also been further information published in the last few months clarifying companies’ statutory commitments.
Both these factors have required companies to review their proposed plans and revise their expenditure forecasts to reflect what would be required to fully comply with all statutory requirements.
We note that Thames Water has now published an update to its business plan. We will publish our draft view on companies’ plans on 12 June.
LaToya Harding
Thames Water outlines spending promise
Thames Water is planning to spend around £20bn fixing leaks and sewage spills under a new business plan sent to regulators.
The water supplier said it is looking to spend £1.1bn more than previously thought under proposals sent to Ofwat, known as PR24.
Chris Weston, chief executive, said:
“Our business plan focuses on our customers’ priorities.
“As part of the usual ongoing discussions relating to PR24, we’ve now updated it to deliver more projects that will benefit the environment. We will continue to discuss this with our regulators and stakeholders.”
LaToya Harding
UK economic forecast: interest rates to fall to 4.5%
UK interest rates have been predicted to fall to 4.5% this year by the EY Item Club. The group said is was forecasting a fall of 75bps in 2024, with the first cut to come in June.
However, this comes as a less significant reduction compared to the 125bps of cuts predicted in January’s winter forecast as the Monetary Policy Committee’s (MPC) messaging has suggested that rates may need to stay high for longer.
In addition to this, EY is expecting 0.7% growth for 2024, a downgrade from the 0.9% previously predicted. However, 2025 growth predictions were upgraded from 1.8% to 2% as barriers to growth fall away. This includes falling inflation, higher consumer spending, and anticipated reductions in interest rates.
While it is uncertain whether Consumer Price Index (CPI) inflation will decline to the Bank of England’s 2% benchmark in April, due to sticky services inflation, the EY Item Club expects it to do so by the second half of 2024.
EY cited falling prices of wholesale energy, as well as slowing inflation of food and goods prices. It then expects inflation to average just below 2% for the rest of the year.
Stocks in Asia were mostly higher overnight, managing to shrug off a slump on Wall Street on Friday after big tech stocks suffered their worst week since the COVID crash in 2020.
The Nikkei (^N225) rose 1% on the day in Japan, while the Hang Seng (^HSI) advanced 1.8% in Hong Kong.
However, the Shanghai Composite (000001.SS) was 0.7% down by the end of the session after the People’s Bank of China kept its 1-year and 5-year loan prime rates unchanged.
Across the pond, the S&P 500 (^GSPC) and Nasdaq (^IXIC) both had a six-day losing streak, falling by 3.05% and 5.52% last week after a tech sell-off. The Dow (^DJI) closed 0.6% higher.
The Nasdaq (^IXIC) fell by 2% on Friday alone, driven by a 10% plunge in chip-maker Nvidia.
Elsewhere, oil markets (BZ=F) retreated again after Iranian state media downplayed a retaliatory air strike from Israel on Friday. Brent crude prices closed at around $86 per barrel on Friday, down from $90 a week earlier.
Coming up...
Good morning, and welcome to our live blog. As usual we will be taking a deep dive into what's moving markets today, and what's happening across the global economy.
Here's a quick look at what's on the agenda:
7am: Trading updates: Ten Life, Hornby, Cerillion, Paypoint.
9.30am: Nathanaël Benjamin, executive director for Financial Stability Strategy & Risk at the Bank of England, speaks at a Bloomberg event
11am: CBI industrial trends survey of UK factry sector
1.30pm: The Chicago Fed National Activity Index for March
3pm: Eurozone consumer confidence stats
4.30pm: ECB president Christine Lagarde gives a lecture at Yale University
Watch: How does inflation affect interest rates?
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