Yahoo Finance FTSE 100 Live: ‘Fresh signs that inflation will go further into retreat’; FTSE falls to close at 7,569.31
The FTSE 100 is holding firm after yesterday’s 0.7% decline, but homeowners remain under pressure as mortgage rates continue to rise.
FTSE 100 Live Tuesday
Mortgage rates continue to rise
Car dealership Lookers backs £465m bid
Saga hails progress in travel recovery
FTSE closes at 7,569.31
Tuesday 20 June 2023 16:37 , Daniel O'Boyle
The FTSE 100 fell late in the day to close at 7,569.31, down 0.3%.
The idnex was steady almost all day, as markets await an inflation redeading tomorrow that could play a big role in where interest rates go next. But London shares followed those in Wall Street down once US trading opened after a long weekend.
The FTSE 100 has now lost almost 120 points since Friday morning.
Miners made up many of the biggest fallers, with Anglo American losing 3.7%..
West End Final: Homeowners facing soaring costs shouldn’t expect sympathy from renters
Tuesday 20 June 2023 16:09 , Daniel O'Boyle
“Are homeowners suffering from a severe bout of main character syndrome? A decade of record-low interest rates fuelled a prolonged house price boom that was impervious even to a once-in-a-century pandemic.
“But as interest rates have climbed to 4.5 per cent and two-year fixes now float above 6 per cent, we are hearing howls of anguish from the over-leveraged. On the one hand, this is fair enough. Borrowers are going to face difficult choices as their monthly repayments soar. On the other hand, renters may be forgiven for muttering: ‘welcome to our world’.
“The average London rent has hit £2,000, a rise of £490 a month over the last two years, according to property website Zoopla. While nationally, rents for new lets have outpaced earnings for 21 consecutive months. And the direction of travel is only pointing one way.”
Read more of today’s West End Final newsletter here
Sustainable fashion brand Pangaia takes out new Chancery Lane office
Tuesday 20 June 2023 15:29 , Daniel O'Boyle
Sustainable fashion brand Pangaia has taken out a 5,700 sq ft office on Chancery Lane, in a newly resigned building that’s home to the London Silver Vaults.
Pangaia will be the first tenants of Chancery House, a new 125,000 sq ft building from The Office Group. It said the location was “carefully considered” based on environmental factors.
CBI frozen out of meetings with other businesses
Tuesday 20 June 2023 14:43 , Daniel O'Boyle
The Confederation of British Industry’s fight for survival following a sexual misconduct crisis has been hampered by being excluded from regular meetings with other top business lobby organisations.
It is believed that the failure of other corporate interest groups to interact with the CBI or invite it to meetings with ministers has made it more difficult for the organisation to restore its position at the nexus of business and government.
The Federation of Small Business (FSB), British Chambers of Commerce (BCC), Institute of Directors (IoD), and Make UK are the other four "B5" lobbying groups, and the Financial Times has verified that they have declined to meet with the CBI.
City voices: Don’t rush to write off London for listings after one failed float
Tuesday 20 June 2023 14:02 , Daniel O'Boyle
Last week WE Soda — an industrial company and the world’s largest producer of natural soda ash — cancelled its plans for a London listing.
After a number of tech floats had previously chosen the US over London, a good deal of hype had been generated around this potential IPO, so many in the City were left disappointed when it fell through.
Like using tea leaves to divine the future, many then began to make claims about the wider significance of the news for London.
City comment: ‘AI revolution’? This feels like the dot com bubble all over again
Tuesday 20 June 2023 13:20 , Daniel O'Boyle
Is AI going to end the world, save the world or just cost you a lot of money?
The last one seems the most certain.
There is every reason to wish luck to ElevenLabs, which we report today is valued at $100 million despite having little in the way of staff or even revenues.
It might make it. But most new AI businesses won’t.
Habitat for Humanity sets sights on converting disused offices and retail to homes
Tuesday 20 June 2023 12:17 , Daniel O'Boyle
Homebuilding charity Habitat for Humanity Great Britain has launched a new blueprint for converting disused office and retail space into social housing, after completing two such conversions in the borough of Barking and Daghenham.
The charity, the UK arm of the group associated with former US president Jimmy Carter, today launched an app for people to identify empty office and retail spaces that could be turned into homes. It also launched a new tool kit, allowing other groups to replicate its conversions.
Tuesday 20 June 2023 11:27 , Daniel O'Boyle
A record number of London offices are being rented out at more than £100 per sq ft, as the “super prime” sector becomes an ever-increasing part of London’s commercial property market.
According to real estate advisor CBRE, 37 properties were rented out at £100 or more per sq ft during the first quarter of 2023: the highest total on record. Those deals make up 14% of total office rentals during the quarter.
“What is clear is that Q1 2023 was not an outlier,” says Simon Brown, senior director and head of office research at CBRE.
AI firm ElevenLabs achieves $100 million valuation within months of launch
Tuesday 20 June 2023 11:06 , Simon Hunt
London-based AI startup that launched earlier this year has already reached a $100 million valuation in fresh signs investors are pouring in cash to snap up shares in the nascent technology.
ElevenLabs, which uses artificial intelligence to generate audio for dubbing videos into different languages, has no office and up until recently had fewer than ten employees. But it has already achieved a $19 million funding round backed by the likes of VC giant Andreessen Horowitz and DeepMind co-founder Mustafa Suleyman, valuing it at around $99 million.
Mati Staniszewski, co-founder of ElevenLabs, told the Standard: “When we were pitching with investors in 2022, most of them were still focusing on crypto and the metaverse but there was no clear interest in AI – the whole market thought this was not the best time.”
Next shares hold gains after upgrade, Currys higher
Tuesday 20 June 2023 10:25 , Graeme Evans
Currys shares were in focus in the FTSE 250 today as traders responded to the latest white goods move by Frasers Group.
The disclosure of a 9% interest in Currys emerged a few days after the Sports Direct owner revealed a 21% stake in AO World as part of a strategic partnership.
Speculation over the interest of Frasers made Currys the most traded stock in the FTSE 250 at one point this morning. The shares rose 3% or 1.45p before settling half a penny higher at 53.5p.
They remain a third lower over the past year as ultra-competitive conditions in the Nordic region have offset a resilient performance in the UK. Shares in Frasers, whose other brands include Jack Wills, rose 3p to 715p today as it also revealed a 5% stake in fast fashion retailer Boohoo.
Elsewhere in retail, Next shares put on another 12p at 6754p after closing 5% higher last night on the back of its weather-inspired upgrade to sales and profit forecasts.
The FTSE 100 index was 3.88 points higher at 7592.36, with China’s overnight move to cut two key lending rates having little impact. Support for London’s top flight came from its biggest stock after AstraZeneca added 1% or 124p to 11,770p.
On the fallers board, grocery warehouse technology firm Ocado was under more pressure after JP Morgan placed the stock on negative catalyst watch. Having rebounded last week, the shares dropped back 5% or 21.3p to 413.6p.
The UK-focused FTSE 250 index lost 98.97 points to 18,755.32, with technology and engineering-focused recruitment firm SThree down 3.5p to 363.5p despite an in-line trading update.
Good news on inflation?
Tuesday 20 June 2023 10:21 , Daniel O'Boyle
Susannah Streeter, head of money and markets at Hargreaves Lansdown, was optimistic on inflation after the latest figures from Kantar showed that price rises at supermarkets appear to be easing.
“There are fresh signs that inflation will go further into retreat as the growth in wholesale commodity prices paid by companies slows sharply overall, even though food costs are still staying stubbornly high. Big falls in energy costs are showing up in the figures, along with major decreases in wood and metal prices,” she said. “
However, producer price inflation for food still came through at 11.9% for the year to May. This indicates that that there is still a very long way to go before there is significant relief pressure for consumers at the tills. Tesco’s boss has already warned that although there are signs inflation may have peaked, prices will stay stubbornly high.
“This has been backed up by the latest snapshot from Kantar, which shows that although grocery price inflation has fallen back, it was still a scorching 16.5% in the four weeks to June 11. Predictions that inflation will continue to drop will come as a relief and fierce competition in the UK grocery sector has seen further reductions passed onto shoppers, with Marks and Spencer and Morrisons joining the price cut party to help lure customers through the doors.”
‘Destination’ website sells City to tourists
Tuesday 20 June 2023 10:04 , Michael Hunter
A BID began in the City today for the Square Mile to attract more tourists.
London’s business district is launching a website — thecityofldn.com — to showcase its cultural assets, from historic sites to state-of-the-art hotels and bars, top restaurants and unique pubs.
The Corporation of the City of London, which runs the Square Mile, has already set up a programme to boost the leisure economy, called Destination City, and called today’s launch “a pivotal moment” for the policy.
Chris Hayward, the Corporation’s policy chairman, said the new website aims to make the City into a “thriving, seven-day-a-week destination”
Mortgage rates continue to shoot upwards
Tuesday 20 June 2023 09:19 , Daniel O'Boyle
Mortgage rates jumped further today, with the average two-year fixed-rate deal now carrying a 6.07% interest rate.
That is an increase from 6.01% yesterday, and brings rates closer to those hit last Autumn.
The average five-year fixed rate is 5.72%, up from 5.67%. Buy-to-let rates also rose rapidly, with the average two-year deal hitting 6.4% while five-year deals hit 6.29%.
The number of products on offer declined further, meaning more lenders might still be preparing to reprice at even higher rates.
Market snapshot with blue-chip shares slightly higher
Tuesday 20 June 2023 08:52 , Daniel O'Boyle
Take a look at all the key market data as the FTSE 100 started slightly higher, while gilt yields eased back but remained around 15-year highs.
‘Challenging week’ ahead amid expected rate rises
Tuesday 20 June 2023 08:48 , Daniel O'Boyle
Ipek Ozkardeskaya, senior analyst at Swissquote Bank says the week ahead will be challenging as central banks continue to raise rates. The Bank of England is set to raise rates for the 13th consecutive meeting this week, with markets seeing a serious chance it could hike rates by 50 basis points rather than the more widely expected 25-basis-point rise.
“Asian stocks were moody, European indices traded lower, and US futures were under pressure on Monday,” Ozkardeskaya said. “The rest of the week will likely prove to be challenging both in the US and elsewhere, as central bankers continue pressing economies like lemons, while signs of pain are just before their eyes.
“It’s not because the stock markets are driven higher by the AI-speculation that the underlying fundamentals are doing well. Average mortgage rates in the US are at the highest levels since the subprime crisis whereas mortgage rates in the UK are again above 6%. The last time we saw these levels was back during Liz Truss mini-budget crisis.”
Saga travel arm recovers but insurance arm continues to struggle
Tuesday 20 June 2023 08:35 , Daniel O'Boyle
“Superbrand for older people” Saga’s travel & cruise arms are on track to return to profitability after Covid-19, but “market conditions” continue to hold back its insurance arm.
The insurance business had struggled since the introduction of new regulations from City watchdog the FCA to sto “price walking”, which prompted it to switch to a lower-margin approach.
The business has plans to expand its operations further, launching pet insurance and “Saga spaces”, which will be a new platform offering subscribers “social interaction and a series of online services”.
Saga CEO Euan Sutherland said: “We have taken strong bookings for our ocean cruises with a load factor that is ahead of the same point in the prior year, and our River Cruise and Travel businesses are on track to return to profitability in line with previous guidance.”
“In Insurance, market conditions, particularly in motor, continue to weigh on our group result.”
Shares fell initially, but quickly rebounded and are now up 5.8% to 138p.
Rally for Currys as Frasers builds stake, FTSE 100 lower
Tuesday 20 June 2023 08:22 , Graeme Evans
Currys shares have risen 3% or 1.75p to 54.7p after Frasers Group last night disclosed that it had built a 9% stake in the electricals retailer.
Frasers, which is controlled by Sports Direct founder Mike Ashley, rose 10.5p to 722.5p in the FTSE 100 index as the retail sector continues to benefit from yesterday’s positive trading update by Next.
Next shares were 10p higher at 6752p this morning, having closed up 5% last night on the back of its weather-inspired upgrade to sales and profit forecasts.
The FTSE 100 index was 8.20 points lower at 7580.28, with grocery warehouse technology firm Ocado among the leading fallers after a drop of 10p to 424.9p.
The FTSE 250 index lost 31.34 points to 18,822.95, with STEM recruitment firm SThree down 1% or 4p to 363p after its trading update.
Revolution Beauty considering legal action against ex-boss
Tuesday 20 June 2023 07:58 , Daniel O'Boyle
Revolution Beauty is considering legal action against its former boss Adam Minto, “looking to recover material sums” from him, as it alleges Minto’s actions contributed to the firm’s disagreement with auditors and share suspension.
Revolution shares have been suspended since September of 2022 after it couldn’t get auditors to sign off on its accounts for the previous financial year.
The audited accounts were eventually published last month, showing the business made £23 million less than it had previously reported, but shares remain suspended.
Revolution said it sent a letter of claim to Minto, who quit in November, on 19 May. That letter alleged he “breached his fiduciary, statutory, contractual and/or tortious duties to the company”.
“Certain of the matters alleged contributed to the delay in the audit of the Group’s FY22 results, and to the suspension of the company’s shares from trading on AIM,” it said.
Lookers’ board backs £465 million bid from Canada
Tuesday 20 June 2023 07:52 , Michael Hunter
The board of Lookers is backing a £465 million bid for the company from Alpha Auto Group of Canada, priced at 120p per share.
Stock in the car dealership, which has around 150 forecourts in the UK and first listed in London in the 1970s, closed at 89p on Monday.
Lookers was advised by Numis and Peel Hunt before it backed the bid, calling it “fair and reasonable”.
The company was the subject of an inquiry by the Financial Reporting Council in 2019, when its shares were suspended before it eventually reported a £45 million loss for the year, just before the pandemic hit car sales.
It was approached by rival dealership Pendragon, but resisted the bid, and there has been speculation of further bids for the Manchester-based company ever since, as pat of expected dealmaking in the industry,
FTSE 100 seen flat, Brent Crude below $76 a barrel
Tuesday 20 June 2023 07:30 , Graeme Evans
The FTSE 100 index fell 0.7% or 54 points last night and is likely to struggle for direction this morning due to Wall Street being closed yesterday for the Juneteenth public holiday.
CMC Markets expects London’s top flight to open unchanged at 7588 this morning qs concern over the impact of higher interest rates also continues to impact European markets.
The pound is just below $1.28, having recently hit its highest level since April 2022 on expectations for another interest rate hike by the Bank of England on Thursday.
Brent Crude, meanwhile, stands at $75.76 a barrel after falling 0.4% this morning as traders continue to worry about the uncertain demand backdrop.
China cuts key lending rates, Asia markets lower
Tuesday 20 June 2023 07:11 , Graeme Evans
The People’s Bank of China has sought to boost the country’s economic recovery by announcing cuts of 0.1% to its one and five year lending rates.
The support follows recent indicators suggesting that the post-lockdown rebound is running out of steam, with the property market a particular concern.
On Sunday, Goldman Sachs became the latest Wall Street bank to downgrade its China GDP forecasts after lowering its estimate for this year from 6% to 5.4%.
Asian markets were lower this morning amid disappointment that the change in the five-year lending rate used as a benchmark in mortgages was not the 0.15% forecast.
It is the first time that policymakers have cut the rates in 10 months, having also reduced two other key lending rates in recent days.
Recap: Yesterday’s top stories
Tuesday 20 June 2023 06:48 , Simon Hunt
Good morning. Here’s a summary of our top stories from yesterday:
There were further signs of chaos in the mortgage market as two-year rates crossed the 6% level
Next surprised investors with increased profits guidance on the back of warmer weather and inflation-linked pay rises.
The new chief exec of British American Tobacco has initiated a major shake-up of the company’s board.
