Yahoo Finance FTSE 100 Live: Markets await inflation reading; FTSE closes above 7900 for first time in six weeks
Labour market statistics today revealed stronger-than-expected earnings growth alongside a slight rise in the overall unemployment rate to 3.8%. The pound rallied after the release pointed to the need for further interest rate hikes.
Meanwhile, China’s first quarter GDP figure beat expectations as the country’s recovery from Covid lockdowns continues.
On the corporate front, the FTSE 100 index moved higher in a session when drugs giant GSK revealed a major acquisition and FTSE 250-listed easyJet raised its profits guidance.
FTSE 100 Live Tuesday
Earnings surprise as jobless rate hits 3.8%
Airline easyJet raises City guidance
GSK in £1.6bn deal for cough treatment firm
UK awaits tomorrow’s inflation reading
Tuesday 18 April 2023 17:25 , Daniel O'Boyle
Tomorrow the ONS will March’s publish inflation figures, after February’s shock 10.4% reading.
Danni Hewson, head of financial analysis at AJ Bell, noted that economists predict a drop to 9.8% and a second miss in the wrong direction is unlikely, but we are still some way from prices being under control.
“The expectation is that the UK’s inflation reading will finally drop to single digits, but investors were caught on the hop last month after salad shortages and Valentine’s Day celebrations sent prices heading in the wrong direction.
“A second misstep is hugely unlikely as March was the month last year when prices at the pump shot up to record highs, an unpleasant portent of what was to come. By comparison this March was marked by falling retail sales and the comparison with those hikes last year should mean inflation finally falls below ten percent for the first time since last summer.
“It will be a relief for policy makers but the reality for the consumer is that whilst price rises are slowing, for the most part prices aren’t falling.”
Tuesday 18 April 2023 17:19 , Daniel O'Boyle
The FTSE 100 closed at 7909, the first time it finished above 7900 in six weeks.
The index crossed the 7900 threshold yesterday, but slipped as the day went on to finish at 7879.
The biggest riser of the day was Ladbrokes and Coral owner Entain, on a combination of strong results and hope that regularity uncertainty that had seemingly suppered an acquisition by American joint venture partner MGM may be over.
Households with childcare and pet costs squeezed by rising living costs – survey
Tuesday 18 April 2023 15:36
Households with children and pets are feeling particularly tightly squeezed by rising living costs, research suggests.
On average, people were paying £441 a month extra on household bills in the 12 months to February, according to a survey commissioned by mutual insurance and pensions provider, Royal London.
Those with children and pets have seen their total monthly bills soaring by £497 a month typically, the findings indicate.
S&P 500 off to strong start, but Goldman drags Dow down
Tuesday 18 April 2023 14:49 , Daniel O'Boyle
It was a strong start to the day for most US shares on Wall Street, but the largest-cap companies were dragged down by Goldman Sachs’ disappointing results.
The S&P 500 is up 0.4% to 4166 and the Nasdaq up 0.6% to 12234, but the Dow Jones is down 0.2% to 33927, with Goldman the biggest faller.
Nearly a quarter of subscription holders ‘say current service is too expensive’
Tuesday 18 April 2023 14:36
Four-fifths (79%) of people are signed up to at least one subscription, despite the pressure on household budgets, a new poll indicates.
But more than half (51%) would be willing to cut their service in order to save money, and nearly a quarter (23%) believe their current service is too expensive.
US shares set to rise on major results day
Tuesday 18 April 2023 13:35 , Daniel O'Boyle
Shares on Wall Street are set to rise on a day in which a number of top American firms either have reported or will report financial results.
According to futures markets, the S&P 500 is set to rise by 0.4% to 4195, while the Dow Jones is expected to rise by 0.1% to 34176 and the Nasdaq index by 0.7% to 13280.50.
While Goldman Sachs missed expectations, Johnson & Johnson and Bank of America both overperformed. Among the companies reporting results later today will be streaming market leader Netflix.
The biggest gainer is Canadian cough medicinne maker Bellus health, on the back of a planned takeover by GlaxoSmithKline.
Goldman misses expectations
Tuesday 18 April 2023 12:48 , Daniel O'Boyle
Goldman Sachs’ earnings in the first quarter of the year came in below expectations, at $3.23 billion.
Revenue for the American banking giant was $12.22 billion, less than the expected $12.8 billion, in a period marked by chaos in the banking sector.
Rival JPMorgan posted strong results last week, leading to optimism around Goldman, but its results disappointed Wall Street.
“The events of the first quarter acted as another real-life stress test, demonstrating the resilience of Goldman Sachs and the nation’s largest financial institutions,” chairman and CEO David Solomon said. “Our deeply rooted risk management culture, strong liquidity and robust capital position enabled us to continue to support our clients and deliver solid performance.
“We are operating from a position of strength and remain focused on executing our strategy to further grow our leading Global Banking & Markets and Asset & Wealth Management franchises.”
Interest rate fears return as earnings blow hot and cold
Tuesday 18 April 2023 11:36 , Jonathan Prynn
On a trip to South Wales in January, Andrew Bailey gave the strongest of hints that he believed 4.5% would mark the top of the interest rate cycle.
Well it won’t be too long before we find out if the Governor was right.
City voices: Partnership, not regulation, will unlock Open Banking
Tuesday 18 April 2023 10:59 , Daniel O'Boyle
Open banking has come a long way since it was first initiated, back in 2017, as part of a suite of measures to increase competition and innovation in financial services.
Today open banking is a British success story that is being exported around the world. It is used by more than 7 million people and businesses to make an average of 8 million payments per month, fuelling a £4 billion boost to the economy.
Open banking payments are quickly becoming an alternative to card payments, which is particularly remarkable in a card-dominated market like the UK. They offer an instant, secure and cost-effective payment option for businesses.
This comes at a time when the sky-high card fees which sellers face are being investigated by the Payment Systems Regulator.
FTSE 100 maintains progress, Mitie up 13%
Tuesday 18 April 2023 10:22 , Graeme Evans
China’s GDP figure and a robust start to Wall Street’s earnings season today helped the FTSE 100 index rise for an eighth session in a row.
Heavyweight mining stocks drove the latest improvement after stronger-than-expected figures showed China’s GDP accelerated 4.5% in the first quarter of the year.
The rebound in the world’s second largest economy helped Anglo American and Antofagasta shares up by 2%, while Rolls-Royce cheered 1.5p to 152.5p as traders regard China airlines as key to a sustained recovery in engine flying hours.
A run of resilient earnings from major US lenders also helped the mood in London as the FTSE 100 index improved 18.15 points to 7897.66.
Ahead of the UK sector’s own reporting season starting next week, NatWest shares rose 3.8p to 275.1p and Barclays added 1.9p to 156.2p in a further sign that confidence is returning after last month’s industry turmoil.
The blue-chip risers board also featured the betting giant Entain after its latest update highlighted “strong momentum“ driven by its BetMGM US joint venture.
Shares jumped 32.5p to 1338p as Entain said BetMGM’s Super Bowl quarter saw a 76% surge in revenues consistent with 2023 guidance for an annual figure of up to $2 billion.
The stand-out performance in the FTSE 250 index came from the facilities manager Mitie after it added £10 million to its profits guidance for the year just ended.
The company, whose 68,000 employees work on behalf of customers including Eurostar and the Ministry of Defence, now expects a surplus of at least £155 million. Mitie jumped 13% or 10.5p at 92p as it also pledged to buy back £50 million of shares.
In contrast, a lacklustre FTSE 250 index edged up 18.41 points to 19,306.42 after falls of more than 3% for housebuilder Redrow and Harbour Energy. Moneysupermarket.com rose 4p to 252.5p as the price comparison site reported strong first quarter growth in insurance and travel revenues.
Insolvencies exceed Covid-era levels to hit new record in March
Tuesday 18 April 2023 10:09 , Daniel O'Boyle
Insolvencies last month rose to the highest level since the Government began collecting the statistics four years ago, exceeding pandemic-era highs.
There were 2,457 companies declared insolvent last month, up 16% from March 2022, as well as 288 compulsory liquidations, double the figure from a year earlier.
PwC head of insolvency David Kelly said the figures showed that whether the UK can avoid a technical recession will be of little relief to business owners, who will be struggling either way.
“While there was some good news earlier this month that the UK avoided a technical recession, this has been of little comfort to businesses, many of whom are still struggling with adverse economic conditions,” he said.
GSK to spend £1.6 billion on Canadian maker of blockbuster cough drug
Tuesday 18 April 2023 09:30 , Michael Hunter
GSK announced plans today to spend £1.6 billion on buying Canadian drug maker Bellus Health in a move that will help revitalise the City’s reputation for dealmaking while bringing a potential blockbuster cough treatment to the FTSE 100 company.
The $2 billion shot in the arm for the capital comes after a recent quiet spell for mergers and acquisitions added to worries about its status as a major international M&A venue.
Easyjet flying high
Tuesday 18 April 2023 09:13 , Simon English
EASYJET offered hope for the beleaguered airline trade and for the wider consumer economy today when it said summer bookings are soaring even as ticket prices rise.
At the height of Covid easyJet racked up losses of more than £2 billion amid wider fears for the future of air travel. Some said the days of cheap air flights for the masses were over.
Today the budget carrier said profits for the year will beat City expectations of £260 million.
Demand was strong over Easter with 1600 flights a day taking off. Passenger levels are back to pre Covid levels, despite French air traffic control strikes and a squeeze on consumer spending due to the widely reported cost of living crisis.
Easyjet’s summer holidays are 80% sold already suggesting its pricing point is an advantage in tough economic times.
Passenger numbers reached 15.6 million during the first three months of the year, up by more than a third from 11.6 million during the same period in 2022.
FTSE 100 higher, airline stocks rally after easyJet upgrade
Tuesday 18 April 2023 08:34 , Graeme Evans
The FTSE 100 index is 22.89 points higher at 7902.40, with gambling firm Entain the best performing blue-chip stock following its latest trading update.
The Ladbrokes owner’s shares surged 3% or 35.5p to 1341p, beating mining stocks such as Antofagasta and Anglo American as traders also cheered today’s stronger-than-expected GDP figures in China.
The FTSE 250 index rose 43.56 points to 19,330.46, with outsourcing firm Mitie up nearly 10% or 7.8p to 89.3p after it upgraded profit guidance and announced it will launch a new £50 million buyback of shares.
Low-cost airline easyjet surged 2% or 12.2p to 523.2p, close to its highest level since May, after it reported a significant drop in winter losses and raised full-year expectations as booking momentum builds into the summer.
Easter demand was strong with around 1600 flights operating on average per day. Wizz Air benefited from the update as its shares rallied 3% or 89p to 2850p.
Wise shares sink after revenue stalls
Tuesday 18 April 2023 08:24 , Simon Hunt
Wise shares sunk 10.6% to 523p after an unexpected dip in fourth-quarter revenues.
Sales at the fintech giant fell 1% to £224 million in the three months to end March, while the average volume transaction fell 7%, implying higher costs for every £1 transacted.
Wise said: “We continue to see a slower pace of growth in higher-volume customer cohorts (>£10k). We believe payments amongst these cohorts, such as for property purchases and investments, to be more discretionary in nature and influenced by macroeconomic conditions to a greater extent.”
Acquisitions keep Ladbrokes owner growing as UK arm stalls amid reform delays
Tuesday 18 April 2023 08:03 , Daniel O'Boyle
Ladbrokes owner Entain leaned on acquisitions and the US to keep growing as UK online revenue dipped while the company awaits a package of reforms that appears to have been delayed further.
Organic revenue was flat, but Entain noted that without the UK and Germany - where reforms also hit the company - revenue would have grown by 6%.
In the UK, the company put in place a number of changes to get out ahead of widely expected government reforms such as ‘affordability checks’ for high-spending customers. It says will cost it £110 million per year.
However, while the white paper laying out these reforms was originally scheduled for 2021, it has still not been published. Reports last month said publication could come yesterday, but it did not materialise.
While organic revenue was flat, the acquisition of Dutch betting site BetCity helped ensure the company’s overall revenue was up by 16%. Revenue growth also would have been higher if the figures included Entain’s American joint venture BetMGM, which has grown rapidly as states legalise sports betting.
Earnings growth fuels rates rise speculation
Tuesday 18 April 2023 07:54 , Graeme Evans
A bigger-than-expected 5.9% rise in UK earnings in today’s labour market report has heaped more pressure on the Bank of England ahead of its May policy meeting.
The annual earnings growth including bonuses for the three months to February compared with City forecasts of 5.1%, However it remains significantly below the most recent inflation rate of 10.4% as the real-terms pay squeeze continues to hit households.
The figure and evidence of a tight labour market will concern monetary policymakers as they look for signs that inflation is coming back under control after a series of interest rate rises.
The pound rallied 0.3% to $1.241 this morning after the labour market report pointed to the need for further rate rises.
Saatchi pays £10.8 million to fight off takeover bids
Tuesday 18 April 2023 07:53 , Daniel O'Boyle
Marketing giant M&C Saatchi spent £10.8 million fending off two takeover bids last year.
Advanced Computer Software founder Vin Murria and Next Fifteen Communications had both hoped to buy the business founded by Maurice and Charles Saatchi in the 1990s, with the Saatchi board approving a $390 million offer from Next 15. However, after Next 15’s share price fell, the board withdrew its approval, but the group continued to try to strike a deal before giving up in October.
The near-£11 million cost for Saatchi of fending off those bids meant that although its headline profit was at a record high, its final bottom-line figure was down to £5.4 million.
The announcement comes as many London-listed firms appear to be targets for takeovers by US private equity.
Wise beats guidance in 2022-23
Tuesday 18 April 2023 07:41 , Daniel O'Boyle
Wise reported income for the year to 31 March of £964 million, ahead of its previous expectations.
The fintech giant expected income - which represents revenue plus interest income - to grow by between 68% and 72% for the year, but the final figure instead represents 73% growth.
“At Wise we are focused on our mission of building money without borders and bringing faster, fairer options to more people and businesses around the world,” CEO Kristo Käärmann said. “To deliver on this mission we're building a resilient, profitable business that our customers can trust to be here for them through good times and through the challenges of a more uncertain macroeconomic environment.
“Our financial results this quarter show great progress on our mission.”
Markets higher after robust US earnings
Tuesday 18 April 2023 07:38 , Graeme Evans
A robust start to the US earnings season meant a calm session for Wall Street markets yesterday, with the Dow Jones Industrial Average and S&P 500 index both 0.3% higher. The FTSE 100 index is also forecast by IG Index to open 15 higher at 7895.
Bank of America pointed out yesterday that 90% of the early reporters had beaten earnings forecasts in the first week of results covering the first quarter.
Most of the figures have been from the financial sector, with this week seeing results broaden to other sectors as Netflix is due to report after tonight’s closing bell and electric car maker Tesla the following evening.
Despite the signs of a resilient first quarter, UBS warned this week that it may take time for headwinds such as tighter lending standards and higher interest rates to show up in corporate fundamentals.
Mark Haefele, UBS’s Global Wealth Management chief investment officer, said: “While the upcoming earnings season may not weigh on market sentiment, we still see reasons for investors to remain cautious on US equities this year.”
GSK unveils £1.6 billion deal to buy Canadian medicine maker Bellus Health
Tuesday 18 April 2023 07:37 , Michael Hunter
FTSE 100 pharmaceutical company GSK is spending £1.6 billion to acquire US medicine maker Bellus Health and its potential blockbuster drug to treat chronic coughs.
The deal is one of the biggest deals involving a London-listed company so far this year.
GSK said the $2 billon, $14.75-per share offer will strengthen its pipeline for speciality respiratory medicines. There are global estimates that 28 million people suffer from chronic coughs, with 10 million having symptoms for over a year, the company said. Bellus’s Camlipixant drug is seen as one of the best remedies and is expected to hit the market in 2026.
Luke Miels, chief commercial officer, GSK, said: “his proposed acquisition complements our portfolio of specialty medicines and builds on our expertise in respiraton”
The deal is subject to regulatory approval.
Unemployment remains low by historic standards
Tuesday 18 April 2023 07:19 , Simon Hunt
Despite stagnant economic growth, unemployment in 2023 remains around the lowest level seen in the 21st century.
In fact, you have to go back as far as 1973 to find lower rates of unemployment in the UK.
Jane Gratton, Head of People Policy at the British Chamber of Commerce, said: “The Government needs to fix the people problem in the economy if it is to have any hope of boosting growth.
“When firms cannot recruit and train from the local labour market, and where national shortages are crippling sectors of the economy, they must have access to skills and labour from outside the UK. We need a pragmatic approach to immigration policy - that ensures the Shortage Occupations List accurately reflects the reality on the ground.”
Cineworld ends marketing for ‘Rest of World’ business after inadequate proposals
Tuesday 18 April 2023 07:10 , Simon Hunt
Bankrupt Cineworld has said it will cease marketing its cinemas outside the UK and US after failing to receive any suitable offers.
The UK-based cinema chain said it had received proposals “ from a number of prospective counterparties, however the proposals did not meet the value level required by the Group’s lenders.”
The company, which entered Chapter 11 bankruptcy last year, said it expected to emerge from Chapter 11 later this year and its cinemas would continue to operate as normal worldwide during its planned restructuring.
China GDP beats hopes, oil prices rise
Tuesday 18 April 2023 07:07 , Graeme Evans
China’s recovery from Covid lockdowns is happening at a faster than expected pace after figures today showed that its economy expanded by 4.5% in the first quarter of 2023.
This follows a rate of 2.9% the previous three months and compares with market forecasts for growth of 4%. Oil prices rallied on the back of the robust update, with Brent crude trading above $85 a barrel this morning.
Separate figures from the world’s second largest economy also revealed a two-year high for retail sales growth and a five-month high for industrial output.
China expects its economy to grow by 5.5% this year, having missed targets for 2022 by a considerable margin after Covid lockdowns limited expansion to 3%.
Unemployment rate ticks up to 3.8%
Tuesday 18 April 2023 07:04 , Daniel O'Boyle
The unemployment rate for December 2022 to February 2023 ticked up slightly, by 0.1 percentage points to 3.8%.
The rate had held steady at 3.7% in each of the previous four months at 3.7%, and was excpected to do the same.
The amount of vacancies also fell, which the ONS said “reflects uncertainty across industries”.
“With the number of people neither working nor looking for a job down again, there were rises in both those in work and those actively looking for a job,” ONS director of economic statistics Darren Morgan said. “However, while the group outside the labour market – termed ‘economically inactive’ – fell, the number among them who were long-term sick rose to a new record high.”
Recap: Yesterday’s top stories
Tuesday 18 April 2023 06:41 , Simon Hunt
Good morning. Here’s a summary of our top stories from yesterday:
Is the entire UK stock market up for sale? You could be forgiven for thinking so. Three separate announcements yesterday show how vulnerable much of corporate Britain is to money-bags private equity houses. Read an explainer here.
London is set to see more new office space completed in 2023 than any year in the past two decades raising the prospect of higher vacancy rates, according to a report.
The Bank of England’s deputy governor said stablecoins may need the same regulation as traditional payments in order to prevent threats to Britain’s financial stability.
Shares in AIM-listed artificial intelligence firm DeepVerge plummeted after it revealed its revenue for 2022 could be half as much as previously stated.
Today we’re expecting:
UK unemployment rate
UK claimant count rate
THG results
City Pub Group results
Xeros Technology results
Liontrust Asset Management trading update
