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FTSE 100 Live 22 May: Shares close down as inflation makes June rate cut unlikely, Anglo rejects fresh BHP bid

Higher-than expected UK inflation figures disappointed the City today, with shares closing down as the 2.3% Consumer Price Index reading dashed hopes of a June interest rate cut.

Meanwhile, profits surged at M&S in the latest sign of its recovery, while British Land and Severn Trent also reported their results.

There was also a fresh twist in the bid saga over Anglo American, as it rejected a £38 billion offer from BHP but said it would continue to engage with the Australian giant.

Busy day of results tomorrow

Wednesday 22 May 2024 17:13 , Daniel O'Boyle

Nationwide and Royal Mail owner International Distribution Services are among the companies that will be reporting on a busy morning tomorrow

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Results

Royal Mail, Nationwide, Wizz Air, Tate & Lyle, National Grid, Bloomsbury, Great Portland Estates, Helical, Investec, Johnson Matthey, AJ Bell

Trading updates

Aviva, Bakkavor, Essentra

Economics

UK and German May PMIs

Eurozone consumer confidence

G7 Finance Ministers and Central Bank Governors meet in Italy

FTSE closes down 0.6% after inflation disappointment

Wednesday 22 May 2024 16:38 , Daniel O'Boyle

The FTSE 100 closed today at 8,369.07, down 0.6%, after this morning’s disappointing news on inflation.

The rate of price rises fell, but remained further above the Bank of England’s target than economists expected, seemingly dashing hopes of a June interest rate cut.

The FTSE was down by as much as 0.9%, but picked up a little late in the day amid reports an election is about to be called.

M&S was easily the top riser after bumper results today, while miners Antofagasta, Glencore and Rio Tinto were the big fallers.

Virgin Money shareholders vote to back acquisition by Nationwide

Wednesday 22 May 2024 16:34 , Daniel O'Boyle

Virgin Money shareholders have voted in favour of the bank’s £2 billion acquisition by Nationwide.

Almost 90% of votes were cast in favour of the deal at Virgin Money’s shareholder meeting.

David Bennett, Chairman of Virgin Money UK PLC, said: “The board of Virgin Money welcomes the outcome of the shareholder meetings that took place earlier today, where shareholders voted strongly in favour of the recommended cash acquisition by Nationwide. We are hopeful that the transaction will complete before the end of the year, subject to the outstanding conditions being satisfied.”

The deal has attracted controversy on the Nationwide side, with many members of the UK’s largest building society arguing that they should be given a vote on whether to approve the transaction.

Shares pick up a little amid election reports

Wednesday 22 May 2024 16:29 , Daniel O'Boyle

The FTSE 100 picked up a little late in the session as reports suggest that Rishi Sunak will indeed call a July election today.

AFP, the Guardian and Sky are among those reporting that an election announcement is imminent.

It’s still down 0.5% for the day, but London’s top flight has gained about 25 points in the last half an hour.

These are the UK's most in-demand jobs, according to Indeed CV searches

Wednesday 22 May 2024 16:26 , Daniel O'Boyle

Nursing is the most in-demand job in the UK, while chefs and salespeople make up the rest of the top three, according to new data from Indeed.

The job listings platform has found that almost 7% of CV searches from employers were looking for nurses, a long way ahead of the second-most in-demand role of sales. Chef, meanwhile, was third with 3.6% of searches.

Read more here

Market snapshot: FTSE 100 down 0.8%

Wednesday 22 May 2024 15:56 , Daniel O'Boyle

The FTSE 100 is now down 0.8%, after a further slide in afternoon trading.

Take a look at the latest market snapshot:

Water firms hike dividends despite sewage pollution scandal and rising bills

Wednesday 22 May 2024 15:35 , Daniel O'Boyle

England’s three biggest listed water companies have hiked their dividend payouts to investors and announced more than £700 million in profit, despite rampant sewage pollution and substantial planned rises in bills.

London-listed Pennon Group, Severn Trent and United Utilities all released their financial results for 2023-2024 in the last week, revealing a combined £710 million in profit.

The firms risk angering MPs, campaigners and consumers by increasing shareholder dividend payments while all three are embroiled in a nationwide scandal over water pollution.

Read more here

Halifax reduces mortgage prices despite inflation dashing June Bank of England rate cut hopes

Wednesday 22 May 2024 15:10 , Daniel O'Boyle

The UK’s largest lender, Halifax, announced today that it will cut its mortgage rates this week, despite this morning’s higher-than-expected inflation reading appearing to make a Summer interest rate cut unlikely.

The new mortgage rates will come into effect on Friday (24 May).

The latest reduction follows a cut in prices in recent days from rival ‘big six’ lenders HSBC, Santander and Barclays.

It also comes despite higher-than-expected consumer price inflation figures released by the Office for National Statistics (ONS) this morning.

Read more here

Anglo rejects new BHP bid, but will 'continue to engage'

Wednesday 22 May 2024 14:19 , Daniel O'Boyle

FTSE 100 mining giant Anglo American has rejected a new, higher offer from Australian rival BHP.

But Anglo will ‘continue to engage’ with the business over a potential blockbuster deal.

The £29.34 offer comes after Anglo rejected an earlier approach last month. It would value Anglo at almost £39 billion.

Anglo’s board said: “The Board and its advisers have engaged with BHP and its advisers on multiple occasions with a particular focus on the proposed structure and associated risks. The Board continues to believe that there are serious concerns with the structure given that it is likely to result in material completion risk and value impact that disproportionately falls on Anglo American's shareholders.”

Stuart Chambers, Chairman of Anglo American, said:

"The Board is confident in Anglo American's standalone future prospects and believes that Anglo American has set out a clear pathway and timeframe to deliver the acceleration of its strategy to unlock significant and undiluted value for Anglo American's shareholders. The Board considered BHP's Latest Proposal carefully, concluded it does not meet expectations of value delivered to Anglo American's shareholders, and has unanimously rejected it. In particular, it does not address the Board's concerns about the structure, which results in significant complexity, execution risks, an extended timeline to completion and consequently has the potential for material value leakage to be disproportionately suffered by Anglo American's shareholders. Multiple engagements with the BHP team have not yet been able to resolve the concerns on these issues.

"However, the Board is willing to continue to engage with BHP and its advisers on this topic and has therefore requested a one week extension to the PUSU deadline which has been consented to by the Panel."

City Comment: Just call an election, Rishi — the economy won't look any better by November

Wednesday 22 May 2024 14:04 , Jonathan Prynn

With hindsight will this prove to be the day the number crunchers handed the keys of Number 10 to Keir Starmer?

The two sets of economic figures from the Office for National Statistics today were both, in their different ways, pretty dire.

That slender miss on the 2.3% April inflation figure may not sound much, but it will have a huge knock-on effect for millions of homeowners and businesses. It seems almost inconceivable now that three MPC hawks can be converted into doves in time for the June 20 meeting of the Bank’s MPC.

Read more here

Minister says no decision has been made on Harland and Wolff financial support

Wednesday 22 May 2024 13:39 , Daniel O'Boyle

The minister for defence procurement has insisted that no decision has been made around financial support for Harland and Wolff.

Last week, a report in The Times newspaper suggested Chancellor Jeremy Hunt is expected to block a key support package application by the firm, amid an “intense Government row”.

Harland and Wolff group chief executive John Wood then insisted their application “has not been rejected”, and “continues to be a work in progress”.

Read more here

Three-month annualised inflation at 5.2%

Wednesday 22 May 2024 13:12 , Daniel O'Boyle

While year-on-year inflation fell to 2.3%, there are signs in the most recent monthly data that price pressures are increasing.

Panmure Gordon economist Simon French points out that annualisted three-month inflation is back up to 5.2%.

Hunt hit by inflation ‘miss’ and benefits bill

Wednesday 22 May 2024 12:58 , Daniel O'Boyle

Jeremy Hunt was dealt a double blow today as a smaller than expected fall in the rate of inflation hit hopes of a rate cut in June, while worse than expected public finance figures limited the Chancellor’s scope for a pre-Budget tax cut.

The Consumer Prices Index (CPI) — the headline measure of the rising cost of living — rose by 2.3% compared with City forecasts of 2.1%. Although a sharp fall from March’s figure of 3.2%, the “miss” was big enough to alarm City markets and send traders and economists to rewrite their expectations for rate cuts from the Bank of England.

Read more here

Network Rail Property submits plan to redevelop final parcel of land from 2012 Olympics site

Wednesday 22 May 2024 12:28 , Daniel O'Boyle

Network Rail’s property arm has submitted plans to finally develop the last parcel of land from the 2012 Olympic site, almost 12 years after the torch left London.

Network Rail Property has submitted a masterplan for London’s largest integrated rail freight logistics hub at Bow Goods Yard in East London, hoping to create a hub for last-mile warehousing.

Read more here

Market snapshot: FTSE 100 lower

Wednesday 22 May 2024 12:02 , Daniel O'Boyle

Take a look at the latest market snapshot with the FTSE 100 down

Average London home price falls below half-million pound mark

Wednesday 22 May 2024 11:29 , Daniel O'Boyle

The average price of a home in London has fallen below the half a million pound mark for the first time since July 2021, official figures revealed today.

Data from the Land Registry shows UK house prices in March rose year-on-year for the first time since last summer, but property values in the capital continued to fall. London and the South East were the only regions where prices declined.

The average price of a house in London in March was £499,663, which is about £17,500 less than in March 2023.

Read more here

BT fined £2.8m over contract failures for 1.1m EE and Plusnet customers

Wednesday 22 May 2024 10:45 , Daniel O'Boyle

BT has been fined £2.8 million by the industry watchdog after EE and Plusnet failed to provide clear and simple contract information to more than a million customers before they signed up.

Ofcom said that since June 2022, BT’s EE and Plusnet businesses made more than 1.3 million sales without providing customers with a contract summary and information documents, which affected at least 1.1 million customers.

This meant that BT broke the regulator’s consumer protection rules, which came into effect in 2022 and are designed to ensure customers get clear, comparable information about the services they are considering buying.

Read more here

Banks get a boost as rate cut bets move back

Wednesday 22 May 2024 10:23 , Michael Hunter

Shares in banks were higher today, with financial stocks one of the beneficiaries of the narrowing prospects of a Bank of England rate cut in June,

With lenders eyeing higher margins from elevated base rates lasting longer. NatWest rose almost 3p to 318p. Lloyds Banking Group was up 1p at 57p. HSBC added 3p to 701p.

The rally came as a counterweight on a falling FTSE 100, where housebuilders were taking up residence at the bottom of the market.

Overall, in mid-morning trade the main London stock index was down 45 points at 8,371.95.

Wednesday 22 May 2024 09:47 , Simon Hunt

Shares in Mitchells and Butlers rocketed more than 13% this morning after the pub giant posted a more than doubling of profits.

The Nicholson’s, All Bar One and Toby Carvery operator said it had seen ‘outperformance against the market’ as easing cost inflation helped boost margins.

Total sales for the six months to mid-April rose 8.9% to £1.4 billion while pre-tax profit jumped 170% to £108 million.

CEO Phil Urban told the Standard: “Nicholson’s in London was particularly strong..because it talks so much to people coming back to office working and to tourism, as well as Toby Carvery which is in the sweet spot for the cost of living crisis.

“Energy costs have dropped significantly and that has certainly helped our six month results…what’s been pleasing is that food costs have been coming back down to where we would expect and we’re seeing inflation normalising.”

The operator, which runs more than 1700 pubs and restaurants across the UK, has put pint prices up by as much as 10%, or 65p in London pubs since the start of last year, an Evening Standard analysis shows. But Urban said more moderate increases of 2.5-5% would be more likely in the months ahead.

Harvester and Toby Carvery owner Mitchells and Butlers hailed strong results (Jonathan Brady/PA) (PA Archive)
Harvester and Toby Carvery owner Mitchells and Butlers hailed strong results (Jonathan Brady/PA) (PA Archive)

SSE shares fall as it opts against guiding on profits

Wednesday 22 May 2024 09:40 , Daniel O'Boyle

Renewable energy firm SSE returned to profit in the year to 31 March, but shares fell as it said markets are still too volatile for it to predict profits for the current financial year.

The business returned to a profit of £2.5 billion, after a loss a year earlier driven by “significant volatility in commodity markets”.

However, while prices are more stable, SSE said it still would not forecast its 2024-25 profits because of the seasonality of its business.

Shares were down 2.2% to 1759p.

Close Brothers keeps estimate of costs over car claims on hold

Wednesday 22 May 2024 09:21 , Michael Hunter

Close Brothers, the merchant bank facing a wave of payouts over unfairly sold car loans, said today it was “working through a period of uncertainty” but left its estimate of the costs from the claims on hold.

The historic City bank said it expects to around £10 million in costs this year over the handling of complaints over its motor finance arm. They relate to the way salespeople across the industry were incentivised to agree higher-priced loans even when customers could have had lower rates.

Close Brothers dropped its dividend payout earlier this year to preserve cash to handle the claims.

It also reported year-to-date annualised net inflows of 9% at its asset management arm. Managed assets rose to £18.5 billion by 30 April, up from £17.7 billion at the end of January.

Its shares fell 22p to 470p today.

April wages data will be 'critical piece' after inflation miss

Wednesday 22 May 2024 09:15 , Daniel O'Boyle

Philip Shaw at Investec says: “Today’s figures are something of a setback for prospects of a cut in rates as soon as its next meeting on 20 June, but the committee will be able to assess a further month of indicators before making its decision, with April’s labour market data another critical piece in the jigsaw.

“To paraphrase Andrew Bailey at his recent MPR press conference, ‘A June cut is in no way a fait accompli, but not entirely ruled out’.”

M&S checks out top spot on FTSE 100 as wider retailers rally

Wednesday 22 May 2024 08:56 , Michael Hunter

Shares in Marks and Spencer are making the best gain of the morning on the FTSE 100, after a warm reaction in the market for the high street stalwart’s annual results.

The  58% rise in annual profits to £716 million has sent M&S stock to the top of the leaderboard, with a rise of over 24p, or almost 9% to 298p. There is also a wider rally for retailers, on hopes that there could be a wider trend for better-looking numbers in the sector.

B&M, the discount homewares chain, gained almost 8p to 549p and took second place. Ocado, which offers home delivery of M&S food, was up almost 5p at 360p.

Traders bet against summer rate cuts

Wednesday 22 May 2024 08:38 , Daniel O'Boyle

City traders have bet against a June interest rate cut after today’s inflation disappointment, with an Autumn cut now looking most likely.

Before the figures were published, markets saw about a 50-50 chance of a cut in June.

Even a cut in August is now seen as fairly unlikely, with markets pricing in a 60% chance of a hold.

Bank fined £62 million after trader makes $444 billion 'fat finger' error

Wednesday 22 May 2024 08:25 , Daniel O'Boyle

Watchdogs have fined US banking giant Citigroup £61.7 million after its systems failed to prevent a ‘fat finger’ error worth more than the GDP of Denmark.

The fine relates to a Citigroup Global Markets trader’s attempt to sell a group of stocks worth $58 million. According to the Financial Conduct Authority (FCA), the trader “made an inputting error while entering the basket in an order management system”.

“This resulted in a basket to the value of US$444bn being created,” it said.

Read more here

FTSE 100 falls as bets on interest rate timing are pushed back

Wednesday 22 May 2024 08:23 , Michael Hunter

London’s main stock market index fell by more than 50 points in opening trade, after the latest inflation data was stickier-than-expected, pushing back expectations on the timing of an interest rate cut from the Bank of England.

House builders, which have been grappling with a slowdown in house sales with interest rates at 15-year highs, took a hit.

Persimmon’s shares fell by almost 30p to 1426p. Taylor Wimpey fell almost 2p to 145p. Rightmove, the property website lost 8p to 543p.

Overall, the FTSE 100 fell by over 55 points to 8,360.83, leaving it heading away from the record highs it reached last week.

The FTSE 250, the index of second-tier companies often seen as more representative of the UK economy, was down over 90 points at 20,691.61 with financial stocks under pressure.

Severn Trent boss "proud" at "best ever leakage"

Wednesday 22 May 2024 07:59 , Simon English

Severn Trent CEO Liv Garfield today claimed to be "proud of the performance our brilliant teams have delivered this year" in face of the sewage dumping scandal.

Garfield, paid £3.2 million last year and £13 million over the last four, said the group has “achieved our best ever leakage performance”.

Severn Trent was responsible for 60,000 sewage spill last year.

Severn Trent has raised £1 billion from investors to “help us continue to transform the network, reducing spills, improving river health and providing our customers with the best and most reliable service”.

Group profits rose from £132 million to £140 million.

The CEO blamed the weather for the leaks.

Garfield said: “Our region had 35% more rainfall in 2023 than in the previous year, and experienced ten named storms between September and March, with close to 30% of rivers in our region reaching their highest recorded levels this financial year.”

Pound hits two-month high against the dollar after inflation number

Wednesday 22 May 2024 07:50 , Michael Hunter

Sterling hit its highest level agains the dollar since late March in the wake of today’s stronger-than-expected inflation data, as expectations of an interest rate cut as soon as next month cooled.

The stronger-than-expected consumer price index for April, at 2.3%, took it toward the Bank of England’s official 2% target, but not as close as had been expected.

With inflation looking stickier, the chances of the BOE’s June meeting ending in the first rate cut since the pandemic appeared to narrow.

That gave the pound a boost on the currency markets. Sterling rose against all its major developed-market peers.

Against the dollar it hit its highest level since March 21, up 0,4% at $1.2752, a rise of around half a cent.

Against the euro, the pound was at €1.1745, up 0.3%, or over a third of a cent, and also a two-month high.

Market bets on the timing of a rate cut put the odd of action in June at under 50%.

M&S profits jump

Wednesday 22 May 2024 07:35 , Simon English

Marks & Spencer continued its return to form today with a 58% in annual profits to £716 million.

That’s still shy of the glory years when £1 billion of annual profits was considered a success, but a radical improvement on the times when the business seemed stuck in the doldrums.

Overall sales jumped 9.3% to £13 billion.

Chief executive Steve Machin said: “Two years into our plan to Reshape for Growth we can see the beginnings of a new M&S. Food and Clothing & Home grew volume and value share ahead of the market and sales increased across stores and online. Both businesses have now delivered 12 consecutive quarters of sales growth and this trading momentum gives us wind in our sails, and confidence that our plan is working. We are becoming more relevant, to more people, more of the time.”

The food arm has won many new fans but questions remain about the clothes, still regarded as dowdy in some quarters.

M&S shares open today at 273p, which values the business at £5.6 billion. They are up 68% in the last year.

FTSE 100 set to slip in opening trade

Wednesday 22 May 2024 07:28 , Michael Hunter

London’s FTSE 100 is expected to slip back in initial trade this morning, as investors factor in this morning’s inflation data, which came in higher than expected.

The main City share index will lose just over 30 points according to opening calls from spread betting companies. That would take the FTSE 100 to around 8385.0 points.

Reaction to the inflation reading for April – which came in at 2.3%, above the 2.1% forecast – saw it as a number that makes the Bank of England’s decision more difficult on the timing of its first rate cut since the pandemic, which could come as early as its meeting next month.

Global markets are also waiting for insight into the timing of rate cut action in the US. Minutes from the last meeting of its central bank’s last policy meeting are due out later today.

In the meantime, trading felt cautious in Asia. And the 30-point fall expected in London would fit that pattern, with the outlook for interest rates setting the tone.

Mahmoud Alkudsi, Senior Market Analyst at ADSS, said: “We will likely see the BoE hold interest rates for a little longer.

“As ever, the key thing to watch will be how the members of the Monetary Policy Committee vote at their next meeting. This encouraging inflation data may be the tipping point for the BoE, but they will likely want to see this level of inflation sustained before relaxing their relatively tight policies.”

'Upward risk' to inflation' remains

Wednesday 22 May 2024 07:26 , Daniel O'Boyle

NIESR Economist Paula Bejarano Carbo said: “Inflation has fallen to its lowest level in almost three years. This is positive news, however inflation remains above the Bank of England's 2 per cent target and core inflation is still higher than its historical average at 3.9 per cent.

“Paired with last week’s strong wage growth data, we believe that elevated services inflation will remain an upwards risk to inflationary pressures in the second half of this year. As a result, the MPC may exert caution at its upcoming meeting and hold interest rates, despite today’s encouraging fall in the headline rate.”

'June rate cut unlikely... August may be in doubt too'

Wednesday 22 May 2024 07:22 , Daniel O'Boyle

Paul Dales, Chief UK Economist at Capital Economics, said: “The smaller-than-expected fall in CPI inflation from 3.2% in March to 2.3% in April (BoE & consensus 2.1%, CE 1.9%) makes a June rate cut unlikely and casts some doubt over August too. To some extent, it also makes our forecast that rates will fall from 5.25% now to 3.00% next year look more challenging.

“Even though there is still a wages and a CPI release to go before the BoE meeting on 20th June, it feels as though a cut then now seems very unlikely. Even a cut in August is looking a bit more doubtful.”

Bank of England decision 'even harder' now

Wednesday 22 May 2024 07:18 , Daniel O'Boyle

Jonny Black, Chief Commercial & Strategy Officer at abrdn adviser, said: “As we inch closer to the Bank of England’s 2% target, speculation over its next interest rate decision is set to intensify. It is now not a case of if rates will be cut, but when.

“Another fall in inflation will start to feed through to day to day living costs and alleviate pressure on household finances. But some are predicting inflation will start to climb again in the second half of the year and last week’s UK employment figures, which showed resilient wage growth despite rising unemployment, makes the Bank’s decision even harder.”

Food and tobacco inflation falls but fuel prices rise faster

Wednesday 22 May 2024 07:13 , Daniel O'Boyle

ONS Chief Economist Grant Fitzner said: “There was another large fall in annual inflation led by lower electricity and gas prices, due to the reduction in the Ofgem energy price cap.

“Tobacco prices also helped pull down the rate, with no duty changes announced in the budget. Meanwhile food price inflation saw further falls over the year. These falls were partially offset by a small uptick in petrol prices.

“The prices of goods leaving factories have risen a little over the last year. Meanwhile, the prices of raw materials and fuels grew in the last month, though they remain below where they were a year ago.”

Inflation higher than expected at 2.3%

Wednesday 22 May 2024 07:09 , Daniel O'Boyle

Inflation fell to 2.3% in April, higher than hoped close to above the Bank of England’s target.

Economists had expected inflation to fall to 2.1%.

Core inflation and services inflation were also higher than expected, at 3.9% and 5.9%. Both figures are watched closely by the Bank of England.

The hot reading is likely to be a major blow to hopes of an interest rate cut.

Recap: Yesterday's top stories

Wednesday 22 May 2024 06:54 , Simon Hunt

Good morning from the Standard City desk.

"We’re not just repeating what’s been done in the industry,” the president of British EV company Arrival said ahead of its £10 billion float via a SPAC on the Nasdaq in 2021.

“We’ve rethought how the industry should work.”

The ailing UK car dealership industry was “ripe for disruption,” Cazoo founder Alex Chesterman said ahead of the firm’s own Nasdaq SPAC float a few months later, as he listed off a host of problems with decades-old rivals.

Arrival entered administration in February, and it looks like Cazoo followed suit yesterday.

The lesson? If someone thinks they get the market better than anyone else, they probably don’t.

At the time, both these firms choosing not to list in London was seen as a blow to our public markets. Now, it looks like London dodged a bullet, or two.

Chesterman said he picked New York because putting cash into in a high-growth business that was not aiming for short-term profitability was “just better understood by investors in the US.”

It would be tempting to stop listening to anything Chesterman says at this point. But he’s still right.

A sluggish domestic IPO market means we avoid all the corporate failures – but at the expense of a much larger number of successes. That is the bigger risk.

~

Here’s a summary of our top headlines from yesterday:

Inflation set to fall near 2%

Wednesday 22 May 2024 06:51 , Daniel O'Boyle

The UK’s inflation rate is expected to fall to 2.1% when figures are published this morning, bringing it near the Bank of England’s 2% target.

If it does, that is likely to prompt further calls for the Bank of England to cut interest rates as soon as possible.

Read our preview of the potentially ‘momentous’ reading here