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FTSE 100 Live 23 May: Index closes down as growth slows, Nvidia soars on Wall Street, Nationwide profits slip

FTSE 100 Live 23 May: Index closes down as growth slows, Nvidia soars on Wall Street, Nationwide profits slip

The FTSE 100 steadied this morning after an early fall, as markets digest news of a July election and PMI figures showing a slowdown in services inflation.

Meanwhile, National Grid has announced a huge investment in green transition infrastructure.

FTSE 100 closes down 0.4%

Thursday 23 May 2024 16:40 , Daniel O'Boyle

The FTSE 100 closed down 0.4% at 8,339.23 today, moving further away from record levels.

London’s top flight fell early on before steadying, but then declined again late in the day.

The top riser was St James’s Place, followed by Scottish Mortgage Investment Trust.

National Grid was the top faller.

Chelsea's 102 year old Sloane Club to get major makeover to attract a younger set

Thursday 23 May 2024 16:27 , Daniel O'Boyle

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One of London’s most refined private members venues The Sloane Club is to get a £20 million makeover to help draw in a younger and more metropolitan crowd.

The 102 years old institution on Lower Sloane Street close to the Chelsea Flower Show ground has traditionally been a haven for aristocracy and high society, but the profile of its 2,500 membership is growing increasingly elderly and “out of town.”

Read more here

Market snapshot: FTSE 100 lower

Thursday 23 May 2024 15:54 , Daniel O'Boyle

The FTSE 100 is lower again as market close approaches.

Here’s the latest market snapshot:

City Comment: Businesses are ready to back Starmer. Will he give them a week-one reward?

Thursday 23 May 2024 15:34 , Jonathan Prynn

When I wrote yesterday of the possibility of a “July date with political destiny” I did not expect to be proved right within hours.

But now the gun has been well and truly fired on an election campaign that will bring to an end one of the most turbulent five-year periods for business in living memory. Polls of business leaders suggest they are pretty relaxed about the prospect of Keir Starmer moving into No 10. And in truth most are fed up with a Conservative administration that delivered political chaos, soaring costs, and acute labour shortages.

Read more here

Nvidia shares surge beyond $1000 mark

Thursday 23 May 2024 14:37 , Daniel O'Boyle

Shares in Nvidia have surged on Wall Street after the chips giant beat expectations yet again in its results last night.

The “only stock that matters” jumped by 9.1% to $1036.

That leaves the business worth $2.55 trillion, after about $160 billion was added to its market cap today. The business is worth well over half the value of the entire London stock market.

Brian Colello, Strategist at Morningstar said: “Wide-moat Nvidia once again reported stellar quarterly results and provided investors with even rosier expectations for the upcoming quarter, as the company remains the clear winner in the race to build out generative artificial intelligence capabilities.

“We’re encouraged by management’s commentary that demand for its upcoming Blackwell products should exceed supply into calendar 2025, and we see no signs of AI demand slowing either.”

'Delayed audit process' makes Royal Mail owner's results late

Thursday 23 May 2024 14:04 , Daniel O'Boyle

Royal Mail owner International Distribution Services (IDS) says its results will be delayed because of an audit issue.

It said: “The Group's auditor, KPMG, has requested additional time to complete the usual standard procedures after their internal reviews were late in the audit timetable, thereby delaying their final audit process.”

It added that adjusted operating profit excluding voluntary redundancy costs will be “in line with previously published guidance”.

IDS has been in takeover talks with Czech billionaire Daniel Kretinsky, and said last week it was “minded to” accept a £3.5 billion offer from him.

US jobless claims down

Thursday 23 May 2024 13:45 , Daniel O'Boyle

US jobless claims for the week declined again to 215,000, below economists’ expectations.

It’s the biggest back-to-back drop since September, and the latest sign that the American labour market appears near-impervious to high interest rates.

But the lack of a labour slowdown may lead to growing concerns that the recent resurgence of inlfation will continue.

New charges for claims management firms proposed by financial ombudsman

Thursday 23 May 2024 12:45 , Daniel O'Boyle

Claims management companies (CMCs) face new fees of up to £250 to lodge a case, under proposals from the financial ombudsman to make costs fairer.

The Financial Ombudsman Service (FOS), which resolves complaints from consumers about financial firms, said the fee would be reduced to £75 if the case outcome is in favour of the consumer.

Read more here

Royal Mail owner fails to publish financial results amid impending takeover bid

Thursday 23 May 2024 11:48 , Daniel O'Boyle

The owner of Royal Mail has failed to publish its annual trading update, scheduled for early Thursday morning, as the group heads towards a potential overseas takeover.

London-listed International Distribution Services told markets it would publish its full-year financial results at 7am on Thursday, but by 11.30am nothing had been released.

It comes a week after the company said it was “minded” to agree to a takeover by Czech billionaire Daniel Kretinsky.

Read more here

PMI survey offers hope Bank of England may cut interest rates in August

Thursday 23 May 2024 11:09 , Daniel O'Boyle

Tentative signs emerged today that the Bank of England could be ready to cut interest rates in August, as an influential business survey suggested that the service sector may finally be cooling down.

The S&P Global Flash United Kingdom PMI survey for May showed that prices charged inflation fell to its lowest level since February 2021. The decline was mostly driven by slow services inflation, as businesses aimed to undercut rivals on price.

Read more here

Wizz Air returns to profit, but with 'air of what might have been'

Thursday 23 May 2024 10:02 , Daniel O'Boyle

Low-cost airline Wizz Air returned to profit after three straight years of losses, results revealed today, as it carried a record 62 million passengers in the year to 31 March.

The carrier, founded in Hungary, reported profits of €341.1 million (£291 million) in its 20th year of operation, after a €565 million loss last year. It comes as revenues grew by 30% to more than €5 billion thanks to a 20% surge in passenger numbers and a “favourable pricing environment”, despite an €80 million revenue hit as it suspended flights to Israel.

The airline was also able to shrug off disruption related to mandatory inspections of its Pratt & Whitney engines, which led to the grounding of 47 of its planes.

It expects profits to grow further this year, to as much as €600 million, despite around 20% of its 208 planes remaining grounded.

Wizz restarted flights to Israel in March, and says that “demand has been building steadily since”.

CEO József Váradi said: “Sustained healthy demand for air travel across our markets was a defining feature of F24, signalling that the surge witnessed post pandemic has evolved into a longer-term trend in consumer behaviour.”

Mark Crouch, analyst at investment platform eToro, said there was “an air of what might have been” about the results, as the engine issues and geopolitical uncertainty prevented an even bigger surge in passenger numbers, revenue and profits.

The shares rose by 5% to 2060p, valuing the business at £2.13 billion. That’s still less than half of their pre-pandemic level.

Private sector growth continues, but more slowly

Thursday 23 May 2024 09:35 , Daniel O'Boyle

The UK private sector is still growing, but slower than expected as the dominant service sector disappointed but manufacturing posted its strongest month in almost two years.

According to the influential S&P Global Flash United Kingdom PMI, growth slowed in May, with a PMI reading of 52.8. Any figre above 50 represents growth.

That figure is down from April’s 54.1 and the expected reading of 54.

The gap between manufacturing and services narrowed, as the former improved while the latter declined.

Manufacturing PMI was at a 22-month high of 51.3, but the services PMI was at a six-month low of 52.9.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “The flash PMI survey data for May signalled a further expansion of UK business activity, suggesting the economy continues to recover from the mild recession seen late last year.

“The survey data are consistent with GDP rising by around 0.3% in the second quarter, with an encouraging revival of manufacturing accompanied by sustained, but slower, service sector growth.

“The survey also brings welcome news of a cooling in service sector inflation, which is needed to open the door for the Bank of England to start cutting interest rates.”

AJ Bell profit margins soar

Thursday 23 May 2024 09:11 , Simon English

AJ BELL today shrugged off caution in UK markets to record another jump in profits and customer numbers.

The investment platform saw customer numbers grow past half-a-million as 27,000 new investors signed up.

Revenue in the half year was up 27% to £131 million, with profit up 47% to £61.4 million. That leaves AJ Bell with a profit margin of nearly 47%, an astonishing figure that few other sectors get anywhere near.

Critics say it is a sign of over-charging. CEO Michael Summersgill insists it is a competitive market.

He said: “There was been a lot of doom and gloom around UK capital markets. That doesn’t apply to AJ Bell, we are in a great part of the market.”

He added: “There is a big long term need for people to invest to build their own retirement funds. There is plenty of runway to attract new customers.”

An improved dividend of 4.25p a share will be paid, a large chunk of which goes to founder Andy Bell.

AJ Bell shares rose 33p to 395p which leaves the business valued at £1.65 billion. The stock is up 26% in the last year. It may have benefitted from strife at arch rival Hargreaves Lansdown which yesterday turned down a £5 billion takeover bid from a group of private equity firms including CVC.

Summersgill added: “Our philosophy is to use our economies of scale to provide customers with one of the most competitively-priced platforms in the market. On 1 April we reduced our custody fees for advised customers and halved our headline dealing fee for D2C customers to £5, whilst also increasing the interest rates payable on cash balances held across our products. This focus on keeping our charges low, combined with high service standards and easy to use products, puts us in a very strong position to continue growing our market share in the future.”

National Grid shares plunge after fundraise for £60bn investment plan

Thursday 23 May 2024 09:09 , Daniel O'Boyle

Shares in National Grid have plunged after the cut-price fundraise announced today to fund its £60 billion investment plan.

Shares are down 8.4% to 1,033p, after the utility revealed it would raise £7 billion with a 645p-per-share rights issue.

The National Grid board said: “The board unanimously believes this comprehensive financing plan will allow the group to fund a significant increase in capital investment, maintain its strong investment grade credit rating, deliver for customers, and continue to achieve attractive shareholders returns.”

Germany growth accelerates, France returns to decline

Thursday 23 May 2024 08:57 , Daniel O'Boyle

The German private sector continued its growth in May, but France returned to decline, according to the latest PMI survey.

The HCOB Flash Germany PMI beat expectations with a reading of 52.2. Any figure above 50 represents growth.

Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said: "These numbers offer hope. The manufacturing output index has reached its highest level in 13 months in May, while the recovery in the services sector has gained momentum. Consequently, the composite PMI now signals solid growth. Our GDP Nowcast estimates a 0.3% GDP increase in the second quarter compared to the first quarter.”

However, France returned to decline with a PMI reading of 49.1.

But Norman Liebke, Economist at Hamburg Commercial Bank, said the dip was not a major cause for concern.

He said: “The French economy will grow in the second quarter thanks to strong domestic demand. Although the HCOB Composite Output PMI fell slightly below 50 in May, there is no reason for any major concern. Demand has grown for the first time in over a year and employment is still growing robustly. Our HCOB Nowcast expects 0.3% economic growth for the second quarter.

“While this is strong compared to the last few quarters, it is still slightly below the previous estimate due to the worsethan-expected HCOB PMI figures, down from 0.4%.”

Hargreaves Lansdown shares soar after it rebuffs £4.7 billion bid

Thursday 23 May 2024 08:50 , Michael Hunter

Shares in Hargreaves Lansdown surged to the top of the FTSE 250 today after the fund manager turned down a £4.7 billion bid from a consortium led by private equity giant CVC.

The Bristol-based firm said the 985p-per-share offer “ substantially undervalues Hargreaves Lansdown and its future prospects.”

It also said the consortium approached Hargreaves’ board with the offer in late April.

As the stock took top spot on the leaderboard of London’s second-tier index, it did so some way above the offer price, with a 149p advance taking it to 1128p, a rise of over 15%. It had gained around 5% during the previous session, when rumours of an approach swirled around the stock.

The offer comes as the latest sign of private equity’s interest in UK listed companies, amid fears in the City that valuations on the stock exchange are too low, with the pool of capital available less deep, especially when compared with London’s arch rival, New York.

The consortium bidding for Hargreaves also includes a subsidiary of the Abu Dhabi Investment Authority, Platinum Ivy.

Hargreaves has almost 2 million customers using its investment site, which is run on a so-called “execution-only” basis, meaning it carries out orders from customers, without running the ancillary or support services seen at full-service brokerages,

It was founded in the early 1980s by entrepreneurs Peter Hargreaves and Stephen Landsown.

Investec sets aside £30m for car loans probe

Thursday 23 May 2024 08:46 , Simon English

RUTH Leas, the CEO of Investec’s UK arm, today said clients are poised to start doing deals once the general election is out of the way and interest rates fall.

They have been stymied by uncertainty for some time, she admits.

“The future is looking bright with the potential for rate cuts and the election announced yesterday. Everyone wants clarity so they can make decisions – we have been treading water for some time,” she said.

The wider group, headquartered in South Africa, saw profits for the year up 8% to £884 million. The UK arm has set aside £30 million to cover potential costs from the investigation by the Financial Conduct Authority into car loans.

It admits the final total could be higher or lower than that depending on the scope of the inquiry.

Investec employs about 1600 bankers at offices on Gresham Street in the City and is looking to hire more.

“We are positioned well for openings in the IPO market,” said Leas.

Fani Titi, Group Chief Executive, said:

"The Group has delivered strong financial performance notwithstanding the uncertain operating environment that prevailed throughout the financial year. This performance demonstrates the continued success in our client acquisition strategies which underpinned the increased client activity and loan book growth, supported by the tailwind from the high interest rate environment.”.

FTSE 100 makes steady start as gains for financials help off set weakness for utilities

Thursday 23 May 2024 08:20 , Michael Hunter

London’s main stock market started the day in neutral gear, with investors working through a busy run of corporate news amid a wider sense of caution amid concern at fresh trade tensions between the US and China.

The FTSE 100 slipped 9 points to 8,361.70. Utility stocks stood out on the list of fallers. National Grid made the biggest single drop, down over 8%, or 91p, to 1037p after it announced a £60 billion investment programme to pay for decarbonising the UK’’s electricity distribution system.

Water utilities were also notable decliners, with Severn Trent down almost 4%, or 99p, to 2540p. United Utilities was down by the same margin, or 40p, to 1037p.

Financial stocks lent support to the index. Barclays was up 1%, or almost 2p, to 214p. Schroders gained 1.4%, or over 5p, to 388p.

National Grid hails 'defining moment' as it announces £60 billion energy transition investment

Thursday 23 May 2024 07:56 , Daniel O'Boyle

National Grid plc will invest £60 billion over the next five years in a major green energy transition push in both the UK and US.

The plan will include £23 billion invested in energy transmission in the UK to support offshore wind, as well as £8 billion on “asset replacement, reinforcement and new connections”.

A further £28 billion will be spent in the US.

It has launched a rights issue to raise money for the investment, but this will be at a steep discount from its last closing share price. The rights issue is at 645p per share. National Grid closed at 1120p yesterday.

it comes as profits at the utility declined by 15% to £3.05 billion.

Chief executive John Pettigrew said: “Today is a defining moment for National Grid as we announce a significant increase in investment that cements our position as a leader in the energy transition on both sides of the Atlantic.

“This is an unprecedented time for our industry that is creating significant opportunities for National Grid today, over the next five years and for decades to come. Our new five-year investment plan will deliver long-term value and returns for our shareholders, support over 60,000 more jobs, and accelerate the decarbonisation of the energy system for the digital, electrified economies of the future.”

Rolls-Royce says engine flying time back at pre-pandemic levels in milestone moment for global travel industry

Thursday 23 May 2024 07:49 , Michael Hunter

Rolls-Royce, the world famous engine maker that powers many of the world’s planes, provided a landmark moment today for the move away from Covid.

The FTSE 100 giant said the amount of time its jets are in the air has returned to pre-pandemic levels.

Rolls is paid for the number hours flown by its Trent-branded jets, meaning the milestone also has important implications for its revenue. It was reached in the four months to the end of April.

It cited “the continued recovery of international traffic in Asia and our growing fleet”, and it said that for the full-year, it expected to pass 2019’s total for flying hours by about 10%.

GPE raises £350 million for investment in central London offices

Thursday 23 May 2024 07:42 , Jonathan Prynn

London property company Great Portland Estates is to raise £350 million through a rights issues of shares for investment in City and West End offices.

The company says the three for five issue will be priced at 230p. The company said the fund raiser will give it a war chest that “will allow GPE to take advantage of the attractive new acquisition and development opportunities emerging in central London commercial real estate and deliver attractive and accretive shareholder returns.”

It said the era of high interest rates has pushed values in central London to levels “approaching their trough” and not far from 2009 levels in real terms.

CEO Toby Courtauld, said: “The fully underwritten Rights Issue will allow GPE to seize the significant opportunity we see emerging in the central London commercial real estate space. We have seen a correction in asset values over the last 18 months with central London commercial real estate now trading in line with levels last seen in 2009 in real terms.

“We are currently tracking approximately £1.4 billion of acquisition opportunities which we believe are capable of being purchased at or below replacement cost, with GPE well placed to take advantage of these opportunities given our best in class offering, sustainability credentials and differentiated flex offering.

“Beyond this, there is a further £1.4 billion of opportunities on our watchlist. GPE have a strong track record and a disciplined approach to allocating capital, ensuring we operate in tune with London’s cyclical property markets with the objective of delivering attractive stakeholder returns.”

FTSE 100 set to tick higher in opening trade

Thursday 23 May 2024 07:34 , Michael Hunter

London’s main stock market index is expected to make modest opening gains today, with investors keeping watch on the state of global trade relations, but encouraged by strong earnings from US chip maker NVIDIA.

According to opening calls from spread betting companies, the FTSE 100 will add 5 points to 8375.30, as the mood for measured optimism holds.

Minutes from the latest rate-setting meeting of the Federal Reserve in the US sounded a hawkish tone on the timing of a cut in the cost of borrowing there, opening the way for modest closing losses on Wall Street.

But after NVIDA’s earnings followed the closing bell, the mood improved and stock market futures picked up.

Asian markets slipped after fresh tariffs from the US stoked concern about a potential trade war between the world’s two economic giants. Shanghai’s main stock index fell by over 1% and Taiwan’s was down 0.5%.

Nationwide profits slip

Thursday 23 May 2024 07:28 , Simon English

Nationwide profits slipped by £200m to £2bn for the year to April it said today, one day after Virgin Money shareholders backed the £2.9bn takeover by the society.

That controversial deal, an unusual takeover of a listed bank by a building society has earnt fierce resistance from some members who have not been given a vote on the deal.

To win them over, today the society launched a Member Exclusive Bond paying interest of 5.5% and other member benefits.

It extended it promise to keep branches open to 2028.

Chief executive Debbie Crosbie, formerly of Virgin Money, said: “I believe this deal offers an exciting opportunity to create a more diverse business that delivers even more value to our members and will strengthen Nationwide financially.”

Hargreaves Lansdown rejects bid

Thursday 23 May 2024 07:15 , Daniel O'Boyle

Hargreaves Lansdown has rejected a 985-p-per-share offer from a consortium led by private equity giant CVC.

The deal would have valued the funds giant at £4.7 billion.

The Hargreaves Lansdown board said: “The board confirms that it unanimously rejected the proposal on the basis it substantially undervalues Hargreaves Lansdown and its future prospects.”

Recap: Yesterday's top stories

Wednesday 22 May 2024 23:52 , Simon Hunt

Good morning from the Standard City desk.

The two sets of economic figures from the Office for National Statistics yesterday 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.

It was 7-2 for a hold last time and that split may not change. Underneath the headline CPI figure all the data points most closely watched by the MPC are all running far too hot for comfort.

The figure for services CPI in particular must be a huge cause for concern after it only dipped from 6% to 5.9%.

Those big pay rises appear to be feeding through to prices, particularly in the hospitality sector. Stealth price rises such as the baked-in RPI-plus increases for the cost of mobile phone and broadband contracts that come into force in April also played their role.

A succession of interest rate cuts will always have been inked into Downing Street’s plan for a recovery in popularity in the run up to the election.

With that now effectively taken away, Rishi Sunak has concluded there is not much to be gained from waiting until the autumn before going to the country. Hold on to your hats for a July date with political destiny.

~

Here’s a summary of out top stories from yesterday: