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FTSE 100 Live 24 May: Index recovers from early plunge but still down, retail sales shock

FTSE 100 Live (Evening Standard)
FTSE 100 Live (Evening Standard)

150,000 to fly out of Stansted over bank holiday weekend

16:08 , Daniel O'Boyle

Stansted Airport will carry 150,000 passengers over the bank holiday weekend, as British Airways returns to the Essex hub.

In total, 845,000 passengers will be travelling to or from Stansted May 25 and June 2, including 150,000 departures on the Saturday, Sunday and Monday.

Top destinations for Londoners seeking breaks include the Canary Islands, Turkey, Spain, Italy, Dubai, Dublin, Edinburgh and Barcelona.

Read more here

'Mind-boggling': Mortgage brokers shocked as Barclays ups interest rates but TSB cuts

15:49 , Daniel O'Boyle

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Mortgage experts were taken by surprise this week high-street bank Barclays opted to increase its mortgage rates on the same day as reductions were announced by TSB.

The price changes came soon after inflation fell to 2.3%, which brings it closer to the Bank of England’s target level but was higher than economists had expected, taking a June interest rate cut off the table. The figures most closely watched by the Bank’s rate-setting Monetary Policy Committee - core inflation and services inflation - were little changed and well above the levels that the Bank hopes for.

Read more here

FTSE 100 steadies but still down

15:32 , Daniel O'Boyle

The FTSE 100 has steadied, and is now down only 0.2%, after this morning’s early fall.

Joint venture partners Ocado and M&S are the top risers.

Ofwat delays water bills price decision until after General Election

14:34 , Daniel O'Boyle

A hotly anticipated review of how expensive water bills could be over the coming years has been pushed back because of the General Election.

Water regulator Ofwat has pushed back the date for its consultation on draft pricing decisions for the sector until July 11.

The announcement had been pencilled in for June 12, but after Prime Minister Rishi Sunak called an election for July 4 it will now be delayed.

Read more here

Wizz Air marks 20 years with LSE opening

13:31 , Simon Hunt

 (Wizz Air)
(Wizz Air)

Wizz Air celebrate the 20th anniversary of its first flight by opening the London Stock Exchange this morning.

The celebration also marks the upcoming 10th anniversary of Wizz Air’s admission to the Exchange on 25th February 2015.

Since its first flight took off on 19th May 2004 from Katowice, Poland to London Luton, Wizz Air has flown more than 390 million passengers.

In fiscal year 2024 ended on 31 March 2024, it set a new record, carrying 62 million passengers, the highest number in the airline’s history.

Coventry Building Society confirms purchase of Co-op Bank in mega-deal

12:48 , Daniel O'Boyle

Coventry Building Society has finalised its £780 million deal to buy rival lender the Co-operative Bank, and confirmed it will not be giving its members a vote.

The tie-up will create a banking giant with millions of customers and about £89 billion worth of assets.

It means Co-op Bank will return to a mutual structure, meaning it is owned by individual members rather than shareholders and investors like most UK banks.

Read more here

Most of our economic problems are beyond the control of politicians

12:24 , Daniel O'Boyle

Here is the terrible truth about the ability of politicians to grow the economy, and boost the stock market. They can’t really.

As Simon French at Panmure Gordon puts it: “Over the next six weeks there will be plenty of claims from both sides of the UK political divide as to their respective economic credentials. Most of these claims will be best ignored.”

He examines data going back to 1955 and finds that GDP growth is basically the same under Labour or the Tories.

Read more here

Supermarket reports soaring sales of mashed potato – with new mash factory built

11:43 , Daniel O'Boyle

Mashed potato sales have soared at a UK supermarket, with a new multi-million-pound mash factory opening to help meet demand.

Tesco said its shoppers bought one million more packs of fresh ready-made mash in 2023 than in 2022.

The chain said demand for fresh mash had started to rise shortly before the pandemic, but whole potatoes were more popular in lockdown when Brits had more time to cook from scratch.

Read more here

Poundland revenue lags after taking on former Wilko stores

11:06 , Daniel O'Boyle

Poundland’s owner has said the retailer has lagged behind expectations after a major overhaul of its product range, higher labour costs and the introduction of former Wilko stores onto its estate.

Pepco Group, which owns Poundland in the UK, said sales at the budget retailer grew 5.3% to 1.05 billion euros in the six months to March 31, behind the wider group’s sales growth of 16.3%.

Read more here

Energy price cap down to £1,598

10:36 , Daniel O'Boyle

UK households are set to save another £122 a month on their energy bills from July, as Ofgem announced the latest energy price cap will be set at £1,598.

The cap will apply from the three months from 1 July, and is down from £1,690 for the April-June period. The cap itself is set per unit of energy, and the figure used for the cap refers to the amount an average household would spend in a year with bills at that level. This means that some households’ annual bills will be higher than the cap figure.

The cap is still 25% higher than in the winter of 2021-22, before Russia’s invasion of Ukraine sent the price of natural gas soaring.

Simon Virley, head of energy at KPMG, said: “This news will be welcomed by households who have been facing a cost-of-living crisis and struggling to pay their energy bills over the past few years.

“But we should remember that the price cap was only ever supposed to be a temporary measure, while the retail energy market was reformed.”

Market wrap: Retailers rally despite tepid sales figures

10:31 , Simon Hunt

Another 10% was wiped from the shares of National Grid today after the company yesterday announced a 7-for-24 rights issue to raise just under £7 billion.

The company said it plans to maintain its progressive dividend policy going forward, but with the payment rebased for the new shares in the rights issue, resulting in a lower dividend per share. The stock has now sunk some 20% in the past 48 hours.

Elsewhere, Britain’s biggest listed high street chains appear to have shrugged off this morning’s gloomy, worse-than-expected retail sales figures, with shares in Next up 0.8% to 9,380p, ASOS up 0.5% and M&S up 0.6%.

Packaging business Mondi made among the biggest blue-chip gains today, with the stock rising 2% to 1,608p after the firm unwrapped plans for a €500 million Eurobond. Banks were among the biggest laggards, with Lloyds down 1.7% to 55p and Barclays down 1%.

Amid its CEO exit, Abrdn has moved up the ranks to become the UK’s second most-shorted company, according to figures from Research Tree, with a short interest of 7.4%, up 0.9 percentage points from last month.

After a weeks-long rally which saw it hit fresh records, the FTSE 100 index has this week gone into reverse gear and was today set to end the five-day session down around 1.7%.

“It’s not been the best of weeks for the FTSE 100,” said Russ Mould, investment director at AJ Bell.

“Inflation, interest rates, politics, declining commodity prices, rights issues, the list goes on and it is fair to say the market has had quite a bit to worry about.”

'Retail sales fall won't stop interest rates staying high'

09:07 , Daniel O'Boyle

Charles Hepworth, Investment Director, GAM Investments, says: “UK retail sales for April showed a sharper decline than forecast. Bad weather was the explanatory factor from the ONS as store footfall fell but more constrained consumer spending habits can’t be ruled out as cost of living pressures continue to weigh on the broader economy. Bad economic news should be good for markets in the sense that it would lift hopes for easing in central bank policy, but that narrative has now shifted with a growing market realisation that stubborn unshifting policy is the new normal. Expect rates to remain higher for longer despite a slowdown in consumer spending.”

GSK in major court victory

09:02 , Simon Hunt

British pharma giant GSK has won a high-stake court case in Illinois over the side-effects of its Zantac drug, the first of a number cases relating to the drug to have gone to trial.

The jury found that the drug, which is used to treat heartburn, had not caused the plaintiff’s colon cancer, with the judge rejecting a request for $640 million in damages.

Another Zantac trial in Illinois, that was due to have started yesterday, was also dismissed in a recent court ruling.

GSK said: “This outcome is consistent with the scientific consensus that there is no consistent or reliable evidence that ranitidine increases the risk of any cancer.”

It added it “will continue to vigorously defend itself against all other claims.”

'Customers looking for a way to hold onto finances'

08:39 , Daniel O'Boyle

Danni Hewson, head of financial analysis at AJ Bell, comments on the latest UK retail sales figures: “There was nothing charming about the rainfall that soaked our high streets in April.

“People stuck close to home. There was little need to fill up the car if you weren’t taking any unnecessary journeys and sales at the pump suffered their biggest monthly fall since October 2021.

“It didn’t help that Easter came early and all those tasty chocolate eggs and family feasts were totted up in the previous month’s numbers, but even then, March’s flat lining sales were revised down.

“Consumers are still looking for ways to keep a tight hold on their stretched finances. If they don’t need to spend, they probably won’t, even if they’ve found a few more pennies in their pay packets thanks to the increase in the National Living Wage and a cut in National Insurance contributions. Part of this will be because many of those extra pennies were quickly sucked up by increases in broadband and mobile phone costs, rising water bills and bigger council tax payouts.

Retail sales likely to improve from here

08:17 , Daniel O'Boyle

Commenting on today’s retail sales figures, Thomas Pugh, economist at RSM UK, said: “The sharp drop in sales volumes in April is a disappointing start to Q2 for retailers, especially against a backdrop of rapidly falling inflation. Much of the blame seems to lie with the miserable weather last month.

“However, we expect retail sales volumes to continue to gradually improve from here for three key reasons. First, households’ real disposable incomes are set to rise rapidly from April as inflation falls back to 2%, tax cuts kick in and the large minimum wage increase comes in. This will boost overall consumer spending and retail sales volumes. What’s more, consumer confidence should continue to rise, ensuring that households spend most of their new income. Consumer confidence rose to -17 in May, its highest level since 2021. Admittedly, the campaign for the general election may knock consumer confidence in June but we don’t expect this to be significant.

“Second, inflation is especially weak within retail sales. The price of retail goods increased by just 1.7% in April annually, the slowest rise since early 2021. This means that continued strong nominal spending will increasingly show up in sales volumes.

“Third, retail sales volumes are now about 5% below their pre-pandemic level. This is partly a hangover after a huge splurge in spending on goods during the pandemic. But after two years of reduced spending on retail goods, households will need to start replacing some of those things bought during the pandemic. What’s more, as the housing market starts to recover and transactions increase, this will boost demand for household goods.”

FTSE down 0.8%

08:16 , Daniel O'Boyle

The FTSE fell sharply this morning, down 0.8% to 8,268.38.

That leaves it down 1.8% this week and almost 200 points off of its record highs.

DS Smith and housebuilders Berkeley and Barratt are among the biggest fallers. National Grid led a short risers board after its shares tumbled yesterday.

Abrdn bss qts

07:57 , Daniel O'Boyle

Abrdn CEO Stephen Bird is leaving the role with immediate effect, weeks after he said mocking the struggling funds giant’s ‘disemvowelled’ name was “corporate bullying”.

Finance boss Jason Windsor will take over as interim CEO as the business looks for a full-time replacement.

Sir Douglas Flint, Chairman of abrdn, said: "On behalf of the Board, I want to thank Stephen for everything he has achieved at abrdn over the last four years. He joined us as the pandemic took hold and, despite the restrictions this imposed, spearheaded a fundamental reshaping of the company, leading from the front to create a company that can be competitive in a fast-evolving sector.

“Adapting the inherited business model to be capable of generating sustainable and profitable growth required strategic vision, intense hard work and the courage to make tough but necessary decisions. While this was underway, Stephen took time to assemble the talent needed to execute successfully on his strategic vision and he passes on to them, with confidence, the responsibility to execute the next stage of our transformation. We owe him a great debt of gratitude and wish him well in the next phase of his career.”

Bird became CEO in 2020 and led the firm’s rebranding from Standard Life Aberdeen, removing all of the vowels except the one at the start.

Bird will work with Windsor on the handover until 30 June.

Retail sales below 2023 GDP nadir

07:46 , Daniel O'Boyle

Ashley Webb, UK economist at Capital Economics, notes that total retail sales volumes are now 1.0% below their October level, the nadir in economic activity according to GDP data.

Webb said: “The 2.3% m/m fall in retail sales volumes in April was much bigger than most expected (CE forecast -0.5% m/m, consensus -0.4% m/m), due to the unusually wet weather discouraging shoppers from visiting physical stores. But as inflation falls further this year, rising real household disposable income should boost retail activity throughout the rest of 2024.”

FTSE in for big fall

07:44 , Daniel O'Boyle

The FTSE 100 is on for a sharp fall when markets open this morning, after US and Asian shares struggled.

London’s top flight is set to open down 80 points, or 1% at 8261, according to IG.

That would leave it down more than 150 points for the week if it were to close there.

Retail sales in shock 2.3% fall

07:05 , Daniel O'Boyle

Retail sales fell by a shocking 2.3% in April, amid the earlier Easter timing and bad weather.

Economists were confounded by the figures, expecting 0.3% growth.

The ONS said: “Sales volumes fell across most sectors, with clothing retailers, sports equipment, games and toys stores, and furniture stores doing badly as poor weather reduced footfall.”

Recap: Yesterday's top stories

06:44 , Simon Hunt

Good morning from the Standard City desk.

The FTSE 100 slipped on Thursday as it was impacted by weaker utilities and banking stocks.

London’s top utility companies took a hit after National Grid announced a rights issue to pay for infrastructure investment plans.

Shares in the power giant plunged 9%, prompting falls in United Utilities, Severn Trent and Drax as investors worried about the health of the utility sector.

Elsewhere in Europe, Germany’s Dax nudged upwards, finishing 0.06% up, while France’s CAC 40 ended up 0.13%.

Stateside, the S&P 500 had a strong start following the news of strong first quarter earnings from chipmaker Nvidia.

The index was up 0.21% as markets closed in London, while the Dow Jones was down 0.68%.

~

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

  • Nationwide profits slip by £200m to £2bn, extends branch promise to 2028 and offers a new bond paying 5.5%. Comes day after Virgin Money shareholders backed the £2.9bn takeover by the society.

  • Bloomsbury Publishing hits new records for revenues and profits as Sarah J Maas sales rocket 161%, Harry Potter goes back to top of bestseller lists and air fryer cookbooks fly off the shelves

  • Rolls-Royce says the flying time notched up by its engines returns to pre-pandemic levels “driven by the continued recovery of international traffic in Asia”

  • National Grid raise £7 billion through a rights issue to help fund £60 billion decarbonisation investment programme including better connections for offshore wind farms

  • GPE raises £350 million for investment in “underpriced” City and West End offices

  • Investec sets aside £30m to pay for car loans probe, but profits up 7% to £963m.

  • AJ Bell makes profits of £61m at amazing profit margin of 47% opening fresh questions about charges to investors.

  • Wizz Air returns to profit despite “unprecedented supply chain disruption”