The FTSE 100 finished the week at a two-month high, recovering from Thursday’s decline after large cap stocks went ex-dividend
- FTSE 100 up 118 points
- Vodafone targets TalkTalk
- Wall Street turns positive
4.50pm: FTSE gains 118 points at the close
The FTSE 100 finished the week on a positive note, recovering from Thursday’s decline to its best level in two months as mining shares moved higher and US stocks turned positive.
London’s blue-chip index closed at 7,670 points, a 1.56% gain.
“The FTSE 100’s resilience is a welcome relief for UK investors,” commented Chris Beauchamp, chief market analyst at online trading platform IG. “The index has bounced back from Thursday’s ex-dividend driven fall, and with mining stocks leading the way it is back on course for the recent highs. European markets generally are doing well, recouping some losses, but with the outlook so uncertain thanks to inflation and the Ukraine war this mood of optimism is unlikely to last.”
Beauchamp said next week’s ECB meeting will give investors more of a clue on how the central bank is looking at policy, even if no rate hikes are expected.
On Wall Street by the London close, the Dow Jones Industrial Average was up 227 points, or 0.66% at 34,810, while the S&P 500 was 0.13% higher. The Nasdaq was still 0.67% lower.
3:51pm: FTSE headed for a postive close
London’s blue-chip index is expected to close higher for the fifth week in a row in what has turned out to be a good week for the index, with energy, healthcare and financial companies leading the charge.
“Today’s positive session for European markets appears to have more to do with the fact that the strength of the US dollar has pushed both the pound and the euro lower, with the pound falling to its lowest levels since November 2020, below the US$1.30,” said Michael Hewson, analyst at CMC Markets.
“The CAC40 in France has come under pressure this week, ahead of the first round of the French elections this weekend, as Marine Le Pen has closed the poll gap with Emmanuel Macron, while the DAX has also fallen back on concerns that the German economy is slipping into recession.”
2.50pm: US stocks open lower
US stocks opened lower, going pre-market predicitions.
The Dow Jones was down 69 points, or 0.18%, at 34,513, while the S&P 500 fell 16 points, or 0.38%, to 4,483.
The tech-laden Nasdaq lost 123 points in early trading to 13,774, losing 0.88%.
2.31pm: Shell targets solar acquisitions
Footsie giant Shell is part of a three-horse race to purchase renewable energy assets in Spain valued at US$1.1bn, according to Reuters.
Spanish utility company Naturgy and Austrian electricity firm Verbund are said to be the other two interested parties.
The portfolio is being sold by fund manager Q-Energy, and mainly consists of solar projects near Guadalajara in central Spain and the southern coastal region of Andalucia.
Included among the assets is 75MW of solar capacity that guarantees core earnings of €60mln per year and a development project with the capacity to generate about 3.6GW of electricity once completed.
Should Shell be successful, it would add to the number of solar and renewable energy acquisitions made, with it this year winning a licence with Iberdrola’s Scottish Power to develop wind farms in the North sea.
Binding bids are due by the end of April, according to Reuters’ sources.
Shell also received its first upgrade following yesterday’s trading update, with the target price set at 3000p
Barclays has upped its forecast for first-quarter net income by 8% to US$8.4bn, citing higher integrated gas production and trading and lower upstream costs and tax.
The oil giant itself said earnings from oil and gas trading were expected to be ‘significantly higher’ in the period to end-March as the price of both commodities has soared.
2.01pm: Global food prices surged in March
Global food price inflation surged in March, with oils, cereals and sugar seeing the steepest climbs, according to new data.
The UN Food and Agriculture Organisation (UNFAO) global food price index, which tracks the most globally traded food commodities, jumped to 159.3 in March from 141.5 last year, a 33% gain.
Average prices rose nearly 13%, with oils surging 23.2%, and cereals following behind with a 17.1% increase.
1.21pm: More trouble for P&O
The story rumbles on at P&O Ferries after the scandal hit business told customers to with other operators, cancelling all services this weekend.
The shipping company announced that services were set to resume yesterday, before retracting the statement on Twitter.
#PODover #POCalais 08/04 00:01 – 10/04 23:59 All P&O Ferries Passenger Services are suspended this weekend. For travel 8/9/10th April please re-book directly with another operator before arriving at the port. DFDS will not be able to transfer P&O customers onto their services.;
— P&O Ferries Updates (@POferriesupdate) April 8, 2022
12.55pm: Russian recession
The UK government predicts that Russia is heading for its deepest recession since the collapse of the Soviet Union in the early 90s.
GDP is expected to contract by anywhere between 8.5% and 15%, with it to be depressed over the longer term as sanctions continue to hit the nation.
The government estimates nearly £275bn, or 60%, of its foreign currency reserves are frozen, hampering its ability to support its own economy.
“Our unprecedented package of sanctions is hitting the elite and their families, while degrading the Russian economy on a scale Russia hasn’t seen since the fall of the Soviet Union,” said foreign secretary Liz Truss.
12.36pm: Russian ruble bounces back
The Russian ruble has made an astonishing recovery this week, and is sitting at the level it was at before the war against the dollar, with one ruble equalling US$0.013.
Naeem Aslam, a market analyst at AvaTrade adds, “the most important factor to pay attention to here is that this is despite seeing overall strength in the dollar index this week because of the ultra hawkish stance by the US Federal Reserve.”
“The Fed cannot afford the current level of inflation, nor is it comfortable with the size of its balance sheet. It announced this week that it wants to reduce its balance sheet by US$95bn per month, which is a number that massively surprised Wall Street.
12.02pm: Vodafone eyes TalkTalk
Reports have emerged that Vodafone PLC could be interested in buying UK broadband provider TalkTalk, which is being put up for sale only two years after being taken private.
Toscafund, the owners of TalkTalk after agreeing a £1.1bn takeover in December 2020, has received “tentative approaches” about a possible £3bn deal, Sky News has reported, with Sky also said to be in the running as a potential suitor.
It is suggested that Vodafone “has been weighing whether to make a potential offer”, though its huge levels of debt make this seem unlikely.
Vodafone shares were up almost 2% earlier and have since dipped.
Elsewhere, Intertek is the biggest faller, which is off the back of a downgrade from HSBC as part of a wider note on industrial testers.
The Footsie is picking up again, up 75 at 7,627.05.
11.50am: Wall Street heading higher
US stocks are poised to open higher on Friday, in a quiet end to the week, with markets having already factored in a slew of interest rate increases in the world’s biggest economy.
The hawkish tone struck by the Federal Open Market Committee (FOMC) has signposted the path for higher interest rates in the world’s biggest economy and markets have had time to digest the news.
Futures for the Dow Jones Industrial Average were up 0.3% in Friday pre-market trading, while those for the S&P 500 were up 0.2% and contracts for the tech-heavy Nasdaq-100 rose 0.1%.
“The data calendar across Europe and the US is decidedly second-tier and quiet. It wouldn’t surprise me if the conditions we are seeing in Asia today continue through to the New York close. If oil keeps falling, equities should finish the week on a positive note, temporarily at least,” said Jeffrey Halley, Senior Market Analyst, Asia Pacific, at OANDA.
In March, the rate-setting body raised interest for the first time since 2018. The minutes of that meeting, released earlier this week, showed that most officials had agreed that “one or more 50 basis-point increases in the target (interest rate) range could be appropriate at future meetings, particularly if inflation measures remained elevated or intensified”.
“St Louis Federal Reserve President Bullard was the latest Fed talking head to come out with a series of hawkish statements on future monetary policy. The fact that equities recovered intraday losses suggests that the 225 basis points of Fed Funds hikes futures markets have now priced in could be enough for now. It is the Fed’s battle to lose, not win,” added Halley.
The FOMC also said it will soon scale back its $9 trillion balance sheet, sending out a clear signal to markets.
“I believe the real stress point will be the Federal Reserve’s quantitative tightening, slated for a May start, and the appetite from the market to absorb the sales,” said Halley.
Benchmark Brent crude futures were up 0.7% at $101.31 while WTI futures were up 0.9% at $96.92.
While oil futures were higher, prices have eased over recent weeks after reaching around $130 a barrel when Russia invaded Ukraine late February. Some of the deepest concerns about runaway inflation have been allayed but investors will continue to watch developments on the war front in Ukraine.
11.22am: Sainsbury’s pay hike
UK households’ financial confidence sinks to a new low, according to a new YouGov and Cebr survey.
Elsewhere, a day after Tesco hiked its pay, rival J Sainsbury PLC (LSE:SBRY) has gone one better and become one of the first big grocery groups to sign up to the Real Living Wage.
The FTSE 100 supermarket chain said it will pay staff £11.05 an hour in London and £9.90 outside the capital.
The move follows Tesco increasing its hourly rate 5.8% to £10.10 yesterday.
Sainsbury’s had announced in January that it would be increasing workers’ base pay to £10.00 per hour for directly employed staff outside of London but a group of institutional and private investors led by ShareAction had lodged a resolution for its upcoming AGM to request it start paying a living wage to all its staff.
Simon Roberts, Sainsbury’s chief exec, said: “Our strategy is about investing in what matters most for both customers and colleagues. We know times are tough for everyone. That’s why we were one of the first in the industry to pay over the Real Living Wage at £10 per hour and brought forward the announcement of our annual pay review to early January, as we wanted to help colleagues plan and manage the cost of living in the year ahead.”
Among retailers, John Lewis confirmed last month that it would pay a Real Living Wage, joining Burberry and Ikea.
The FTSE 100 is up 64 points or 0.85% 7,616, underperforming European indices again.
10.20am: Russia cuts rates
Russia’s central bank (CBR) has lowered its main interest rate to 17.00% today, following its massive emergency rate hike to 20% at the end of February, following the invasion of Ukraine.
The decision came as a surprise as no official meeting had been scheduled until late April.
There is a “steady inflow of funds to fixed-term deposits”, the CBR said, and recent economic data “point to a noticeable slowdown in current price growth rates”.
The CBR seems confident that the most acute phase of the economic crisis has now passed, said Liam Peach at Capital Economics.
“Further interest rate cuts are likely over the course of this year, but it is likely to be a gradual process as the central bank attempts to bring inflation back to target.”
With the press statement pointing to the inflow of funds to fixed-term deposits, this suggests that the CBR has become confident that it its emergency rate hike at the end of February, alongside capital controls and other measures, prevented a major and destabilising bank run.
On the data pointing to slowing price growth, he said: “Although figures due later today are likely to show that consumer prices rose by around 8% m/m in March, price growth (measured in w/w terms) slowed sharply towards the end of the month and inflation may have slowed to 2-3% m/m in April, owing at least in part to the appreciation of the ruble in recent weeks.”
9.57am: Financial leaders
Financial stocks are leading the way for the Footsie, boosted by expectations of faster rate hikes.
“Investors continue to wrestle with the challenges posed by rising interest rates and surging inflation with the latest data on wages in the UK offering an indication of how entrenched inflationary pressures are,” says Russ Mould, investment director at AJ Bell.
While the surging pay in the REC and KPMG report might be cause for celebration for those in receipt of the bumper pay packets, “the risk is even the most generous salaries will see their buying power severely pinched by the rapidly escalating cost of living,” says Mould.
As employers struggle to fill roles across the economy, yesterday saw Tesco following rivals Sainsbury’s and Morrisons with plans to boost pay, though BP Group was met by an unimpressed reaction from its main union.
Looking around the markets, Ukraine-based iron ore outfit Ferrexpo PLC (LSE:FXPO) was up 13%, which reported production down only 2% year-on-year in the first quarter, as its operations are outside the main conflict zones.
“The situation in Ukraine remains complex,” it said in the statement, with the local government requesting economic activities to continue, but staff safety a concern and alternative export methods being examined as its main shipping berth is in the port of Pivdennyi in southwest Ukraine, which remains closed.
Amid plenty of headlines about travel woe this week, Jet2 PLC reported bumper summer bookings and saw its shares climb over 4%.
Elsewhere, shares in Polymetal International PLC (LSE:POLY) were up despite Deloitte resigning as auditor amid an extension of the deep freeze facing Russian companies that also saw the US blacklist the world’s largest diamond miner, Alrosa.
The FTSE is up 1% at 7,626.77, while despite Ferrexpo’s gains the FTSE 250 is up 0.4% at 21,121.
9.03am: Salary rises steepening still
A survey from the Recruitment and Employment Confederation (REC) and KPMG starting salaries surging at the fastest pace in March since records began in the late 1990s.
The steep rise in permanent salaries came amid a persisting imbalance of labour supply and demand, with vacancies up for the fourteenth consecutive month in March and at the quickest rate since September.
The survey implied a softer pace of hiring in March, with the index reflecting permanent places edging down to its softest in a year, while the respective index for temporary billings stood at an eleven-month low, but still remained at a historically high level.
The report “made for familiar reading, with the ongoing demand-supply imbalance for labour continuing to add upwards pressures on wages”, said analysts at Daiwa Europe.
The report “reflected a lack of supply of appropriate candidates, as pandemic and war-related uncertainty and fewer EU workers had limited worker availability, rather than softer demand”.
8.45am: Surging start
The FTSE 100 is seemingly followed the pace set in the US, which rallied overnight.
Big news this morning is that UK starting salaries rose at record pace in March despite hiring slowing down, according to the latest KPMG/REC report on jobs. This is because of increased labour demand and higher wages being paid to alleviate soaring inflation.
Elsewhere, Rishi Sunak claims he is a victim of a “smear” campaign after Labour slammed his wife’s tax status. The Chancellor’s wife was criticised because she is claiming non-domicile status, meaning she avoids having to pay UK tax on income from foreign investments.
Spread better CMC Markets PLC (LSE:CMCX) shares are up 8% after it said operating income for the financial year just ended should be at the top end of the company’s guidance range, representing a record performance.
Ethernity Networks PLC expects significant revenue growth this year from existing and potential contracts. The telco hardware business reported an increase in revenues in its results for 2021, with the top line growing to US$2.6mln.
Oncimmune Holdings PLC (AIM:ONC) has landed two new contracts for its ImmunoINSIGHTS services. Both deals are with US biopharmaceutical companies and add to a flurry of similar contract wins for company.
8.47am: Oil and banks on top
The FTSE 100 shot higher in early trade, making up for the losses earlier in the week and reaching its highest point in almost two months.
London’s gauge of blue-chip shares jumped 81 points or 1.1% to 7,632.9.
Oil behemoths BP PLC (LSE:BP.) and Shell PLC (LSE:SHEL, NYSE:SHEL) were leading the way, even though crude prices softened overnight.
Banks are also prominent on the leaderboard, with Barclays PLC and Standard Chartered PLC uppermost.
6.25am: Claw-back
The FTSE 100 is set to claw back most of yesterday’s losses on Friday morning after US indices rallied late in the day yesterday.
Spread betting quotes indicate the index will open 33 points higher at 7,585.
US indices closed the day in credit despite more hawkish commentary from the Federal Reserve on interest rates.
“St Louis Federal Reserve President Bullard was the latest FED talking head to come out with a series of hawkish statements on future monetary policy. The fact that equities recovered intra-day losses suggests that the 225 basis points [2.25 percentage points] of Fed Funds hikes futures markets have now priced in could be enough for now. It is the Fed’s battle to lose, not win,” said Jeffrey Halley at OANDA.
Berenberg took the hint and raised its call for the Fed funds rate “to reflect upside inflation risks and growing consensus among FOMC [Fed policy-making committee] members that aggressive policy rate moves are warranted to tamp down on inflation”.
It now expects half-point rate hikes in both May and June, followed by quarter-point policy rate increases at the remaining four meetings this year.
The Dow Jones advanced 87 points (0.3%) to close at 34,584 while the broader-based S&P 500 climbed 19 points to 4,500.
In Asia this morning, markets are in retreat.
Tokyo’s Nikkei 225 is down 6 points at 26,883 and Hong Kong’s Hang Seng is off 125 points at 21,684.
In London today, we have a trading update scheduled from CMC Markets PLC (LSE:CMCX), the trading platform operator.
The company said at the end of January that both its leveraged and non-leveraged platforms will continue to perform well during 2022.
Both platforms were running at “close to record levels”, according to the chief financial officer, Euan Marshall.
CMC indicated that it was still confident of achieving net operating income within its guidance range of £250mln-£280mln for the year March 31.
Iron ore pellets producer Ferrexpo PLC (LSE:FXPO) is expected to produce a first-quarter production update in which investors will be interested to learn how much production at its operations in central Ukraine have been hit by the war in the country.
Around the markets
- Sterling: US$1.3060, down 0.14 cents
- Gilt: 1.731%, up 2.08 basis points
- Gold: US$1,931.90 an ounce, down US$6.90
- Oil: US$100.11 a barrel, down 47 cents
- Bitcoin: US$43,512, down US$61
- Ethereum: US$3,252, up US$13
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