- Blue chips fall 71 points to 7,904
- Only 7 FTSE 100 constituents rise
- US jobs data comes in hotter-than-expected
14.39pm: Wall Street opens higher
US stocks have defied the overarching concerns that a rate cut may not come until later in the year and have instead opened higher.
The Dow Jones lifted 46 points to 38,643, while the Nasdaq jumped 58 points to 16,108.
The S&P 500 is also in the green, up 16 points to 5,165.
Non-farm payrolls revealed that 303,000 new jobs were created in March, better than the 200,000 listed and highlighting that the US economy is recovering better-than-expected and therefore may not require an early rate cut.
However, some analysts believe that if a string of layoffs begins it could make things worse.
Daniel Casali, chief investment strategist at Evelyn Partners said” The risk for markets is that layoffs and unemployment start to pick up sharply from here.
“Under this scenario, this could lead to a collapse in consumer and business confidence that drives down economic growth. For now, this risk looks contained.”
13.54pm: Markets brace for later rate cuts
Both the US and UK markets are holding their positions after US job data came in better than expected.
However, analysts aren’t sure the stocks will be able to hold for much longer. Especially as they believe it means rate cuts could be postponed.
George Lagarias, chief economist at Mazars, said: “The US economy is really firing on all cylinders, creating more jobs than anticipated.
“The data might not be that welcome from markets; however the US Federal Reserve had already been apprehensive about cutting rates in the summer, and a stronger economy certainly does not make the case for monetary easing.
“Unless Fed officials come out in the next weeks, explicitly saying that the central bank will reduce interest rates in the summer, I would expect the first rate cut to be postponed into the latter part of the year.”
13.34pm: US stocks to open higher despite strong jobs data
Wall Street is scheduled to open higher on Friday despite the US seeing more jobs added than expected in March,
303,000 new jobs were added in March, marking a sign of an improving economy but coming as a sharp blow to the prospects of interest rate cuts.
Non-farm payrolls from the Labor Department came in ahead of forecasts that 214,000 new jobs would be added.
An overly strong job market has always been cautioned by the Fed as a potential catalyst for inflation and could limit the scope of rate cuts.
The Dow Jones is set to open 94 points higher at around 39,014, while the S&P 500 is positioned to open up by 19 points at 5,216.
The Nasdaq is looking to open around 73 points higher at 18,150.
13.16pm: FTSE 100 keeps lower
The FTSE 100 is continuing to hold onto its early losses and is currently 76 points down at 7,900.
Risers have been sparse today, with only Admiral, artificial hip manufacturer Smith & Nephew and Shell having jumped – albeit all by less than 0.5%.
Meanwhile, leading the charge that’s pushing the index lower is Ocado, which is down 6% as it continues yesterday’s losses, having announced the departure of its chairman. Weak retail data from this morning won’t have helped either.
Other fallers include St James’s Place and JD Sports, down 4%, Kingfisher, down 3.5%, and British Airways owner IAG, down 3%.
David Morrison at Trade Nation said: “All the major European indices are down well over 1%, while the UK’s FTSE 100, although weak, is faring a touch better so far. Investors are a touch antsy this morning.
“They have been thrown by the unexpectedly poor start to the second quarter, having got used to seeing equities only move in one direction since the end of October.”
12.51pm: Senior doctors accept new pay deal
Senior doctors have agreed to an improved pay offer from the giving, soothing fears of another set of walkouts.
The British Medical Association said 83% of its senior doctors/ consultants voted for the offer, with 62% of members having turned out to vote.
A previous office was rejected in a vote back in January.
The new deal sees those who have been senior doctors for four to seven year receive a 2.85% wage hike, while other changes have been made to the doctors’ pay review body.
Last year, both NHS and junior doctors took to the picket line after being in a dispute over pay.
While NHS workers accepted a pay deal, junior doctors, who staged a strike in February, are still without an accepted deal.
12.19pm: Thames Water defaults on its bonds
Thames Water’s owner has told its bondholders it will default on £400 million of bonds.
Kemble Water already warned it would be unable to meet interest payments on debt which is due at the end of the month.
It comes after shareholders rejected plans to inject £500 million into the debt-laden water provider.
Yesterday, it was revealed Kemble’s future hangs on a consortium of lenders that includes two Chinese state banks.
According to the Financial Times, the consortium owed the money is made up entirely of foreign banks including Bank of China and the Industrial and Commercial Bank of China.
12.00pm: Body Shop administrators consider CVA to save stores
The Body Shop, now under the management of administrators from FRP, is considering a potential rescue strategy through a controversial restructuring approach.
Administrators said discussions were taking place with the company about undergoing a Creditors Voluntary Arrangement (CVA).
This strategy aims to renegotiate lease terms with landlords, while shutting down underperforming stores.
FRP said: “We have been provided with trading forecasts which are based on ongoing discussions with key suppliers, landlords and other relevant stakeholders.
“Once we are satisfied that we are in receipt of a workable CVA proposal we will revert to creditors.”
11.40am: Apple and Disney: Cost cutting in two very different ways
In US mega caps, both Apple and Disney have announced new plans to cut costs, however, both have gone about it in very different ways.
For Apple, the tech giant is sacking 600 workers as a result of it cancelling its electric vehicle division.
Some 614 employees were informed of cuts in late March, according to Californian state records, marking the technology giant’s first significant round of layoffs since the pandemic.
Apple’s multibillion-dollar endeavour electric car project, known as Project Titan, was cancelled last month, with the group switching its focus to AI.
For Disney, its cost-cutting measures have come at the expense of its streaming service freeloaders.
The media conglomerate said it would be following in the path of rival Nextflix by introducing a crackdown on password sharing to boost profits from its faltering streaming service Disney+.
Restrictions will be imposed in some countries from June with all countries to be covered by September, chief executive Bob Iger announced overnight.
Disney already has the technology in place to block other password sharing but has chosen not to implement it up to now, he said
11.12am: Commodities giant Trafigura shakes up boardroom
Trafigura, one of the world’s leading commodities traders, has undergone a board shakeup which has led to the departure of two senior executives.
Finance chief Christophe Salmon confirmed he will be retiring in June, while executive director and head of oil Jose Larocca will retire in September.
Larocca had been trained by founder Claude Dauphin before working his way to one of the top roles in the group, which he held for the last decade.
Salmon has also held is role for around a decade after he joined the group in 2012. Stephan Jansma, Trafigura’s Asia Pacific CFO, will replace Salmon when he retires.
It comes just seven months after management started restructuring its management team, with long-time chief operating officer Mike Wainwright having retired last month.
10.43am: UK construction industry grows for first time in seven months
Britain’s construction industry has shifted from contraction to growth for the first time in seven months.
The S&P Global UK Construction PMI lifted from 49.7 in February to 50.2 in March, rising above the 50 mark which separates contraction from growth.
Today’s figures also represent a beat compared to the market consensus of 50, highlighting the strength of the UK economy’s recovery.
Martin Beck, the chief economic advisor to the EY ITEM club, said: “The latest construction index adds to signs that the economy returned to growth in Q1 2024, following the mild technical recession in the second half of last year.
“The impact of public sector strikes will cap how much GDP grew in the first quarter, but the EY ITEM Club thinks a combination of lower inflation, rising real incomes and actual and prospective cuts in taxes and interest rates should see momentum in the economy continue to build this year.”
10.15am: Gas and oil prices surge as Middle East tension rise
Wholesale gas and oil prices are continuing to rise higher as tensions in the Middle East continue to grow.
Europe’s benchmark contract for gas jumped up to 2.2% to €27 per megawatt hour, marking its second consecutive day of rises.
Meanwhile Brent crude lifted to US$91 a barrel, its highest price point since October last year.
It comes as worries grow over whether Iran will retaliate to the Israeli’s launching an airsrtike on it embassy in Syria, which reports said resulted in the death of two high-ranking military leaders.
Ole Hansen, head of commodity strategy at Saxo Bank, said: “The general boost to energy prices from geopolitical tensions seems to be the most viable explanation for higher gas
prices.
“Although we remain stuck in a relative tight range with no clear signs of a breakout looming.”
9.56am: FTSE 100 sees only two stocks rise
London’s blue-chip index continues to hold lower, down 82 points at 7,893.
Only two stocks out of the 100 constituents are trading higher; Shell, which is up 0.2% on the back of upping its gas production guidance, and artificial knees and hip maker Smith & Nephew, which lifted 0.1%.
Meanwhile, the FTSE 100’s top fallers have been making slightly more movements, with St James’s Place down 3.5%, while Pershing Square, Ocado, JD Sport, IAG and several others are down 3%.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown said: “The FTSE 100 has gone backwards on its last trading day of the week, as investors digest PMI data as well as a downbeat tone over in the US.
“The narrative around the potential for interest rate cuts has been slightly contradictory this week, so there’s a lot resting on this data to help steady the ship.”
9.29am: Majestic saves wine bar Vagabond from administration
Majestic Wine has saved bar chain Vagabond from administration, having completed its purchase of the company today.
Britain’s largest wine retailer was reported to have been in talks with Vagabond administrators last month, soon after the chain slipped into insolvency.
Majestic’s acquisition of the wine-centric bar means it will enter into a new area of the hospitality industry, having saved all nine sites and the jobs of 171 workers.
An underperforming site in Canary Wharf and its Gatwick airport locations have not been saved however.
John Colley, chief executive of Majestic, said: “We are delighted to have secured this partnership with Vagabond Wines and are looking forward to working with the team to share our collective passion, expertise and love of wine.
“The completion of this deal marks the start of a long-term partnership and we are committed to investing in the Vagabond business, with the potential to open new wine bars across the UK when the right opportunities arise.”
9.09am: Public shake hands of rail workers on strike, says Aslef boss
Large areas of the UK are without rail services today as a fresh round of strikes takes place, with union members fighting for better pay.
Aslef members working for Avanti West Coast, CrossCountry, East Midlands Railway, West Midlands Railway and London Northwestern staged a walkout today and have taken up picket lines outside stations.
Mick Whelan, Aslef’s general secretary, said the public says the support for the workers has been “more than you might think”.
Members are scheduled to undergo a three-day walkout over the pay dispute.
Whelan said: “There isn’t a household in the country with someone in the public sector or private sector.
“We’ve had people shaking their hands, hooting their horns and waving at us. We haven’t had one disgruntled person come up to this line yet.”
8.48am: The morning so far
Stocks were down sharply in opening exchanges, with the FTSE 100 losing 80 points, bringing the index down to 7,902 at the time of writing.
It follows a bruising US session, when the Nasdaq 100 fell more than 1.5% after Federal Reserve chairman Jerome Powell made some hawkish comments about the prospect of interest rate cuts.
“Recent readings on both job gains and inflation have come in higher than expected,” said Powell, warning that interest rate cuts will only happen when policymakers “have greater confidence that inflation is moving sustainably down” to the Fed’s 2% goal.
The FTSE 100 wasn’t the only thing falling: According to the BDO High Street Tracker, total like-for-like (LFL) sales in the UK high street were down by 2.2% in the five weeks to 31 March compared to the same period last year, marking the sixth consecutive month of negative performance.
Today’s Halifax House Price Index, meanwhile, showed that house price inflation slowed more than expected in March.
The index rose by 0.3% year-on-year in the month, slowing sharply from a downwardly revised 1.6% growth the month before and undershooting forecasts of 1.45%.
“That a monthly fall should occur following five consecutive months of growth is not entirely unexpected, particularly in view of the reset the market has been going through since interest rates began to rise sharply in 2022,” said Halifax director Kim Kinnaird. “Despite this, house prices have shown surprising resilience in the face of significantly higher borrowing costs.”
On the company news front, Shell increased its production guidance in the first quarter, though cautioned on continued losses in the renewables segment.
8.34am: Why are stocks falling today?
The Federal Reserve made some hawkish comments overnight that may have spooked the London stock market.
“Recent readings on both job gains and inflation have come in higher than expected,” Powell said in a speech at the Stanford Graduate School of Business.
Powell warned that interest rate cuts will only happen when policymakers “have greater confidence that inflation is moving sustainably down” to the Fed’s 2% goal.
The markets had generally anticipated three rate cuts this year, but traders have become more sceptical in recent days.
Atlanta Fed president Raphael Bostic’s comments to CNBC this week likely haven’t helped. Rather than three cuts, “I think it will be appropriate for us to start moving down at the end of this year, the fourth quarter”, said Bostic.
The Nasdaq 100 closed 1.55% lower yesterday, preempting today’s 80-point fall to 7,895 for the FTSE 100.
8.10am: High street sales continue to plummet
The onset of spring did not translate into positive sales figures for the UK high street, despite a slight boost from Mother’s Day and Easter.
According to the BDO High Street Tracker, total like-for-like (LFL) sales were down by 2.2% in the five weeks to 31 March compared to the same period last year, marking the sixth consecutive month of negative performance.
Lifestyle sales showed resilience, likely buoyed by gift purchases around Mother’s Day, while Fashion and Homewares plummeted 3.2% and 10.9% respectively.
“Following the Spring Budget, it remains to be seen whether the changes to the National Minimum Wage and National Insurance bands result in increased consumer spending, however the latest consumer confidence data suggests consumers remain wary about the national economic outlook,” said BDO.
7.33am: House price inflation slows more than expected
Today’s Halifax House Price Index showed that house price inflation slowed more than expected in March.
The index rose by 0.3% year-on-year in the month, slowing sharply from a downwardly revised 1.6% growth the month before and undershooting forecasts of 1.45%.
Nicky Stevenson, managing director at national estate agent group Fine & Country, noted that the market may be shifting to the buyers’ side.
She said: “An increasingly busy property market helped to prop up prices on an annual basis at the beginning of spring, but the monthly fall shows there is still some turbulence.
“Buyers are in a strong position and vendors are more open to negotiation, which is bringing prices down in some areas.
“The market is proving to be resilient in the face of ongoing economic challenges, and February’s mortgage approvals reached their highest levels since September 2022 thanks to activity levels starting to bounce back. Demand has remained steady since, with a strong showing over the Easter bank holiday weekend.”
“There is currently a healthy balance between demand and the steady drumbeat of more properties coming onto the market.
“This is encouraging more people to market their properties as they can see they have somewhere to move to, unlike a couple of years ago where a chronic undersupply of homes became a barrier for potential sellers.”
7.25am: Shell provides first-quarter guidance
Shell forecasts its production to range between 960 to 1,000 thousand barrels of oil equivalent per day (kboe/d), with liquefied natural gas (LNG) liquefaction volumes expected to lie between 7.2 to 7.6 million tonnes (MT) in the first quarter.
The company anticipates underlying operating expenses to be between $1 billion and $1.2 billion, with adjusted EBITDA estimates of $1.2 billion to $1.6 billion.
The Renewables and Energy Solutions segment is expected to post between a loss of $100 million to a gain of $500 million.
7.20am: FTSE 100 to reverse Thursday gains
FTSE 100 futures suggest the blue-chip index will open a full 90 points lower when markets open today.
It follows a decent Thursday session with the FTSE 100 closing around 38 points higher at 7,975.
Despite futures pointing to losses, there are hopes the index can smash 8,000 to close off the week.
In company news, Shell has a first-quarter trading update due, while the Halifax House Price Index will also be out shortly.
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
