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FTSE 100 Live: Index closes ahead as interest rate expectations ease, pound below $1.25

 (Evening Standard)
(Evening Standard)

The FTSE 100 is sllightly higher today, despite losing more than 30 points upon opening.

Melrose has been among the big winners after a pivot to focus on being a pure-play aviation business.

Elsewhere, the UK’s average house price fell by 1.9% in August, the largest monthly fall recorded by lender Halifax since November.

FTSE 100 Live Thursday

  • House prices post big August fall

  • Currys reveals UK sales decline

  • Jet2 takes £13m disruption hit

Closing markets snapshot

16:41 , Daniel O'Boyle

Take a look at our end-of-day mark

et data.

FTSE closes at 7,441.72

16:37 , Daniel O'Boyle

The FTSE 100 closed at 7,441.72 today, up 0.2% despite an early-morning fall.

Aerospace firms Melrose and Rolls-Royce were the two top risers, while Smurfit Kappa, which appears set to be bought by a US firm, was the biggest faller.

Average easy access savings rate at highest since November 2008

16:27 , Daniel O'Boyle

Typical rates being offered on easy access savings accounts are at their highest in nearly 15 years, according to a financial information website.

The average easy access savings rate on the market surpassed 3% this week, climbing from 2.99% on Tuesday to 3.01% on Wednesday and then to 3.02%, according to Moneyfactscompare.co.uk.

Typical easy access rates are at their highest since November 2008, on a first day of the month basis, Moneyfacts said.

Read more here

NatWest cuts mortgage interest rates for second time in four days

15:59 , Daniel O'Boyle

NatWest has cut its mortgage rates for the second time in just four days, after comments from the Governor of the Bank of England suggested the peak of interest rates could be within sight.

NatWest had already lowered interest this week, announcing a range of cuts on Monday.However, it is now bringing in further, though smaller, reductions for new customers and switcher deals.

Justin Moy, managing director at Essex-based EHF Mortgages, said: “Just a few days since their last repricing, this is evidence that the rate chase is well underway.

Read more here

City Comment: Ministers must ditch their anti-London mindset and back ‘roadmap’ for City growth

15:27 , Daniel O'Boyle

It is fair to say the City is not in a golden era right now. Fundraising and deal-making are sharply down, overseas rivals are raising their game.

Post the twin shocks of Brexit and the pandemic, the Square Mile has simply not recaptured its swagger of old. There is a sense of drift.

Some of this is cyclical, but given the City’s huge role in the London and national economy it is a cause for concern. Today the City of London Corporation unveils its “roadmap for prosperity” blueprint for getting the City firing on all cylinders again.

Read more here

Nasdaq loses more than 1%

14:51 , Daniel O'Boyle

The Nasdaq has fallen sharply this morning in New York, with Apple among the big fallers after China expanded its ban on state employees using its products.

Take a look at our US market snapshot.

Michael O’Leary hit with pie

14:40 , Daniel O'Boyle

Eco activists have hit Ryanair boss Michael O’Leary with cream pies outside the European Commission’s headquarters in Brussels.

The incident happened on Thursday morning as Mr O’Leary was preparing to hand in a petition.

He was approached by two women who hit him in the face and back of the head with cream pies before walking off.

Read more here

Playtech boss hits out at listed rivals for ‘black market’ gambling

14:35 , Daniel O'Boyle

The boss of gambling tech provider Playtech slammed highly valued rivals listed outside of London, accusing them of doing business in “black markets”.

Mor Weizer told the Standard it was “frustrating” to be compared to listed firms that have seen a boom in their revenues and share price, but do business in countries where online gambling is illegal.

“Other suppliers are very significant in grey markets or black markets,” he said. “It is less helpful when they operate in black markets and use that money to penetrate regulated markets. We know some that operate in sanctioned markets, countries on the US sanctions list.”

Read more here

Finance bosses doubt Bank of England, saying inflation will still be too high in 2026

13:56 , Daniel O'Boyle

Finance bosses still have little faith in the Bank of England’s ability to get inflation under control, as Bank’s the latest survey of decision makers shows they believe the consumer price index will still be above-target in August 2026.

The Bank of England’s monthly decision-maker panel survey was conducted in early-to-mid August, after the ONS reported a sharper-than-expected fall in the rate of prices in June, which had been the first significant positive surprise since inflation peaked last year.

Business leaders’ one-year-out expectations of inflation improved, to 4.8%, but were still well above the Bank’s own projections that the rate will be below 3% at that time.

Read more here

Market snapshot as pound falls

13:16 , Daniel O'Boyle

The pound is below $1.25 for the first time in almsot three months.

Take a look at our full market snapshot.

UK vet sector under review amid worries over costs and competition

12:14 , Daniel O'Boyle

Britain’s £2 billion veterinary industry is being scrutinised by the competition watchdog amid concerns that pet owners are not getting value for money and that the cost of care has soared faster than inflation.

The Competition and Markets Authority (CMA) is launching a review of the sector, looking at consumer experiences and vet business practices for household pets in the UK.

It is worried that pet owners are not given easy access to information about pricing and treatment options when deciding which vet to use and which services to buy.

Read more here

Aldi sets out plans to open 500 new stores amid ‘huge demand’ for discount supermarkets

11:33 , Daniel O'Boyle

Aldi has set out plans to open 500 more shops across the country, after opening its 1000th UK store today in Woking.

The discount supermarket said it has seen demand grow as shoppers turn to lower-priced options amid the cost-of-living crisis. According to market research firm Kantar, Aldi is the fastest-growing supermarket in the UK, the fourth-largest by market share. Fellow discounter Lidl has also seen its market share rise.

Aldi UK and Ireland CEO Giles Hurley, said: “Opening our 1,000th store is a huge milestone and wouldn’t have been possible without the hard work and dedication of our 40,000 incredible colleagues.

“Our popularity is growing, and there is huge demand for people to have an Aldi store near to them to increase shoppers’ access to our unbeatable prices.”

Read more here

Pets at Home shares hit by CMA review, FTSE 100 rallies

10:38 , Graeme Evans

Shares in Pets at Home and CVS Group fell sharply today after a watchdog launched a review of the £2 billion market for vet services.

The Competition and Markets Authority (CMA) will look at pricing, how prescriptions and medication are sold and the ownership of vets practices following recent consolidation.

It said the percentage of independent practices had fallen to 45% by 2021, compared with 89% in 2013. Almost two-thirds of households in the UK own a pet, a number that surged during the Covid-19 pandemic.

Today’s announcement by the CMA, which will update on its progress by early next year, sent Pets at Home down by 11% or 40.2p to 338.4p in the FTSE 250.

The company generated £123 million in revenues from its Vet Group business during the year to the end of March, a rise of 13% on a year earlier and resulting in underlying profits for the division of £50.9 million.

Shares in the £1.5 billion-valued CVS Group, which has over 500 veterinary surgeries in four countries, slumped by 29% or 598p to 1488p.

AJ Bell investment director Russ Mould said: “The problem for both businesses is the process is likely to be time-consuming and, with a further update not due until early 2024, it could weigh on both stocks for some time to come.”

Other stocks under pressure today included the speciality chemicals firm Synthomer, which dived 30% or 17.8p to 43p after announcing plans to tap shareholders for £276 million in a discounted rights issue aimed at bringing down debt levels.

The wider London market struggled for momentum amid ongoing uncertainty over whether global interest rates are at their peak. The FTSE 100 index fell for a fourth session in a row although it recouped initial losses to stand 21.68 points higher at 7447.82.

London Stock Exchange dropped 126p to 8138p after the former owners of the company’s data business Refinitiv last night reduced their stakes at a price of 7950p.

Smurfit Kappa shares fell 70p to 3148p after yesterday’s merger deal with US-listed WestRock but rival paper and packaging group Mondi rose 12p to 1308p.

Jet2: Nats crisis and Greek fires cost us £13m

10:25 , Daniel O'Boyle

Package holiday operator Jet2 said the disruption caused by wildfires on Rhodes and the UK air traffic control shutdown will cost it around £13 million.

However, it also said it has seen strong bookings in July, August and September and is on track to reach market profit expectations of between £480 and £520 million.

Winter 2023/24 forward bookings are described as “encouraging” with average load factors 0.3 percentage points ahead of those of the 2022/23 season at the same point.

Summer 2024 is on sale with average load factors “slightly ahead of summer 2023 at the same point.”

Holiday group Jet2 has revealed a hit of around £13 million from ‘significant’ disruption caused by the recent air traffic control (ATC) failure and wildfires across popular destination Rhodes (Nicholas T Ansell/PA) (PA Wire)
Holiday group Jet2 has revealed a hit of around £13 million from ‘significant’ disruption caused by the recent air traffic control (ATC) failure and wildfires across popular destination Rhodes (Nicholas T Ansell/PA) (PA Wire)

Market snapshot as FTSE 100 recovers

10:18 , Daniel O'Boyle

The FTSE 100 bounced back after an initial decline, and is now up slightly for the day, with Melrose leading the way.

Take a look at all our key market data.

Lucky Strike maker BAT signs deal to sell Russian business after 18 months

10:05 , Daniel O'Boyle

Lucky Strike cigarette maker British American Tobacco (BAT) has signed a deal to withdraw from Russia, 561 days after the country launched its full-scale invasion of Ukraine.

The company, which also makes Dunhill, Kent and Pall Mall, said it has “entered into an agreement to sell its Russian and Belarusian business”, adding that the deal complies with both local and international laws.

It promised to not receive any “financial gain from ongoing sales in these markets”.

Read more here

Funding Circle sees slowdown in demand as interest rates soar

09:16 , Simon Hunt

British small business lender Funding Circle today bemoaned high interest rates and sluggish economic growth as it swung to a loss.

The London-based firm reported a 15% drop in its loan book to £3.5 billion in the first six months of the year, driven by the repayment of loans taken out by small businesses under the Government’s post-Covid Recovery Loan Scheme, while pre-tax losses came in at £16.6 million down from a £1.6 million profit the year before.

Loan originations slipped 27% in the UK, while its US arm showed signs of growth over the same period. That was in-part offset by growth in uptake of its new line of credit product, FlexiPay.

Funding Circle said the “UK economic recovery has been slower than we anticipated” as “Bank of England base rate increases…have raised the cost of borrowing for SMEs.”

CEO Lisa Jacobs told the Standard: “We are seeing a difference in demand where businesses are putting off investment decisions and instead focusing on shorter-term capital.

“Given all the volatility there’s been it’s been a challenge for small businesses to have foresight. I do expect that as there is more certainty in the economy businesses will make more long-term investment decisions that they are today.”

Funding Circle shares fell 1.7% to 40p.

Melrose shares jump on profit lift-off

08:47 , Simon English

MELROSE today set out plans to turn the screws on arch rival Rolls Royce as it forecast annual profits of £1 billion amidst an aerospace boom.

With customers playing catch up after Covid and new orders flying in, analysts think the aerospace trade is set for a prolonged boom.

Melrose, no longer an aggressive dealmaker, will focus entirely on its aerospace arm.

That means CEO Simon Peckham and CFO Geoffrey Martin will stand down next year, to be replaced by insiders Peter Dilnot and Matthew Gregory.

In the half-year Melrose saw revenue up 19% at £1.63 billion, while profits jumped from £9 million to £134 million.

It plans to buy back a large chunk of shares and will start in October, earlier than previously guided.

Peckham, after 20 years at Melrose, said: “There will be a big uplift in the aerospace cycle, there is a huge backlog of orders.”

Profit this year will be as high as £385 million with an expectation in the longer run to hit annual profits of £1 billion. That should take three years and puts it in line for a scrap with Rolls Royce, for whom it already makes some engine parts.

If it hits those profit goals, the business could be worth £10 billion. Today the shares jumped 39p to 548p, which values the company at £7.4 billion.

read more here

Melrose shares jump after upgrade, Pets at Home down 12%

08:45 , Graeme Evans

Melrose Industries is the leading riser in the FTSE 100 index after the GKN aerospace business sweetened its full-year profits guidance and brought forward the launch of a share buyback programme to next month.

The stock rose 7% or 34.6p to 543.6p, with other industrial beneficiaries including Weir, Rolls-Royce and BAE Systems.

The paper and packaging group Mondi lifted 33.5p to 1329.5p on hopes of further industry consolidation after last night’s announcement of a tie-up between Smurfit Kappa and US-listed WestRock.

Smurfit shares fell 84p to 3134p, while London Stock Exchange dropped 190p to 8074p after the former owners of data business Refinitiv sold more shares.

The FTSE 100 index stood 34.27 points lower at 7391.87 and the FTSE 250 index weakened 90.89 points to 18,360.93.

Direct Line shares surged 17% after its results, but Pets at Home slumped 12% or 46p to 332.6p after the Competition and Markets Authority announced a review into veterinary services.

Currys shows Nordic progress, but UK in decline

08:18 , Daniel O'Boyle

Currys showed slow sings of progress towards getting its struggling Nordics business back on track today, but a fall in computer sales hit its core UK arm.

The fridges-to-phones retail giant said trends in the Nordics region had “improved slightly” in the 17 weeks to 26 August. However, the environment “remains challenging”.

But in the UK, sales were down 2% due to  “weakness” in its computing division.

"Our priorities this year are simple: to keep the UK&I’s encouraging momentum going, and to get the Nordics back on track,” CEO Alex Baldock said. “We’re making good progress on both, in what continues to be a challenging economic environment.

“We remain confident that we’re building a stronger business that’s resilient today and fit to prosper in the longer term."

Shares were flat at 48.7p.

Direct Line in £520 million sale of commercial insurance as half-year loss rises

08:01 , Michael Hunter

Direct Line announced the sale of its commercial insurance brokerage today as the beleaguered  FTSE 250 company reported a widening first-half loss.

It said the £520 million sale would help it “restore the resilience of its capital position” and provide “a platform for improved performance.” The buyer is RSA Insurance, a subsidiary of Intact Financial.

News of the sale came as Direct Line reported a pre-tax loss of £76.3 million, up from £11.1 million in the same period a year ago.

Last month it appointed a new CEO, Adam Winslow, as the permanent replacement for Penny James, who left suddenly in January two weeks after it issued a profit warning and scrapped its dividend.

Earlier this month it pledged to pay back around £30 million to customers it overcharged after the City watchdog banned insurers from charging more for renewals than new policies.

Lloyd’s of London returns to profit with ‘bulletproof’ balance sheet

07:47 , Michael Hunter

Lloyd’s of London, the world’s largest insurance exchange, moved back into profit today, helped by a rise of over a fifth in gross written premiums.

The 21.9% rise in new insurance business of £29.3 billion in the first half of 2023 helped it return to profit before tax, of £3.9 billion, up from a loss of £1.8 billion in the same period a year ago.

Its CEO, John Neal, described Lloyd’s balance sheet as “bulletproof’, adding it “means we can support customers through a range of shocks and scenarios”.

Its total capital ticked up to £40.8 billion from £40.2 billion.

FTSE 100 seen lower, oil above $90 a barrel

07:35 , Graeme Evans

The poor run for the FTSE 100 index is set to continue as investors worry about slowing economic activity and the prospect of elevated oil prices contributing to interest rates staying higher for longer.

London’s top flight is forecast by CMC Markets to open 18 points lower at 7408, having posted three successive sessions in negative territory during this week.

The latest downbeat performance follows falls for Wall Street benchmarks as the S&P 500 index lost 0.7% and the Nasdaq declined by 1%.

Brent Crude is 0.5% lower this morning but still above $90 a barrel after rallying above the threshold yesterday. The pound is just below $1.25 after Bank of England governor Andrew Bailey yesterday signalled that interest rates may be near their peak.

House prices in steepest drop since November

07:27 , Graeme Evans

The UK’s average house price fell by 1.9% in August, the steepest drop since November as the property market feels the heat from Bank of England interest rate rises.

The average home recorded by lender Halifax now costs £279,569, down by around £5,000 since July, and back to the level seen at the start of last year. On an annual basis prices fell by 4.6%, from 2.5% in July and the biggest year-on-year decrease since 2009 amid comparisons with the record-high property prices seen last summer.

Halifax Mortgages director Kim Kinnaird said: “It’s fair to say that house prices have proven more resilient than expected so far this year, despite higher interest rates weighing on buyer demand.

“However, there is always a lag-effect where rate increases are concerned, and we may now be seeing a greater impact from higher mortgage costs flowing through to house prices.

“Increased volatility month-to-month is also to be expected when activity levels are lower, though overall the pace of decline remains in line with our outlook for the year as a whole.”

London had an average property price of £529,814, down by 4.1% over the last year. Southern England and Wales have seen the most downward pressure on property prices, withScotland showing greater resilience.