Hot Features
Premium
Trade smarter, not harder: Unleash your inner pro with our toolkit and live discussions.
London open: Stocks jump as uninspiring GDP raises rate cut hopes
London stocks rose in early trade on Wednesday as uninspiring UK GDP data raised hopes of a rate cut this summer.
At 0825 BST, the FTSE 100 was up 0.5% at 8,188.83.
Figures released earlier by the Office for National Statistics showed the economy stagnated in April, having just come out of a recession a month earlier. GDP was flat, in line with analysts’ expectations, following 0.4% growth in March.
The data showed that output in services grew 0.2% in April, the fourth consecutive monthly growth, and by 0.9% in the three months to April.
Output in production fell 0.9% following 0.2% growth in March, but was up 0.7% in the three months to April.
Meanwhile, construction output declined by 1.4% in April – the third consecutive monthly fall – and by 2.2% in the three-month period.
The manufacturing and construction sectors took a hit from wet weather. The ONS said overall rainfall in April was 155% of the long-term average according to the Met Office’s Monthly Climate Summary.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “With this hiccup in the recovery, growth set to remain sluggish this year and unemployment rising to 4.4% it may give Bank of England policymakers more confidence that demand is being squashed out of the economy.
“This keeps hopes alive for interest rate cuts this summer, and while June looks unlikely August is still a possibility.”
Looking ahead to the rest of the day, all eyes will be on the US CPI release at 1330 BST and the latest Federal Reserve interest rate decision at 1900 BST.
In equity markets, Rentokil surged to the top of the FTSE 100 on reports that activist investor Nelson Peltz’s Trian Management has taken a significant stake in the pest control company.
According to sources cited by Bloomberg, the investment firm is now among the top 10 shareholders in Rentokil, which owns Terminix in the US.
On the downside, Legal & General slumped after it announced a £200m share buyback as it set out plans to restructure the business into three core units and promised to increase shareholder returns.
“The strategy and targets set out today signal L&G’s ambition and commitment to invest to grow our business, and reward our shareholders for their support,” said chief executive António Simões.
The company said it intends to return more to shareholders over 2024 to 2027, with 5% dividend growth in 2024 followed by 2% growth per annum, in addition to further share repurchases.
Outside the FTSE 350, DFS slid as it warned on profits again, pointing to weaker demand and Red Sea disruption.
The sofa retailer now expects pre-tax profit of between £10m and £12m for FY24, down from previous guidance of £20m to £25m. DFS also cautioned there is an additional profit risk of up to £4m if Red Sea shipping delays continue through to its year end date.
Meanwhile, revenues are now expected to be between £995m and £1bn, down from previous guidance of £1bn to £1.02bn.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rentokil Initial Plc | +11.92% | +49.50 | 464.70 |
| 2 |  |
St. James’s Place Plc | +3.94% | +20.00 | 528.00 |
| 3 |  |
Standard Chartered Plc | +2.47% | +17.80 | 739.00 |
| 4 |  |
Marks And Spencer Group Plc | +1.75% | +5.20 | 301.80 |
| 5 |  |
Lloyds Banking Group Plc | +1.72% | +0.92 | 54.30 |
| 6 |  |
Hiscox Ltd | +1.61% | +18.00 | 1,133.00 |
| 7 |  |
3i Group Plc | +1.48% | +44.00 | 3,014.00 |
| 8 |  |
Informa Plc | +1.40% | +11.60 | 838.20 |
| 9 |  |
Bhp Group Limited | +1.35% | +30.00 | 2,256.00 |
| 10 |  |
Ferguson Plc | +1.31% | +205.00 | 15,855.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Legal & General Group Plc | -3.25% | -7.90 | 235.20 |
| 2 |  |
Ocado Group Plc | -1.51% | -5.30 | 346.00 |
| 3 |  |
Whitbread Plc | -0.57% | -17.00 | 2,965.00 |
| 4 |  |
Smurfit Kappa Group Plc | -0.56% | -20.00 | 3,570.00 |
| 5 |  |
Severn Trent Plc | -0.46% | -11.00 | 2,371.00 |
| 6 |  |
Auto Trader Group Plc | -0.44% | -3.60 | 810.60 |
| 7 |  |
Flutter Entertainment Plc | -0.41% | -60.00 | 14,415.00 |
| 8 |  |
Smith (ds) Plc | -0.34% | -1.20 | 354.80 |
| 9 |  |
Scottish Mortgage Investment Trust Plc | -0.31% | -2.80 | 889.40 |
| 10 |  |
Carnival Plc | -0.30% | -3.50 | 1,156.00 |
US close: Markets mixed ahead of FOMC and CPI, but Apple surges
US stocks finished in a mixed fashion on Tuesday with the Dow falling but the Nasdaq putting in decent gains, helped by a strong performance from tech heavyweight Apple.
The Dow finished 0.3% lower while the S&P 500 rose just 0.3% with investors scaling back their appetite for risk ahead of the conclusion of the Federal Open Market Committee meeting and crucial consumer price index (CPI) inflation data due out on Wednesday.
However, the Nasdaq jumped 0.9% after a 7% surge in the price of Apple as the market welcomed the company’s new AI system, Apple Intelligence.
“So much now hinges on where the CPI comes in,” said David Morrison, senior market analyst at Trade Nation. Economists expect headline annual inflation to remain unchanged at 3.4% in May. “If recent history is any guide, then there should be widespread relief even if CPI only matches expectations,” Morrison said.
As for the FOMC meeting, with no change in policy expected, all eyes will be on the Fed’s Summary of Economic Projections and the so-called ‘Dot Plot’ graph, which should give some visibility over the interest-rate outlook in the near term.
In economic news on Tuesday, the NFIB Small Business Optimism Index rose to 90.5 last month, up marginally from the 89.7 reading in April and ahead of the 89.8 consensus estimate. While this was the highest reading since December 2023, it was still the 29th straight month below the historical average level of 98, according to the NFIB. Meanwhile, the Uncertainty Index rose nine points to 85, its highest reading since November 2020.
Market movers
Apple’s share price surged after the launch of Apple Intelligence, new software that uses OpenAI technology to supercharge Apple devices with generative artificial intelligence. “We think Apple Intelligence is going to be indispensable to the products that already play such an integral role in our lives,” said CEO Tim Cook.
Banks and financial stocks were providing a big drag on the Dow, with American Express, JPMorgan Chase and Goldman Sachs among the worst performers.
Buy-now, pay-later service Affirm Holdings jumped 11% after the company said it would be embedding Apple Pay into its payment options.
General Motors gained despite lowering its forecasts for electric vehicle sales after the carmaker unveiled a $6bn share buyback programme.
Wednesday newspaper round-up: Entain, Invesco, Deltic Energy
The owner of South West Water has warned that global heating will increase the risk of outbreaks of the parasite that caused diarrhoea and vomiting in south Devon. Pennon Group said that “gradual and significant increasing average and high temperatures” could pose “risks to water quality and water treatment” – including the cryptosporidium parasite – in its annual report, published this week. – Guardian
Investors could seek more than £100m in compensation from the owner of Ladbrokes and Coral for failure to update them on issues with bribery and corruption at the group’s former Turkish operation. The planned action, led by the legal firm Fox Williams, follows Entain’s agreement to pay almost £600m – one of the largest financial penalties ever imposed in the UK – in a deal with HM Revenue and Customs finalised in December 2023 after an investigation into alleged bribery. – Guardian
An investment team formerly run by Neil Woodford is being disbanded amid flagging interest in London-listed shares. Invesco is to close its dedicated UK stock-picking unit and merge it with its European division from January. The teams are being merged as investor interest in British stocks wanes. Money in the Invesco UK Equity Income and High Income funds has shrunk to £6.86bn, compared to £33bn when Mr Woodfood oversaw them. – Telegraph
An oil and gas company run by a Labour campaigner has blamed “negative political rhetoric” for its decision to abandon work on one of the most significant discoveries in the North Sea. Deltic Energy on Tuesday blamed “deteriorating sentiment towards the oil and gas industry as a result of ongoing fiscal volatility and negative political rhetoric in the run-up to the July election” for its decision to walk away from the Pensacola field. – Telegraph
Banana firm Chiquita Brands has been ordered to pay $38.3m (£30m) to 16 family members of people killed by a right-wing paramilitary group it funded during Colombia’s long civil war. The decision by a federal jury in Florida marks the first time the company has been found liable in any of a number of similar lawsuits pending elsewhere in the US. – Sky News
