FTSE 100 Live: Interest rate expectations in focus at Jackson Hole, shares rally
A summit of central bankers gets underway today, with traders focused on the prospect of further big hikes in interest rates.
The annual Jackson Hole economic symposium takes place in Wyoming, where the main event will be Friday’s speech from Federal Reserve chairman Jerome Powell.
Markets appear to be pricing in a third successive 0.75% increase in US interest rates at next month’s meeting as Fed policymakers continue their inflation fight.
FTSE 100 Live Thursday
Markets higher amid focus on central bank guidance
Recruitment firm Hays reports strong activity levels
Building materials firm CRH ups dividend
Well-received earnings news helps FTSE make modest rise
15:17 , Michael Hunter
Robust-looking earnings news from the building products sector and gains for oil stocks helped London’s FTSE 100 make modest overall gains as housebuilders and retail stocks continued to fall on fears at the implications of rising interest rates.
The index added 6 points overall to 7478.67, a rise of 0.2%. CRH, the global building products group, topped the leaderboard with a gain of almost 4% after its half-year results. Persimmon, the developer, was the biggest single faller, down over 4%.
Investors across global markets will get clues on the outlook for rate rises in the US when the chairman of the Federal Reserve speaks at a gathering of central bankers at Jackson Hole, Wyoming. The speech has dominated sentiment for much of the week.
Wall Street ticks higher as corporate news breaks into wait for rate clues
14:44 , Michael Hunter
New York stocks picked up in opening trade, with investors looking through a run of corporate news ahead of remarks due tomorrow from the chairman of the Federal Reserve.
Jay Powell will speak at the Jackson Hole gathering of central bankers in Wyoming, in an event likely to shape the market’s impressions on the speed and extent of rate hikes in the US as policymakers fight inflation.
The S&P 500 gained 7 points to 4148.7, a gain of 0.2%. Tesla rose 0.9% after the electric car maker split its stock in a move designed to attract more retail investors. Amazon gained 0.4% after it announced plans to shut its over-the-internet healthcare business. Peloton, the maker of connected expercise equipment, tumbled 16% after it reported a quarterly loss of over $1 billion dollars.
Peloton shares look set for a wild ride after it reports a loss of over $1 billion
13:22 , Michael Hunter
Peloton’s stock is on course for another wild ride after the maker of internet-connected exercise bikes reported a quartely loss of over $1 billion dollars just a day after a sales pact with Amazon sent the shares up by over 20%.
They are now down by over 14% in pre-market trade in the run-up to Wall Street’s opening bell after it reported a loss of $1.24 billion for the three months to the end of June as the company embarks on a restructuring programme cutting the size of its retail chain and prioritising the sale of subsciptions to its online exercise classes. It lost $313 million in the same period a year ago.
The company, which enjoyed a sales boom during lockdowns, has stuggled since Covid restrictions were lifted, is raising prices again having cut them after pandemic.
Its chief executive, Barry McCarthy, said the connected fitness market will remain “challenging for the foreseeable future”, after shrinking by 51% in the year-to-date, with Peloton’s market share up 17%.
Cannabis products firm Love Hemp hit by trading suspension
12:55 , Simon Hunt
Cannabis-based products business Love Hemp has been slapped with a £100,000 fine and de-listed from alternative market Aquis Stock Exchange (AQSE) due to a fundraising issue.
The company backed by two-time world heavyweight champion boxer Anthony Joshua specialises in cannabis oil (CBD) and other hemp products, including edibles and capsules, and has now agreed to pay a reduced fee of £70,000 after falling foul of an AQSE investigation.
Love Hemp said it had completed a £2 million funding round despite certain participants in the fundraise delaying the settlement terms with the full amount of the proceeds of the funding drive unavailable to the company for “20 days following the announcement”.
CRH builds its earnings even as costs are ‘challenging and volatile’
12:26 , Simon Hunt
CRH, the global building materials giant, has pointed to a “challenging and volatile” environment for costs as inflation continues to hammer the building sector.
There were signs within its results for the six months to June 30 of the impact. Operating profit in its Europe West division fell year-on-year, where its precast concrete business grew sales but took a hit on profit from rising costs. In Europe East, CRH said it it was continuing to assist its staff in Ukraine
The global company said it was able to offset the overall impact of rising costs due to “a strong focus on commercial and operational initiatives” and reported a rise of over 2% in earnings of $2.2 billion, from sales of $15 billion, up 14%. Margins rose across the group and stayed flat in Europe while ongoing “backlogs” were still helping parts of its business.
CRH shares rose 3.5% in early trading this morning.
Amigo customer numbers halve in a year
11:58 , Simon Hunt
Sub-prime lender Amigo has witnessed its customer numbers half in just a year even facing the worst cost of living crisis in decades a key time for consumers to take out “non-traditional” loans.
The troubled group that has had run ins with the Financial Conduct Authority (FCA) that led to its self-imposed departure from the lending market two years ago has seen customer numbers dive by 48.3% from 118 million in the three months to the end of June last year to 61 million during the same period this year.
Revenue at the lender, now involved in a customer compensation scheme as a result of mis-selling complaints, also slid by almost 70% during the period from £10.4 million from £32.5 million last year.
Amigo shares dropped 9% in early trading this morning.
Morses Club sinks to £43m loss as claims surge from borrowers
11:34 , Simon Hunt
Doorstep lender Morses Club has posted a £43 million loss after being flooded with claims from borrowers over “unaffordable” lending.
The claims surge follows a clampdown by the Financial Conduct Authority on subprime lenders that it said do not treat customers fairly.
Earlier in August the company put a pause on processing claims to avoid “significant near-term liquidity issues”. The firm said its status as a viable business in the months ahead relied on a slowdown in the number of claims made.
Morses Club boss Gary Marshall said: “The last 12 months have been challenging for the company and we fully recognise the current challenges we as a group still face.”
Sony ramps up PS5 price amid increased cost pressures
10:59 , Simon Hunt
Sony is to raise the UK price of popular Christmas present, the PS5 games console, by £30 as it tackles increased costs.
The Tokyo-based company said its PS5 with Ultra HD Blu-ray disc drive would rise from £449.99 to £479.99 with immediate effect in the UK but will stay the same in the US.
In July, the company cut its profit forecast for its gaming unit by 16% which it blamed on a lack of new releases.
“We’re seeing high global inflation rates, as well as adverse currency trends, impacting consumers and creating pressure on many industries,” said Jim Ryan, president and CEO of Sony Interactive Entertainment.
CRH leads FTSE 100 higher as results impress
10:27 , Graeme Evans
CRH shares jumped 3% today as results from the building materials giant impressed in the face of cost and economic headwinds.
Dublin-based CRH, whose operations include aggregates, asphalt and cement, rose 92p to 3223p in the FTSE 100 index after its half-year results were boosted by strong pricing power and demand from public sector infrastructure projects.
Underlying earnings rose 21% to $2.2 billion (£1.9 billion), with the half-year dividend up 4% on the back of confidence for a higher full-year surplus of $5.5 billion (£4.6 billion).
CRH contributed to an improved mood for the London market after three days of losses. The FTSE 100 index rallied 50.30 points to 7521.81, with Glencore, BP and Antofagasta among stocks up more than 1%.
The gains came at the start of the Jackson Hole economic policy symposium in Wyoming, where traders will look for clues on how central bankers plan to tackle inflation without sending the global economy into a deep recession.
AJ Bell investment director Russ Mould said: “There’s a lot riding on US Federal Reserve chair Jerome Powell’s address tomorrow. Speculation is running so hot ahead of his remarks that it feels like even subtle variations in intonation could make a difference to jittery markets.”
Blue-chip fallers included asset manager Abrdn, whose latest decline of half a penny to 149.7p reinforces expectations that it will be relegated based on valuations in next week’s quarterly FTSE 100 reshuffle. Hikma Pharmaceuticals is also in danger, with wound care firm ConvaTec and F&C Investment Trust the most likely replacements.
War for talent in City says Hays
10:06 , Simon English
TTHE City of London jobs market is booming, defying wider economic gloom amidst what top recruiter Hays calls an “acute skill shortage”.
The headhunter today reported a 128% leap in profits for the year to June of £210 million. That allows it to pay dividends worth £168 million to investors with a possible £75 million of share buybacks this year to come on top of that.
Chief executive Alistair Cox told the Standard there is a war for talent: “London and the City are facing quite an acute skill shortage -- there are not enough talented people to go around.”
While he is mindful of wider economic insecurity, he said: “Right here, right now, activity levels are very good. We operate in the skilled labour market and despite what may happen with the economy, I can’t see those skill shortages going away.”
FTSE 100 rallies, Harbour Energy up 9%
08:51 , Graeme Evans
The FTSE 100 index has staged a bigger-than-expected rally, with the top flight up 50.59 points to 7522.10 thanks to gains of more than 2% for mining giants Glencore and Anglo American.
BP also contributed to the improvement as shares lifted another 8.4p to 461.35p after the Brent crude price rose to more than $102 a barrel. The leading blue-chip stock is now back where it was prior to the Covid-19 pandemic.
Irish building materials firm CRH topped the risers board, adding 154p to 3285p following a 29% rise in half-year profits.
The FTSE 250 index recovered some of its recent weakness by adding 57.17 points to 19,362.40, led by results-day gains for Harbour Energy and recruitment firm Hays.
Harbour, which was created in 2021 when Chrysaor merged with Premier Oil, increased its buyback programme to send shares 9% or 37.5p higher to 468p. Upbeat results from Hays meant its shares lifted 4.3p to 119.1p.
China boosts economy support, FTSE 100 seen higher
07:57 , Graeme Evans
The FTSE 100 index is set to break a three-day losing streak after Asian markets followed Wall Street’s lead by finding positive territory.
Sentiment was boosted by China’s announcement of a further 1 trillion yuan (£120 billion) of measures to enable its economy to recover from Covid disruption.
US markets were moderately higher on Wednesday, with the focus over the rest of this week on the Jackson Hole economic symposium and Federal Reserve chair Jerome Powell’s speech on Friday.
The 10-year US bond yield has risen this week to its highest level in nearly two months at 3.1%, reflecting expectations that the Fed will continue to aggressively tighten monetary policy.
In the UK, the equivalent figure is at its highest level since 2014 at 2.68% as traders price in a further half point rise in interest rates next month.
Deutsche Bank analyst Henry Allen said: “Given the US faces a more favourable situation on the energy side, the moves in central bank pricing weren’t as pronounced as in Europe yesterday.
“But the peak rate priced in by Fed funds futures for March 2023 still rose 3.5 basis points on the day as investors continued to adjust their policy expectations closer towards the more hawkish rhetoric from Fed officials.”
Futures markets are pointing to a flat start on Wall Street later, while CMC Markets has forecast that the FTSE 100 index will open 18 points higher at 7489.
