FTSE 100 Live 27 March: Index closes at 12-month high, Bank of England warns of 'sharp correction'
M&A activity fuelled trading interest today as Diploma and DS Smith surged to the top of the FTSE 100.
Industrial products firm Diploma jumped more than 10% to a fresh record following its deal to buy a US-based aerospace fasteners firm.
The prospect of a bidding war also lifted Mondi merger partner DS Smith after International Paper tabled an approach worth £5.7 billion.
FTSE 100 Live Wednesday
Diploma and DS Smith get M&A boost
Ad market still in mire says Sorrell's S4
Travis Perkins CEO steps down
FTSE 100 closes at 7931.98 in another 12-month high
16:38 , Daniel O'Boyle
The FTSE 100 closed at a 12-month high again - and again by an ultra-thin margin - after an afternoon rally.
Today’s closing figure of 7931.98 is a little over one point ahead of yesterday’s 12-month high.
With Easter approaching, the index is within 100 points of an all-time high.
M&A activity put Diploma and DS Smith at the top of the risers board.
Flutter Entertainment led the fallers.
'We want to create an alternative to big corporate AI' says Fetch.ai boss after $7.5 billion crypto merger unveiled
16:34 , Daniel O'Boyle
The boss of tech firm Fetch.AI as unveiled plans to merge three crypto tokens into one in a deal which could value the combined token at as much as $7.5 billion.
SingularityNET, FET operator Fetch.ai and Ocean Protocol today reached the agreement which is aimed at helping them build a decentralized AI platform.
Under the terms of the deal, the three entities would continue to act as standalone businesses while the combined token, to be known as ‘ASI’, would allow greater interoperability between different services. The three firms have undertaken to cooperate under a ‘Superintelligence Collective’ umbrella run by SingularityNET founder Ben Goertzel, with Fetch.ai CEO Humayun Sheikh, who led the deal, serving as chairman.
Market snapshot: Shares recover, Flutter slides
15:26 , Daniel O'Boyle
The FTSE 100 has recovered and is once again close to a 12-month high, still led by two takeover targets.
On the fallers board, Flutter shares are down 7% after rising yesterday
Ofgem approves £3.4bn package for Scotland to England electricity cable
15:06 , Daniel O'Boyle
A project which will bring enough clean Scottish electricity to England to power around two million homes has been given the go-ahead from Ofgem for a £3.4 billion funding package.
The high voltage power cable – billed as an “electricity superhighway” – will connect Peterhead in Aberdeenshire to Drax in North Yorkshire when it is completed in 2029.
It is part of the efforts needed to ensure that not only are wind farms built but they are also connected to the towns and cities which need their electricity.
Market snapshot as FTSE slides
13:45 , Daniel O'Boyle
Take a look at the latest market snapshot as the FTSE 100 struggles
Financial traders found guilty of rate-rigging have appeal bids rejected
13:15 , Daniel O'Boyle
Two former financial market traders convicted of interest rate benchmark manipulation have had bids to clear their names rejected by the Court of Appeal.
Tom Hayes, 44, a former Citigroup and UBS trader, was found guilty of multiple counts of conspiracy to defraud over manipulating the London Inter-Bank Offered Rate (Libor) between 2006 and 2010.
His case, alongside that of another similarly jailed trader, Carlo Palombo, 45, were referred to the court by the Criminal Cases Review Commission (CCRC), which investigates potential miscarriages of justice.
The Standard View: London’s stock market is struggling — and it must win back investors
12:50 , Daniel O'Boyle
London’s stock market is struggling, and it is not merely a blip. Investors are increasingly pulling their money out of the UK in search of better returns in the United States. As a result, new flotations — that is, companies raising funds to join the London Stock Exchange (LSE) — have all but collapsed.
The numbers are stark. While new listings raised £12 billion on the LSE in 2021, that fell to £338 million in 2022 — and so far this year the figure is a paltry £18.5 million. And that is just new business. Small investors have actively pulled £25 billion from the stock market over the past two years.
Meanwhile, big-name London-listed companies such as Paddy Power owner Flutter are an example of those moving their stock listing to the US. There are even whispers that a corporate giant on the scale of Shell could leave the capital, which would transform a torpor into a full-blown crisis.
Morrisons boss says ‘customers are beginning to notice’ improvements as sales rise
12:47 , Daniel O'Boyle
The boss of Morrisons said “customers are beginning to notice” the supermarket getting better, as sales edged up to nearly £4 billion in the first three months of the year.
Like-for-like sales excluding fuel grew by 4.6% at £3.9 billion, roughly in line with grocery inflation. It’s the fastest growth for the retailer in three years, after its market share declined in the face of competition from discounters Lidl and Aldi.
CEO Rami Baitiéh, who joined in November, said: “Availability, waste, newness, innovation, speed and accuracy are all on an improving trend and our customers are beginning to notice.” He noted that complaints have plunged, down 60% over the last 20 weeks.
Fears over ‘uninvestable’ London stock market as more firms tipped to leave City
11:40 , Daniel O'Boyle
A warning over an exodus of major companies from the London stock market was sounded today as investors pull money out of Britain in search of better returns in the United States.
A huge gap in the value of similar companies in London and New York is putting pressure on chief executives to switch their listing in moves that could be devastating to the capital’s status as a global financial centre.
There is growing talk that a giant such as Shell could quit London, turning stock market strife into a full City crisis. Figures compiled for the Evening Standard show the market for new flotations — companies raising money to join the London Stock Exchange — has collapsed.
Read our special report on the crisis in the City here
Economy faces growing risks from global financial markets, Bank warns
11:25 , Daniel O'Boyle
The UK economy is facing heightened risks from vulnerabilities in global financial markets amid rising political tensions and higher interest rates, the Bank of England has said.
But households and businesses have remained resilient despite cost-of-living pressures.
The Bank’s Financial Policy Committee (FPC) found some risks to financial stability globally have increased since it last met in December.
Bank of England warns of 'sharp correction' in asset prices
10:45 , Daniel O'Boyle
The Bank of England has warned of the risk of a “sharp correction” in asset prices, in its latest financial stability report.
The central Bank said: “Investors in financial markets expect the economy to continue to recover and inflation to fall. They are putting less weight on risks that might cause weaker growth or interest rates to stay higher than expected.
“As a result, the prices of many assets such as shares and bonds have gone up. Their value appears to be high relative to historical norms, in the context of risks to the economic outlook. That means there is a greater risk of a sharp fall in asset prices, which could ultimately make it more costly and difficult for UK households and businesses to borrow.”
It also warned that falling commercial property prices could hit investor confidence.
It said: “The economic outlook for the UK has improved somewhat since our Financial Stability Report in December. But some risks to the stability of the UK financial system have increased. And parts of the global financial system remain vulnerable to stress.”
But it also noted that the UK banking system is “strong enough to support households and businesses, even if the economy does worse than expected. “.
Diploma US deal boosts shares, DS Smith higher on bid approach
10:19 , Graeme Evans
Deal-making Diploma soared in value today as the FTSE 100 industrial products firm reversed the trend of London stocks as US takeover targets.
The £236 million swoop for New York-based Peerless extends Diploma’s capabilities in the $7 billion aerospace fasteners market.
Investors backed today’s deal, having seen the London company deliver strong growth from the £1 billion spent on 37 businesses over the past five years.
Diploma’s shares, which have doubled since 2020 and entered the FTSE 100 index last year, jumped 11% or 384p to a fresh record of 3810p.
Its move came as shares in packaging firm DS Smith surged on takeover interest from US-based International Paper.
The UK stock, which recently agreed a merger with Mondi, jumped 24.7p to 384.5p on the all-share approach worth 415p a share or £5.7 billion.
The M&A activity failed to prevent the FTSE 100 falling 22.08 points to 7908.88, with BP and Shell among those under pressure.
Sainsbury’s moved the other way, up 3% or 8.5p to 271p after UBS switched to a “Buy” stance with a 295p target.
The FTSE 250 fell 52.82 points to 19,724.82 but Ithaca Energy rallied 4p to 146.2p after it expanded its UK oil and gas portfolio through a deal with Italy’s Eni.
Ad market still in the mire warns S4 Capital boss Sir Martin Sorrell
10:00 , Daniel O'Boyle
Advertising guru Sir Martin Sorrell admitted today to a “difficult” year due to recession fears and higher interest rates as his S4 Capital made a loss of £6 million.
While that was better than last year’s loss of £160 million, it is still indicative of wider strife in the ad market as big tech companies pull back on spending.
Sales for the year to December fell 5.4% to just over £1 billion and there have been more than 1000 job cuts.
Biotech firm C4X becomes latest to quit London stock market
09:40 , Simon Hunt
Biotech firm C4X today became the latest business to abandon the London stock market after is said its future growth would be better secured through private investment.
The Manchester-based business, which has been listed on the AIM market for nearly a decade and in 2022 signed a deal with AstraZeneca worth up to $400 million, said its stock price was not rising commensurate with its business successes.
It said that raising funds on the public markets “would be challenging” and “may not be at a valuation that is acceptable to shareholders or at all.”
C4X CEO Dr Clive Dix told the Standard: “Everywhere I look the private companies are more valuable than the public ones.”
Ad market still in strife warns S4 Capital
09:29 , Simon English
Advertising guru Sir Martin Sorrell admitted today to a “difficult” year due to recession fears and higher interest rates as his S4 Capital made a loss of £6 million.
While that was better than last year’s loss of £160 million, it is still indicative of wider strife in the ad market as big tech companies pull back on spending.
Sales for the year to December fell 5.4% to just over £1 billion and there have been more than 1000 job cuts.
Sorrell, who built up and then left ad giant WPP in acrimonious circumstances, thinks there are some signs of recovery in the ad market in what should be a strong year given elections on both sides of the Atlantic.
The shares slid 6p, 13%, to 38p which leaves the business valued at £222 million. A year ago the shares were 176p when S4 was looking like becoming a plausible competitor to WPP.
A report in the US said S4 had received a takeover bid from American rival Stagwell and from private equity.
Sir Martin dismissed this talk today saying “we received nothing credible” and “we control our own destiny”.
That destiny includes a board shake-up and a new chief operating officer in Jean-Benoit Berty, a former partner at EY.
Sorrell added: “After our first four strong net revenue growth years, we had a difficult 2023 reflecting challenging global macroeconomic conditions, fears of recession and high interest rates.” Berty’s “extensive management consulting experience will be of great value in focusing on the opportunities and challenges we face.”
A fall in interest rates due this year ought to encourage higher spending by clients, but S4 is more cautious than rivals about that. Both WPP and Publicis think revenues will rise this year.
S4 says clients are taking a short-term attitude to 'larger transformation projects', leading to spending cuts.
Asos, Asda and Boohoo sign agreement after greenwashing concerns
09:19 , Daniel O'Boyle
Asda, Asos and Boohoo have all promised to ensure customers are given accurate information about how environmentally friendly their clothes are after a 20-month probe by a regulator.
The Competition and Markets Authority (CMA) said that it had secured agreements from the three firms, which commits them to informing their customers properly in the future.
It started an investigation into potential greenwashing at the firms in the summer of 2022, saying it was worried that some clothes in the companies’ ranges did in fact not meet green criteria.
Market snapshot: FTSE 100 lower
08:48 , Daniel O'Boyle
Take a look at our latest market snapshot as the FTSE 100 retreats
DS Smith and Diploma lead FTSE 100, oil stocks lower
08:28 , Graeme Evans
DS Smith shares are 7% higher after it emerged last night that the FTSE 100 listed packaging firm is in the sights of US-based International Paper.
The UK company, which recently agreed a merger with Mondi, rose 26.2p to 386p following the all-share takeover proposal at 415p a share or £5.7 billion.
The FTSE 100 was led by seals, controls and life sciences business Diploma after it announced the acquisition of Peerless Aerospace Fastener for £236 million. Shares jumped 12% or 398p to 3824p.
Despite the M&A, London’s top flight fell 12.67 points to 7918.29. The fallers included BP and Shell after the Brent Crude price retreated to $85.34 a barrel.
The FTSE 250 index dipped 18.82 points to 19,758.82.
In the FTSE All-Share, shares in CMC Markets jumped 18.5p to 206.5p on the back of an encouraging trading update.
H&M profits up despite lower sales
07:55 , Daniel O'Boyle
Profits at Swedish fashion giant H&M grew in the first quarter of the year despite sales dipping, as it hailed a new cost and efficiency programme.
The retailer’s operating profits came to SEK2,077 (£155 million), even though sales were slightly lower at SEK53,699. The group reduced its footprint by 76 stores compared to a year earlier.
CEO Daniel Ervér said: “Through continued cost control, better precision in our collections and close cooperation with our suppliers, we now stand better equipped.”
Playtech says biggest client has failed to pay
07:42 , Daniel O'Boyle
Gambling software firm Playtech says its biggest client, Mexican bookie Caliplay, has refused to pay for its services amid a long-running legal dispute.
Playtech says that €122 million in fees from 2023 and 2024 are outstanding. Playtech still included the figure in its revenue and profit as it said it was “highly probable” it would be able to collect the money.
Caliplay and Playtech have been involved in a long-running legal battle as the Mexican firm aimed to get out of its contract.
Profits for 2023, which include the money that wasn’t paid, soared to €235.8 million as revenue grew to €1.7 billion.
CEO Mor Weizer said: “We remain very confident in our ability to execute our strategy and to continue delivering value for our shareholders."
Travis Perkins boss to go
07:37 , Michael Hunter
Travis Perkins, the UK’s biggest builders’ merchants chain, announced the departure of its chief executive this morning.
Nick Roberts has run the 700-outlet firm for five years.
The FTSE 250 firm, which is also behind the Toolstation brand, has issued a string of profit warnings over recent months.
It met reduced its guidance for 2023 in numbers also today, reporting annual profit of £180 million.
Forecasts for the year were cut in October from £240 million to a range between £175 million and £195 million.
Jasmine Whitbread, Travis; chair, said: “The board fully recognises the under performance of the business over recent reporting periods, in the context of continued economic challenges and end market weakness.”
The company statement said “the board and Nick are aligned that now is the right time to search for a new leader to take the business forward”.
Travis has been hit by what Roberts called “weakness in the new build housing and domestic repair, maintenance and improvement sectors, and compounded by deflationary pressures on commodity products.
Roberts will stay on while a successor is found and said: “I will continue to rigorously execute on our plan and drive performance” in the meantime.”
FTSE 100 seen flat after US reverse, Brent Crude price slips
07:15 , Graeme Evans
High-flying Nvidia shares last night closed 3% lower and other Magnificent Seven stocks also lost ground as the US market experienced a late reverse.
The S&P 500 index finished down by 0.3% and the Nasdaq Composite fell 0,4%, having been in positive territory up until the final hour of trading.
The selling means IG Index expects a flat start to London’s session after the FTSE 100 index yesterday closed 0.2% higher at a 12-month high of 7930.
Asia markets have been mixed, with the Hang Seng index down 1% but Tokyo’s Nikkei 225 up 0.9% after the yen fell to a fresh 34-year low.
Brent Crude futures, meanwhile, retreated 1% this morning to $85.39 a barrel after figures yesterday showed a big rise in US crude oil stockpiles.
Recap: Yesterday's top stories
06:45 , Simon Hunt
Good morning from the Standard City desk.
In September 2008 Lloyds Bank bought HBOS, the mess that was left from what was once Halifax Building Society.
As one City analyst at the time put it: You know what you get when you merge ice-cream with horse-manure? Horse-manure.
Virgin Money is basically the old Northern Rock, which some other bits lobbed on.
Nationwide’s plan is to operate the building society and VM separately for four years, then begin an integration that shall be pure torture for those involved (that isn’t their description of the process. Yet.)
Eventually, most VM customers become Nationwide members. In theory.
All of this looks like an unnecessary risk for Nationwide CEO Debbie Crosbie to take. When Lloyds bought HBOS, there was government encouragement to do so.
Nationwide has reported record results and benefits to members, despite a sluggish housing market.
Crosbie was under no pressure to do what she has just done. And we won’t really know whether it worked or not for years.
She makes the point that the ratings agencies – Moody’s and the like – think this is a good deal because it is acquiring assets at a low multiple of earnings.
But for them Nationwide is now just a customer to be flattered. When it came to predicting the financial crash of 2008, the ratings lot had no clue.
This could be a total disaster for Nationwide, perhaps our most important financial institution after the Bank of England. I sincerely hope I am wrong.
Here’s a summary of our top stories from yesterday:
Grocery inflation falls to two year low of 4.5% with Ocado emerging as the big winner as the cost of living crisis eases with sales growth of 9.5%, three times faster than Aldi
Cocoa futures on course to hit $10,000 per tonne for first time ever - just in time for Easter/ Closed at $9,649 last night.
William Hill owner 888 makes £121 million loss after interest charges balloon to almost £200 million. Changes name to “Evoke” ...while Paddy Power and Betfair owner Flutter makes $1.2 billion loss after writing down the value of its Pokerstars arm. will move its primary listing from London to new York on May 31.
Revolution Bars seeks emergency funding as late night drinking continues to decline
And...why digital government is failing and the cracks are starting to show
