The pound has fought back from record lows touched in reaction to Kwasi Kwarteng’s tax-slashing mini budget, while according to opening calls, the FTSE 100 is expected to make modest opening gains, after managing a small overall rise by the end of the previous session.
The rebound came after the Treasury pledged to hold a full Budget in the spring and the Bank of England said it was keeping watch on markets and would not hesitate to raise rates.
Mortgage lenders have pulled some deals on offer as economists warn the potential inflationary effect could result in Bank of England interest rates having to stay higher for longer, highlighting the ongoing fall-out from the government’s tax cuts.
FTSE 100 closes lower as stocks exposed to the UK mortgage market fall heavily
17:07 , Michael Hunter
London’s main stock market index ended lower overall as stocks exposed to the UK’s housing market took a toll on worries about the impact of higher interest rates on the mortgage market.
The FTSE 100 closed down almost 40 points at 6,982.10.after an uncertain day’s trade . Several attempts at a rally, driven by exporters and international resource stocks, faltered as housebuilders and domestic banks stayed lower throughout most of the day.
As the outlook for higher UK interest rates continued to hit home after the reaction to Kwasi Kwarteng’s mini budget, the biggest single faller on the top tier was a bellwether company for the national housing market. Rightmove fell 49p to 500p, a drop of almost 9%.. Taylor Wimpey, the developer, was down over 7p to 89p, a fall of over 7%. . Persimmon lost 53p to 1208p, a decline of over 4%.
The trading pattern came as policymakers signalled that bigger interest rate rises lie ahead. Huw Pill, the chief economist at the Bank of England, pointed to a “significant” hike, but also said action before the next scheduled meeting in November was unlikely.
The pound stayed off the record lows touched after the overhauled tax and spending plans were announced, while investors were demanding yields of over 4% to lend to the UK, with the benchmark 10-year Gilt yielding over 4.5% and both the two-year and five-year yields over 4.7%.
Wall Street stocks open with gains as house price data raises hopes on Fed’s inflation fight
15:13 , Michael Hunter
The S&P 500 made opening gains in New York after news of the first fall in the Federal Housing Agency’s index of house prices stoked some hopes that policymaker’s aggressive fight against inflation might be working.
The measure fell by 0.6% in July, the first fall in over two years. After it came out, the broad US equity index gained 21 points to 3,681.20, snapping a six-session losing streak.
After three consecutive aggressive rate hikes of 0.75% from the Federal Reserve, traders are on close watch for any signs in the flow of economic data that the central banks ant-inflationary medicine may be working.
Boohoo founder Mahmud Kamani loses £500 million as firm’s stock becomes UK’s most shorted
12:45 , Simon Hunt
The wealth of the founder one of the UK’s biggest fashion retailers, Boohoo, has plummeted a staggering half a billion pounds in just two years and the company’s stock has become the most shorted in the UK in the latest blow for the firm as it deals with a downturn in sales and a greenwashing investigation by the UK competition watchdog.
Mahmud Kamani, the British retail tycoon who founded Boohoo in 2006, has seen the value of his share in the business shrink to just £60 million from a high of over £570 million in 2020, an Evening Standard analysis found. The firm’s market cap fell below £500 million this week, a drop of over 90% from its June 2020 high of over £5 billion. Kamani controls a 12% stake in the firm, according to Refinitiv data.
Disclosed short positions in the online fashion retailer reached 9.65% today, up over 2% on last month, according to market insight firm Research Tree, edging closer to the 10% threshold some investors consider alarming for the health of the stock.
Original recipe Irn Bru sweetens sales at AG Barr
11:41 , Simon Hunt
Sales of the sugary original recipe Irn Bru have helped drinks maker AG Barr boost profits and increase its shareholder dividend.
The drink – called 1901 -- was launched in 2019 after an outcry over a new lower-sugar recipe and became permanent in 2021.
AG Barr boss Roger White told the Standard: “1901 has done really well but standard Irn Bru is growing as well. 1901 is doing better in Scotland [which] we first launched as a Scotland-only product.”
The firm posted 16.7% sales growth in the first half of 2022 to £158 million. It issued a 2.5p dividend, up 25% on last year.
FTSE 100 fails to hold opening gains as stocks exposed to UK house market fall
11:00 , Michael Hunter
London’s FTSE 100 fell under the 7000-point mark again, unable to hold overall opening gains driven by international mining stocks as companies exposed to the UK housing market hit the bottom of the market.
The main UK stock index was down 37 points overall to 6985.25, a fall of 0.5%.
Rightmove, the online estate agency and bellwether for the housing market, was among the biggest single fallers, down 21p to 528p. Barratt Developments was down 11p to 375p. Persimmon lost 31p to 1229p.
The moves came as City forecasters upped their predictions for the peak UK base rates would reach as the Bank of England tightens monetary policy to 6%, up from previous estimates of between 4% and 5%.
JD Sports slapped with £1.5 million fine for price fixing
10:59 , Simon Hunt
JD Sports has been slapped with a £1.5 million fine from the UK competition watchdog after being accused of price-fixing Rangers FC clothing at its stores.
The Competition and Markets Authority said JD agreed to raise the prices of Rangers replica kits after reaching “an understanding” with Rangers and the shirt’s manufacturers, Elite Sports, between September 2018 and July 2019.
Elite Sports was also handed a fine of £459,000, while Rangers was fined £225,000. The CMA said the penalties had been discounted to reflect the fact that all three organisations had admitted to acting illegally, which sped up its investigation.
FTSE 100 opens higher as resource stock rise but housebuilders fall further
08:25 , Michael Hunter
London’s main stock index made modest gains in opening trade as the pound fought back to trade around $1.08, above the record low the currency hit in reaction to the government’s redrawn tax and spending plans.
The FTSE 100 rose over 27 points in opening trade to 7048.65, a gain of 0.4%. It extended a marginal overall rise notched up by the end of the previous session, which came after the Treasury pledged to outline further details of it intentions on spending in the spring and the Bank of England said it was watching the markets and would not hesitate to raise rates.
International resource stocks dominated much of the leaderboard. Anglo American was up 50p to 2647p. Rio Tinto gained 69p to 4767p. Heavy fuel user and parent of British Airways rose 2p to 103p.
But signs of stress remained. A flurry of demand for housebuilders in initial trade failed to hold, and bargain hunting in the sector gave way to further losses, with traders unnerved by the outlook for the UK mortgage market, with lenders pulling some fixed rate deals as the outlook for base rates at the Bank of England was redrawn again.
Persimmon failed to hold opening gains of around 17p to stand 6p lower overall at 1258p. Barratt Developments fell 2.2p to 383p. Rightmove, the online estate agency and bellwether for the UK housing market fell 4.4p to 545p. Banks were also lower. NatWest fell 1.1p to 232p. Lloyds Banking Group lost 1p to 43p.
Pound finds support around $1.08 and FTSE 100 expected to make modest opening gains
07:35 , Michael Hunter
The pound was consolidating just above $1.08 as the sustained sell-off sparked by the government’s tax and spending plans eased, in part after the Bank of England said it was watching the markets and would not hesitate to raise rates.
According to opening calls from IG Markets, the FTSE 100 will make opening gains of 0.1% , taking the index to around 7030 points, with bigger rises of between 0.5% and 0.6% predicted for continental stock markets.
Sterling was up 1.1% to $1.0802 into the full market open.