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FTSE stuck in red as Wall Street rebounds

·33 min read
A jogger runs along the river Thames, passing skyscrapers in the City financial district of London - Dominic Lipinski /PA
A jogger runs along the river Thames, passing skyscrapers in the City financial district of London - Dominic Lipinski /PA

London’s markets spent the afternoon trying to drag themselves higher after plunging sharply into the red for the second time this week.

The FTSE 100 fell as much as 2.5pc early in the day to wipe around £48bn off the combined value of its constituent companies. It touched its lowest level since April 7 by midmorning while all blue-chip stocks were on a downward trajectory. The slide came as inflation fears once again spooked global stock markets, and following Asian markets which reached seven-week lows overnight.

Such lows were short-lived, however, with the FTSE 100 closing down a lesser 0.6pc, or 41.3 points, at 6,963.33.

“After what was a positive Wednesday for the FTSE 100, from the bell the index struggled to ignore investors’ growing inflation fears,” said Hugh Shield, at Spreadex. “Despite a late rally back this afternoon, the FTSE 100 falls on the day, with the damage of the open too great to fully recover.”

Losses in heavyweight commodity stocks and luxury fashion brand Burberry kept the top flight in the red.

Miners made up half of the top ten fallers as the recent rally in commodity prices stalled over a strengthening dollar. Anglo American lost 150.5p to £32.50, Rio Tinto fell 271p to £63.04, BHP dropped 93p to £22.51, Fresnillo shed 27.8p to 869p and Glencore slipped 8.7p to 324.4p.

They were joined by oil majors BP and Royal Dutch Shell which tracked lower crude as the Colonial pipeline – the US’s biggest gasoline pipeline – restarted after a cyberattack prompted fuel shortages.

Burberry, meanwhile, was the fourth biggest loser, despite full-year revenues of £2.34bn and underlying profits of £366m, both above expectations. It reported a 10pc fall in annual sales amid store closures and reduced tourism.

“There was disappointment over its guidance with respect to margins for the upcoming year, with management citing headwinds in the form of increased investment and expenses normalisation,” said CMC’s Michael Hewson.

The FTSE 250 lost 38.53 points to close at 22,069.31, bookended by top riser NCC Group and biggest loser Wood Group.

Manchester-based cybersecurity adviser NCC Group shot up 36p to 290p after it revealed plans for a £156m acquisition of the Intellectual Property Management business of US IT giant Iron Mountain. Chief executive Adam Palser said: “This acquisition will transform NCC Group’s software resilience business, making it a market leader.”

Wood Group, however, shed 18p to 267.2p after the oil services business said the first quarter had been slower than expected. Its order book, however, has grown 9pc since the start of the year.

05:22 PM

Wrapping up

That is all from us today - here are some of our top stories:

Thanks for following along and see you tomorrow!

05:12 PM

Tesla on track for biggest weekly drop in over a year

Musk
Musk

Tesla's shares are headed for their worst weekly loss since the coronavirus-driven selloff in March 2020.

Shares are now down over 14pc so far this week as investors in Elon Musk's electric-vehicle company missed out on the broader recovery in technology stocks today with the stock touching a low of $567.97.

On Wednesday Mr Musk tweeted that the company was suspending purchases of its cars using the cryptocurrency Bitcoin. It marked a turnaround from February when Tesla said it had purchased $1.5bn in Bitcoin and planned to accept it as a payment, triggering a rally in its own stock as well as the currency. See our report on the change of tune here.

05:01 PM

Sanjeev Gupta's bank to be sold or closed

Gupta
Gupta

Embattled industrialist Sanjeev Gupta's bank is set to be sold or closed after paying back all deposits and with Mr Gupta declining to pump in fresh funds.

My colleague Rachel Millard reports:

Mr Gupta set up Wyelands Bank in 2016 as part of his GFG Alliance group, saying he wanted to help businesses around the world grow.

By April 2019, according to its latest available annual report, the company had more than 15,000 savers in Britain and £726m in deposits. But in March, the Bank of England ordered Wyelands to repay all depositors, in an unprecedented move amid concern over its financial position.

Wyelands said yesterday it would file accounts showing £61.3m of loan impairments for the year to April 20, and a pre-tax loss of £63m.

Mr Gupta pumped in £75m via a loan in May 2020, and Wyelands said today it had paid all but £600,000 of its deposits, with funds set aside for the remainder. Almost £43m of Mr Gupta's loan has been converted to equity.

04:45 PM

Oil slips up

Oil slid the most intraday in over a month alongside a commodities downturn amid growing inflation concerns.

WTI futures slumped as much as 4.1pc, while Brent also retreated after failing to reach the psychological $70-a-barrel mark in the prior session.

Prices paid to US producers rose more-than-expected in April, adding to signs of rising inflationary pressures that have gripped broader markets recently.

Elsewhere, China’s Premier Li Keqiang urged the country to deal effectively with the commodity price surge and its impact, according to a state television report, echoing previous comments from officials.

The latest data “are cementing the view we’re going to have markets that are just fixated on inflation,” said Edward Moya, senior market analyst at Oanda Corp told Bloomberg. “All these pricing pressures are ramping up those rate-increase bets. For crude, we’re trying to get a sense of what the path of the dollar’s going to be, and that’s uncertain.”

04:32 PM

Accountancy firm sanctioned by FRC for shoddy audit

The accounting watchdog has sanctioned UHY Hacker Young for a shoddy audit of a Malaysia-based rubber manufacturer, making it the latest mid-tier accounting firm to be reprimanded by the regulator.

My colleague Simon Foy reports:

The Financial Reporting Council (FRC) said it issued a “severe reprimand” to the firm for its 2016 audit of Inch Kenneth Kajang Rubber (IKKR), telling it to give the staff involved more training, but stopped short of fining UHY.

The sanction could cast doubt on plans to boost audit competition, as the Government seeks to break the dominance of Big Four firms KPMG, EY, Deloitte and PwC.

UHY’s audit failings included a general failure to prepare sufficient audit documentation, a failure to obtain sufficient appropriate audit evidence and a lack of professional scepticism, the FRC said.

The watchdog also singled out Julie Zhuge Wilson for criticism, who was the audit engagement partner on the project, and banned her from acting as a statutory auditor of any listed company for two years.

It did not issue a fine to UHY or Ms Wilson, but said both will have to pay for the cost of the investigation, which amounts to £146,752 and £62,894 respectively.

The FRC added that the firm has already undertaken “significant remedial action” following the regulator’s audit quality review of the group. UHY was contacted for comment.

03:56 PM

Update: lowest furlough levels since November

My colleague Louis Ashworth brings you some more detail from our post at 10:50am about the reduction of workers on furlough:

The proportion of Britain’s workforce placed on furlough has fallen to the lowest level since November as the economy ramps up for further re-opening.

Around 11pc of the workforce was on furlough from mid-April to the start of May, a drop from almost 13pc the prior fortnight, according to the Office for National Statistics.

The concentration of workers using the Coronavirus Job Retention Scheme rises to about a fifth for companies that have temporarily closed or paused trading, which will likely include many bars and restaurants that plan to reopen in the coming weeks.

The ONS’s latest survey found 57pc of people had returned to their normal place of work by the start of this month – a level not seen since before England entered its third lockdown just ahead of Christmas.

03:27 PM

London indexes remain in red

Wall Street's rally is pushing London indexes up but the gains are not yet as strong.

The FTSE 100 is still down 0.49pc while the FTSE 250 is down 0.11pc.

03:13 PM

Wall Street stocks climb after this week's sell off

Wall Street stocks are soaring, clawing back some of the losses they suffered from this week's three day sell off.

Just after 4pm UK time, The Dow Jones was up 1.35pc, the S&P 500 rose 1.27pc and the Nasdaq lifted 1.03pc.

Tech stocks, which were hit heaviest in the sell off, help lead the rebound. Facebook, Amazon and Google owner Alphabet were all up over 1pc.

03:08 PM

Colonial Pipeline paid $5m ransom to cyberhackers

Bloomberg has more details:

[The US fuel operator] Colonial Pipeline is understood to have paid nearly $5m (£3.5m) to Eastern European hackers on Friday, contradicting reports earlier this week that the company had no intention of paying an extortion fee to help restore America's largest fuel pipeline.

The company paid the hefty ransom in untraceable cryptocurrency within hours after the attack, underscoring the immense pressure faced by the Georgia-based operator to get fuel flowing again to major cities along the US east coast, according to unnamed sources reported by Bloomberg.

Read the full story here.

03:00 PM

McDonalds raises hourly wages fuelling inflation anxieties

Musician Travis Scott outside a California McDonald's in September 2020 - Jerritt Clark /Getty Images 
Musician Travis Scott outside a California McDonald's in September 2020 - Jerritt Clark /Getty Images

Restaurant chain McDonald’s said it will raise its hourly wages for workers in the US to help the company hire and retain workers in an increasingly tight labour market.

The company said this means entry level salaries are to rise on average 10pc, from between $11 and $17 (£7.83 and £12).

Managers will be earning between $15 and $20 (£10.67 and £14.23) , depending on their location.

The pay increases have already started to be rolled out and more than 36,500 employees will benefit, said McDonalds, adding this will push average hourly pay at the company to above $13 (£9.25).

The good news for McDonalds workers is also being read as another sign of inflationary pressures building in the US economy, as bottlenecks in the supply of goods and labour clash with surging demand as coronavirus restrictions lift.

02:44 PM

Prudential shares drop after regulatory hold up delays demerger

A regulatory hold up has delayed the planned demerger of Prudential’s US insurance business, with the move not expected to be given the go ahead until the second half of the year, reports Simon Foy.

The 173-year-old insurer had been targeting a demerger of its Jackson unit in the second quarter of this year but said it was still awaiting approval from US regulators. Shares tumbled as much as 6pc following the announcement.

While Pru received approval for the spinoff from regulators in Michigan and New York, it is still awaiting a review of a document that needs to be updated to include Jackson’s first quarter results, it said, which will set the completion date back by several months.

The group, which focuses mainly on life and health insurance, looked to offload Jackson last year after Third Point, an aggressive New York hedge fund led by corporate raider Dan Loeb, revealed it had built a near-5pc stake in the company.

It demanded that the Pru completely separate Michigan-based Jackson from its high-growth Asian operations in a bid to double the value of the business by 2023.

After spinning off its UK business in 2019, the insurer planned to separate Jackson by floating part of it in the US. However, it abandoned that plan in January and settled instead for a demerger of the unit.

Chief executive Mike Wells said: "The US demerger will complete Prudential's structural transformation into a business solely focused on the growth opportunities of Asia and Africa.”

02:25 PM

Rolls Royce and Boeing in talks about new mid-range plane

Technical staff members prepare one of the Rolls-Royce Holdings Plc engines of a Boeing Co. 787 Dreamliner aircraft  - Toru Hanai/Bloomberg
Technical staff members prepare one of the Rolls-Royce Holdings Plc engines of a Boeing Co. 787 Dreamliner aircraft - Toru Hanai/Bloomberg

Rolls-Royce is in talks with Boeing about providing engines for a possible new mid-range plane in a boost for the FTSE 100 company after a torrid year, reports Rachel Millard.

The talks revive a prospect first explored several years ago. They were put on the backburner as Boeing put the prospect of a new plane on hold and Rolls feared its new UltraFan might not be ready on time.

Warren East, the chief executive, told the Rolls annual meeting that the UltraFan programme was now more advanced, but cautioned it might yet not turn out to be right for a smaller plane.

The FTSE 100 company has also spoken with Airbus, Mr East said.

Boeing has not formally confirmed plans for a mid-market plane, but chief executive David Calhoun said in January the mid-market segment is "where our development efforts lean".

02:10 PM

US stocks buoyed by lowest jobless claims since March 2020

Employers have rediscovered their appetite for hiring, according to the latest US jobless claims data - OLIVIER DOULIERY/AFP via Getty Images
Employers have rediscovered their appetite for hiring, according to the latest US jobless claims data - OLIVIER DOULIERY/AFP via Getty Images

All three US stock markets are posting growth of over 1pc in an apparent nascent recovery from their inflation-inspired tumbles this week.

The Nasdaq leads the pack with a 1.26pc rise with the S&P 500 and Dow posting rises of 1.1pc and 1.03pc respectively.

Traders may have felt buoyed by this afternoon's US jobless claims figure, which fell to 473,000 for the past week, the lowest since March 14, 2020 when the pandemic began to bite. That is 34,000 lower than last week's revised level and a sign that employers are beginning to regain their appetite for hiring.

“Employers are really clinging to their talent,” Jay Denton, chief analyst for ThinkWhy, a labor-analytics firm, told the Wall Street Journal. “There’s a lot of demand there. We will start to see more hiring.”

One analyst, Briefing.com's Patrick O'Hare, also suggested the gains showed "that the scope of recent losses has gone far enough to whet the appetite of the buy-the-dippers who have successfully feasted over the last year or so on down moves like the one that has recently unfolded".

01:52 PM

BT's more ambitious rollout a sign of Jansen doing the 'heavy lifting'

Philip Jansen
Philip Jansen

Coming back to that faster BT full-fibre rollout we mentioned earlier (see 10.19am), our City commentator Ben Marlow is full of praise for chief executive Philip Jansen's ambition, even if he does think the telecoms boss could tone down the rhetoric.

He says:

The creation of 7,000 jobs as a result is not to be sniffed at but Jansen’s assertion that it will “help fuel economic recovery” is a bit of a stretch given that the work isn’t due to be completed by 2026. The economy should be firing on all cylinders again before the end of the year.

Still, the sentiment is right. Better connectivity will help propel Britain into the digital age. Currently too many parts of the country suffer from substandard broadband. A fast and functioning network will be even more vital for the millions of people who plan to work from home more in a post-Covid world. Without it, productivity will slump.

Read the full article here.

01:46 PM

Wall Street opens up despite markets uncertainty

Wall Street
Wall Street

US markets bucked a wider correction after opening up this afternoon, while Europe was left stuck in the red - though not to such a great extent as in previous days.

World stocks were spiralling towards their worst week of the year on Thursday, as a bigger-than-expected rise in US inflation worried bond markets and as red-hot metals, crop and cryptocurrency prices all suffered sudden stops.

Asia had taken a post-Wall Street pounding overnight, London's FTSE 100 was down 1.3pc by the time the US opened and the Euro Stoxx 600 was down 0.54pc. Germany's Dax suffered a 0.17pc decline while France's Cac fell 0.21pc - neither nearly as bad as far deeper falls in earlier sessions.

"Inflation pressures are going to be rising, and they're not going to be temporary," said Jeremy Gatto, investment manager at Unigestion. "What does that mean? Effectively that (interest) rates will be rising."

But Wall Street bucked the trend, with the S&P 500 posting a 0.78pc leap at the start of its trading session and the tech-heavy Nasdaq climbing over 1pc after steep declines. The Dow Jones rose 0.6pc.

US markets were blindsided on Wednesday when data showed US consumer prices jumped by the most in nearly 12 years in April. It showed booming demand amid a reopening economy meeting equally powerful supply constraints both in the US and abroad.

The jump, which sparked the S&P 500's worst one-day drop since February, was largely due to outsized increases in airfares, used cars and lodging costs, all driven by the pandemic and likely to prove transitory.

Fed officials were quick to play down the impact of one month's numbers, with vice chair Richard Clarida saying stimulus would still be needed for "some time" but traders weren't wholly convinced.

"The big question today is not by how much inflation is going to spike, but for how long inflation is going to spike," said Hugh Gimber, a global market strategist at JPMorgan Asset Management.

"As to the (global market) slide today, I think really it's highlighting how uncomfortable investors are in assessing the new mandates for the Fed. They still don't fully understand when the Fed would move."

01:06 PM

US unemployment claims at pandemic low

Unemployment claims in the US declined to a pandemic low last week, the Labor Department said today.

The number of claims fell to 473,000 last week, from 507,000 a week earlier.

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12:57 PM

US producer prices spike twice expected rate in April

US producer prices rose 0.6pc in April compared to the previous month, twice the expected rate.

The data, considered a key gauge of inflation, showed a sharp increase in consumer prices, spiking 6.2pc for the year ending in April. That is the largest increase since the US Bureau of Labor Statistics started tracking the data in 2010.

12:44 PM

BoE deputy governor makes case for digital 'Britcoin'

Sir John Cunliffe - Jane Mingay /The Telegraph
Sir John Cunliffe - Jane Mingay /The Telegraph

Bank of England deputy governor Sir Jon Cunliffe said today he could see a good case for the central bank launching its own digital currency as the pandemic accelerates a shift away from cash.

“We may not be there yet, but it looks probable in this country that if we want to retain public money capable of general use, and available to all citizens, the state will need to issue, public digital money,” he said in a speech to the OMFIF central banking think tank.

You can read more on the digital 'Britcoin' here.

12:36 PM

Alibaba reports first ever quarterly loss after Beijing fine

People walk past a sign at the Alibaba Group Holding Ltd. headquarters in Hangzhou, China - Qilai Shen /Bloomberg 
People walk past a sign at the Alibaba Group Holding Ltd. headquarters in Hangzhou, China - Qilai Shen /Bloomberg

Today, China's top e-commerce platform Alibaba reported its first quarterly operating loss since going public in 2014 due to a record anti-monopoly fine.

The company's US listed shares fell more than 3pc in pre-market trading, even though the company forecast 2022 revenue would be above market expectations.

The fine by China's markets watchdog in April was the largest-ever of its kind and came soon after Alibaba's co-founder Jack Ma came under intense regulatory scrutiny after making disparaging comments about the authorities.

For background, my colleagues Louise Moon and Lucy Burton wrote about the Beijing-Alibaba fall out back in January, you can read it here.

12:23 PM

FTSE recovers from earlier lows

The FTSE 100 has recovered slightly from earlier, after it dropped to daily lows of 6,826 points around 10am.

Now, the index is trading at around 6,908 points, down 1.4pc.

12:15 PM

Prudential 'highly unlikely' to invest in EDF's Suffolk nuclear plant

Insurance giant Prudential has said it is "highly unlikely" it will invest in the proposed nuclear power plant Sizewell C, in a blow to EDF as it seeks to finance the project, reports Rachel Millard.

The campaign group Stop Sizewell C challenged the FTSE 100 company, a major infrastructure investor, at its AGM today over whether it had any plans to invest.

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Chairman Shriti Vadera replied: "This issue of the energy transition and the role nuclear should play is complex and it differs from market to market.

"As an Asia and Africa-focused group going forward, Sizewell is highly unlikely to be the sort of project that we would directly invest in.

"We will be focusing our efforts and investments on a just and inclusive transition in the markets in which we operate."

EDF has entered negotiations with the Government over a financing model for Sizewell C, which it wants to build in Suffolk, and also hopes to attract big institutional investors.

Supporters argue nuclear power is an important source of stable, low-carbon power, but opponents point to the costs, risks and local environmental impact.

12:00 PM

YouTube Europe chief appointed head of Sky Studios

Sky has poached YouTube's EMEA chief to lead the company's production and development arm across Europe, ahead of its major new studio development opening in north London next year.

Cécile Frot-Coutaz, who is currently head of YouTube in EMEA, will adopt her new position as CEO of Sky Studios in September.

Frot-Coutaz, said she "could not pass up the opportunity" to lead Sky Studios.

“Sky is a company that I have always admired as a content maker, as a partner and as a consumer," she added.

Entertainment news outlet Deadline reported that Frot-Coutaz has been considering a return to traditional television since discussing the position of CEO with BBC Studios last year.

Reports suggest she eventually turned the role down and the BBC is yet to fill the position.

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She began at the Google-owned platform in 2019, where she was based in London.

Before that, she spent 20 years at global production company Fremantle, where she developed shows including American Idol and Deutschland 83 during her six-year tenure as CEO.

The 54-year-old's new role will involve delivering comedy, drama, and documentary to Sky’s 24m customers across Europe and her remit will extend to the giant new film and TV studios that will open in Elstree next year.

Frot-Coutaz will also take charge of Sky Studios global portfolio of production companies, including Love Productions, creator of the Great British Bake Off.

She will replace the current chief executive Gary Davey who launched Sky Studios three years ago,

Dana Strong, Group Chief Executive, Sky said: “Cécile is a global leader in content and entertainment and has the bold vision and unique mix of experience needed to take Sky Studios to the next level of becoming a European production powerhouse.”

In an interview earlier this year with Elle Magazine, Frot-Coutaz said she stumbled into business after one of her teachers suggested it would be a good fit.

‘So I enrolled at a grande école. It was 1985 and there weren’t many women in those schools. One of my uncles said to my mother, “What’s the point? She’s a woman. She’s not going to get anywhere.”’

11:42 AM

Wood Group's order book grows 9pc

Oil services business Wood Group says the first quarter has been slower than expected but its order book has grown 9pc since the start of the year, reports my colleague Rachel Millard.

Chief executive Robin Watson said margins were robust and it expects more work from its consulting arm throughout the year.

The FTSE 250 company makes sales of about £5.7bn, employs more than 40,000 people across more than 60 countries.

It is holding its AGM today, with Mary Shafer-Malicki resigning as a non-executive director.

11:19 AM

FTSE 250 down 1.2pc

The FTSE 250 is down 1.2pc, trading at around 21,827 points.

Bucking the trend however was Manchester-based cyber security adviser NCC Group, seeing its shares rise 9.25pc.

That surge was linked to the company today revealing plans for a £156m acquisition of the Intellectual Property Management business of US IT giant Iron Mountain.

Adam Palser, NCC's chief executive, commented:

"This acquisition will transform NCC Group's Software Resilience business, making it a market leader, and deliver immediate financial and operational benefits to the whole of the Group."

10:58 AM

Italy fines Google €102m

Italy's competition regulator has fined Google €102m for excluding e-mobility app JuicePass from the tech giant's Android system.

The app, developed by Italian energy group Enel shows drivers where they can charge their electric vehicle. However for the past two years, Google has now allowed JuicePass to be used as part of Android Auto, a system allowing apps to be used safely in cars.

The regulator said Google was unfairly curtailing JuicePass while favouring its own Google Maps app.

"The contested behaviour can influence the development of e-mobility in a crucial phase... with possible negative spill-over effects on the growth of electric vehicles," the watchdog added.

Google "respectfully disagrees" and the company said it's priority for Android Auto is to ensure safety while driving, with strict guidelines for the apps it does support.

10:35 AM

18pc plunge for Alphawave's market debut

Shares in chip designer Alphawave slumped 18pc as trading began in another opening day flop for a high profile London float, reports my colleague Matthew Field.

He writes:

The Canadian semiconductor company had priced its shares at 410p but they fell as low as 350p, cutting its value by more than half a billion pounds.

The float price had valued the company at £3.1bn.

The slump will also cut the value for holdings of Alphawave’s three founders, who each stood to make paper gains of hundreds of millions of pounds.

Read the full story here.

10:11 AM

British airlines cancel Tel Aviv flights

British airways - DANIEL LEAL-OLIVAS /AFP
British airways - DANIEL LEAL-OLIVAS /AFP

British Airways and Virgin Atlantic have both cancelled flights to Tel Aviv as fighting between Israelis and Palestinians escalates.

"The safety and security of our colleagues and customers is always our top priority, and we continue to monitor the situation closely," British Airways said today.

Virgin Atlantic said it was reviewing whether to operate its Thursday evening flight. The company had said earlier this week that bookings to Israel had soared 250pc week on week after Britain announced Israel was on its "green list" for holiday destinations.

09:50 AM

Reduction in number of workers on furlough

A rise in social spending is having a knock-on effect on catering and hospitality jobs, the ONS said.

Data from job search engine Adzuna show UK job adverts for the catering and hospitality industry were up 46pc since 9 April, before the first easing of hospitality restrictions.

Furlough however was only reducing incrementally. An ONS survey found that the proportion of the workforce of all UK businesses currently on furlough was 11pc, down from the 13pc reported last week.

ONS data - Office for National Statistics
ONS data - Office for National Statistics

09:42 AM

UK 'social spend' rises as restrictions lift

British consumers spent 99pc more on their credit and debit cards in the week to May 6, compared to a week earlier, according to data published by the Office for National Statistics.

Spending was up 106pc from February 2020 levels, with the new figures showing consumers were spending more freely on travel, eating out and other leisure activities as coronavirus restrictions lift.

Restaurant booking app Open Table also estimated the average number of UK seated diners in the week to 10 May was at 60pc of its level in the same week of 2019.

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09:31 AM

Strengthening dollar pulls down commodity prices

Momentum in the commodity market seems to be slowing, with a strengthening dollar slamming on the brakes.

Rallies in iron ore and copper have stalled. Benchmark iron ore futures in China fell over 7pc. Three month copper on the London Metal Exchange slipped 0.1pc to $10,440 a tonne this morning.

Oil also retreated to $65 a barrel, as the biggest U.S. gasoline pipeline restarted after a cyberattack prompted fuel shortages.

09:19 AM

BT seeks joint venture to fund faster broadband for 5m more homes

BT is seeking partners to help fund "full-fibre" broadband upgrades for an extra 5m homes as the financial burden of its pensions black hole eases and its seeks to capitalise on its dominant network business Openreach, reports my colleague Ben Woods.

He writes:

The former state telecoms monopoly plans to explore potential joint ventures to upgrade the extra homes by 2026, which comes on top of an existing commitment to install 20m faster and more reliable broadband connections.

Alongside its annual results BT said it "believes it could deliver further shareholder value by funding the additional five million premises through a joint venture with external parties and will explore joint venture structures over the first half of the current financial year".

Read the full article here.

08:56 AM

FTSE entirely in the red

The blue-chip index is now at its lowest level since April 7, with all stocks on a downward trajectory.

FTSE in the red - Hargreaves Lansdown
FTSE in the red - Hargreaves Lansdown

08:31 AM

Inflation analysis

AFP has more on the inflation concerns that are making markets nervous and reverberating through the FTSE this morning:

Trading floors were already awash with red this week owing to growing fears that the blockbuster global economic recovery and vast stimulus measures will see a splurge in spending by pent-up, cashed-up shoppers that will strain supplies and push up costs.

And those concerns were given oxygen Wednesday by figures showing US consumer inflation spiked at 4.2 percent in April, far higher than estimates and the highest since 2008 just before the global financial crisis kicked in.

The Fed has repeatedly insisted it expects such sharp spikes but they will be transitory owing to last year's low base and policymakers will not make any adjustments until they are happy unemployment is under control and inflation is running hot for some time.

However, investors are not convinced and there is growing unease that the central bank could lose control of the situation if it does not act in time, with analysts warning it could risk people's confidence in the institution.

Former Treasury secretary Lawrence Summers said: "I am very concerned that the Fed's analytical assessment that inflation is transitory, combined with its policy move toward not being pre-emptive with respect to inflation, will be to repeat the mistakes of the 1960s and 1970s" when inflation surged.

For its part, the Fed remained steadfast in its outlook. Fed Vice Chair Richard Clarida said he was "surprised" by the latest data but that officials were prepared to act when needed.

08:20 AM

FTSE extends losses, down by 2.2pc

The FTSE 100 is falling further this morning, as US inflation fears spook global markets.

At 9.20am, the index was down over 2pc, trading at around 6,852 points.

08:14 AM

Rolls-Royce insists performance is 'on track' ahead of AGM

British engineering company Rolls-Royce stuck to its guidance to turn free cash flow positive at some point during the second half of 2021 as vaccine rates rise and travellers return to the skies.

The company, which charges airlines for the number of hours its engines fly, said in the first four months of 2021 large engine flying hours were 40pc of 2019 levels. That number was held up by cargo flights and maintenance of key routes.

After a torrid 2020, Rolls-Royce has cut costs, taken on debt and raised equity to survive. Good progress was being made with a permanent cost-cutting plan, the company added

It also plans to sell 2 billion pounds ($2.8 billion) worth of assets to help repair its finances and said there was an "encouraging range of interest parties" interested in buying its Spanish unit ITP Aero, for which it hopes to get €1.5bn.

07:50 AM

Oil majors and miners trail in FTSE

Alongside Burberry, oil majors and miners were among the biggest drag to the FTSE 100 as oil and commodity prices dropped.

BP was down 2.7pc, Glencore slid 2.8pc, Royal Dutch Shell dropped 3.1pc and Rio Tinto fell by 3.6pc in early trading.

07:38 AM

Burberry falls 8pc after reporting 10pc drop in annual sales

Pedestrians walk past a Burberry Group Plc. store on Canton Road in the Tsim Sha Tsui district of Hong Kong, China  - Anthony Kwan /Bloomberg 
Pedestrians walk past a Burberry Group Plc. store on Canton Road in the Tsim Sha Tsui district of Hong Kong, China - Anthony Kwan /Bloomberg

Luxury fashion brand Burberry fell 8.3pc, to the bottom of the FTSE 100 index after it reported a 10pc drop in annual sales, impacted by store closures and reduced tourism due to COVID-19.

The company reported very different results in different parts of the world. While the Asia Pacific, led by Mainland China and Korea, grew by 18pc year on year, Europe, the Middle East. India and Africa fell by 44pc in the same period.

"The UK remained challenged with London performance weak given high tourist exposure," Burberry said.

07:23 AM

Bitcoin recovers after Musk Tweet

Bitcoin is recovering from the blow dealt to the cryptocurrency by Tesla founder Elon Musk yesterday.

The coin plunged 17pc after Musk announced on Twitter at 11pm UK time that Tesla had suspended accepting Bitcoin due to "the rapidly increasing use of fossil fuels for Bitcoin mining".

However Bitcoin has been clawing back those losses and is back above $50,000 this morning.

07:08 AM

FTSE slides on opening

The FTSE slides to 1.4pc at 6,907, just minutes after opening this morning.

The drop follows the path of other European markets which are also slipping, with Asian markets reaching seven-week lows overnight.

This is all part of on-going anxieties over inflation, fuelled by data released yesterday that showed U.S. consumer prices jumped by the most in nearly 12 years in April.

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06:43 AM

Rolls-Royce sticks to guidance for 2021

Engineering giant Rolls-Royce stuck to its guidance to turn free cash flow positive at some point during the second half of 2021 as vaccinations kick in and travellers return to the skies.

In the year to date, the company said this morning its operational and financial performance had been in line with expectations, suggesting the return of some stability after a torrid 2020 for one of the last vestiges of Britain's manufacturing industry.

Rolls' model of charging airlines for the number of hours its engines fly meant much of its income dried up last year when travel stopped. It has cut costs, taken on debt and raised equity to survive.

06:21 AM

Markets turn red

Good morning. The FTSE 100 is expected to resume its slide as fears over global inflation return to stalk markets.

5 things to start your day

1) Tesla stops taking Bitcoin payments due to fossil fuel concerns: 'We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions,' Elon Musk wrote on Twitter.

2) Electric cars may make driving too expensive for middle class: Driving could become the preserve of the rich as Britain and other countries impose bans on diesel and petrol cars, warns Vauxhall chief.

3) Train bosses poised to bring back Rail-era InterCity 125 carriages: Great Western Railway is considering bringing in additional British Rail-era carriages as part of emergency measures to keep passengers moving.

4) Cryptocurrency created two days ago worth $45bn: Internet Computer token becomes world's eighth-largest digital currency as Dfinity aims to end traditional web hosting dominance.

5) France seeks to keep the City out of Europe after fishing spat: France said to be trying to delay a memorandum of understanding on post-Brexit access to single market for UK-based finance firms.

What happened overnight

Asian stock markets followed Wall Street lower for a second day on Thursday after unexpectedly strong US consumer price increases fuelled worries inflation might drag on an economic recovery.

Market benchmarks in Shanghai, Tokyo, Hong Kong and Southeast Asia retreated.

The Shanghai Composite Index fell 0.6pc to 3,441.37 and the Nikkei 225 in Tokyo tumbled 1.8pc to 28,628.73. The Hang Seng in Hong Kong lost 0.8pc to 28,010.86.

The Kospi in Seoul sank 0.1pc to 3,158.88 and Sydney's S&P-ASX 200 was 0.4pc lower at 7,018.00. New Zealand also retreated.

Coming up today

Corporate: Burberry, BT, 3i (Full year); Countryside Properties, Grainger, Brewin Dolphin Holdings (Interim); Greggs, ContourGlobal, Elementis, Beazley, Rolls-Royce, Hargreaves Lansdown (Trading update)

Economics: Jobless claims, producer price index (US)