FTSE 100 near record high amid interest rate cut hopes – as it happened

With the FTSE 100 poised to close at its highest level in over a year, here’s a round-up of the main stories today:

• UK retail sales stagnated last month, as wet weather kept shoppers away from the high street

• Aston Martin has poached the chief executive of its rival Bentley to be its new CEO

• Russia’s central bank has left interest rates on hold at 16%

• Shares in Nike have dropped 8% after it predicted revenues would fall in the first half of its next financial year

I don’t think we’ll see a record high on the FTSE 100 today, alas.

The index is still holding its gains – up 53 points or 0.7% at 7935, just over 100 points away from last year’s all-time intraday high of 8047 points.

A record high would be welcome news for investors in the UK stock market.

But…Alex Wright, portfolio manager of the Fidelity Special Situations Fund and Fidelity Special Values, says there has been “little change in the generally weak sentiment towards UK equities” since the Brexit referendum in 2016.

Wright adds:

The strength of US equities, led by the ‘Magnificent Seven’ tech-related stocks, has continued to dominate the market narrative in the opening months of 2024.

This can be seen in valuation multiples, with the UK trading on an estimated PE multiple of c.11x for 2024, which compares to nearly double that for US equities at over 21x, or even Europe and Japan on c.15x.

Wall Street stocks are in a lacklustre mood today, after a strong week.

The S&P 500 has dipped by 0.1%, with Nike (-8%) dragging on the index, but still on track for its best week this year.

Donald Trump has moved a step closer to collecting a $3bn windfall from his social media firm Truth Social.

Shareholders in Digital World Acquisition Corporation have voted today to approve a merger with Trump Media & Technology Group, the private firm that owns the Truth Social app platform.

Digital World Acquisition is a special purpose acquisition company, or Spac, a vehicle floated on the stock market with the goal of buying another company.

The merger would mean Trump Media would be listed on the market; and at Digital World’s share price this week, it would make Trump’s stake worth $3.3bn.

Digital World shares have risen 140% this year, amid a meme-stock flurry of images urging people to buy its shares.

This has driven its value steadily higher, even though Trump Media has posted sales of less than $5m.

However, Trump wouldn’t be able to cash in shares for six months, meaning the eventual value of his stake could end up being rather lower (or higher! You never really know with meme stocks..)

In New York, shares in Nike have dropped 8% at the start of trading after it issued a weak sales forecast last night.

Nike’s shares have dropped to $92.76, having closed at $100.82 last night.

The selloff somes after Nike told analysts last night it is “prudently planning” for revenue in the first half of fiscal 2025 to fell by a low single-digit amount, reflecting “a subdued macro-outlook around the world.”

According to Reuters, Nike is planning to trim supplies of classic shoes such as its Air Force 1 and Pegasus, as it focuss on reviving its running shoe category.

The warning came after Nike reported a small rise in revenues in the third quarter of its current financial year (ending on 29 February)

John Donahoe, President & CEO of NIKE, Inc, said:

“We are making the necessary adjustments to drive NIKE’s next chapter of growth.

“We’re encouraged by the progress we’ve seen, as we build a multiyear cycle of new innovation, sharpen our brand storytelling and work with our wholesale partners to elevate and grow the marketplace.”

One of Nike’s ‘innovation’s is causing a storm in the UK today, though. It’s being criticised for using a multicoloured St George’s Cross on the new England shirt, instead of the traditional red and white one on the shirt.

Rishi Sunak has said the cross of St George should not be messed with, while Keir Starmer says the new kit should be scrapped.

Nike’s warning that its revenues will fall in the first half of the next financial year has knocked the leisure sector; Shares in UK retailer JD Sport are down 7% today, while Germany’s Puma are down 1.8%.

HSBC has brought forward its expectations for the first cut in UK interest rates to June, having previously expected the first 25 basis cut in August.

It also kept its forecast of one rate cut per quarter from August onwards, which would lower Bank rate to 3.5% by the end of 2025.

Kathleen Brooks, research director at XTB, says:

This shift in rate cut expectations from the Bank of England is like a red flag to a bull, and markets have rallied sharply.

The FTSE 250 has also made strong gains this week, and… is only 400 points away from the record high made in 2021.

Markets are relieved that this month’s central bank policy decisions have not repeated the more hawkish tone of the January meetings, says Raffi Boyadjian, lead investment analyst at XM:

Shares on Wall Street are headed for strong weekly gains following the conclusion of the March central bank meetings that cemented rate cut expectations for 2024. After the European Central Bank paved the way for lower rates at the beginning of the month, the Federal Reserve and Bank of England became the latest this week to not push back on market bets for a series of rate reductions later this year.

The Swiss National Bank went a step further and announced a surprise 25-basis-point cut, becoming the first major central bank to commence with an easing cycle, and even the Bank of Japan’s much-anticipated exit from negative rates turned out to be a dovish hike.

Britain’s blue-chip share index is climbing towards its alltime high this morning, as hopes build that interest rates will be cut this year.

The FTSE 100 index has jumped by 64 points, or 0.8%, to 7947 points, adding to the 145 points it jumped yesterday – its best day in over a year.

The Footsie has now gained over 4% since the start of March.

It is now just 1.2%, or 100 points, away from the all-time high of 8,047 points set in February 2023.

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It’s part of a global stock market rally, which saw Japan’s Nikkei hit record highs this week, and the main US share indices also hit record levels.

The prospect of cuts to UK interest rates this year – hinted at by the Bank of England governor – are cheering traders, as lower borrowing costs should stimulate the economy.

But it’s a wider issue too – the US Federal Reserve lifted markets on Wednesday by sticking to its forecast of three rate cuts this year. Yesterday, Switzerland got the rate cut ball rolling by unexpectedly lowering its policy rate, after its inflation rate fell.

Neil Wilson, analyst at Markets.com, says there is a definite sense that central banks are prepared to tolerate higher inflation and are ready to cut – or already have.

He adds:

Suppressing yields and pushing up inflation has been their stated aim for well over a decade. Now they have it and want to keep it – hiking interest rates into the oblivion of unemployment and recession was never the plan.

Interestingly, the Nikkei rallied despite the Bank of Japan bucking the trend and raising rates this month, out of negative territory.

In the foreign exchange markets, the pound continues to trade at its lowest level since the start of the month, down three quarters of a cent at $1.258.

Newsflash: Russia’s central bank has left interest rates on hold, at 16%.

At the end of a busy week for central banks, the Bank of Russia says it maintained borrowing costs as inflationary pressures “gradually ease but remain high”.

It says:

Domestic demand is still outstripping the capabilities to expand the production of goods and services. Labour market tightness has increased again. For the moment, it is premature to judge the pace of future disinflationary trends.

Russian inflation rose to a one-year high of 7.7% in February.

The Bank of Russia says it expects annual inflation will fall to between 4% and 4.5% in 2024, and stabilise close to its 4% target further on.

In the car sector, luxury automaker Aston Martin has named Bentley head Adrian Hallmark as its new CEO to replace Amedeo Felisa.

Hallmark becomes the third CEO of Aston Martin since its largest shareholder, Lawrence Stroll, took over the carmaker in 2020.

Hallmark will join Aston Martin by 1 October, with Felisa – who turns 78 in October – staying on until his replacement arrives.

Stroll says:

“When Amedeo was appointed CEO, I spoke of him leading a new phase of growth and development.

Two years on, we have delivered on that promise, as we near completion of our thrilling new product portfolio and move closer to our vision of becoming the world’s most desirable, ultra-luxury British performance brand.”

Shares in Aston Martin are up 1% this morning at 172p, but have dropped by almost a quarter so far this year. Five years ago, they were worth around £25.

Last year, Aston Martin’s pre-tax losses narrowed to £239.8m, from £495m in 2022. On an adjusted EBITDA basis, earnings rose to £305.9m from £190.2m

Bentley, which is owned by Germany’s Volkswagen, make operating profits of €589m (£502m) last year. It has benefitted from the boom in the world’s richest people opt to spend hundreds of thousands of pounds to personalise their vehicles:

Over in Germany, business morale has picked up.

The IFO institute’s business climate index has risen this month, to 87.8 points, up from 85.5 and higher than expected.

Companies’ expectations were less pessimistic in March, while their assessments of the current business situation also improved.

Ifo president Clemens Fuest says:

“The German economy glimpses light on the horizon.”