Yahoo Finance FTSE 100 Live: Focus turns to UK GDP after shares close lower following ECB rates hold, AstraZeneca pay revolt
A new pay deal for AstraZeneca boss Pascal Soriot and the fallout from yesterday’s US inflation shock are among areas of focus for London traders.
Astra’s AGM takes place this afternoon and includes a vote on a new remuneration policy that will increase the potential rewards for the FTSE 100’s best paid CEO.
The outlook for interest rate cuts is also in the spotlight, with the European Central Bank’s latest policy decision due at lunchtime.
FTSE 100 Live Thursday
AstraZeneca lifts divi ahead of pay vote
Shurgard to buy Lok'nStore for £379m
Darktrace in fresh boost to guidance
More than a third of AstraZeneca shareholder reject CEO pay deal
17:51 , Daniel O'Boyle
More than a third of AstraZeneca shareholders at the biotech’s AGM voted against CEO Pascal Soirot’s
Soirot, already the FTSE 100’s highest-paid boss, is set to see his pay including bonuses rise to £18.7 million under the new deal, after it received approval from the majority of those voting.
But 35.6% voted against the plan, after advisory groups Glass Lewis and ISS described the pay as excessive.
AstraZeneca upped its dividend earlier today, in an apparent step to get ore shareholders on its side.
AstraZeneca said that after the revolt it “will continue to engage with our shareholders and the proxy advisors to explain our need for global benchmarks and pay for performance, which is driven by the Policy”.
Attention turns to GDP, before Bernanke Bank of England review
17:31 , Daniel O'Boyle
February GDP figures will be the big-ticket event tomorrow morning, while in the afternoon we’ll be digesting Ben Bernanke’s review of the Bank of England.
US banks
Citigroup, Wells Fargo, JP Morgan
Economics
7am: UK GDP (Feb)
12pm: Ben Bernanke report into Bank of England forecasting procedures
US Michigan consumer confidence
FTSE 100 closes down 0.5%
16:48 , Daniel O'Boyle
The FTSE 100 closed down 0.5% today at 7,923.80.
Hints that the ECB plans to cut rates soon were not enough to bouy London’s top flight. An hour before close, London’s top flight was as low as 7889.
Top risers included Centrica and Smiths Group.
Aviva and Phoenix were the biggest.
Questions rise over Goldman's ability to promote top women bankers
15:43 , Daniel O'Boyle
Has Goldman Sachs got a women problem?
Is it still, in the face of all changing fashion, a macho world of golfing bros who cut deals over late night sambucas in ways that make it very difficult for women, especially those with families who hate golf, to get ahead?
There’s evidence, and a growing anecdotal feeling, that Goldman – once likened to a sea monster for its voracious appetites -- can’t change
February figures expected to show UK economy grew in February, but only just
15:33 , Daniel O'Boyle
Figures Friday morning are expected to show the UK economy is continuing its recovery from recession with growth in February: but only just.
A survey of City economists for Refinitiv suggest GDP in February rose by 0.1%, giving the UK its first consecutive months of growth since August to September.
Crucially, a second quarter of growth, even minimal growth, would make it overwhelmingly likely that the UK exited its end-of-2023 recession in the fastest possible time, making it one of the smallest official slumps in history.
'Today's meeting all about setting the stage for rate cuts'
15:10 , Daniel O'Boyle
Alexander Batten, Fund Manager, Fixed Income at Columbia Threadneedle Investments, says: “As widely expected, the ECB kept rates unchanged at today’s meeting, but today’s meeting was all about setting the stage for the start of a rate cutting cycle in June.
“The language in the statement around the contribution that monetary policy has made to reducing inflation thus far and the newly-included explicit mention of rate cuts, albeit conditioned on further progress on inflation, leave June as the likely starting for an easing cycle without pre-committing to it.”
"we are not Fed dependent" says Lagarde
14:27 , Daniel O'Boyle
Christine Lagarde has given the clearest indiciation yet that the European Central Bank could cut rates before the Fed.
“We are not Fed dependent” she said.
Will we see rate cuts by June? Don't bank on it
14:12 , Simon English
Even till just a few days ago the route for markets seemed clear. Inflation was under control nearly everywhere that matters, even if the Fed was making noises suggesting otherwise. That was just the US central bank chief Jay Powell making sure we didn’t get ahead of ourselves.
In the UK, May inflation figures would come in at 2% or lower, City economists were sure, setting the scene for rate cuts that would take borrowing costs from 5.25% at present to 4% by Christmas.
All this might come to late to be of any use to Rishi Sunak’s election chances –but it was as nailed on as these things ever get.
That fall in rates would see investors switch out of bonds, which would be paying lower returns, and into shares, giving stock markets, especially the one in London, a much needed boost.
Talk about Shell or other FTSE 100 giants decamping to the US in search of higher valuations could be safely put to bed.
Yesterday there was an American spanner in the works in the form of inflation still at 3.5%.
Will we see rate cuts by June? Don't bank on it
13:47 , Simon English
Even till just a few days ago the route for markets seemed clear. Inflation was under control nearly everywhere that matters, even if the Fed was making noises suggesting otherwise. That was just the US central bank chief Jay Powell making sure we didn’t get ahead of ourselves.
In the UK, May inflation figures would come in at 2% or lower, City economists were sure, setting the scene for rate cuts that would take borrowing costs from 5.25% at present to 4% by Christmas.
All this might come to late to be of any use to Rishi Sunak’s election chances –but it was as nailed on as these things ever get.
That fall in rates would see investors switch out of bonds, which would be paying lower returns, and into shares, giving stock markets, especially the one in London, a much needed boost.
Talk about Shell or other FTSE 100 giants decamping to the US in search of higher valuations could be safely put to bed.
Yesterday there was an American spanner in the works in the form of inflation still at 3.5%.
ECB 'stopped short of pre-committing' to rate cuts
13:33 , Daniel O'Boyle
Richard Carter, head of fixed interest research at Quilter Cheviot, says the ECB hasn’t ‘pre-committed’ to future rate cuts.
“The European Central Bank has predictably opted to hold rates once more. While for the first time it has signalled a clear intention to begin cutting rates if inflation continues to head in the right direction, which could potentially come as soon as June, it stopped short of pre-committing to this.”
ECB hints at future cuts
13:24 , Daniel O'Boyle
In a key line, the ECB hinted at future rate cuts, but only if it gets further signals of inflation on its way down.
It said: If the Governing Council’s updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission were to further increase its confidence that inflation is converging to the target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction. In any event, the Governing Council will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction, and it is not pre-committing to a particular rate path.”
ECB holds as expected
13:17 , Daniel O'Boyle
The European Central Bank has opted to hold its interest rates, as was expected.
'Lagarde to strongly indicate' June cut coming
13:08 , Daniel O'Boyle
Matthew Ryan, Head of Market Strategy at global financial services firm Ebury, says: “There will be no change in rates from the ECB on Thursday, although we expect President Lagarde to strongly indicate that a first cut is forthcoming at the bank’s following rendezvous in June.
“This week’s meeting will be an exercise in rhetoric for Lagarde. We think that she’ll proclaim that the bank has higher conviction that inflation is returning to target, while repeating that policymakers will have more information in June. She will probably also say that the first discussions on lower rates were had this week, which markets should perceive as a clear indication that a cut is almost certainly on the way at the next meeting.
ECB to hold, but cuts could come soon
12:50 , Daniel O'Boyle
Ahead of the ECB’s rates call, Henk Potts, Market Strategist at Barclays Private Bank, says that while a hold today is likely, cuts could be coming soon.
He says: “We expect the ECB to keep rates on hold at tomorrow’s meeting, but the economic backdrop looks increasingly conducive for future cuts.
“Key indicators suggest that activity is stabilising and inflation is descending towards targeted levels. Policymakers will remain highly sensitive to the incoming data, but in our view look set to start the rate-cutting cycle in June. As the year progresses we expect quarter-point reductions at the remaining meetings, which should put the deposit rate at 2.75% at year-end.”
Default rates on mortgages and credit cards expected to rise in months ahead
11:33 , Daniel O'Boyle
Default rates on mortgages, credit cards and other household loans have recently increased and are expected to rise further in the coming months, according to a Bank of England survey of lenders.
Demand for credit card borrowing increased in recent months, and is expected to increase further by the end of May, the report found.
Lenders reported that overall demand for non-mortgage lending had increased in the past few months and was expected to increase further in the coming months.
Fake flights and missing motorhomes among common holiday scams, says bank
10:56 , Daniel O'Boyle
Victims of holiday scams are losing £765 on average, according to data from Lloyds Bank.
It said people aged 35 to 44, who are often booking trips for their families, make up more than a quarter (27%) of victims.
Flight tickets are the most common fake item sold relating to holidays, Lloyds said.
Fake flights and missing motorhomes among common holiday scams, says bank
10:55 , Daniel O'Boyle
Victims of holiday scams are losing £765 on average, according to data from Lloyds Bank.
It said people aged 35 to 44, who are often booking trips for their families, make up more than a quarter (27%) of victims.
Flight tickets are the most common fake item sold relating to holidays, Lloyds said.
AstraZeneca divi lifts shares ahead of pay vote, FTSE 100 lower
10:31 , Graeme Evans
Plans for a 7% dividend hike today lifted AstraZeneca shares ahead of a potential AGM showdown over greater rewards for the FTSE 100’s best paid chief executive.
Long-serving Pascal Soriot’s salary, bonus and long-term incentives hit £16.8 million in 2023, a figure that could increase to about £18.7 million under a new three-year remuneration policy.
The company said competition for talent in the global pharma market and Astra’s much larger footprint were among reasons for the more lucrative pay package.
But voting advisory groups Glass Lewis described the plans as excessive and recommended shareholders oppose the binding vote on the new policy.
Shares rose 122p to 10,854p ahead of this afternoon’s London AGM after the company revealed a 20 US cents increase in 2024’s dividend to $3.10 a share.
Chair Michel Demaré said the move showed the “continuing strength of AstraZeneca's investment proposition for shareholders".
AJ Bell investment director Russ Mould said Soriot had delivered plenty of value for shareholders and presided over a major period of growth for the business.
However, he added: “Does anyone really deserve to take home that amount of money?
“It’s not wildly out of kilter with some of the peer group and AstraZeneca clearly wants to do everything it can to keep the architect of its success. However, it begs the question whether pay in general has gotten out of hand in the pharma sector.”
Astra’s shares were among today’s best performers as sentiment steadied after yesterday’s hot US inflation figure dealt a blow to global hopes for summer interest rate cuts.
London’s FTSE 100 index opened in positive territory before retreating to stand 20.31 points lower at 7940.90.
Other big movers included Marks & Spencer, up 3.7p to 259.4p after JP Morgan analysts upgraded their target price to 330p. B&Q owner Kingfisher also rallied 3% or 7.9p to 250p after HSBC raised the stock to a “Buy” rating with a new valuation of 305p.
Property sales expectations put spring in the step of the housing market
09:33 , Daniel O'Boyle
Surveyors are predicting that house sales will bounce upwards in the months ahead.
There was a steady improvement in sentiment in March, with home buyer demand and the supply of available properties increasing, the Royal Institution of Chartered Surveyors (Rics) said.
But it cautioned that, against a backdrop of elevated mortgage rates, the scope for an acceleration in housing market activity “will still be relatively limited”.
Shurgard to buy Lok'nStore for £379m in 1110p per share bid
08:47 , Michael Hunter
The run of international deals taking UK companies off the London stock market gathered pace this morning, with an offer from Belgian firm Shurgard for its British peer Lok’nStore
The 378 million deal will intensify concern that companies listed in the City are looking inherently undervalued by a struggling stock market, making such buyout deals more likely.
But the 1110p per share offer, priced at a 16% premium to where Lok’n’Store’s stock closed yesterdays was backed by its board.
Lok’nStore began in 1995 in Horsham and listed in May 2000. Shurgard started in the same year and is now Europe’s biggest self storage firm, with 270 sites in seven European countries used by 190,000 customers.
Marc Oursin, Chief Executive Officer of Shurgard, said: “ I am excited to disclose this new acquisition in the UK, which doubles our presence in the country, and accelerates our growth and expansion strategy.
“The acquisition brings with it a strong pipeline and development team, which can be leveraged to accelerate new opportunities in London, the South East and Manchester.”
Andrew Jacobs, Chair of Lok'nStore, said:
"Lok'nStore's board believes the offer represents significant value for Lok'nStore's shareholders.
“ We believe that integrating Lok'nStore's assets and operations into Shurgard is highly complementary considering Lok'nStore's asset locations and positioning in its markets.”
Market snapshot: Shares flat, bitcoin climbs
08:46 , Daniel O'Boyle
Take a look at this morning’s market snapshot
M&S and AstraZeneca among risers as FTSE 100 holds firm
08:33 , Graeme Evans
AstraZeneca shares have risen 112p to 10,840p after the drugs giant announced a 7% increase in 2024’s annual dividend to $3.10 a share.
The move came ahead of this afternoon’s AGM, when shareholders will vote on a bigger pay package for chief executive Pascal Soriot. He got £16.85 million in 2023, including £12.9 million from the vesting of long-term incentives.
Other big movers include Marks & Spencer, up 5.3p to 261p after JP Morgan analysts lifted their target price to 330p. B&Q owner Kingfisher also rallied 9.6p to 251.7p.
The FTSE 100 index held firm despite the US inflation shock, with the top flight down by 1.76 points at 7959.64. Property and building stocks including Persimmon and British Land were steady after falling yesterday.
Aviva and Lloyds Banking Group were among today’s biggest fallers after their shares traded without the right to their latest dividend awards.
Darktrace ups guidance for second time in a row
08:17 , Simon Hunt
Darktrace has raised its annual revenue and margin forecasts for the second time in a month as the cybersecurity firm reported a 27% jump in third-quarter revenue.
The Cambridge-based business now expects full-year revenue growth of at least 25.5%, 0.5 percentage points above the high end of its previous 23.5% and 25.0% range, which it said reflected continued strong recurring sales to revenue conversion and a relatively stable exchange rate environment.
CFO Cathy Graham said: “Following the roll-out of significant Go-to-Market changes in our first quarter, we were very pleased to see the resulting benefits that drove strong second quarter results, continue to accelerate third quarter financial performance.
“Today's results reinforce our view of first half stabilisation and second half re-acceleration.”
FTSE 100 steadies after US inflation shock, Brent Crude above $90
07:23 , Graeme Evans
The S&P 500 index closed 0.95% lower last night after another hot US inflation reading caused global markets to revise bets on summer interest rate cuts.
The headline print of 3.5% and third monthly increase for core inflation of 0.4% means September is now the most likely date for the first move by the Federal Reserve.
The 10-year US Treasury yield saw its biggest jump since September 2022 as the Wall Street shares rally that’s delivered a series of recent record highs for the S&P 500 came unstuck.
Traders have also lowered the probability of the Bank of England cutting rates in June, as well as the European Central Bank ahead of today’s policy decision.
London-listed property, housebuilding and utility stocks reversed after the inflation surprise but a late recovery meant the FTSE 100 index finished 26.42 points higher at 7961.21.
IG Index expects the top flight to open about 0.2% or 19 points higher today.
Brent Crude this morning stood above $90 a barrel, with gold steady at $2336 an ounce despite the deterioration in the outlook for US rate cuts. A stronger dollar left the pound near five-month lows at $1.25 this morning.
Poundland sales slip as it switches clothes to Pepco brand
07:21 , Daniel O'Boyle
Sales at Poundland slipped in the first three months of 2024, its parent company Pepco revealed today.
The 0.7% decline came as the discount chain switched its clothing range to Pepco-branded products.
Pepco, which is one of Europe’s top retailers and also owns the Dealz brand, also appointed Stephan Borchert as its new boss after Trevor Masters left last year.
Recap: Yesterday's top stories
07:12 , Simon Hunt
Good morning from the Standard City desk.
Can Britain’s slow lane economy manage to eke out growth for two months on the trot for the first time since September?
That does not seem a very high bar to aspire to yet such are the grim realities of the UK’s parlous situation that it would be seized as major triumph by Downing Street after the autumn recession.
The consensus forecast among City scribes point to a 0.1% advance in GDP when the scores on the doors for February are revealed on Friday. Following the 0.2% mini-boom (by recent standards) in January that would represent something of a sustained spurt on recent performance.
But hang on to your hats.
The anecdotal feedback we hear consistently is that consumer spending remains fragile, with interest rates still at 5.25%, and business cost pressures have not gone away.
Throw in “noises off” such as the diversion of shipping away from the Red Sea thanks to the Houti attacks, and the relentlessly awful weather, and my guess would be that UK plc will do well to reach the heady heights of 0.1%.
JP Morgan boss Jamie Dimon’s tour d’horizon message to shareholders this week outlined many reasons why inflation may prove harder to master than the Bank of England currently hopes, delaying and slowing the interest rate cuts that would provide a welcome adrenaline rush.
Let’s hope the City forecasters are right, after all, even slow growth is better than no growth - just.
~
Here’s a summary of our top stories from yesterday:
Tesco makes £2.3 billion profit as easing cost of living crisis see shoppers finally start buying more again
M&C Saatchi reports 10% fall in profits as advertisers rein in spending in “challenging” market
Former Rolls Royce boss is new chair for air traffic control body
THG bosses waive bonuses after it makes yet another huge loss amid “challenging macroeconomic environment” and yen devaluation
Direct Line appoints new finance chief after series of disasters
