Introduction: Ofcom warns broadcasters to remain impartial ahead of election, Lloyds profit falls 28% – business live
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The UK’s media regulator has warned broadcasters to maintain due impartiality ahead of the general election later this year. Ofcom also published new strengthened rules on using politicians as presenters following repeated breaches of its guidance, but stopped short of an outright ban, saying this is not what people want.
Cristina Nicolotti Squires, Ofcom’s broadcasting and media group director, said:
People are clear that they expect broadcasters to maintain the highest standards of due impartiality. It follows that, given politicians’ partial viewpoint, audiences don’t want to see or listen to politicians presenting news – full stop. But while many are instinctively uncomfortable with politicians presenting current affairs, there was no clear consensus for an outright ban.
Lloyds Banking Group, which owns Halifax, has kicked off the UK bank earnings season, reporting a 28% drop in first-quarter pre-tax profits to £1.6bn. Peaking interest rates and growing competition in the mortgage market squeezed margins.
FTSE 100 futures point to the index hitting another all-time high when markets open.
Asian stocks have rallied, led by tech stocks after Tesla, the US electric carmaker, surged in after-hours trading following its promise of new models. Japan’s Nikkei gained 2.3%, Hong Kong’s Hang Seng rose 2.1% and the Singapore exchange added 0.8%. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.6%.
US stocks closed higher after companies such as General Motors reported strong results. The Nasdaq finished 1.6% higher while the S&P 500 rose 1.2%. Tesla kicked off the earnings season for the US tech giants, known as the Magnificent 7, which last week had close to $1 trillion wiped off their combined market value in a boon to short sellers.
Tesla shares surged nearly 10% in after-hours trading, despite a revenue miss for the first quarter of 2024, a steep decline in profits, and a recall of its most recently released car, the $100,000 Cybertruck. However, investors were cheered by previews of a ride-hailing app to be integrated into Tesla products, and the company’s promise to release new vehicle models sooner than previously announced (it referenced a robotaxi network in the works).
The FTSE 100 index touched a new intraday all-time high of 8092.20 earlier today, and is now trading at 8066, up 0.27% and currently higher than yesterday’s record closing high of 8044 points. UK shares have been lifted by rate cut hopes and a slight easing of geopolitical tensions.
The FTSE is is on track for its sixth consecutive session of gains, the first such winning streak since August 2023.
Brent crude, the global oil benchmark, has dropped 0.4% to $88.10 a barrel.
European stock markets have edged higher, and Wall Street is also up, with the Nasdaq gaining 0.7% boosted by tech stocks such as Tesla.
Italian luxury group Prada has posted 16% revenue growth in the first quarter, on the back of the success of its youth-focused brand Miu Miu.
The family-owned company made sales of €1.19bn in the first three months of the year, above the €1.14bn forecast by analysts, despite a slowdown in the global luxury sector.
Sales at Miu Miu jumped 89%, bringing in €233m for the fashion group, which was founded in 1913 in Milan by Mario Prada. Miu Miu accounts for 15% of group sales. Sales at the flagship label Prada grew by 7%.
A model walks the runway during the Miu Miu Ready to Wear Spring/Summer 2024 fashion show as part of the Paris Fashion Week on October 3, 2023 in Paris. Photograph: Victor VIRGILE/Gamma-Rapho/Getty Images
Europe and Asia Pacific, especially Japan, drove the sales growth, while the Americas lagged.
Prada chairman Patrizio Bertelli said:
Over the first quarter, we delivered a solid performance in a more challenging market environment.
Chief Executive Andrea Guerra added:
While the industry is experiencing new dynamics, we retain our ambition to deliver solid, sustainable and above market growth.
Wall Street has opened higher, thanks to a boost from technology stocks, with Tesla leading gains, while other upbeat company results also lifted sentiment.
While the electric carmaker Tesla’s first-quarter revenues disappointed, its promise to bring out new, cheaper models earlier than expected cheered investors, and its shares rose 11%. The Nasdaq climbed 126 points, or 0.8%, while the S&P 500 gained 0.3%.
US durable goods orders rose by 2.6% in March from April, slightly more than expected.
However, this was mainly due to the volatile transport component, noted Stephen Brown, deputy chief North America economist at Capital Economics.
There was a 31% rebound in non-defence aircraft orders amid the resumption of orders at Being, following its latest safety scandal at the start of the year (see my earlier post).
Motor vehicle orders rose by 2.1%, helping to lift overall transport equipment by 7.7%.
Core orders, excluding transport, edged up by just 0.2%, in part due to a 3.9% drop back in orders for computers and related products, following their strength in January and February.
Boeing lost $355m in the first three months of the year as the US planemaker slowed production amid a renewed safety scandal when a door panel blew out of a plane in mid-air.
The losses were smaller than investors had expected, although Dave Calhoun, Boeing’s chief executive, said that slower production would hit its financial performance.
The incident - the result of bolts apparently removed by a contractor in the factory - has put Boeing’s safety record back in the spotlight after years of crisis following two fatal crashes of its bestselling 737 Max plane.
Analysts had expected losses of $619m, according to forecasts collated by S&P Global Market Intelligence. Boeing’s revenues dropped to $16.5bn, down from $17.9bn in the same period last year.
A Boeing 777-9, a variant of the 777X, performs a flying display at the 54th International Paris Airshow at Le Bourget Airport in 2023. Photograph: Benoît Tessier/Reuters
We are using this period, as difficult as it is, to deliberately slow the system, stabilise the supply chain, fortify our factory operations and position Boeing to deliver with the predictability and quality our customers demand for the long term. As these efforts begin to take hold, we’re seeing early signs of more predictable, stable and efficient cycle times in our 737 factory, and expect this will continue to slowly improve.
Near term, yes, we are in a tough moment. Lower deliveries can be difficult for our customers and for our financials. But safety and quality must and will come above all else.
The boss of Schroders, Peter Harrison, is stepping down after eight years at the helm of the UK’s biggest asset manager.
The company said it expects “an orderly transition during 2025 and Peter will remain as a director of the company throughout this period”.
The firm, whose founding Schroders family remains its largest shareholder with a 44% stake, has hired headhunters to conduct a global search find a successor.
Among potential internal candidates are chief financial officer Richard Oldfield, who joined from PwC in October; the firm’s global chief investment officer, Johanna Kyrklund; its global head of private assets, Georg Wunderlin; and group chief operating officer Meagen Burnett, the Financial Times reported.
Harrison, one of the longest-serving financial services bosses in the FTSE 100, has been running Schroders since April 2016, taking charge two months before Britain voted to the leave the EU, which dented the City’s allure and the UK’s status as an investment hub.
The group’s share price has lost 40% since peaking in September 2021.
Elizabeth Corley, chair of Schroders, said:
The board recognises that in Peter, Schroders has had an outstanding CEO over the past eight years. During his tenure, the business has undergone a remarkable transformation to become a global, diversified active investor across both public and private markets, as well as a leader in UK wealth management, more than doubling assets under management to over £750bn.
Harrison joined Schroders in March 2013 as global head of investment, and previously served as chairman and CEO of investment boutique RWC Partners. He had started his career at Schroders in 1988 and also worked at JPMorgan and Deutsche Asset Management.
He said:
Having started my career as a graduate at Schroders, it has been an immense privilege to be CEO. I care about the firm and our people deeply. I believe that now is the right time for the board to begin the search for my successor.
Schroders CEO Peter Harrison is planning to step down in 2025 and the money manager is soon set to kick off a search for his successor https://t.co/rJcOxk6s0O
‘In the US they think we’re communists!’ The 70,000 workers showing the world another way to earn a living.
The Basque Country’s Mondragón Corporation is the globe’s largest industrial co-operative, with workers paying for the right to share in its profits – and its losses. In return for giving more to their employer, they expect more back, writes Oliver Balch.
When Marisa Fernández lost her husband to cancer a few years ago, her employers at the Eroski hypermarket went, she says, “above and beyond to help me through the dark days afterwards, rejigging my timetable and giving me time off when I couldn’t face coming in.”
She had a chance to return the favour recently when the store, in Arrasate-Mondragón in Spain’s Basque Country, was undergoing renovations. Fernández, 58, who started on the cashier desk 34 years ago, and now manages the store’s non-food section, volunteered to work extra shifts over the weekend along with her colleagues to ensure everything was ready for Monday morning. “It’s not just me. Everyone is ready to go the extra mile,” she says.
Such harmonious employer-worker relations are the stuff of corporate dreams, and they are no accident here: the Eroski retail chain is part of Mondragón Corporation, the largest industrial co-op in the world. As a fully signed-up member, Fernández co-owns part of the supermarket chain that also employs her. “It feels like mine,” she says. “We work hard, but it’s a totally different feeling from working for someone else.”
That sentiment is echoed by Mondragón’s 70,000 other workers. Made up of 81 autonomous co-operatives, the corporation has grown since its creation in 1956 to become a leading force in the Basque economy. Eroski is one of its most conspicuous manifestations, with 1,645 outlets across Spain. In addition to food, the chain has profitable sidelines in white goods, electronics, insurance and holiday bookings.
UK factory orders drop while optimism improves – CBI
Factory orders in the UK continued to fall in April but at a slower pace, and optimism picked up to the highest level since mid-2021, according to a survey.
The Confederation of British Industry’s latest manufacturing survey showed output volumes were broadly stable in the three months to April, following strong declines in output in the quarter to March.
The total new orders balance showed a balance of -6%, compared with -13% in January, but manufacturers expect orders to return to growth in the next three months (+8%). The balance measures the number of those saying orders rose minus those who report falling orders.
The business sentiment balance rose to +9%, from -3% in January.
Manufacturers expect output to rise over the next three months, with expectations the strongest since October 2023. Average cost growth remained high compared to historical norms, while domestic and export price inflation are expected to pick up slightly in the coming months.
The latest CBI Industrial Trends Survey found that output volumes were broadly unchanged in the quarter to April, the strongest outturn in 9 consecutive rolling quarters #ITSpic.twitter.com/7xEwecbrbf
Conditions facing manufacturers have taken a turn for the better, with sentiment improving and expectations for future output growth their strongest in six months. A softer labour market has eased concerns that skills and labour could constrain output and orders. Concerns about access to materials and components are also at their lowest since January 2020. These brighter conditions are supporting a more stable picture for investment over the year ahead.
With the recovery still to fully pick up steam, we need to see everyone laser focused on delivering the big reforms that will help manufacturers grow and invest. Full capital expensing, with the potential to extend this to leased and rented assets, can be a game changer that unlocks the incredible power of our manufacturing sector and drives economic growth.
GB News can continue to use politicians as presenters, says Ofcom
Here’s our full story on Ofcom:
GB News can continue to use politicians as presenters, after the media regulator Ofcom concluded the British public does not want to ban the likes of Jacob Rees-Mogg and Lee Anderson from hosting programmes on news channels.
Cristina Nicolotti Squires, the Ofcom executive responsible for broadcast regulation, said that while “many are instinctively uncomfortable” with politicians presenting current affairs programmes, there was “no clear consensus for an outright ban”.
Instead, the media regulator will now explicitly require that GB News ensures serving politicians do not adopt the style and mannerisms of an unbiased newsreader, interviewer, or reporter – such as reading out a list of headlines directly to the audience.
Ofcom also reiterated existing rules banning serving politicians from presenting programmes during an election – meaning GB News will have to fill large gaps in its schedule when Rishi Sunak finally goes to the country.
The media regulator has faced growing criticism over how it applies its rules to GB News and whether the channel is being treated more leniently than traditional broadcasters.
Last month GB News was found to have repeatedly breached impartiality rules by paying Conservative MPs hundreds of thousands of pounds to serve as news presenters and interview the prime minister, Sunak. But rather than impose sanctions on GB News, the regulator instead simply put the channel “on notice” and warned it against further breaches. GB News has broken broadcasting rules on 12 occasions in the last 18 months, with a further eight investigations in progress.
Woodside Energy’s climate plan rejected by shareholders in ‘globally unprecedented’ rebuke
The Australian oil and gas company Woodside Energy has suffered an embarrassing rebuke of its climate credentials after its emissions plan was overwhelmingly rejected by shareholders at its annual general meeting on Wednesday.
Investors lodged a 58% vote against Woodside’s climate report, representing the strongest protest recorded against any of the dozens of listed companies around the world that regularly put climate-related resolutions to shareholders.
The Woodside chair, Richard Goyder, who survived a push against his own re-election at the AGM, said he was disappointed by the result, which was non-binding.
“The board will seriously consider the outcome when reviewing our approach to climate change,” Goyder told shareholders in Perth. “We take the shareholder feedback seriously.”
The well-known businessman, who also chairs Qantas and the AFL, was defiant, telling investors that Woodside’s operations were part of the solution to climate change.
“The world’s going to be a heck of a lot better off if it moves from coal-fired power to gas-fired power as soon as it can,” he said.
The battle over Woodside’s climate plan pitted the country’s biggest oil and gas producer against global and Australian investors increasingly concerned about the energy sector’s contribution to global warming.
Critics believe Woodside’s strategy is overly reliant on offsets, not aligned with Paris climate agreements, and does not seriously consider emissions produced by those using its gas.
Customer service managers on London Underground are to stage a fresh strike in a dispute over terms and conditions.
Members of the Transport Salaried Staffs’ Association (TSSA) will walk out on Friday and ban overtime until 5 May.
The union said the action is likely to cause tube stations to close at the last minute, including into Saturday morning. The workers held a previous strike earlier this month.
The TSSA’s general secretary, Maryam Eslamdoust, said:
It’s clear that our customer service managers’ strike on 10 April made a real impact, many stations shut at short notice, and we had overwhelming support from the public.
Because of London Underground’s refusal to get back round the negotiating table, we have been forced to take further strike action this week.
London Underground must now come clean with the public. Their refusal to negotiate seriously and fairly with our union will lead to stations closing at the last minute and other stations being understaffed.
We have made it clear that our union will not accept the continued threats to our members’ roles, locations, terms and conditions to stand unchallenged. We will continue to take sustained action until London Underground is prepared to negotiate with us in good faith.
London Underground train. Photograph: William Barton/Alamy
The return of optimism in Germany: a third monthly increase in the Ifo index strengthens the view that the German economy has left the trough behind and should be able to enjoy some more cyclical improvement, writes Jeroen van den Broek, global head of sector research at ING.
Germany’s most prominent leading indicator, the Ifo index, has added to recent evidence of a bottoming out of the German economy. In April, the Ifo index increased for the third month in a row, to 89.4, from 87.9 in March. Judging from previous experiences, three consecutive increases tend to mark a turning point in the economy.
The cycle has started to turn for the better. Today’s Ifo index provides further evidence of a bottoming out of the German economy. Hard data for the first two months of the quarter already suggested that the economy could have left recession behind earlier than expected. Strong activity in the construction sector on the back of mild winter weather, and a technical rebound in trade and industrial production should have offset still weak private consumption. This cyclical upswing looks set to continue in the second quarter…
All in all, today’s Ifo index brings back more optimism for the German economy. The cyclical trough is behind us but this doesn’t necessarily mean that a strong recovery is imminent as structural weaknesses remain. A new risk of this cyclical improvement could be that it gives rise to policy complacency.
