CMC under pressure in blow to Tory Party
PROFITS tumbled at CMC Markets, the trading house led by major Tory donor and Boris Johnson backer Peter Cruddas in a possible blow to party coffers.
A Covid inspired trading boom is over, though CMC still managed to record a 2% jump in revenue to £288 million in the year to March. But profits tumbled 43% to £52 million and the dividend was slashed by 40% to 7.4p.
That’s a blow to the Cruddas personal fortune since he remains the biggest CMC shareholder — and perhaps to the Tory party. He made a £500,000 donation to the party just days after he was made a Lord against the advice of parliamentary watchdogs.
Cruddas was “too busy” to take questions today. He has been outspoken in his support for Johnson, whom he was working to get reinstalled as leader.
Euan Marshall, the chief financial officer, said: “Market conditions have been relatively quiet. The important thing is that we remain laser focussed on the future.”
CMC has expanded into simple share trading and ISAs, an attempt to take on Hargreaves Lansdown on its home turf.
Lord Cruddas said in a statement: “Since pioneering online trading over 30 years ago, CMC continues to innovate and respond to market changes and challenges.”
CMC shares fell 4% to 163p. They are down nearly 40% in the last 12 months.
Spanish banking giant gets new London hub
INTERNATIONAL finance house Alantra today opened a new HQ on Cannon Street in London, a boost to the Square Mile and a vote of confidence in the City.
The Spanish giant said the new offices are an expansion from previous offices on Queen Victoria Street and King William Street. They will house 180 staff of which 150 are investment bankers.
They will include Miguel Hernández, the CEO of investment banking, and other leading executives.
Alantra has offices in 22 countries. It said today: “It is a natural next step to create a key hub in London, given the significance of the City of London as a global financial centre which offers access to institutional capital and top talent from around the world.”
Post Brexit, many predicted bankers would leave London and head instead to rivals such as Frankfurt. In practice, very few major jobs have shifted.
Alantra has a 30% stake in Singer Capital Markets. It has advised on 450 deals in the last five years.
Two-year gilt yields exceed mini-Budget highs
Two-year gilt yields have rocketed to levels not even seen during the chaos of last year’s disastrous mini-Budget, after hotter-than-expected job and wage figures today.
The yield hit 4.74%, ahead of the 4.73% reached on 28 September, in the aftermath of Kwasi Kwarteng’s “fiscal event”, when a programme of unfunded tax cuts led to a bond sell-off that ultimately prompted the Bank of England to interfere.
FTSE 100 edges ahead, Admiral shares reverse 4%
The FTSE 100 index continues to underwhelm, with today’s performance held back by the impact of a weaker dollar on overseas-earning stocks.
London’s top flight rose by 10.88 points to 7581.57 compared with gains of more than 0.5% for leading European benchmarks.
Ocado shares are on the risers board for the second successive session after lifting 10p to 410.5p, while there’s a 2% recovery for mining stocks Rio Tinto and Antofagasta.
Car insurer Admiral is the leading faller following a decline of 4% or 103p to 2225p, while North America-focused plant hire business Ashtead is down 48p to 5366p in the wake of annual results.
The FTSE 250 index is 24.89 points higher at 19,215.70, led by a jump of 4% or 32p to 784p for Auction Technology Group.
Key market data as gilt yields rise again
Take a look at the key market data as the FTSE 100 opened higher, but gilts got even closer to the highs reached amid last year’s mini-Budget.
Another rate rise on way as wage growth hits 7.2%
The faster-than-expected annual wage growth of 7.2% for the three months to April in today’s employment report means a further interest rate hike looks a certainty by the Bank of England next week.
Economists at ING point out that UK rates are now comfortably into restrictive territory and that the amount of tightening priced into markets – an additional 120 basis points of rate hikes – looks excessive.
However, they added: “Today’s data are a reminder that the Bank of England is unlikely to rush into rate cuts, which we think are unlikely until this time next year.”
ING adds that it’s going to take some time for wage growth to come down to something consistent with at-target inflation.
The bank added: “Worker shortages do appear to have eased, and the number of workers inactive (neither employed nor actively seeking a job) has fallen in recent months.
“Nevertheless, it looks like some of the drivers of hiring difficulty during the pandemic are structural. That’s neatly demonstrated by a further rise in the number of workers outside of the labour market due to long-term sickness.”
US inflation rate set for big fall, focus on core prices
Lower energy prices mean the US headline inflation rate is expected to fall to 4.1% when the figures for May are published later today.
A reading at this level would be the lowest since March 2021 and compares with 4.9% in April and the high of 9.1% seen last June.
Core inflation, which excludes food and energy, is proving to be more stubborn as Wall Street expects this rate to fall from 5.3% to 5.1%.
Signs of lingering price pressures may prompt the Federal Reserve to abandon plans to pause interest rates for the first time since January 2022 when policymakers announce their latest decision tomorrow.
Oanda markets analyst Edward Moya said: “If the US economy is dealt a hot report, the Fed may have to debate delivering one more rate hike and possibly signal they might need to stand ready to do more.”
Nikkei and S&P 500 continue to rally, FTSE 100 struggles to keep up
Brent Crude futures are near $72 a barrel this morning after yesterday’s 4% slump on the back of the weakening global demand outlook.
The pressure meant the commodity-focused FTSE 100 index underperformed European markets by adding just 0.1% compared with 0.9% for the Frankfurt-based Dax.
Wall Street had another strong session yesterday as the S&P 500 index moved further into bull market territory by improving 0.9% to a one-year high, with the tech-focused Nasdaq Composite up another 1.5%.
The focus now turns to this afternoon’s US inflation reading for May, which economists expect will show a fall in the headline rate to 4.1% but with core prices still at a stubborn 5.3%.
The outcome will have a bearing on whether the Federal Reserve opts to pause interest rate hikes for the first time since the start of 2022 when the central bank announces its latest decision tomorrow evening.
This morning, policymakers in China took steps to bolster the country’s recovery by lowering the seven-day reverse repurchase rate by 10 basis points to 1.9% in the first reduction since last August.
The move brought a mixed response in Asia markets as the Shanghai Composite traded in negative territory but Tokyo’s Nikkei extended its recent progress to set another post-1990 high.
According to CMC Markets, the FTSE 100 index is expected to open 27 points higher at 7597 today.
Jobs market stays resilient with unemployment at 3.8%
The unemployment rate dipped to 3.8% while wages accelerated, as the labour market continued to show little sign of slowing even against rising interest rates.
Unemployment had been expected to rise to 4.0%, but instead 250,000 more people were in work, meaning the number employed exceeded pre-pandemic levels.
ONS director of economic statistics Darren Morgan said: “With another rise in employment, the number of people in work overall has gone past its pre-pandemic level for the first time, setting a new record high, as have total hours worked.
“The biggest driver in recent jobs growth, meanwhile, is health and social care, followed by hospitality.
“While there has been another drop in the number of people neither working nor looking for work, which is now falling right across the age range, those outside the jobs market due to long-term sickness continues to rise, to a new record.
Pay, meanwhile, closed in on inflation with pay including bonuses up by 6.5% and pay without bonuses up 7.2%, both ahead of expected. While both were still below inflation, they were much closer than in past months.
“In cash terms, basic pay is now growing at its fastest since current records began, apart from the period when the figures were distorted by the pandemic,” Morgan said. “However, even so, wage rises continue to lag behind inflation.”
