- FTSE 100 up 31 points at 7,963
- UK recession confirmed
- Thames Water rescue collapses
4.06pm: FTSE 100 edges toward 8,000 mark
London’s blue-chip index edged ever closer to the 8,000 mark into late trading on the final day of the shortened Easter week.
Come the final hour of trading, the index sat 31 points higher at 7,963. Earlier it hit a new 12-month high of 7,975.38 – the highest since 22 February 2023.
Big risers included JD Sports Fashion PLC (LSE:JD.), British Airways owner International Consolidated Airlines Group and Hikma Pharmaceuticals PLC (LSE:HIK, OTC:HKMPF).
JD Sports climbed almost 15% after pleasing investors with an update earlier in the day… Read more
IAG’s 3.4% gains came after the firm received positive comments from JP Morgan on Wednesday, meanwhile… Read more
United Utilities PLC and Severn Trent PLC (LSE:SVT) remained under pressure and were among the index’s biggest fallers, after Thames Water faced its shareholder rescue package being withdrawn… Read more
M&G PLC (LSE:MNG) remained the index’s biggest loser though, falling 6.2%, while Smith & Nephew PLC (LSE:SN) slid 4.4% after confirming a new chief executive would join next month.
3.55pm: Union calls to nationalise Thames Water to save jobs
Unison union has called on the government to renationalise Thames Water as questions swirl over the firm’s ability to survive without rescue funding from shareholders.
“It’s clear the business model for Thames Water has failed and the company is unviable. Even Thames Water’s own shareholders refuse to keep it afloat,” the union’s environment head, Donna Rowe-Merriman, said.
“Yet again, staff are facing an uncertain future with jobs at risk and no hope of much-needed investment. Customers will have to contend with poor water quality and rising bills.
“This utter chaos is further evidence the government needs to renationalise Thames Water now.”
Some £500 million in rescue funding was pulled by Thames Water shareholders on Tuesday morning, over disagreements with Ofwat on the London supplier’s turnaround plan… Read more
3.40pm: Baltimore port closure to have little economic impact – analysts
The lengthy closure of Baltimore port, following the collapse of the Francis Scott Key bridge, is unlikely to have a material economic impact, analysts reassure.
Having been struck by a Maersk-operated container ship on Tuesday, the bridge collapsed, leaving several people missing and presumed dead.
As per Lloyd’s of London, the case could prompt the largest-ever maritime insurance claim… Read more
However, according to Capital Economics analysts, the macro impact should not be of too much concern.
Indeed, the closure of the shipping lane, prompted by the collapsed bridge, could “result in a lengthy disruption to the Baltimore port,” analysts acknowledged.
“Nevertheless, since that port is the 15th largest in the country, handling only 1.5% of total nationwide container traffic, even an extended closure wouldn’t have any impact on either GDP or inflation,” they said.
3.28pm: BuzzFeed to be taken over by the Independent
The Independent is set to take over BuzzFeed and HuffPost through a deal bringing together several online media brands.
BuzzFeed and other brands included in the deal will continue to operate as separate sites under the agreement but will be managed by the Independent, which will also take on staff.
The move comes after BuzzFeed and the Independent have each struggled financially in recent years, with each appealing to younger audiences but the former failing to convert these to profits and the latter being hit by the shift to online.
“Our partnership with BuzzFeed represents a new leap forward for our business,” Independent chief executive Christian Broughton said.
“The synergies between our companies have been clear from day one, and we know this partnership will unlock new business, drive growth and ultimately take both companies’ brands to the next level in the UK and Ireland,” BuzzFeed’s Alan Reid added.
3.14pm: Energy prices to fall further in July – analysts
Energy prices will likely fall even further in July following a hefty drop from April 1, Cornwall Insight analysts have forecast.
In its latest forecast, the energy consultant said Ofgem’s price cap would likely fall by 8% to £1,560 on an annualised basis in July, from £1,690 in April.
This is higher than original predictions though, which Cornwall said was due to a rise in wholesale prices during February.
“Additionally, the new predictions also include two adjustments from Ofgem which are being introduced from the start of April,” Cornwall added.
“The regulator has allowed a temporary allowance to aid suppliers in meeting the cost of customers who are struggling to pay their bills.”
Such a move has been designed to recoup some of the roughly £3 billion worth of energy debt faced by suppliers, though British Gas and E.ON have reported soaring profits on such allowances previously… Read more
“Predictions of a fall in energy prices in July are another step in the right direction for households who have been struggling with the cost of living over the last few years,” Uswitch’s Will Owen commented.
2.35pm: Boots UK’s sales climb on strong skincare demand
More on Walgreens Boots Alliance Inc (NASDAQ:WBA, ETR:W8A) and the wing’s UK division, Boots, enjoyed a 3% rise in sales over the three months to February.
This was as in-store sales climbed 4.5%, while digital sales jumped 16.8%, including on Boots’ website and app.
The retailer’s skincare division saw particularly strong demand meanwhile, with sales up 15%.
“I am really pleased to see our positive momentum continue across the whole business, with more people shopping with us both online and in-store, and strong gains in both our key markets of healthcare and beauty,” Boots UK boss Sebastian James said.
This came as the firm’s parent, which includes the US wing and other international businesses, posted expectation-beating sales, but a US$5.9 billion net loss.
“Walgreens is currently in the middle of a major cost-cutting phase […] while it attempts to pivot from a pharmacy and retail chain to a healthcare provider,” eToro analysts said.
2.10pm: US markets open higher as GDP revised upwards
The Dow Jones led markets slightly higher in early trading after data revealed that US gross domestic product (GDP) grew more than previously thought in the final quarter.
As per the Bureau of Economic Analysis (BEA), the third and final estimate for GDP over the last three months of last year was 3.4%, against the 3.2% originally thought.
Faster growth came from upward revisions in consumer spending and non-residential fixed investments, the BEA said.
The Dow Jones added 17 points to reach 39,777 on the data, while the S&P 500 and Nasdaq climbed 4 and 6 points to 5,253 and 16,406 respectively.
The upward revision indicates “resilience in the US economy, despite what many would consider to be restrictive real interest rates,” Validus Risk Management’s Ryan Brandham commented.
Separate Labour Department data showed weekly jobless claims slipped by 2,000 to a seasonally adjusted 210,000 meanwhile, flat with previous readings and below expectations.
“Overall, this data will reinforce the stance of some Fed members who are questioning the necessity of three rate cuts in 2024,” Brandham explained.
“It will also support members of the Fed who are cautious about initiating cuts prematurely.”
Among companies, Walgreens Boots Alliance Inc was among the few reporting in the run-up to Easter, with shares rising after sales came in above expectations.
1.45pm: JD Sports, Flutter lead FTSE 100 higher
JD Sports Fashion PLC (LSE:JD.) held its spot as the FTSE 100’s biggest riser into Thursday afternoon, soaring 11.6% after pleasing investors with an update earlier in the day… Read more
Reassurances from analysts that Flutter Entertainment PLC (LSE:FLTR) should fare relatively well against several proposed clampdowns on gambling firms in the US saw it emerge as the next biggest riser meanwhile, climbing 2.9%… Read more
Hikma Pharmaceuticals PLC (LSE:HIK, OTC:HKMPF) and British Airways owner International Consolidated Airlines Group also enjoyed gains, with the latter having received positive comments from JP Morgan on Wednesday… Read more
Water firms Severn Trent PLC (LSE:SVT) and United Utilities PLC sat among the FTSE 100’s biggest fallers in the meantime, after Thames Water shareholders axed the firm’s rescue package… Read more
FTSE 250-listed Pennon Group PLC (LSE:PNN, OTC:PEGRY) also dipped over 1% on the news.
M&G PLC (LSE:MNG) also faced a hefty fall, sinking 5.9%, while Smith & Nephew PLC (LSE:SN) slid 4.1% after confirming a new chief executive would join next month.
The FTSE 100 itself gained 35 points to reach 7,967.
1.30pm: Bitcoin gains on dollar
Bitcoin (BTC) added 2.2% against the US dollar on Thursday morning after closing lower yesterday, bringing its week-on-week performance above 4%. The BTC/USD pair was swapping at around $71,000 at the time of writing.
Bitcoin exchange-traded funds continued to recover on Wednesday, with another $243 million of cash inflows, adding to the $400 million-plus earlier in the week.
The bitcoin ETF space as a whole is approaching $12 billion of net cash inflows for the first time since the US Securities and Exchange Commission approved the products in January.
12.47pm: UK emissions fell last year as wind hit record
UK greenhouse emissions fell by 5.4% over the course of last year as less gas was used for electricity and heating and wind took a larger role in powering the country.
As per government figures, Britain emitted 384.2 million tonnes of carbon dioxide equivalent (MtCO2e) over the year, with the energy sector recording the largest drop.
Some 41.1 MtCO2e was released by the sector, which accounts for 11% of UK emissions, against 51.9 MtCO2e in 2022.
This was as gas power generation fell by 21.1%, while wind made up a record 28.7% of the UK’s energy needs for the year.
Overall, renewables outperformed fossil fuels for a third year, generating a record 47.3% of Britain’s electricity, compared to 41.5% in 2022.
“These official figures show that renewables have outstripped fossil fuels yet again and provided more of the UK’s annual electricity needs than ever before, with wind leading the way as our biggest source of clean power,” RenewableUK director Ana Musat said.
“With renewables, we can strengthen Britain’s energy security with the cheapest sources of new power available for billpayers.
“That’s why we’re urging ministers to work with us to increase the number of shovel-ready renewable energy projects which the government could bring forward through this year’s auction for contracts for difference auction.”
12.30pm: Mixed start seen on Wall Street
Futures trading had markets showing mixed ahead of Thursday’s opening bell.
The Dow Jones was called 9 points higher at 40,153, while the S&P 500 and Nasdaq looked to slip 1 and 4 points to 5,307 and 18,499 respectively.
Thursday brings the release of revised fourth-quarter gross domestic product data, with previous readings showing 3.2% growth for the final three months of the year.
Jobless claims data is also expected, with the market anticipating a slight rise from the previous reading of 210,000 to 214,000.
That said, it’s Friday’s personal consumption expenditure data that has investors really on edge, according to Scope Market’s Joshua Mahony.
This should be “a key driver of sentiment over what the Fed might do from here,” he said, given recent commentary from policymakers that there was “no rush to lower interest rates as things stand”.
Anticipations that rates could start being cut in June seem optimistic as a result, he added.
12.07pm: Ofwat responds to Thames Water issues
Ofwat has urged Thames Water to assess all options to secure funding to improve the firm for customers after shareholders stepped back on a £500 million rescue package this morning… Read more
Having been accused of not satisfying Thames’ turnaround plan ahead of the implementation of tougher new regulations next year, Ofwat responded:
“Safeguards are in place to ensure that services to customers are protected regardless of issues faced by shareholders of Thames Water.
“Today’s update from Thames Water means the company must now pursue all options to seek further equity for the business to turn around the performance of the company for customers.
“Ofwat’s PR24 [five-year plan] price control will put customer and environmental priorities at the heart of the water sector. In order to drive this change, we need to ensure that the sector attracts investment and is fair to billpayers. Since 2020 nearly £4.6 billion in new equity has been injected into the sector. We will set out our draft determinations in June this year.
“We also need to see companies deliver the performance that customers expect and that they are run in a way that meets customers’ expectations.”
11.47am: M&A market rebounds in first quarter
The dealmaking market looked to be regaining traction over the first quarter following a downtrodden year, with the value of takeovers more than doubling.
As per LSEG data, eleven transactions worth over US$10 billion took place, fetching a total value of US$215 billion, against US$100 billion in the first three months of 2023.
This was as the value of global merger and acquisition (M&A) deals jumped 30% to US$690 billion, despite the number of deals sitting 31% lower.
“We’re back to average, or back to normal,” said Goldman Sachs’ Andre Kelleners commented.
“We’ve seen a real, robust rebound from exceptionally low levels this period a year ago.”
Activity is said to have increased as optimism grows around the prospect of interest rate cuts in the coming months, making financing for such deals cheaper.
11.32am: Flutter climbs as analysts brush off fears over US clampdowns
Flutter Entertainment PLC (LSE:FLTR) climbed on Thursday, as Jefferies analysts reassured it was well positioned to address the likes of higher taxes, potential clampdowns on VIP schemes and prospective bans on college betting in the US.
Responding to media reports that each were being called for, Jefferies argued “Flutter sits in a relatively better position to address [these]”.
As per the Wall Street Journal, Senator Richard Blumenthal has sent letters to eight gambling firms urging an end to using player data to target VIP schemes at repeat, and potentially problem, customers.
Calls have come for a ban on college prop betting, alongside proposals in New Jersey to tax gambling firms 30% instead of 15%, which Jefferies also reassured would not pose large issues.
Shares climbed 2.1% on Thursday, having plummeted on Wednesday… Read more
11.01am: No one expected economic growth last year – Chancellor
Chancellor Jeremy Hunt has found himself defending the government once again after revised ONS data confirmed the UK’s slip into technical recession late last year.
“The prime minister’s pledge last year was to halve inflation and he delivered on that. In fact, inflation has fallen from over 11% to 3.4%,” he said when asked if the 0.4% contraction in GDP over the latter half of the year meant Rishi Sunak had failed on pledges to grow the economy.
Hunt continued: “Having done that he then said we would grow the economy. I don’t think any of us were expecting the economy to actually grow last year, the Bank of England wasn’t, the Office for Budget Responsibility wasn’t, in fact it did, albeit at a very slow rate.”
“That is a testament to the resilience of the economy but also the fact the government took some very difficult decisions early on to make sure we got the economy back on track.”
Thursday’s ONS data had confirmed that GDP contracted by 0.1% and 0.3% over the third and fourth quarters of last year respectively, meaning the UK was in recession. Over the year, GDP grew by 0.1%… Read more
10.41am: Thames Water parent to default on debt
Thames Water’s ultimate parent company Kemble has confirmed it will not be able to make debt repayments due next month after losing out on a £500 million rescue package.
“Absent an investible proposition for the shareholders to provide new equity, Kemble […] considers at the current time that it will not be possible to pay further interest payments and, unless an extension to the maturity of the facility is granted by lenders, it will not be able to refinance or repay a £190 million facility which matures on 30 April 2023,” it said.
Shareholders were confirmed to have opted out of granting the highly indebted London water supplier a £500 million rescue package this morning.
Advisers from turnaround consultant Alvarez & Marsal have been appointed to lead negotiations with lenders and debt holders in the meantime… Read more
9.57am: Baltimore bridge collapse could be largest insurance payout ever – Lloyds
Lloyd’s of London chair Bruce Carnegie-Brown has said the Baltimore’s Francis Scott Key Bridge incident could turn out to be the largest marine insurance payout of all time.
The bridge collapsed after being struck by the Dali cargo ship, operated by Maersk on Tuesday morning.
Several people have been left missing presumed dead following the incident, including workers on the bridge at the time, while drivers have been pulled from the river since.
One of the US east coast’s major shipping arteries has been shut, and will likely remain so for some time, following the collapse, meanwhile.
Carnegie-Brown commented he would be “very surprised” if the total cost to insurers was not in the multi-billion dollar mark.
“The tragedy has the capacity to become the largest single marine insurance loss ever,” he said.
9.30am: JD Sports leads risers, FTSE 100 climbs
London’s blue-chip index added 32 points to reach 7,964 on Thursday morning, with JD Sports Fashion PLC (LSE:JD.) leading the way after a positive trading update.
Having reassured that it was outperforming the market and that conditions should improve later this year, the retailer climbed 5.4% to 122.61p.
Also rising were HSBC Holdings PLC (LSE:HSBA) and Flutter Entertainment PLC (LSE:FLTR), as each looked to recoup falls seen on Wednesday.
Severn Trent PLC (LSE:SVT) and United Utilities PLC featured among the day’s fallers meanwhile, following news that peer Thames Water would not get a rescue package from shareholders.
Medical technology company Smith & Nephew PLC (LSE:SN) fell 3.4% in the meantime, after announcing John Rogers would join the company as chief executive in April, replacing Anne-Francoise Nesmes.
9.10am: Thames Water shareholders blame Ofwat as funding pulled
Shareholders in Thames Water have blamed regulator Ofwat after pulling a £500 million rescue package from the supplier to London earlier today.
In a statement, the nine shareholders said Ofwat had failed to provide regulatory support for Thames Water’s turnaround plan, which included over £18 billion worth of investment in the likes of infrastructure.
“To support such unprecedented investment, shareholders committed to supporting a further £3.25 billion of investment on top of the £500 million provided last year, and pledged to take no cash out of the business until a turnaround was delivered,” the statement read.
“This was a solution which addresses the root cause of Thames Water’s challenges without the need for any taxpayer funding.
“However, after more than a year of negotiations with the regulator, Ofwat has not been prepared to provide the necessary regulatory support for a business plan which ultimately addresses the issues that Thames Water faces. As a result, shareholders are not in a position to provide further funding to Thames Water.”
8.48am: 888 Holdings sells US assets to Hard Rock
William Hill owner 888 Holdings PLC (LSE:888) has agreed to sell selected assets to Hard Rock Digital as it disposes of it US business-to-consumer business.
This will likely be completed in phases up to the fourth quarter of this year, as 888 looks to fully exit from the US by the end of 2024.
“The exit of US B2C operations is expected to realise a recurring annualised benefit to adjusted EBITDA of approximately £25 million from 2025 onwards,” a statement read.
“The group intends to reinvest approximately £10 million of these savings into growth and value creation initiatives.”
A £40 million net impact is set to be incurred from the disposal of its US assets, which 888 added had already been included in financial targets.
Shares dipped 1.7% to 87p.
8.29am: UK recession confirmed, construction rebounds in January
Revised figures from the Office for National Statistics (ONS) on Thursday confirm that the UK did indeed enter a technical recession over the latter half of last year.
However, the contraction was not as bad as originally feared, with gross domestic product (GDP) growth coming in at a negative 0.4%, against previous estimates of minus 0.5%.
This is after revised figures showed a 0.1% contraction between July and September, followed by a 0.3% reduction between October and December.
GDP was said to have ticked up by 0.2% over the month of January meanwhile, supported by a 1.1% growth in the UK’s construction output.
However, the figure remained in negative territory over the three months to January, down 0.2%, as service output stagnated, production dipped 0.2% and construction fell 0.9%.
8.00am: Thames Water misses out on rescue package
It has been confirmed that Thames Water will not receive a £500 million rescue package from shareholders after failing to satisfy agreed conditions.
The company’s immediate parent said on Thursday that it had been required to develop a turnaround plan to qualify for the funding, which shareholders approved.
However, discussions with regulator Ofwat found that the plan would be unfeasible based on new tougher regulatory rules expected next year.
“I’d like to reassure our customers that, despite this announcement, it is business as usual for Thames Water,’ chief executive Chris Weston said.
Liberal Democrat MPs have called for debt-laden Thames Water to be placed into special administration in order to secure water and sewage services for its 15 million customers.
7.43am: JD Sports says it’s ‘outperforming’ the market
JD Sports says it’s “outperforming a challenging market” in a full-year trading update posted today.
Profit before tax is tipped to be in line with the £915-935 million guided range, meaning like-for-like sales were up 4.2% year on year, or 8.4% on an organic basis.
Total sales grew 3.6% to £10.5bn while gross margins were 47.3%, the group confirmed.
JD Sports will be hoping the update resuscitates the group’s flailing share price, which has fallen more than a quarter year to date.
Chief executive Régis Schultz warned that “the current trading environment remains challenging due to less product innovation and elevated promotional activity, especially online”.
“We anticipate trading conditions will improve as we move through the year, helped by a busy sporting summer and softer comparatives with last year.”
7.27am: Spirent accepts offer from Keysight
Spirent Communications (LSE:SPT) plc has accepted a takeover bid from US electronics group Keysight at 201.5p per share, representing a roughly 14% premium to Wednesday’s closing price.
The bid beats out a previous offer from Viavi by a 26.5p per share.
Keysight, which is listed on the New York Stock Exchange at a $27 billion (£21.4 billion) valuation, signalled its intent overnight.
“The Spirent directors consider that the acquisition represents a superior proposition for Spirent shareholders relative to the Viavi offer,” Spirent said in a statement.
“Accordingly, the Spirent directors have unanimously withdrawn their recommendation of the Viavi offer and intend to adjourn the Viavi offer shareholder meetings.
7.12am: Stocks to rally
Stocks are tipped to rally 37 points higher to 7,966 when markets open today, following a middling session on Wednesday when the FTSE 100 closed a few points lower.
It follows a rebound in the US stock market overnight. The three major US stock indexes shook off losses from earlier in the week to finish in positive territory.
On the company news front, it has just emerged that Spirent Communications (LSE:SPT) plc will be the latest UK company to delist after agreeing to a cash offer by Keysight Technologies at 201.5p per share.
The offer represents a 14% premium to Spirent’s Wednesday closing price; the stock is likely to rally to meet this premium when trading commences.
JD Sports Fashion PLC (LSE:JD.) will soon have its finals out, while GDP figures and the Nationwide House Price Index are points of interest on the macroeconomic calendar.
