- Blue-chip index at 7,995
- Miners, housebuilders rally
- Gold, oil prices skyrocket
4.01pm: FTSE 100 looks to miss out on record close
Strong gains did not look enough to take the FTSE 100 to a record closing value on Friday, as the index dipped below the 8,000 mark in late trading.
At 7,995, London’s blue-chip index was up 72 points for the day, or by 0.9%.
Leading the charge was mining companies, with Fresnillo PLC (LSE:FRES) emerging as the day’s top riser on gains of 7.3% as gold prices jumped to a new record high.
Glencore followed suit, adding 4.8%, while Anglo American PLC (LSE:AAL), Antofagasta PLC (LSE:ANTO) and Rio Tinto PLC climbed 3.7%, 3% and 2.9% respectively.
BP PLC (LSE:BP.) and Shell PLC (LSE:SHEL, NYSE:SHEL) climbed 3.9% and 3.1% in the meantime, after reports the latter had recently almost emerged as the target of a UAE state-backed takeover.
Housebuilders also enjoyed a strong showing after a flurry of upgrades by JPMorgan analysts on optimism the sector was approaching recovery.
3.51pm: Oil at six-month high as tensions grow in Middle East
Oil prices soared to a six-month high on Friday as reports emerged suggesting Israel was preparing for an attack by Iran.
By the afternoon, benchmark Brent Crude was at US$91.87 a barrel, taking prices to their highest since October when the Israel-Hamas conflict broke out.
This took prices up 0.8% for the day, and marked an almost 24% increase since the start of the year.
“Heightened tensions in the Middle East, with the risk of a regional war between Iran and Israel breaking out imminently, have propelled both oil and precious metal prices higher,” Bestinvest director Jason Hollands explained.
Indeed, gold climbed past the US$2,400 mark to an all-time high on Friday, taking gains for the year to 20.5%… Read more
According to reports, diplomatic efforts to de-escalate tensions are ongoing, though the US has moved additional resources to the region and is preparing defences.
3.29pm: Gold smashes $2,400 mark
Gold smashed through the US$2,400 ceiling on Friday, continuing a months-long charge and taking mining stocks with it.
At its daily high, the precious metal climbed to US$2,417 per ounce, before later receding to US$2,414 later on.
This was up 20.5% over the last 12 months, with gold having sat as low as US$1,190 more recently in mid-February.
Hargreaves Lansdown analyst Susannah Streeter explained fears over tensions escalating in the Middle East had fuelled the gains in recent months.
This includes concerns over Iran potentially becoming involved in the Israel-Hamas war, while Finalto said traders were also pricing in the prospect of America raising further debt to extend support to Ukraine.
Silver prices also shot up, hitting a ten-year high and peaking at US$29.57 per ounce on Friday.
Mining companies rallied on the news, with FTSE 100-listed Fresnillo PLC (LSE:FRES) topping the index’s risers with gains of 7.7%.
3.00pm: US markets open lower; JPMorgan, Goldman fall
The Dow Jones opened 197 points off at 38,261 on Friday morning, as several banks shed value following first-quarter updates earlier on.
Falling 129 points and 28 points respectively, the Nasdaq and S&P 500 followed suit.
JPMorgan Chase & Co (NYSE:JPM, ETR:CMC) faced a 4% fall despite beating estimates with an earnings update before the market opened.
XTB analyst Kathleen Brooks noted the bank’s guidance for US$90 billion in net interest income this year was lower than market expectations of US$90.72 billion.
“JPMorgan is a victim of its own success,” she said, “the market is getting used to seeing blowout earnings and nice upside surprises. Anything less than […] is a disappointment”.
Goldman Sachs Group Inc (NYSE:GS, ETR:GOS) also took a hit, falling 1.9% on the back of the banking updates, which also featured earnings from Wells Fargo & Co (NYSE:WFC, ETR:NWT) and BlackRock Inc (NYSE:BLK).
2.39pm: Lloyds climbs as analysts brush off FCA motor probe warning
Lloyds Banking Group PLC (LSE:LLOY) and Close Brothers Group PLC (LSE:CBG) were unlikely the targets of a warning from the UK’s financial watchdog to motor finance firms, analysts say.
Given Lloyds made provisions last year and Close Brothers recently cancelled it dividend, KBW analysts said the letter telling firms to hold back cash for a probe into the market was likely aimed at smaller companies.
“It is hard to argue that either are not focused on ensuring that they have adequate financial resources,” KBW said.
An ‘outperfrom’ rating was reiterated for both, with Lloyds climbing 1.4% on the news… Read more
2.10pm: FTSE 100 holds above 8,000 mark
London’s blue-chip index added 77 points to sit at 8,001 come Friday afternoon, buoyed by strong gains from mining companies.
Fresnillo PLC (LSE:FRES) was up 6.6% for the day on the back of surges in gold and silver prices to all-time and 10-year highs respectively.
Glencore PLC (LSE:GLEN) climbed 5% in the meantime, while Anglo American PLC (LSE:AAL), Antofagasta PLC (LSE:ANTO) and Rio Tinto gained 4.3%, 3.4% and 3.2% respectively.
Also climbing was BP PLC (LSE:BP.) on reports United Arab Emirates’ state-owned ADNOC had recently considered a takeover, while housebuilders also gained on a flurry of upgrades from JPMorgan.
1.26pm: BAE Systems climbs as Deutsche hikes targets
BAE Systems PLC (LSE:BA.) climbed on Friday after Deutsche Bank analysts hiked the firm’s share price target on European defence market growth.
“BAE has more exposure to the Nordic, Baltic and Eastern European states, which are the fastest growing defence markets in Europe,” the bank said in a note.
Given the ongoing war in Ukraine, Deutsche highlighted plans from the likes of Poland, Norway, Denmark, Finland and Sweden to boost defence spending.
“BAE could benefit in two ways, either via direct sales to these countries, or via foreign military sales via the US,” analysts added.
Indeed, Deutsche highlighted a series of high-profile contracts from the US so far this year, including for armoured multi-purpose vehicles, alongside M109A6 and A7 Howitzers.
Demand for military jets, such as the Eurofighter, could also be revived, according to the bank, as orders come through from Middle Eastern nations.
Deutsche lifted BAE’s share price target from 1,290p to 1,440p as a result, anticipating a 12% climb on Thursday’s close.
Shares climbed 1.6% to 1,306p on Friday.
12.39pm: Bank of England accused of ‘significant shortcomings’ in forecasting
The Bank of England has been slammed for “significant shortcomings” that have hindered its effort to control inflation.
Former Federal Reserve chair Ben Bernanke said in a report on Friday that the accuracy of predictions by Britain’s central bank had “deteriorated significantly” since the pandemic.
Outdated software and a failure to consult staff, themselves often inexperienced and overworked, were cited as reasons for “deficiencies” in policy maker’s forecasting.
This included of economic shocks such as Russia’s invasion of Ukraine, with Bernanke noting the issues were not unique to the Bank of England, but risked its credibility.
Bank of England governor Andrew Bailey welcomed the review, which also set out 12 recommendations.
“We do not do hindsight. I don’t think it is appropriate to consider whether we would have made different decisions,” he said.
“Would we have communicated our decisions differently? I think the answer to that is yes we would.”
12.09pm: US markets to open lower
Futures trading had US markets opening lower on Friday, as several big banking names reported on first quarter trading early on.
The Dow Jones was seen opening 115 points down at 38,617, while the Nasdaq and S&P 500 looked to fall 98 and 22 points respectively to 18,386 and 5,221 on the bell.
BlackRock Inc (NYSE:BLK) gained 2.6% in pre-market trading after announcing a 36% increase in first quarter profits and that assets under management had hit a record US$10.5 trillion.
JPMorgan Chase & Co (NYSE:JPM, ETR:CMC) fell 3.5%, alongside Wells Fargo & Co (NYSE:WFC, ETR:NWT) by 2.6%, despite both beating estimates.
JPM said profits climbed 6% to US$13.42 billion, while per share earnings jumped 8% to US$4.44.
Wells Fargo reported a 7% drop in net income to US$4.62 billion increase, while earnings per share fell 2% to US$1.20.
Markets also awaited earnings from CitiGroup Inc, with the shares sitting flat in pre-market trading.
11.38am: Housebuilders rally on JPMorgan upgrades
Housebuilders enjoyed gains across the board on Friday after JPMorgan analysts dealt a flurry of upgrades and suggested the sector could be set for a recovery.
Taylor Wimpey PLC (LSE:TW.) gained 3.9%, while Persimmon PLC (LSE:PSN), Barratt Developments PLC (LSE:BDEV) and Vistry Group PLC (LSE:VTY) climbed 2.3%, 1.6% and 1.5% respectively, as all were upgraded to ‘overweight’ ratings.
JPMorgan said newsflow around the UK’s looming general election was likely to boost the sector, with housing expected to be a key focus among campaigning parties.
“Irrespective of which political party wins the upcoming election, we expect the government to increasingly focus on boosting affordable housing and reforming the planning system,” analysts noted.
Cuts to base interest would then likely aid a recovery into 2025, analysts added, after high rates have hit the sector over the last year.
Bellway PLC (LSE:BWY) and Berkeley Group Holdings PLC (LSE:BKG) also climbed 0.6% and 0.4% respectively on the optimistic comments, despite being downgraded to ‘neutral’ by JPMorgan.
Crest Nicholson Holdings PLC, which was kept at ‘underweight’ by JPMorgan, gained 1.2%.
11.13am: Consumers cut non-essential spending – survey
Consumers cut back on non-essential spending over the first three months of this year as cost pressures persisted, a KPMG survey has found.
Some 52% of respondents to the big four accountant’s Consumer Pulse survey said they had scaled back non-essential spending over the quarter.
Just 3% said they had been able to spend more on such products over the same period.
Common discretionary spending, on the likes of travel and alcohol, faced the majority of cuts, according to the survey, followed by clothing and takeaways.
“Should macroeconomic conditions lead to an easing of pressure on household budgets, then four times more consumers say they would boost or replenish their savings, rather than spend more on non-essentials,” KPMG’s Linda Ellett commented.
“If true, it raises significant questions about whether taming inflation leads to a consumer spending boom, or just a rebuilding of savings balances that some consumers have used to offset, or totally pay for, the higher cost of essentials over recent years.”
Analysts had said that consumer spending could fuel economic growth throughout this year, after ONS data showed an 0.1% uptick in UK gross domestic product (GDP) in February… Read more
10.58am: Nationwide members revolt over Virgin Money takeover
Nationwide Building Society is facing a revolt by members over its proposed £2.9 billion takeover of Virgin Money.
Some 1,000 signatures have been collected on a petition calling for Nationwide’s 16 million members to be given a say on the deal.
Mikael Armstrong, who is leading the campaign, argued the building society of strong-arming over the deal, which was announced in early March.
Nationwide appeared “to be going to extraordinary lengths to rush through a deal to fill the pockets of Virgin Money shareholders with Nationwide members’ capital,” he said, “without detailed due diligence”.
“Denying the society’s members, its own customers and owners, a vote on the deal is now an obscene show of arrogance,” he added… Read more
10.01am: Gold continues charge in record territory
Gold prices continued a months-long surge on Friday, hitting yet another record of US$2,400 per ounce early on.
According to Finalto analysts, the latest charge has been buoyed by fears of Iranian involvement in Israel and the prospect of America raising further debt to support Ukraine.
By mid-morning, the precious metal had receded slightly to US$2,397, though this was up almost 20% on a year ago.
Miner Fresnillo PLC (LSE:FRES) was up 4.5% at 604.51p on the back of the rally, with a new 10-year high of US$29.20 per ounce of silver also helping.
“Central banks have been busy stocking up on gold and investors have followed suit,” AJ Bell’s Russ Mould added.
“The asset will come in handy if we continue to see a volatile period on the markets as the timing for interest rate cuts is pushed further back,”
9.30am: UK economy at ‘turning point’ – analysts
Deutsche Bank analysts have said the UK economy is at a “turning point” after data on Friday morning showed a second consecutive month of growth in February.
“The technical recession is behind us,” the bank commented following the data from the ONS showing 0.1% gross domestic product (GDP) growth in February.
“The outlook is brighter than it was a few months ago. Fiscal offsets are already in motion,” the bank added.
“We expect the MPC to gradually dial down the level of restrictiveness in monetary policy.”
Deutsche forecast UK GDP to climb by 0.5% this year, before growing as much as 1.5% in 2025.
The ONS data showed an uptick in the production and service sectors, fuelled by strong manufacturing activity, alongside transport and storage services respectively.
Construction activity remained muted though, as heavy rainfall took its toll.
EY ITEM Club added momentum should continue to build over the rest of the year buoyed by strong wage growth and falling inflation, prompting a “consumer-led recovery”.
9.15am: FTSE 100 tops 8,000 mark
The FTSE 100 rallied above the 8,000 mark on Friday morning following ONS data showing the UK economy grew in February.
By mid morning, the blue chip index was up 83 points at 8,007 and not far off its record highs.
Gross domestic product (GDP) earlier in the day had shown the UK economy grew 0.1% in February, following a 0.3% increase in January.
Miners buoyed the index, with Fresnillo PLC (LSE:FRES), Glencore PLC (LSE:GLEN), Anglo American PLC (LSE:AAL) and Rio Tinto PLC gaining 5.3%, 3.4%, 3.1% and 2.3% respectively.
BP PLC (LSE:BP.) climbed following reports United Arab Emirates’ state-owned ADNOC had recently considered a takeover, while house builders also enjoyed gains.
9.05am: CMA highlights ‘real concerns’ over AI
Britain’s Competition and Markets Authority (CMA) has warned it of “real concerns” over the development artificial intelligence (AI).
Given just a few firms control development of such foundation models, the competition watchdog argued that companies could exploit their market dominance.
This includes Alphabet Inc’s Google, Apple Inc, Microsoft Corp, Meta Platforms Inc, Amazon.com Inc and chipmaker NVIDIA Corp, the CMA said in a research paper.
“When we started this work, we were curious,” the authority’s chief executive, Sarah Cardell, commented.
“Now, with a deeper understanding and having watched developments very closely, we have real concerns”… Read more
8.50am: The morning so far
The strength of Britain’s economy was the point of focus this morning, with gross domestic product growth matching expectations by growing 0.1% month on month in February, following an upwardly revised 0.3% rise in January.
Production was the top performer, soaring by 1.1% in February, with manufacturing, cars and utilities all showing strength. This data underscored the shallowness of Britain’s technical recession at the end of 2023.
On the company news front, Reuters shocked with a report suggesting that the Abu Dhabi National Oil Company (Adnoc) is exploring a bid for British oil and gas giant BP.
Apparently talks have stalled after Adnoc determined that BP was not the ‘right fit’ for the company; politics were also likely a factor.
But the fact that BP was a takeover target in the first place should give policymakers, politicians and the Square Mile pause for thought, particularly given that Shell has also hinted at the prospect of a US listing.
It wasn’t enough to rattle the FTSE 100 index though. Blue-chip stocks are currently 70 points higher at 7,995, with 8,000 a mere whisker away.thanks to the optimistic GDP figures.
Elsewhere in company news, AstraZeneca shareholders approved a controversial increase to chief executive Pascal Soriot’s pay package yesterday.
But it was hardly unanimous, with more than a fifth voting against the increase.
In the cryptocurrency markets, bitcoin (BTC) is up around 1.1% against the US dollar today. Meanwhile, gold has smashed another all-time high of $2,394 an ounce.
8.40am: Bitcoin up, gold hits new ATH
Benchmark cryptocurrency bitcoin (BTC) is up around 1.1% against the US dollar today, with gold has smashed another all-time high of $2,394 an ounce.
Gold is seeing large-scale purchases from central banks in Asia due to its ‘safe-haven’ qualities, while bitcoin remains elevated due to the prospect of lower US interest rates this year.
At the time of writing, the BTC/USD pair was swapping for $70,674, which is around $3,000 below its ATH achieved in March.
Back to stocks, the FTSE 100 remains in a strong position, adding 61 points to 7,984 at the time of writing.
8.15am: BP target of takeover speculation by UAE oil major
Could British oil and gas supermajor BP PLC (LSE:BP.) be the next jewel in the crown of the FTSE 100 to be snapped up by a foreign competitor?
According to a Reuters report, the Abu Dhabi National Oil Company (Adnoc) is exploring a bid for the £90 billion corporation, having sought advice from investment banks on the deal.
Apparently talks have stalled after Adnoc determined that BP was not the ‘right fit’ for the company; politics were also likely a factor.
The fact that BP was a takeover target in the first place should give policymakers, politicians and the Square Mile pause for thought.
Depressed valuations of British companies have seen scores of small, mid and big-cap players leave the London Stock Exchange, with even Shell mulling a delisting in favour of a US float.
Adnoc is headed by Sultan Ahmed Al Jaber, the chair of IMI, which helped to fund the Barclay brothers’ take back of The Telegraph Group from Lloyds.
BP shares were buoyant in early Friday exchanges, adding more than 2%.
The FTSE 100 is currently 68 points higher at 7,992.
7.40am: GDP grows in February
Today’s raft of macroeconomic data underscored the shallowness of Britain’s technical recession at the end of 2023.
Gross domestic product growth matched expectations by growing 0.1% month on month in February, following an upwardly revised 0.3% rise in January.
Production was the top performer, soaring by 1.1% in February, with manufacturing, cars and utilities all showing strength.
Services output also grew, though construction offset the data by shrinking 1.9% due to wet weather.
The solid figures are supporting the FTSE 100 this Friday, with stocks poised to add 45 points when markets open.
7.26am: AstraZeneca executive pay gets the nod
AstraZeneca shareholders approved a controversial increase to chief executive Pascal Soriot’s pay package yesterday.
Over 78% of votes gave the £18.7 million salary and bonus package the nod, representing an 11% year-over-year increase.
Some have argued that Soriot’s exorbitant pay package is too high, though others, including some of AstraZeneca’s own shareholders, have pointed to the US as proof that he’s actually underpaid.
Shareholders were offered a sweetener prior to the vote in the form of a 7% dividend hike; a significant increase from prior years.
7.10am Stocks to move higher
The FTSE 100 is expected to recover from yesterday’s losses, with futures contracts pointing to 35 points of gains, bringing the blue-chip index to 7,958 when markets open.
Stocks closed 37 points lower on Thursday after taking a late whacking on the back of comments made by the IMF on early rate cuts.
Analysts are now predicting the first interest rate cut from the Bank of England will come in September rather than August, with only two cuts this year.
This morning’s gross domestic product print showed a -0.2 year-on-year retraction, though this was an upside surprise compared to the predicted -0.4% retraction.
Industrial production vastly outperformed in February, increasing 1.4% compared to the 0.6% forecast.
There are no major company news announcements expected in the UK today, but a raft of US blue chips are coming later- BlackRock, JPMorgan and Well Fargo.