- FTSE 100 down 99 points
- DS Smith accepts takeover bid
- Supercry to delist
2.21pm: Pension withdrawals on the up
Cash being taken out of pension schemes hit a new record in 2023 according to new data from the FCA.
UFPLS or lump sum withdrawals accessed for the first time rose by 14.6% to 41,571 while the total number of pension plans accessed for the first time increased by 4.8% to more than 739,500.
Paul Leandro, a partner at consultancy Barnett Waddingham, commented: “The FCA should not be surprised by the increasing levels of cash withdrawals from pension pots, but they should be worried.
“Pension freedoms opened up Pandora’s Box – the temptation to draw cash rather than secure retirement income is great, especially in light of the cost-of-living crisis.
“Some withdrawals may be sensible and financially sound, where the individual has suitable resources – but most are not.”
Sales of annuities also decreased though the amount of money withdrawn from pension pots dropped 5% to £43.2 billion in 2023 from a year earlier.
1.49pm: Historic Danish stock exchange burns down
Denmark’s old 17th-century stock exchange building has been engulfed in flames.
Currently home to the Danish chamber of commerce, the Børsen building was seen going up in flames on Tuesday, prompting its spire to collapse.
The near-400-year-old Børsen building was built in 1625, making it one of Copenhagen’s oldest buildings.
Jakob Engel-Schmidt, culture minister, said 400 years of Danish cultural heritage had gone up in flames as a result, with onlookers said to have rushed in to rescue some of the historic paintings inside.
Børsen had been covered in scaffolding and white sheeting as renovations took place, with the cause of the fire as yet unknown.
Everyone inside was reportedly able to escape.
1.28pm: Thames Water given weeks to present survival plan
Thames Water has been given a matter of weeks to convince Ofwat of a viable survival plan to tackle its looming debt pile, the regulator has reportedly said.
A new turnaround strategy must be presented to Ofwat before May 23, the Guardian reported, before a June 12 cut off for the regulator’s so-called draft determinations.
Approval will need to be secured for the London water supplier’s plan to raise consumer bills by 40%, in a bid to address some £16 billion pound worth of debt.
Thames Water has faced crisis and even potential nationalisation over the past year after costs of servicing its debt pile have soared.
Last month, shareholders refused to offer funds to support the company, prompting it to likely default on bonds due later in April, in an apparent dispute with the regulator over hiking consumer bills to foot the cost.
Reports say Ofwat is concerned such plans, without a clear strategy on how management of the debt-laden business would be overhauled, would be unfair on customers.
12.58pm: UK venture capital investment sees worst quarter since Covid
UK companies faced the worst quarter for venture capital investment since the early stages of the Covid-19 pandemic over the first three months of this year.
Start-ups raised US$3.9 billion in the three months to March, against US$4.8 billion a year ago, according to an HSBC Innovation Banking and Dealroom report.
This was the lowest level since the second quarter of 2020, when the pandemic forced the UK into lockdown.
HSBC Innovation Banking said that venture capital investment had “stabilised following a sharp global reset” over the latter half of last year.
Monzo led the way as the UK fintech sector received the most funding over the first quarter, of US$1.4 billion.
Just 36% of this year’s flows so far came from domestic investors though, compared to as much as 64% in 2013, prompting calls for government reform to encourage UK-based investors.
Such venture capital investment had jumped later on in the pandemic, but has since fallen back as the likes of high interest rates hit sentiment.
12.46pm: FTSE 100 under pressure as just a few companies rise
The FTSE 100 continued deep in the red into Tuesday afternoon, down 104 points, or 1.3%, at 7,860.
Overnight news that Israel was to respond to a weekend attack by Iran weighed down stocks globally, leaving just six risers on London’s blue-chip index.
British Gas owner Centrica PLC (LSE:CNA) climbed 1.4% after UBS analysts noted the stock was the “most crowded long” among European utilities.
SSE PLC (LSE:SSE) was up 0.4% in the meantime after the bank highlighted the firm was among the top three for long positions across the sector.
Severn Trent PLC (LSE:SVT) and United Utilities Group PLC (LSE:UU.) also sat among the day’s few risers, alongside Croda International PLC (LSE:CRDA) and Smith & Nephew PLC (LSE:SN).
12.31pm: easyJet suspends Israel flights
easyJet PLC has extended its flight suspension from the UK to Israel until October 27 due to escalating tensions in the Middle East.
Initially paused until April 21, the suspension now covers the entire summer season, reflecting the ongoing volatile situation in the region. Customers with existing bookings have been offered refunds.
This move is part of a broader trend as airlines globally adjust operations in response to recent geopolitical events, including Iran’s attack on Israel, which has significantly disrupted international air travel.
Shares fell 1.2% to 515.60p.
12.22pm: Bank of England to ‘shake up’ inflation forecasting
The Bank of England will “shake up” how it forecasts future inflation following a damning review last week, incoming Deputy Governor Clare Lombardelli has said.
Ex-Federal Reserve chair Ben Bernanke had detailed “significant shortcomings”, including the use of outdated technology, in a review of Britain’s central bank last week.
Lombardelli told MPs on Tuesday that she could “absolutely” assure the bank would carry out “a shakeup in response”.
“There’s a huge amount that we can all learn from what’s happened over the last couple of years,” she said, referencing inflationary shocks from the likes of Russia’s invasion of Ukraine.
“It’s been an extraordinary period and extraordinarily painful,” she added… Read more
12.05am: Mixed start seen in US
The Dow Jones was up 117 points at 38,110 in futures trading, as Tuesday’s opening bell looked to bring mixed fortunes for markets following falls on Monday.
The Nasdaq was seen 22 points lower at 17,854 in the meantime, while the S&P 500 was set to open 3 points down at 5,101.
“Markets have grown increasingly concerned that the events in the Middle East could spark a fresh bout of inflation, thus setting back the expected pathway for interest rates,” Scope Markets analyst Joshua Mahony commented.
That said, commentary due today from the Federal Reserve’s Jerome Powell and Bank of England’s Andrew Bailey could prompt further volatility later, he added.
Among companies, Tesla Inc (NASDAQ:TSLA) (Tesla Inc (NASDAQ:TSLA)) was off 2% in pre-market trading as Monday’s news of sweeping job cuts looked to continue hitting sentiment.
A positive start to the day looked in store for Telefonaktiebolaget LM Ericsson though, which jumped 5% ahead of the markets’ open on a first quarter earnings beat.
11.45am: Tesco rejigs Clubcard after Lidl legal defeat
Tesco PLC (LSE:TSCO) has redesigned its Clubcard Prices logo after losing a legal battle with Lidl over the design.
Some eight million logos will have to be changed in stores under the move, costing over £7 million, after Tesco was ordered last month to change the yellow circle branding.
New Tesco clubcard branding incoming. ???? Clubcard price now in blue background, yellow circle removed. Updated in the Tesco shopping app. pic.twitter.com/EmNjIn8vqR
— Store View (@Storeview) April 12, 2024
Lidl had said the design infringed its own logo, featuring a yellow circle on a blue background, with Tesco’s branding now set to feature a yellow rectangle.
“As we start to roll out our new Clubcard Prices logo, we’re laser-focused on the fantastic offers for our Clubcard customers,” a Tesco spokesperson said.
The spokesperson added Tesco was “disappointed” with the ruling that said it used the design to create a price comparison with Lid, which was upheld in the Court of Appeal.
Tesco fell 1.5% to 281.90p on the news.
11.07am: Chinese economy outgrows expectations, but housing still a lag
Chinese economic growth trounced expectations over the first three months of the year.
Gross domestic product climbed 5.3% over the period, according to China’s National Bureau of Statistics, against expectations for 4.6% growth.
The manufacturing sector drove growth, increasing by 6.7% year on year, buoyed by hi-tech and auto production.
However, housing data showed the market, which accounts for around a fifth of the world’s second largest economy, still faced crisis.
Sales value of newly built residential properties contracted by 30.7%, the fastest pace in more than eight years, while property investment fell 9.5%.
“You cannot manufacture growth forever,” Moody’s Analytics’ Harry Murphy Cruise commented, referencing China’s 5% annual growth target.
“We expect property to remain a major drag on growth this year,” ING Economics analysts added.
“Policies to stabilise the market will likely still be needed in the months ahead.”
10.41am: Long-term sickness at record high
A record 2.8 million people are out of work due to long-term sickness, ONS figures showed on Tuesday.
This comes as the number of 16 to 64-year-olds who are economically inactive hit 9.4 million – the highest level since 2012 in the wake of the global financial crisis.
According to the ONS, long-term sickness is the most common reason for people being economically inactive, meaning they are neither in work, or seeking work.
ONS figures also showed a monthly and annual rise in unemployment to 4.2% between December and March, fuelling hopes that the Bank of England would soon cut base interest.
However, coinciding figures showing a 6% growth in headline earnings, excluding bonuses, clouded optimism.
“While tomorrow’s inflation report will undoubtedly provide financial markets with a greater understanding of the timing around the first Bank of England rate cut, today’s […] highlighted the negative implications of keeping interest rates elevated for an extended period,” Scope Markets analyst Joshua Mahony said.
“Unfortunately, wages remain well above the levels that the BoE would have desired.”
Higher earnings growth than consumer price inflation, of 3.4%, “does at least ensure that the standard of living should be improving,” he added.
9.53am: FTSE 100 a sea of red
Not one company on the FTSE 100 was in the green come mid-morning on Tuesday, prompting London’s blue-chip index 122 points lower to 7,843.
Anglo American PLC (LSE:AAL) led fallers, down 3.6%, while Pershing Square Holdings (LSE:PSH) Ltd, Scottish Mortgage Investment Trust PLC (LSE:SMT), Marks and Spencer Group PLC (LSE:MKS) and IMI PLC (LSE:IMI) were also off by more than 3%.
Following losses on Monday, Israel’s comments overnight that there would be a response to Iran’s weekend attack knocked sentiment further.
The blow stretched to global markets, with indexes in Germany, France, Italy and Spain all shedding between 1.3% and 1.7%, while Shanghai and Hong Kong also dipped overnight.
9.34am: Wage growth skews rate cut hopes on unemployment data
Raised hopes of looming interest rate cuts on news of higher than anticipated UK unemployment were clouded by data showing wage growth remained strong on Tuesday.
Headline wage growth sat at 5.6% between December and February, ONS data showed in the morning.
Excluding bonuses, wage growth came in at 6%, ahead of market expectations for a deeper decline to 5.8%.
“This wasn’t what the Monetary Policy Committee wanted to see,” Deutsche analysts point out, as members mull over the right time to cut base interest.
The data came alongside unemployment figures, showing a rate of 4.2% between December and February, above analysts’ expectations for 4%.
Though the figures suggested signs of slowing UK economic growth, analysts said the continued high wage growth could fuel inflation.
“On the back of this data, the market is now not expecting the first rate cut to come until August,” XTB’s Kathleen Brooks said.
“Stubborn wage growth has reduced the chance of a June rate cut,” she added, with markets now pricing in one cut this year and estimating high chances for a second.
9.06am: Wise falls as revenue disappoints
Wise PLC (LSE:WISE) shares fell almost 8% after reporting full-year revenue below analysts’ expectations.
Revenue for the fourth quarter came in 24% higher at £277.2 million, taking the full-year figure to £1.05 billion, the foreign exchange company reported on Tuesday.
However, this was 1% below consensus estimates, Peel Hunt analysts said, as fourth-quarter volume growth of 14% to £30.6 billion was also slower than expected.
“Given the strong run Wise has had in recent months,” Peel Hunt said the “slight miss on revenues” was likely to weigh on the share price… Read more
8.51am: The morning so far
There was a lot to digest on the company news front this morning, starting with DS Smith agreeing to a £5.8 billion takeover offer from US packaging giant International Paper.
It serves as a snub to domestic bidding rival Mondi PLC (LSE:MNDI), though at 415p per share, DS Smith’s board was duty bound to accept the better offer.
Perhaps surprisingly, DS Smith shares fell 2.4% on opening exchanges, though stocks are in the doldrums across the board as tensions between Iran and Israel continue to flare up.
British clothing brand Superdry bit the bullet and announced that it is leaving the London Stock Exchange.
Superdry shares have tanked this year, with sales falling and losses piling higher after a disappointing Christmas trading season. The group announced an equity raise in tandem with the delisting and the stock plummeted a further 30%.
Dr Martens’ boss Kenny Wilson said he’s leaving the business three years after seeing the iconic British footwear brand go public in the US.
“After six years in the role, I feel that the time is right to hand over this year, and I am excited that Ije will be my successor,” said Wilson.
Dr Martens’ shares have collapsed nearly 90% since its January 2021 IPO, with the stock plunging to new lows following a tough Christmas 2023 trading period.
A trading update today has not helped sentiment.
On the macroeconomic front, the UK unemployment for December to February came in hot at 4.2%, overshooting market consensus of a flat 4%.
The higher-than-anticipated numbers will be highlighted by dovish policymakers as a sign that the UK economy is cooling and therefore the first interest rate cut can get serious consideration.
The FTSE 100 is currently down 115 points to 7,850.
8.33am: DS Smith snubs Mondi, accepts £5.8bn bid from International Paper
DS Smith has agreed to a 415p-per-share offer from US packing group International Paper, putting an end to lengthy negotiations with rival domestic bidder Mondi PLC (LSE:MNDI).
Talks were still ongoing between DS Smith and Mondi as late as last week before Memphis-based International Paper tabled a knock-out £5.8 billion offer.
DS Smith and International Paper today confirmed the combination to create a combined group valued at nearly £16 billion.
Despite accepting the offer from abroad, International Paper has said it will keep DS Smith’s existing HQ along with “key elements” of the London office.
International Paper is also expected to seek a secondary listing of its shares on the London Stock Exchange.
Geoff Drabble, chair of DS Smith, said: “The board believes the combination with International Paper represents attractive value and creates a strong investment proposition for DS Smith shareholders in the global sustainable packaging industry.
“DS Smith is a high-quality business with an excellent customer focus and exceptional people – this is recognised by this combination with International Paper and the strong interest in DS Smith.”
Mark Sutton, Chairman and Chief Executive of International Paper, added: “Combining with DS Smith is a logical next step in International Paper’s strategy to drive profitable growth by strengthening our global packaging business.
“DS Smith is a leader in packaging solutions with an extensive reach across Europe, which complements International Paper’s capabilities and will accelerate growth through innovation and sustainability. We are confident this combination will drive significant value for our employees, customers, and shareholders.”
8.26am: FTSE 100 plummets
The FTSE 100 plummeted 92 points to 7,873 when markets opened today as mounting tensions between Israel and Iran spooked global equities markets.
Oil majors Shell and BP are among the biggest fallers, alongside AstraZeneca, Unilever and Rio Tinto.
Mondi PLC (LSE:MNDI) is among the few risers, despite being gazzumped by US rival International Paper in its takeover bid for DS Smith.
8.07am: Dr Martens boss to depart
Dr Martens PLC (LSE:DOCS) boss Kenny Wilson is leaving the business three years after seeing the iconic British footwear brand go public in the US.
Current chief brand officer Ije Nwokorie will take over the top spot when Wilson leaves before the end of the current financial year.
“After six years in the role, I feel that the time is right to hand over this year, and I am excited that Ije will be my successor,” said Wilson.
Dr Martens’ shares have collapsed nearly 90% since its January 2021 IPO, with the stock plunging to new lows following a tough Christmas 2023 trading period.
Chair Paul Mason called Wilson’s contribution to the company “immense”.
7.39am: Superdry to delist
Superdry has announced a restructuring plan that will see the British clothing company delist from the London Stock Exchange.
Shares in the group have tanked this year, with sales falling and losses piling higher after a disappointing Christmas trading season.
Superdry has therefore decided to launch an equity raise that “will provide necessary liquidity headroom” and a subsequent delisting “which will allow the company to benefit from significant cost savings associated with being listed and implement its turnaround plan away from the heightened exposure of public markets”.
Co-founder and chief executive Julian Dunkerton is underwriting the equity raise.
As part of the restructuring plan, “rent reductions” are planned for 39 Superdry sites.
Currently down 76% year to date, Supercry stocks could fall even further when markets open today.
7.21am: UK unemployment increases
The UK unemployment for December to February came in hot at 4.2%, overshooting market consensus of a flat 4%.
It was the highest rate since August 2023, driven by a decrease in part-time employees.
The number of full-time workers increased during the quarter, as did the number of people in employment with second jobs, accounting for 3.6% of all workers.
The higher-than-anticipated numbers will be highlighted by dovish policymakers as a sign that the UK economy is cooling and therefore the first interest rate cut can get serious consideration.
7.08am: Stocks to open lower
It is looking like a poor opening for the FTSE 100 index this Tuesday, with futures contracts suggesting up to 80 points of losses to 7,882.
It will add to the 30 points of losses tallied up yesterday, with oil heavyweights BP and Shell the primary culprits for the bearish turn.
Tensions between Iran and Israel appear to be spooking stocks across the world; the three major US indexes also finished in the red yesterday, not helped by a middling start to the earnings season and Tesla layoffs.
Israel’s military chief of staff said there “will be a response” to Iran’s launch of missiles and drones towards Israeli territory, Reuters reported overnight.
On today’s macroeconomic calendar, the UK unemployment rate came in higher than anticipated at 4.2%, when analysts had expected a flat 4%.
Speaking of employment, City recruiter Robert Walters PLC (LSE:RWA) will soon public its latest trading update, as will defence contractor QinetiQ and payments disruptor Wise PLC (LSE:WISE).