- FTSE 100 to close 8 points lower
- Vodafone up 6.5% after sale of Italian business
- Reckitt Benckiser down 17%
16:01pm: FTSE 100 to close flat after steady Friday
The FTSE 100 is set to close flat on Friday, bar any huge surprises in the last 30 minutes of trading.
London’s blue-chip index tried to push higher around lunch before losing steam as it slipped 6 points lower.
Vodafone Group PLC (LSE:VOD) and British Airways owner IAG have been the lead risers today with gains of 7% and 6% respectively.
Vodafone’s rally came after it confirmed the sale of its Italian business to Swisscom for €8 billion, while IAG was boosted by two broker upgrades to “outperform”.
However, these gains were wiped away by Reckitt Beckinser’s 18% fall after an Illinois court ordered it to pay US$60 million to a mother whose baby died after drinking its baby formula Eptamil.
While the hit can be absorbed by the mutlinational, fear has begun to suround the stock regarding its long line of other lawsuits it has pending.
The FTSE 250 had a slightly better day, up 13 points, after First Group and Hunting jumped 10% and 5.5% respectively.
Other mid cap movers included PPHE Hotel (+5.5%), Dowlais (+4%), Currys (-6%) and Reinshaw (-6%).
15:34pm: Northern Rail workers strike on Saturday
More rail workers are readying to go on strike after TSSA union members who are employees at South Western Railway threatened to walk out.
Now, contract workers at Northern Rail are set to strike on Saturday as they fight for better pay, union recognition and improved working conditions.
Around 150 members of RMT working for Carlisle Support Service will walk out in Manchester, Leeds and Wigan.
RMT general secretary Mick Lynch said: “Our members are once again taking strike action against a company who has shown no regard for their staff and is not willing to settle this dispute.
“Ultimately, the only, long-term solution is to end contracting out and bring the gateline contract back in house with all the benefits of direct employment from Northern.”
15:22pm: Reckitt Benckiser tanks on US$60 million baby formula hit
Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB), the consumer goods giant, has plummeted 18% after one of its divisions was forced to pay out in a baby formula case.
Mead Johnson, the owner of the baby formula brand Enfamil, was ordered by an Illinois court to pay the mother of a premature baby US$60 million after the infant passed away from an intestinal disease after being fed the product.
Susannah Streeter, the head of money and markets at Hargreaves Lansdown, said: “This ruling has come at a bad time for the Reckitt which had already been struggling with falling volumes across its household goods and hygiene ranges.
“It’s not simply the size of this payout which has caused nervousness, but the fact a long line of other lawsuits are pending, which could mount up to be huge sum for the company.”
14:50pm: FTSE 100 slips as IAG, Vodafone and Scot Mortgage lead risers
The FTSE 100 has struggled to make any significant gains or losses on Friday, with the blue-chip index down 9 points after lunch.
Up 6%, IAG, the British Airways owner, continues to benefit from a rating upgrade to ‘outperform’, the equivalent of a moderate buy recommendation, by BNPP Exane and Raymond James.
Vodafone is following closely behind with a 5.5% gain after it confirmed the sale of its Italian business.
Scottish Mortgage Trust rose around 5% after announcing a new round of shareholder returns.
Aidan Moyle, investment analyst at Hargreaves Lansdown said: “The board has decided to use cash reserves to increase the buyback programme in the hope this will narrow that discount and bring the share price closer to NAV.
“It also shows a sign of confidence in the lead manager Tom Slater and his portfolio, which has had a tougher time more recently as the trust’s high-growth style has fell out of favour.
“Given Slater’s focus on long-term growth companies we believe he could outperform over the long term, though investors should be aware that this trust can be volatile, and its extreme style bias mean it can have prolonged periods when it is out of favour with the market.”
14:34pm: Currys tumbles as JD.com bows out of takeover talks
Currys shares have slipped 4.5% lower after it was Chinese tech giant JD.com revealed it would not be making a bid for the electronics retailer.
Over recent weeks, representatives of JD.com had spoken with the FTSE 250 company’s board but a formal offer was never made.
Now JD.com has confirmed “it does not intend to make an offer for Currys”.
Earlier this week, Elliott Advisors withdrew its intention to make a full takeover offer after the company’s board failed to express interest in being taken private.
Elliot made two approaches, with the second valuing the group at 67p per share, or £750 million.
Analysts had thought another bidder may have offered as much as 75p per share for the company, but with JD.com’s withdrawal, no more suitors lay in the wings.
13:38pm: Wall Street opens lower as Adobe shares tumble
US stocks have opened lower on Friday as Wall Street continues to suffer a loss of confidence after Thursday’s higher-than-expected inflation reading.
The Dow Jones is down around 65 points at 38,840, while the S&P 500 and the Nasdaq are down 26 and 109 points respectively.
Adobe slipped opened around 12% lower after it issued weak revenue guidance and paid Figma US$1 billion for the two groups’ failed acquisition plan.
Other movers include Rivian Automotive (+5%), Micron Technology (+1.5%) and Ulta (-8%).
Analysts have warned Friday could see some volatility in the markets as it sees the simultaneous expiration of futures and options contractions on indexes and stocks.
Known as “triple witching” the process can cause increased volumes and elevated prices for underlying assets.
13:20pm: Vodafone Italy sale doesn’t end its woes – analyst
Shares in Vodafone rose around 5.5% on Friday following the sale of its Italian business to Swisscom for £6.8 billion.
While the market has welcomed the news, analysts aren’t completely convinced this will bring an end to the telecom giant’s woes.
“This deal may not be the full stop Vodafone hopes it will be”, said Russ Mould, investment director at AJ Bell.
“The decision to cut the dividend in half from next year is interesting, particularly given the announcement of a €4 billion buyback funded from a portion of the proceeds of the Italian and Spanish transactions.
“This may help put capital allocation on a more sustainable footing, but it does dilute one of the key reasons people hold the shares.
“Much will depend on its ability to turn things around in its largest market Germany, with very little for the company to hide behind now if it fails to deliver.”
12:54pm: Honda and Nissan to team up in EV push
Honda and Nissan are putting aside their fierce rivalry to combat a common rival in Chinese EV makers as they both look to improve their future technology.
The two Japanese car manufacturers are set to work with each other to develop technology such as EV software and components, having signed a memorandum of understanding.
Behind Toyota, the two are the largest carmakers in Japan and believe they can cut costs through teaming up.
Chinese EV manufacturers such as BYD and Li Auto continue to eat up marekt share of the growing industry.
Earlier this year, BYD overtook Tesla as the world’s best selling EV maker.
12:29pm: Wall Street to open higher after Thursday’s slip
Wall Street is set to open slightly higher on Friday, with the Dow Jones currently up 52 points, or 0.13%, in premarket trading.
US stocks fell on Thursday after a hotter-than-predicted inflation reading left investors concerned about a delay to interest rate cuts.
David Morrison, senior market analyst at Trade Nation said: ‘If fresh inflation data continues to tick upwards (and there’s a Core PCE update at the end of this month) then rate cut predictions could be pushed out further.
“If so, then investors may want to cut their exposure to US equities. Next week’s Fed meeting with its quarterly Summary of Economic Projections could be key.”
The S&P 500 and Nasdaq both dropped around 0.3%, while the Dow Jones fell 0.4% to finish.
Nvidia experienced its second consecutive negative session after closing 3.7% lower but is attempting to hold flat in premarket trades.
12:11pm: Rail union threatens South Western Rail with strikes
A rail union has threatened to walk out over working agreements of control room staff.
The Transport Salaried Staff’s Association (TSSA) has warned strikes could take place for its members who work for South Western Railway.
The two sides failed to come to a resolution after disagreeing over the “imposition” of changed working arrangements.
Gareth Theobald, TSSA organiser for SWR, said: “This isn’t merely a shift in working patterns, it’s a stark deviation from well-established norms and we urge SWR to return to the negotiating table without delay to resolve this issue.
“SWR should be in no doubt that if staff need to take action, then trains will come to a stop.”
11:47am: FTSE 100 attempts to lift higher
The FTSE 100 is looking to break higher, up 15 points, as it heads to lunch after a slow start on Friday morning.
Leading the index are 5% gains from British Airways owner IAG and a 4% surge from Vodafone following the sale of its Italian business.
IAG’s rise comes a day after British Airways’ Concorde was floated up the East River in New York as it returns to the Intrepid Museum after months of renovation.
Scottish Mortgage was another leading riser on Friday, with shares having spiked more than 3% after announcing a £1 billion buyback over the next two years.
Attempting to drive the index lower is a 5% dip from Reckitt Benckiser, which has been struggling to lift after a poor trading update last month.
The FTSE 250 is trading around 53 points higher at 19,539, lifted by gains from Volution Group (+5%), Hunting (+4%) and Bodycote (+4%).
Bank of Georgia was the biggest faller, dropping around 4%.
11:19am: CVS downgraded as vet probe risks appear
CVS Group (AIM:CVSG) plc, the veterinary service provider, has been downgraded to “sector perform” by analysts at RBC following the CMA’s review of the industry.
The group’s price target has also been reduced from 2,100p to 1,200p, with the new price representing around a 15% premium to its current market value.
RBC said: “The CMA’s proposal to conduct a Market Investigation casts a pall over the industry that is unlikely to be resolved for 18-21 months.”
Analysts at the Canadian bank believe the market is “significantly over-discounting the risk”.
“We doubt this valuation discrepancy will attract new investors until closer to a final CMA outcome,” the bank concluded.
11:02am: McDonald’s resolves IT issue which halted orders
McDonald’s has resolved an IT issue which left sites across the country have been unable to serve customers.
The technical problem also affected restaurants in countries such as Japan and Australia.
Some restaurants in Australia were forced to shut, while others have started taking orders by pen and paper.
There are around 1,450 McDonald’s in the UK and Ireland and around 40,000 globally, all of which rely on the same IT system to process orders.
“We are aware of a technology outage which impacted our restaurants. The issue has now been resolved in the UK and Ireland. We thank customers for their patience and apologise for any inconvenience this may have caused. The issue is not related to a cybersecurity event.” the fast food restaurant said in a statement.
McDonald’s is experiencing a system outage in several parts of the Asia-Pacific that’s left customers unable to order at its stores, as well as from electronic kiosks and mobile apps https://t.co/JUt6W7JS8N
— Bloomberg (@business) March 15, 2024
@McDonaldsUK why can I order through the app this morning but all of my local McDonald’s are closed when they are meant to be 24 hours?!
— Tom Bennison (@DrBennison) March 15, 2024
10:43am: Bitcoin continues Friday slump
Bitcoin has continued to fall lower on Friday, slipping close to 5.5% to around US$67,600.
It comes after the world’s largest cryptocurrency reached an all-time high of around US$73,700 on Thursday, indicating Friday’s fall may be investors crystalising their gains.
Nonetheless, bitcoin remains in a strong position at 53% higher year to date, though its week-on-week position has dropped to the negative.
ETC Group’s founder and CEO Tim Bevan spoke with Proactive’s William Farrington to discuss Bitcoin’s extraordinary surge.
10:19am: Insolvencies soar in February
Insolvencies in England and Wales reached more than 2,100 in February as companies continue to struggle against the impacts of higher interest rates, hangovers from the pandemic, weakened spending and supply chain issues.
February’s figure represents a 17% year-on-year increase and an 18% jump compared to January.
Additionally, more than ten thousand individuals declared bankruptcy last month, representing a 23% hike from the same month in 2023.
David Hudson, a restructuring advisor at FRP, said: “Rather than fresh starts, the spring brings with it additional challenges for already distressed businesses, particularly those in the strained retail and hospitality sector.
“Many will see large rises in their business rate bills from the start of April as well as having to shoulder increased wage costs.”
“While the positive view is that the UK’s recent recession was short-lived, factors like these – combined with increased borrowing costs and consumer confidence remaining weak – will continue to weigh heavily on UK plc.”
9:53am: European stocks set for best rally in six years
While the FTSE 100 struggles to lift higher in 2024, up 0.4% year-to-date, European stocks have been on a rip.
The Stoxx600, the index covering top companies across European markets (including the UK), is on its strongest run in six years as investor excitement grows at the prospect of a rate cut.
It is set to experience an eighth consecutive weekly gain, having been reaching all-time highs throughout 2024.
While markets have been boosted by the approval of Vodafone Italy’s sale for £6.8 billion, the index has opened flat on Friday.
Hopes of a summer rate cut in Europe, the UK and the US continue to grow, but hotter-than-expected US inflation data earlier this week may influence the Fed’s decision.
9:27am: Not all doom and gloom for Berkeley
Berkeley shares slipped in the first 30 minutes of trading as investors reacted to its warning that house sales would stay reduced after they fell by around a third in the most recent quarter.
However, with shares starting to pick up, Adam Vettese at eToro has noted that despite the sales drop there are “better times ahead”.
“Conditions have been pretty tough for housebuilders given the inflationary environment and high-interest rates pouring cold water on demand.
“However, Berkeley has been weathering the storm and has reaffirmed their guidance as stated in their previous update. Their sector peer, Persimmon’s update read far worse earlier in the week and the comparative performance of the shares reflects that.
“The firm has sales secured to the end of this financial year as well as 70% of next year, which is a strong position to be in as we start to see some aggravating factors subside, particularly when we begin to see rate cuts which will make the market significantly more attractive.
“Given their smart management of a tough market, there’s no reason why they can’t push on in 2024.”
9:09am: FTSE 100 holds flat as Vodafone rallies
The FTSE 100 is attempting to hold flat, down around 2 points, as the week’s final day of trading got underway.
All eyes were on Vodafone though, which climbed 5% after putting pen to paper on the £6.8 billion sale of its Italian operations to Swisscom.
Also in the green was Scottish Mortgage Investment Trust (+2%), after it announced £1 billion was being set aside for share buybacks over the next two years.
Housebuilder Berkeley faced a mixed morning, starting the day lower before driving back its losses to be 1% higher.
Its shaky start came after confirming sales were still muted and that full-year profits would likely be lower, according to its latest trading update.
Peers Barratt (-1%) and Redrow, flat, also faced a blow meanwhile, with news that the Competition and Markets Authority had begun a probe into their proposed merger.
8.51am: The morning so far
Although the FTSE 100 index had little in the way of excitement, there was plenty to digest on the company news front this morning.
British telecoms multinational Vodafone signed off on an €8 billion (£6.8 billion) disposal of its Italian operations to Swisscom, while announcing €4 billion worth of share buybacks sourced from this, and the Spanish sale to Zegona.
Vodafone shares rallied nearly 5% in morning trades.
Speaking of buybacks, Scottish Mortgage announced a bumper £1 billion share buyback over the following two years, a significant increase from the £353 million returned in the last two years.
Scottish Mortgage shares added 1.5%.
In the housebuilding sector, the UK competition watchdog has opened an investigation into the £2.5 billion merger between British housebuilders Barratt Developments PLC (LSE:BDEV) and Redrow PLC (LSE:RDW).
The CMA is looking into whether the merger may result in a “substantial lessening of competition within any market or markets in the United Kingdom for goods or services”.
Barratt shares were down 0.7% and Redrow was down 0.25%.
On the cryptocurrency front, bitcoin suffered a setback, falling 5% against the US dollar when a bout of profit taking ensued after reaching an all-time high yesterday. BTC/USD was trading at $67,156 at the time of writing.
The FTSE 100 is currently trading five points lower at 7,738.
8.38am: Quick US recap
US stocks finished lower on Thursday after a higher-than-expected inflation print added to concerns ahead of the Federal Reserve’s upcoming policy meeting.
The S&P 500 and Nasdaq both dropped around 0.3%, while the Dow Jones fell 0.4% to finish.
Tech giants Nvidia and Tesla closed around 4% lower, extending losses from the previous session.
The Russell 2000 Index, representing small-cap stocks, was particularly affected, dropping about 2% as investors adjusted expectations for a potential interest rate cut in June.
8.30am: Bitcoin suffers a setback
The world’s largest cryptocurrency bitcoin (BTC) was sent 5% lower against the US dollar this morning after achieving a fresh all-time high on Thursday.
The BTC/USD pair topped out at $73,777 before selling pressure and a bout of profit taking sent it back down to the $67,900 range at the time of writing.
Bitcoin remains in a strong position at 60% higher year to date.
Back to the UK markets, the FTSE 100 blue-chip index remains flat at 7,741.
8.15am: Scottish Mortgage announces £1bln in buybacks
FTSE 100-listed Scottish Mortgage Investment Trust PLC (LSE:SMT) has announced a £1 billion share buyback scheduled for the next two years.
This marks a major ramping up for shareholder returns for Scottish Mortgage; in the past two years, share buybacks totalled just £353 million.
The announcement follows a strong period of cash generation for the business, with free cash flow more than doubling over the past 12 months.
Chairman Justin Dowley commented:
“We remain committed to using share repurchases strategically to enhance liquidity in our shares and to seek to facilitate trading around net asset value.
Our company has a strong balance sheet, and its portfolio companies are delivering strong operational results.
“We are acting upon this investment opportunity by materially increasing the capital available to our liquidity policy over the next two years with the aim of maximising returns for our shareholders.”
Scottish Mortgage shares opened 1.7% higher at 174p.
7.57am: UK watchdog investigating Barratt-Redrow merger
The UK competition watchdog has opened an investigation into the high-value merger between British housebuilders Barratt Developments PLC (LSE:BDEV) and Redrow PLC (LSE:RDW).
Barratt struck a deal in February to buy Redrow for £2.5 billion.
Both firms described the deal as a “uniquely compelling opportunity” to “create an exceptional UK homebuilder”.
But the CMA is looking into whether the merger may result in a “substantial lessening of competition within any market or markets in the United Kingdom for goods or services”.
The CMA has opened a window to comment until 2 April.
7.47am: Vodafone Italy sold to Swisscom for €8bln
Vodafone has announced the €8 billion (£6.8 billion) sale of its Italian operations to Swisscom.
The British telecoms multinational initially confirmed talks with Swisscom on a potential sale in February as part of a major opertational review.
“Today, I am announcing the third and final step in the reshaping of our European operations,” remarked Vodafone boss Margherita Della Valle. “Going forward, our businesses will be operating in growing telco markets – where we hold strong positions – enabling us to deliver predictable, stronger growth in Europe.
“This will be coupled with our acceleration in B2B, as we continue to take share in an expanding digital services market.”
Della Valle said the sale of Vodafone Italy “creates significant value for Vodafone and ensures the business maintains its leading position in Italy, which has been built through the dedicated commitment of our colleagues to serving our customers over many years”.
The sale puts a 7.6 times adjusted EBITDA valuation on Vodafone Italy.
7.30am: FTSE to open flat
The FTSE 100 blue-chip index will open flat when markets open today after closing 29 points lower at 7,743 on Thursday.
All eyes are on Vodafone, which this morning confirmed an €8 billion sale of its Italian operations to Swisscom.
The debt-ridden British telecoms multinational initially confirmed talks with Swisscom on a potential sale in February as part of a major overhaul of its European footprint.