Wall Street and FTSE rise as traders await US inflation figures later this week

LIVE COVERAGE IS OVER20 updates

• Mon 9 September 2024 at 5:32 pm CEST

  Blog close and recap

  Well that’s all folks, thanks for following along… Be sure to join us again tomorrow when we’ll be back for more of the latest market news and all that’s happening across the global economy.

  Here’s a quick recap of some of the top headlines from today:

  • UK jobs market suffers worst month in more than a decade

  • Eurozone investor morale weakens

  • Aldi to open slew of stores as profits more than double

  • Michael O’Leary calls for air traffic control chief to resign

  • Gucci owner hits seven-year low

  • Summer tourism boosts services activity

• Mon 9 September 2024 at 5:11 pm CEST

  Elon Musk on track to be world’s first trillionaire

  Elon Musk is on track to quadruple his wealth and become the world’s first dollar trillionaire in just three years, new research suggests.

  The Telegraph has the details…

  The South African-born entrepreneur, 53, who owns companies ranging from Tesla to X, formerly known as Twitter, is already ranked as the richest person in the world.

  The SpaceX founder has a net worth of $251bn (£191bn), according to Bloomberg’s Billionaires Index, which is growing at a rate of 110pc a year.

  If his wealth continues to grow at the same rate, Mr Musk will be the world’s first US dollar trillionaire by 2027, according to data from research company Informa Connect Academy.

• Mon 9 September 2024 at 4:56 pm CEST

  FTSE forecast to hit 9,000 points by year-end

  

  Analysts at UBS have downgraded their view on UK shares to Neutral from Most Preferred.

  But it said there are several reasons to be positive about UK equities, including the return of political stability, last month’s interest rate cut by the Bank of England, and a likely return to earnings growth this year.

  Another advantage is that UK stocks still suffer from “undemanding valuations”, with shares trading at a lower price/earnings ratio than the long-running average.

  UBS analyst Dean Turner said UK stocks will keep rallying, pushing London’s benchmark index to around 9,000 by year-end. That would be a new record high after the previous best was 8,474 points back in May.

• Mon 9 September 2024 at 4:38 pm CEST

  Pembroke VCT announces £60m fundraise

  • The Pembroke VCT has announced an offer for up to £60m (£40m plus £20m overallotment).

  • The VCTs have total net assets of £224.1m and a combined portfolio of around 45 companies.

  • The manager invests in business models with premium pricing potential, with a bias towards premium consumer brands, technology and business services.

  • Highlights within the portfolio include LYMA Life, the medical grade beauty laser and supplement business, and Five Guys UK, the burger chain.

  • Over the five years to June 2024, the VCTs have generated an average NAV total return of 18.3%.

  • The VCT targets an annual dividend of 5p. (Latest ex-dividend NAV c.102.6p).

  Jonathan Moyes, head of investment research at Wealth Club, said:

  “Since launching its first VCT in 2013, the manager has developed a successful track record for backing premium consumer brands. Historic successes include Pasta Evangelists, the premium fresh pasta delivery chain, and ME+EM, the luxury fashion brand popular with celebrities, royals and politicians alike. It delivered a 16.1x realised return for the VCT in 2022.

  The VCT appears willing to use the experience of lead manager Andrew Wolfson, to back companies at an earlier stage, with greater firepower, and in a sector that many of its peers would be unwilling to match. A notable example being LYMA Life, now the VCT’s largest holding after an initial £2m investment was recently valued at £31.2m.

  Longer term, the VCT benefits from a proven management team and the wider resources of Oakley Capital. After several years of successful fundraises, the VCT has grown assets to more than £200m, meaning it should be able to provide that firepower to early-stage companies without having to bet the ranch in the process, improving the portfolio’s risk management.

  This is a distinctive VCT and should complement a wider VCT portfolio.”

• Mon 9 September 2024 at 4:13 pm CEST

  Gucci owner hits seven-year low

  

  Shares in Kering (KER.PA), the French fashion designer which owns Gucci, plunged on Monday amid fears about the slowdown in China.

  The stock dropped more than 4% to the lowest level since 2017 as analysts at Barclays cut their rating of the stock from “equalweight” to “underweight”.

  Barclays analyst Carole Madjo said: “Gucci appears particularly hard hit by the Chinese slowdown.”

  Kering’s share price has tumbled more than 40% so far this year, putting it on track for its worst performance since the global financial crisis.

• Mon 9 September 2024 at 3:10 pm CEST

  Market movers

  Here’s what happening in equity markets today:

  • Ladbrokes owner Entain (ENT.L) surged to the top of the FTSE 100 after it said online net gaming revenue growth during the second half to date has been ahead of its expectations. Flutter Entertainment (FLTR.L) also gained.

  • Barratt Developments (BDEV.L) edged up after saying that it, Homes England and Lloyds Bank had formed a joint venture that will focus on developments of large sites for housing.

  • Rightmove was boosted by an upgrade to ‘hold’ from ‘underperform’ at Jefferies after Australia’s REA Group confirmed last week that it was considering a possible cash and share offer for the property portal.

  • Burberry (BRBY.L) slid after a downgrade to “underweight” from “equalweight” at Barclays, which cited structural brand weakness. Barclays said that despite already being one of the worst-performing names in its space, it still sees downside for Burberry as it has concerns around the company’s ability to remain a high-end luxury brand in line with its coverage “considering its lack of disciplined full-price strategy”.

  “Burberry looks likely to turn loss-making for the first time in H1-25 and considering that we expect the environment to remain tough next year, it could be difficult to see margin recovery in the short term,” the bank said.

  • Computacenter (CCC.L) was also weaker as it posted a drop in first-half profit, saying that UK demand for hardware has been weaker than it expected at the start of the year, with customers exercising greater caution and purchasing decisions taking longer to conclude.

• Mon 9 September 2024 at 2:22 pm CEST

  Oil growth ‘will come from India, Africa and Latin America’

  Oil prices will plunge in the near future, analysts predict, amid doubts over demand from China.

  Wall Street bank Morgan Stanley and commodities traders at Trafigura have warned that Brent crude, the global benchmark, will continue a drop.

  However, Jeff Currie, chief strategy officer of Carlyle Group’s Energy Pathways, said at the APPEC industry conference in Singapore that prices could rise thanks to interest-rate cuts from the Federal Reserve and a likely recovery in financial positioning, Bloomberg reported. He said:

  I’m not going to be jumping up and down for strong demand growth out of China. The growth going forward for oil and energy is going to come out of places like India, Africa and parts of Latin America.

• Mon 9 September 2024 at 1:59 pm CEST

  The overriding signal from the ECB has been one of caution

  Dave Chappell, senior fund manager, fixed income, at Columbia Threadneedle Investments, after today’s ECB meeting:

  “The overriding signal from the ECB has been one of caution, in a bid to reduce market expectations of consecutive rate cuts in September and October.

  “The current path of normalization sees a pace of rate cuts in every other meeting.

  “However, the size of the first US Federal Reserve rate cut on the 18th September will have a bearing on the ECB’s discussion in October, regardless of what message would accompany the second rate cut later this week.”

• Mon 9 September 2024 at 1:38 pm CEST

  Apple’s upcoming iPhone 16 event…

  Apple is set to launch the iPhone 16 at its “Glowtime” event on Monday, along with other anticipated updates around its hardware and artificial intelligence (AI).

  In addition to four new iPhones, the company is also expected to debut a tenth anniversary edition of the Apple Watch and new AirPods.

  The rollout of the Apple Intelligence AI platform will another be a focus of the showcase, with voice assistant Siri due to get an update from this generative AI.

  This annual event is considered one of the most important in Apple’s calendar and helps set the tone for the year ahead.

  The European Commission is also reportedly set to announce its ruling on a case involving Ireland as to whether Apple has to pay €13bn (£11bn) in taxes.

  Intelligence at the 2024 Worldwide Developers Conference, with the stock up nearly 15% year-to-date. However, it was little changed in pre-market trading on Monday.

  Susannah Streeter, head if money and markets at Hargreaves Lansdown, said: “Clearly this is a this is a key moment for a business that’s struggled to deliver real innovation in recent times and its impressive brand power, which keeps legions of fans loyal, should help it maintain its edge, and give it that extra bit of momentum amid consumer wariness.”

• Mon 9 September 2024 at 1:12 pm CEST

  Barclays cuts rates by up to 0.66%

  

  Following TSB this morning, Barclays has now cut mortgage rates by up to 0.66% on one two-year fixed rate product, admittedly with a £1999 product fee, at 60% LTV and with a minimum loan size of £2m.

  Ranald Mitchell, director at Charwin Mortgages, said:

  “Barclays and TSB have cut mortgage rates once again, continuing what has become a weekly trend. These larger reductions signal a fierce competition among lenders, with no signs of letting up.

  “For consumers, this is great news. Lower rates mean more affordable mortgages, increasing accessibility for first-time buyers and those looking to remortgage. The property market stands to benefit as well, with these competitive rates likely to fuel buyer activity.”

• Mon 9 September 2024 at 12:48 pm CEST

  Barratt teams up with Lloyds and Homes England

  Barratt Developments (BDEV.L) has joined forces with Lloyds Banking Group (LLOY.L) and government body Homes England to launch a venture to build tens of thousands of houses across Britain.

  The tie-up, dubbed Made Partnership, will focus on large sites including so-called brownfield developments, as well as new garden village-style communities.

  It will look to develop these sites to deliver from 1,000 to over 10,000 homes, as well as community facilities and employment uses.

  Barratt said the long-term joint venture will be initially backed by up to £150m of combined equity funding, equally split by the partners.

• Mon 9 September 2024 at 12:26 pm CEST

  Oil stocks higher on Brent Crude recovery

  

  Oil majors BP (BP.L) and Shell (SHEL.L) benefited from an upturn in the Brent Crude price to just above $72 a barrel.

  The benchmark reversed 8% last week but is up this morning, partly due to supply fears caused by the approach of a hurricane in the Gulf of Mexico. Meanwhile, West Texas Intermediate was up 1.3% above $68.

  Oil has risen from its lowest close since 2021 ahead of reports this week that may clarify the demand outlook.

  Traders will have forecasts from the Opec cartel, the Energy Information Administration and the International Energy Agency in

• Mon 9 September 2024 at 12:04 pm CEST

  Unemployment to rise and wage growth to fall?

  All eyes will be on tomorrow’s labour market data as the most crucial piece of macro figures for the week ahead.

  With a September rate cut still looking unlikely despite encouraging third-party data last week, Newspage asked analysts, economists, and experts for their predictions ahead of tomorrow’s unemployment and wage figures.

  Here are some of the comments:

  Gabriel McKeown, head of macroeconomics at Sad Rabbit Investments:

  “With inflation fears still simmering, the forthcoming UK labour market data could be the cold water that extinguishes the Bank’s hawkish fire. The latest projections paint a picture of a cooling labour market, as vacancies have fallen for nine consecutive months, while the availability of workers has increased.

  This shift in the supply-demand balance has begun to exert downward pressure on wage inflation, suggesting a trajectory towards target. Consequently, Tuesday’s labour data is critical for the Bank of England’s (BoE) monetary policy decisions.

  A September cut seems unlikely, with the Monetary Policy Committee (MPC) wanting more evidence of sustained cooling in the labour market and a further moderation in wage growth. However, a higher-than-expected unemployment rate or a sharper wage growth decline could tilt the MPC towards a more dovish stance.”

  Meanwhile, John Choong, head of equities and markets at Investors Edge:

  “With claimant counts rising for three consecutive months we expect the unemployment rate to have climbed back up to at least 4.4%. Concurrently, we anticipate wage growth to cool further, although not as much as the Bank’s estimates.

  “August’s BoE Decision Maker Panel showed that year-ahead wage expectations continued to fall, which supports our thesis, while the latest Citi inflation expectations survey reported its sharpest fall to 2.6%, and has been a reliable leading indicator for the direction of wage growth.

  “This evolving labour market dynamic could, therefore, shift the odds of a September rate cut closer to 50% if the unemployment rate jumps to more than 4.5%. Nonetheless, it’s crucial to temper expectations, as the definitive indicator will be the following week’s services CPI print, which remains the linchpin in this rate cut equation.”

• Mon 9 September 2024 at 11:51 am CEST

  Eurozone investor morale weakens

  Investor morale across the euro area has fallen for the third month in a row, according to the Sentix Investor Confidence Index.

  It hit -15.4 this month, down from -13.9 in August, and lower than was forecast.

  Sentix said that the eurozone economy is “threatening to tip into recession”, and blames the economic problems in Germany. Germany is on the brink of recession after its GDP shrank in the second quarter of this year.

  It said:

  “The eurozone is struggling with dangerous recessionary tendencies ‘thanks to Germany’. The situation in the rest of the world is also weakening, but investors here are somewhat more optimistic in their expectations.”

  ⚠️ EURO ZONE SENTIX INDEX FALLS TO -15.4 IN SEPTEMBER FROM -13.9 IN AUGUST (REUTERS POLL: -12.5)

  — PiQ (@PiQSuite) September 9, 2024

• Mon 9 September 2024 at 11:25 am CEST

  Michael O’Leary calls for air traffic control chief to resign

  

  Ryanair (RYA.IR) boss Michael O’Leary has issued fresh calls for the resignation of the chief executive of air traffic control (ATC) provider Nats.

  He urged Martin Rolfe to step down and “allow someone competent” to take over after flights were disrupted at Gatwick Airport on Sunday due to “Nats staff shortages”.

  The airline’s chief executive has repeatedly criticised Rolfe, particularly over the widespread disruption at UK airports during last year’s August bank holiday Monday, which was caused by a Nats technical failure.

  O’Leary said:

  “This is the latest in a long line of cock-ups by UK Nats, which has yet again disrupted multiple flights and thousands of passengers at Gatwick. Airlines and passengers deserve better.

  “Ryanair again calls on UK Nats chief executive Martin Rolfe to step down and allow someone competent to run an efficient UK ATC service, which airlines and passengers are entitled to expect.

  “If he won’t go, then (new transport secretary) Louise Haigh should sack him.”

• Mon 9 September 2024 at 10:53 am CEST

  Summer tourism boosts services activity

  More from BDO this morning…

  The accountancy firm found that output across the services sector rose to a two-year high in August with a reading of 99.03.

  Growth was driven by an increase in new contracts, and summer tourism spurring more consumer and business spending.

  Kaley Crossthwaite, a partner at BDO, said that services continued to be the “cornerstone of economic growth”.

  She said:

  “The coming months will be crucial in determining whether the UK can maintain its recovery momentum and fight back against these headwinds.

  “No doubt all eyes will be on the autumn Budget and the government’s plans for helping business tackle persistent unemployment levels and the skills gap.”

• Mon 9 September 2024 at 10:33 am CEST

  Aldi to open slew of stores as profits more than double

  

  Aldi is set to open 23 new stores by the end of the year after profits more than doubled last year to almost £537m. It comes as part of an £800m investment in its British estate.

  The German discounter will open sites including Muswell Hill in London and Caterham in Surrey as part of its push to expand its number of supermarkets from more than 1,000 to 1,500.

  It added that it would also refurbish 100 existing stores and expand its distribution centres under a two-year £1.4bn investment plan.

  Sales increased 16% to £17.9bn in 2023, its highest ever period of sales growth.

  Giles Hurley, Aldi UK and Ireland chief executive, said:

  “British shoppers are voting with their feet and choosing Aldi as their first-choice supermarket. We’re responding with our biggest ever annual investment in Britain.

  “For every £1 of profit generated last year, we’re investing £2 this year — opening more stores and building the supply infrastructure to bring high-quality, affordable groceries to millions more families the length and breadth of Britain.

  “We’re also investing at record levels to cut prices, reward our amazing colleagues and support more causes in our local communities. All while creating thousands more jobs and even more opportunities for our growing base of British suppliers and farmers.

• Mon 9 September 2024 at 10:19 am CEST

  UK jobs market suffers worst month in more than a decade

  The UK jobs market suffered its worst month in more than a decade in August, raising pressure on the Bank of England to cut interest rates.

  A report from accountant BDO revealed that the strength of the jobs market declined for a fourteenth consecutive month last moth, with a reading of 95.89.

  Anything over 95 signals growth, meaning recruitment is still just expanding, but this was the lowest score since January 2013.

  There were also more people claiming unemployment-related benefits in August. This was at the highest level since December 2021, according to figures from the Office for National Statistics.

• Mon 9 September 2024 at 9:56 am CEST

  Asia and US stocks

  Asian stocks fell overnight after another rout hit Wall Street on Friday.

  The Nikkei (^N225) fell 0.5% on the day in Tokyo, trading around its lowest level in almost a month earlier in the session, as Japan’s gross domestic product grew by 2.9% in the second quarter compared to the previous three months,

  This was according to revised data from the Cabinet Office, which was below expectations.

  Meanwhile the Hang Seng (^HSI) lost 1.7% in Hong Kong and the Shanghai Composite (000001.SS) was 1.1% down by the end of the session after worse-than-expected inflation data disappointed investors.

  Data from the National Bureau of Statistics on Monday showed deflationary pressure continues to loom large, as the consumer price index grew by 0.6% in the year to August.

  It came after highly anticipated jobs market data came in weak enough to add to worries about the US economy on Friday. It revived fears that months of elevated borrowing costs are putting pressure on the economy.

  Across the pond, the S&P 500 rose 0.5%, and the tech-heavy Nasdaq was 0.7% higher. The Dow Jones also gained 0.5%.

  The S&P 500 (^GSPC) fell 1.7% to 5,408.42 and the Dow Jones (^DJI) slipped 1% to 40,345.41. The tech-heavy Nasdaq (^IXIC) ended 2.6% lower to 16,690.83.

• Mon 9 September 2024 at 9:29 am CEST

  Coming up…

  Good morning, and welcome to our markets live blog. It’s the first one of the week and we’ll be bringing you all the latest news of what’s moving markets and happening across the global economy.

  Here’s a quick look at what’s on the agenda for today…

  • 7am: Trading update: Computacenter

  • 9.30am: TUC Annual congress in Brighton

  • 9.30am: Sentix survey of eurozone investor confidence