BUSINESS LIVE: Bank of England hikes base rate to 5.25%

London Stock Exchange Group expects to complete up to £750million of share buybacks by April 2024 after the firm upgraded its annual outlook.

The financial information provider and trading venue now anticipates full-year income growth on a constant currency basis will be towards the top end of its 6 to 8 per cent guidance range, following a solid first-half performance.

Shaftesbury Capital has hailed ‘positive’ trading across its West London portfolio after sales climbed above pre-pandemic levels in the first half.

The landlord posted reported sales growth of 15 per cent for the six months to 30 June as Shaftesbury shrugs off concerns about the broader property market, which has been weighed down by rising interest rates and consumer weakness.

Today the Bank of England made its 14th consecutive rate hike, a 0.25 percentage point rise to 5.25 per cent.

While borrowers might be struggling, it’s the central bank that’ll be feeling unlucky as the tried and tested orthodoxy of raising rates has done little to bring down inflation.

Chief investment officer at LV= Adam Ruddle:

‘The Bank of England’s decision to raise interest rates by a quarter percentage point is in line with our expectations.

‘There was a strong possibility of a larger increase but given the improving position of forward looking inflation indicators such as manufacturing costs, we believe the Bank will steadily increase interest rates over the coming months.

‘This will balance the Bank’s role to retain price stability with the UK’s economic health. However, inflation remains more persistent in the UK, particularly inflation data excluding more volatile food and energy prices.

‘Though more painful for the economy, I believe that further rises are necessary to curb inflation. Importantly however, on the back of improving data, we believe the peak has fallen from 6.5% to 5.75% which suggests that the end of this hiking cycle is in sight.’

The Bank of England has hiked its base rate by 25 basis points from 5 per cent to 5.25 per cent.

Marcus, the popular app-based bank from Goldman Sachs, has boosted interest rates on its online savings account, cash Isa and one- year fixed rate saver.

From today, the rate on its online savings account and cash Isa has increased from 4 per cent to 4.3 per cent. This rate includes a 12-month fixed bonus of 0.34 per cent.

You might not have heard of Lime bikes but you’ll definitely have seen them on pavements in our biggest cities.

After the successful introduction of ‘Boris bikes’ in London, ride-sharing companies saw the opportunity to launch a more convenient and environmentally friendly way to commute.

Pets at Home shrugged off cost of living pressure in its first quarter as sales and customer numbers continued to climb.

Group revenues jumped 7.9 per cent year-on-year to £436million in the three months to 20 July as veterinary and retail sales rose by 16.3 and 7.1 per cent, respectively.

Will Gardiner claims he is not motivated by money – but he effectively pocketed a £2million pay rise last year.

His salary, bonus and other perks at Drax went up to an astonishing £5.37million, compared with £3.2million in 2021.

Rolls-Royce has hailed ‘significantly improved’ first-half results, with earnings soaring more than fivefold against a continued resurgence in air travel.

The engineering giant revealed its underlying operating profits for the six months ending June climbed to £673million from £125million in the equivalent period last year.

Next has lifted full-year profit expectations after warm weather helped to drive bumper end-of-season sales.

The retail bellwether told investors on Thursday it is increasing its full-year guidance for group profit before tax by £10million to £845million.

Full price sales were up by 6.9 per cent year-on-year for the 13 weeks to 29 July, which was ‘mainly driven by warm weather’, while Next’s clearance rates were ‘ahead of expectations’, it said.

Supermarket giant Asda has become the ‘first’ fuel retailer to publish local petrol and diesel prices online amidst growing pressure from the government and watchdogs.

The group revealed that the price of each of its 320 filling stations across the UK will be made available on the store locator section of its website.

Billionaire George Soros is set for a bumper £36million payday when data company Blancco Technology exits the London stock market.

The tech firm has accepted a takeover approach by US investment company Francisco Partners, in a deal worth £175million.

Supermodels Naomi Campbell and Gigi Hadid helped Hugo Boss defy a slowdown in the luxury sector, with sales soaring thanks to its advertising campaigns.

The German fashion house said sales were up 20 per cent for its second quarter, which covers the three months between April and June.

Daniel Grieder, chief executive of the firm, said: ‘After our highly dynamic start to the year, we continued our strong performance also in the second quarter.

London-listed stocks have opened lower this morning, with shares of London Stock Exchange Group weighing on the FTSE 100 index, as investors await the Bank of England’s verdict on interest rates.

London Stock Exchange Group is down 3.9 per cent after its first-half profit before tax fell 17.6 per cent.

Smith & Nephew has slipped 3.2 per cent after the medical products maker reported a 5 per cent fall in trading profit for the six months to July, missing market expectations.

Also weighing was BT Group, which fell 5.1 per cent as shares of the telecom firm traded ex-dividend.

Director at Edison Group Andy Chambers:

‘Rolls-Royce appears to be emerging from the clouds with a very strong set of half year results that saw underlying revenues growing 31% to £6.9bn with underlying operating profit more than five times higher at £673m, a margin of 9.7%.

‘With the initial results of the transformation programme enhancing performance all three divisions made positive contributions. Civil Aerospace returning to a healthy profit with a strong order intake reflecting the recovery in the large aeroengine market and strong growth in business aviation.

‘Defence also grew strongly with underlying operating profit up 33% reflecting improving demand and a more favourable delivery profile. While Power Systems grew more modestly with a reduction in margins it is expected to improve in the second half.

‘Net debt was also reduced by almost £0.5bn to £2.85bn during the period. Having recently increased FY23 guidance for underlying operating profit to £1.2bn-£1.4bn and free cash flow to £0.9bn-£1.0bn, management expect to announce their medium-term goals alongside its strategy review ay a capital markets day on 28 November 2023.

‘The recovery from the dark days of the pandemic years appears to be progressing well and investors may now be able to take a more favourable view of Rolls-Royce’s potential once again.’

London Stock Exchange Group has posted total income growth of 11.9 per cent year on year to £4.2billion for the first half, with the exchange telling investors revenues are set to come in at the top end of expectations.

‘Data & Analytics is growing faster than it has for many years, with the ongoing improvements to our offering and strengthened customer relationships increasingly reflected in financial performance,’ Chief executive David Schwimmer said.

‘We are progressing well with the implementation phase of our transformational strategic partnership with Microsoft, with customers beginning to see the benefits from next year.’

Aarin Chiekrie, equity analyst at Hargreaves Lansdown:

‘Next has got into a habit of beating market expectations on the upside lately, and today’s second-quarter trading statement continued the hot streak.

‘Full-year pre-tax profit guidance got another bump up today, now expected to come in £10m higher at £845m. Online sales were the main driver of this upgrade, with sales in this channel growing at double-digit rates.

‘End-of-season sales were ahead of group expectations in the period, adding to the positive tailwinds that Next seems to be catching lately. The group still has a strong high street presence too, with sales here also heading in the right direction. Next’s certainly weathering the storm of economic uncertainty admirably, and looks well-placed to prosper further when the cycle turns.’

Global markets suffered a mass sell-off after the US government’s credit rating was downgraded following a debt ceiling crisis earlier this year.

Credit rating agency Fitch, one of the industry’s ‘Big Three’ alongside Moody’s and Standard & Poor’s, lowered its rating on the US to AA+ from AAA, saying the tussle over the country’s borrowing limit in May could threaten its ability to pay its bills.

The firm also predicted the country’s fiscal situation would deteriorate over the next three years as increased polarisation between the Democrat and Republican parties was likely to lead to further stand-offs in the future.

Rolls-Royce has told investors it expects to pay out £100million this year ‘in respect of the outcome of a legal judgment’.

On other costs ahead, Rolls said: ‘We continue to anticipate a year-on-year headwind of c.£200m associated with legacy Boeing original equipment concessions, an increased £150million adverse impact due to fires at two suppliers’ premises, and a new expected outflow of c.£100million in respect of the outcome of a legal judgment.’

Next has raised its guidance for annual profit by £10million to £845million, after full price sales and the end-of-season summer sale came in ahead of forecasts.

It comes just six weeks after the retailer’s last upgrade and shows shoppers continue to defy tough economic conditions.

Next’s forecast for profits of £845million means they will come in 2.9 per cent lower than it made last year.

Isabel Albarran, investment officer at Close Brothers Asset Management:

‘Given the recent drop in inflation data, we expect to see a 25bps rate hike by the Bank of England today. We believe last month’s surprise double hike was likely an anomaly, an emergency response to the disorderly moves in market pricing of rates and inflation, which have to some degree normalised.

‘However, at a time when the Fed have stepped back from hiking at every meeting and the ECB’s language suggests the Council is considering adopting a similar approach, the Bank of England is a hawkish outlier. When will a break be on the horizon for the UK?

‘The BoE is clearly still concerned about changes to the UK mortgage market, and how this will affect the transmission of monetary policy, and the labour market remains tight. However, super-strong wage growth appears to be lagging falling inflation and broader employment indicators show signs of easing. We will be closely watching the announcement today for any signals that the end of the hiking cycle is near.

‘For assets, confirmation that the Bank is close to the end of hiking will be a boon. We have already seen this dynamic play out in the US, where equity sector behaviour suggests investors are already looking past the peak to expected rate cuts.’

The Bank of England’s Monetary Policy Committee is expected to hike interest rates later today.

Market pricing is currently leaning towards a 25 basis point hike to 5.25 per cent, but some forecasters predict the MPC will instead opt for a bigger 50bps hike to 5.5 per cent.