markets – Latest News

More misery predicted for struggling mortgage borrowers as markets price in two more

admin — Fri, 04 Aug 2023 06:32:15 +0000

More misery predicted for struggling mortgage borrowers as markets price in two more interest rate hikes before the end of 2023

Updated: 17:05 EDT, 3 August 2023

Markets are pricing in two more interest rate hikes this year in yet more misery for struggling mortgage borrowers.

The Bank of England raised rates by a widely expected 0.25 percentage points yesterday, with some observers thinking there might be another ‘shock and awe’ 0.5 per cent increase.

Traders are now pencilling in another 0.25 per cent rise in September and another in November or December, taking rates to 5.75 per cent. Analysts at Investec predicted a peak of 5.75 per cent this year.

But investment bank ING forecast 5.5 per cent, saying a second 0.25 per cent hike towards the end of the year would ‘largely depend’ on whether inflation in the services sector had slowed.

Yesterday’s increase was greeted with relief by the markets – avoiding a half-point rise provided a sign the central bank was less troubled by the outlook for inflation.

Latest hike: The Bank of England – led by governor Andrew Bailey (pictured) – raised interest rates by 0.25 percentage points yesterday in a move that was widely expected

Sterling slipped following the announcement by the rate-setting Monetary Policy Committee (MPC), which voted six to three for the increase in rates to 5.25 per cent, their highest since 2008.

Two dissenters backed a 0.5 per cent hike and one voted to leave rates at 5 per cent.

The pound initially dropped to a five-week low of around $1.262 against the dollar but recovered to around $1.265.

On the bond markets, yields on UK gilts fell, meaning the Government is likely to find it cheaper to borrow.

The FTSE 100 ended the day down 0.4 per cent, or 32.47 points, at 7,529.16. But the more UK-focused FTSE 250, which is more exposed to the effects of higher interest rates, closed up 0.1 per cent, or 20.77 points, at 18,833.65.

Economists had been divided about how aggressive the Bank would be, with around a third having predicted a 0.5 per cent hike similar to the one in June.

But traders pared their bets on further rises following the emergence of the divided opinion among the members of the MPC.

‘The vote split indicated we are nearing the peak now,’ Luke Hickmore, an investment director at Abrdn said.

But the Bank warned interest rates could remain higher for longer as inflation, which was recorded at 7.9 per cent for June, was still well above its 2 per cent target.

The MPC said it would keep rates ‘sufficiently restrictive for sufficiently long’ to get inflation back down.

Matthew Ryan, head of market strategy at financial services firm Ebury, noted the Bank was ‘set to raise rates more aggressively than its peers,’ with the likes of the US Federal Reserve having paused their own rate rises.

‘UK rates could remain higher for longer than in most other major nations,’ Ryan said, adding this would help strengthen the value of the pound.

Looking further ahead, Paul Dales, the chief UK economist at Capital Economics, said that the next big surprise would be ‘how fast rates fall in late 2024 and 2025’, particularly if the mounting cost of borrowing triggered a recession.

While the Bank of England did not predict an economic downturn, Governor Andrew Bailey said that growth was still ‘pretty sluggish’ although he maintained that bringing down inflation was ‘going to be good for growth going forwards’.

The Bank cut its growth forecasts for next year and 2025.

For 2024, it expects UK gross domestic product (GDP) to grow 0.5 per cent, down from previous estimates of 0.75 per cent.

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Aquis Exchange boss Alasdair Haynes is a markets maverick

admin — Sun, 30 Jul 2023 06:06:55 +0000

Alasdair Haynes still receives calls from time to time saying: ‘I saw you on TV.’ Nearly 40 years ago he was dancing in the background of Top of the Pops when Frankie Goes to Hollywood performed Relax – one of the most controversial pop songs ever. It seems like an unconventional route to Haynes’s current job.

Today, age 63 – and having survived Covid and cancer – he leads Aquis Exchange. Aquis operates a junior stock market aiming to challenge the might of the 300-year-old London Stock Exchange – or more specifically, its Alternative Investment Market (AIM) for smaller companies.

It may be less rock’n’roll than Top of the Pops, but Haynes is trying to make shares ‘sexy’. He wants some of the millions of people prepared to plough their money into the crypto craze to look at investing in stocks and shares, with a platform that makes it attractive for them to do so.

Haynes was in his early twenties and already working his way up the ladder as a foreign exchange dealer at Morgan Grenfell when he appeared on Top of the Pops in 1984. He had a relative who was a floor manager on the BBC TV show – which was essential viewing for millions of pop fans.

‘I got to dance on quite a few shows,’ Haynes recalls. ‘But Relax was played live and afterwards banned so that video clip has become an iconic moment for Eighties music. Unfortunately, the clip is played regularly and from time to time I still get calls saying I saw you on TV.’

Mystery man: Alasdair Haynes says he’s ‘the man you never heard of

Back in those days the City was a very different place. Drinking and smoking were ubiquitous and the Square Mile was unashamedly male-dominated. There was also a class divide. Haynes – who was starting work straight out of Wellington College – had a harrowing job interview where he had to overcome doubts over his suitability because he was an ex-public schoolboy.

He was desperate to work in Morgan Grenfell’s foreign exchange division, but most of the traders hailed from much humbler backgrounds. The statistics-mad teenager explained that he wanted the job because of his interest in gambling. There was yet another hurdle to leap with his interviewer. Haynes recalls: ‘He asked ‘do you drink?’.’ Haynes, who comes from a family with links to the Deuchars brewery empire, said: ‘Yeah. I’ve been known to do that.

‘They took me off to the Jampot, which is a well known drinking establishment in the City, and said we’ll give you an interview there.

‘My interview was drinking a bottle of white port which I’ve never drunk since – can’t stand the stuff ever since then. I managed to survive and struggle back to the office and they gave me the job.’

He added: ‘Today we look at whether you have a PhD in nuclear physics to be a trader. It’s the luckiest break I’ve ever had. I never looked back.’

Now he is fighting to get himself noticed by Ministers and officials. ‘I normally start conversations with, ‘I’m the man you never heard of, I run a company you’ve never heard of, but one in 20 transactions of all equities across Europe is done on this British success story called Aquis’.

‘We do over two billion [euros] a day. We’re the seventh largest exchange group in Europe.’

Haynes is referring to Aquis’s markets business – a subscription-based platform for trading in large and mid-cap stocks across Europe.

It also operates a business providing exchange technology around the world. And in London it runs its own stock exchange for trading equities and debt securities.

English wine maker Chapel Down and brewer Adnams are among the companies listed on the exchange, inherited from the previous operators of the licence.

But the focus for the future is on helping to grow the next generation of tech ‘unicorns’ – start-ups that are valued at more than a billion dollars.

Haynes argues that markets, which today commonly settle deals two days after the trade date, require a major shake-up to make them fit for the future.

A government taskforce is due to report by the end of next year on moving from two days to one, but Haynes thinks that in ten years’ time instantaneous settlements will be the norm.

‘We’re not going to have the systems that we have today,’ he insists. ‘We don’t in the blockchain environment and crypto- currency world.

Haynes expresses a frustration that nearly five million people in Britain owned cryptoassets last year, but there is comparatively little interest in shares. His children and their friends, he says, are trading cryptoassets on apps. His aim is to do the same for the stock market.

He points out: ‘If five million people can set up accounts and trade cryptocurrency then this country is prepared to take risks.

‘Make equities sexy. They must be an attractive asset class.’

Haynes says he worries that members of the ‘baby boomer’ generation, who came of age in the Eighties, have had the chance to build up wealth, but it will be much more difficult for young people in the modern world.

‘They’re going to have to invest in assets that are going to perform,’ he says. ‘For goodness sake don’t tell me that the future is that they’ve got to buy Bitcoin.

‘The future is that they’ve got to invest properly, wisely.’ Haynes says there needs to be a focus on modernising markets not just for trading in larger companies but also for SMEs – small and medium sized enterprises, the ‘real heart’ of the economy.

He says the Aquis bourse, which had 22 floats last year and has raised more than £320 million since it was launched just over two years ago, is ‘getting important capital out to scale-up businesses’.

Companies, he says, should be able to float earlier in their growth trajectory, and be able to use the stock market as a way of raising capital.

He backs wider efforts in the City and Whitehall to boost UK stock markets, but expresses frustration that too much of the focus has been on the disappointment of losing Arm, the Cambridge-based chip designer which chose to list in New York. Nowhere near enough attention is being given to small companies, he argues.

And he has a problem with the ambition expressed by City Minister Andrew Griffith to revive the ‘tell Sid’ share-buying frenzy of the Thatcher years, which was fuelled by the cut-price privatisations of the likes of British Gas and British Telecom.

‘Actually we don’t want Sid,’ he says. ‘That was a marketplace back in the Eighties where people were given an asset that was under- valued and you knew you were going to make money.

‘It’s not quite the same thing. Sid used an abacus and probably log tables with a slide rule.’

Haynes’s ambition has not been limited by recent health scares including a serious bout of Covid at the start of the pandemic. ‘I ended up in hospital,’ he says. ‘I was taken in an ambulance and couldn’t breathe – so it wasn’t funny in the first stages. My wife wasn’t allowed to join me. She was kept outside.

‘I had cancer, which I got through earlier this year. Happy to be very fit and healthy.’

During his latter illness, recovering and watching daytime TV, Haynes recalls thinking, ‘I don’t want to do this for the rest of my life’.

‘The board when I came back said ‘Are you thinking of retiring?’

‘I said absolutely no way. I’m going to carry on here for ever.

‘I’ve seen what the other side is like and there are only so many Eggheads episodes you can watch. You’re going to have to fire me to get rid of me.’

Pound plummets as markets spooked by recession fears

admin — Sat, 24 Jun 2023 08:03:46 +0000

Rate hikes rattle the market: Growing fears that sharply rising interest rates could push the UK into recession put pressure on pound

Sterling dipped as low as $1.2688 against dollar during turbulent session
Retail sales figures provided bright spot, with unexpected 0.3% bounce in May
But closely-watched monthly business survey showed growth cooling in June

By John-Paul Ford Rojas For The Daily Mail

Updated: 03:41 EDT, 24 June 2023

Growing fears that rising interest rates could push the UK into recession put pressure on the pound last night.

Sterling dipped as low as $1.2688 against the dollar before partly recovering to around $1.27 during a turbulent session as traders reacted to mixed economic data.

Retail sales figures provided a bright spot, showing an unexpected 0.3 per cent bounce in May thanks to warm weather and the Coronation Bank Holiday.

But a closely-watched monthly business survey showed growth cooling this month amid what was described as a ‘loss of momentum for consumer spending’. Sterling hit a 14-month high of $1.2848 last week, but the outlook has since darkened.

Fiona Cincotta, market strategist at spread betting firm City Index, said the pound’s fall reflected recession fears.

‘Normally, a G10 major central bank going for a jumbo rate hike, you’d expect a jump in sterling. But the fact that it’s come off is just a reflection of those fears,’ she said.

Official figures this week showed inflation is proving hard to tackle while the precarious state of public finances suggest the Government has little room to help struggling consumers.

The Bank of England has responded to the inflation data with a sharper than expected hike in interest rates to 5 per cent and financial markets think they could hit 6.25 per cent early next year.

Fears of what that could mean for mortgage holders yesterday prompted Chancellor Jeremy Hunt to summon bank bosses where they agreed to offer more flexibility to borrowers.

There was hope, however, as figures from the Office for National Statistics (ONS) released earlier suggested consumers were so far weathering the cost of living squeeze.

They showed retail sales volumes rose by 0.3 per cent in May compared to April, surprising economists who had pencilled in a 0.2 per cent fall. Sales were still 2.1 per cent lower than in the same month last year.

But James Smith, developed markets economist at ING, said: ‘The worst is probably behind us for UK retailers.’

ONS senior statistician Heather Bovill said online shops did ‘particularly well selling outdoor goods and summer clothes, as the sun began to shine’.

Garden centres and DIY shops were also boosted by the good weather though food sales fell back – partly due to a boost in takeaway orders and trips to the pub over the bank holidays. Separate figures from data firm GfK showed that consumer confidence has climbed to the highest level in 17 months.

‘Consumers are showing remarkable resilience in the face of inflation that is currently refusing to yield,’ said Joe Staton, GfK’s client strategy director.

In another set of economic data yesterday, the purchasing managers’ index (PMI) showed private sector growth was cooling.

Chris Williamson, chief business economist at S&P Global Market Intelligence, which compiled the survey, said it suggested the economy had lost momentum after a brief growth spurt in the spring and looked set to weaken further in the months ahead.

‘Consumer spending on services, which was a core growth driver in the spring, is now showing signs of faltering,’ he said.

Elizabeth Martins, senior economist at HSBC, said it was ‘not a terrible day of data’ with the PMI figures still pointing to growth and job creation in the economy. But it ‘may be a last hurrah before the slowdown hits’.

Martin Beck, chief economic adviser to the EY ITEM Club, said: ‘With inflation proving stubbornly persistent and mortgage holders feeling the effects of higher rates, evidence of weaker momentum in the latest PMIs may continue.

‘However, falling energy prices present a significant positive for activity and mean predictions of recession may be overdone.’

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BUSINESS LIVE: Markets await BoE rate hike; Whitbread sales jump

admin — Thu, 22 Jun 2023 07:55:28 +0000

BUSINESS LIVE: FTSE 100 sinks as markets await Bank of England rate hike; Whitbread sales jump; DS Smith volumes remain weak

By Live Commentary

Updated: 03:50 EDT, 22 June 2023

Markets expect the Bank of England to reveal its 13th consecutive base rate hike at midday with the bank under pressure to bring down consumer price inflation, which held at 8.7 per cent in May.

Traders are currently split as to whether the BoE will opt for a 25 basis point hike to 4.75 per cent or a larger 50bps hike to 5 per cent.

The FTSE 100 is down 1,2 per cent in early trading. Among the companies with reports and trading updates today are Whitbread, DS Smith and Speedy Hire. Read the Thursday 22 June Business Live blog below.

> If you are using our app or a third-party site click here to read Business Live

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MARKET REPORT: Hopes of US debt-ceiling deal lifts global markets

admin — Sat, 27 May 2023 00:08:30 +0000

Global stock markets ended the week in positive territory amid hopes American politicians are closing in on a deal to extend the US debt ceiling.

On a steadier day for the main benchmarks around the world, the FTSE 100 rose 0.7 per cent, or 56.33 points, to 7627.20 while Germany’s Dax rose 1.2 per cent and France’s Cac 40 added 1.2 per cent.

On Wall Street, the S&P 500 was up 1.3 per cent, the Dow Jones gained 0.9 per cent and the technology-heavy Nasdaq climbed 2.2 per cent.

While negotiations between President Joe Biden and House Speaker Kevin McCarthy continue, the pair are close to signing off a deal that would raise the US government’s £25trillion debt ceiling for two years while capping spending on everything but military and veterans.

An agreement must be reached before the June 1 otherwise the US will default on its debt, hammering the economy and sparking panic on financial markets.

Calm: On a steadier day for the main benchmarks around the world, the FTSE 100 rose 0.7 per cent, or 56.33 points, to 7627.20

Michael Hewson, analyst at CMC Markets UK, said stocks enjoyed ‘an end-of-week lift after a negative week for stocks in general’.

He added: ‘The more positive mood appears to be being driven by some optimism that we might see the framework of a debt ceiling deal starting to unfold, with more details expected to emerge over the weekend, as we zero in on next week’s deadline.’

Rio Tinto led a rally among mining stocks after a vote of confidence from the City. Morgan Stanley said the FTSE 100 Anglo-Australian firm, which has been hampered by setbacks and environmental challenges, ‘appeared to have turned the corner’.

It said shares have been hit by demand concerns surrounding China and a slump in iron ore prices. But analysts said it was a ‘business with high-quality assets, a growing copper footprint, [and] improving operating performance’. As a result, the investment bank upgraded it from ‘equal-weight’ to ‘overweight’.

Shares, which have fallen around 15 per cent so far this year, gained 3.5 per cent, or 167p, to 4925p.

There were gains throughout the sector, with Antofagasta up 2.9 per cent, or 39.5p, to 1389.5p while Anglo American added 2.3 per cent, or 51.5p, to 2318.5p, Glencore gained 1.5 per cent, or 6.2p, to 422.65p, Endeavour Mining rose 2.2 per cent, or 44p, to 2010p and Fresnillo edged up 0.5 per cent, or 3.4p, to 656p.

But it was a sluggish session for housebuilders. Persimmon rose 0.5 per cent or 6.5p, to 1226p after Deutsche Bank Research issued a ‘sell’ rating and lowered the target price to 1212p from 1267p.

The broker cut its profit forecasts for the year to £354m from £444m to reflect ‘volume and margin pressure’. It also issued a ‘hold’ rating on Vistry Group – down 1.5 per cent, or 11p, to 740p – and Taylor Wimpey, which fell 1.5 per cent, or 1.75p, to 115.65p.

M&G gained 3.3 per cent, or 6.3p, to 198.35p after Morgan Stanley raised the asset manager’s target price to 270p from 247p.

Cyber security firm Darktrace sank 11 per cent, or 32p, to 260p after Bank of America Merrill Lynch slapped an ‘underperform’ rating on the stock.

Kin and Carta warned its revenue would be lower than hoped following industry-wide issues and contract delays.

The tech consultancy firm said clients have pressed pause on committing to spending on large programmes of work, meaning its revenue for the year to the end of July is expected to be flat.

Its shares tumbled by 9 per cent, or 6.4p, to 64.9p.

UK Commercial Property REIT rose 0.4 per cent, or 0.2p, to 51.2p after it sold a warehouse it has owned since 2009 for £74m, offloading its Wembley logistics asset to Covent Garden IP Limited.

Sharp sell-off in bank stocks expected as jittery markets prepare for fallout

admin — Mon, 01 May 2023 23:38:13 +0000

Sharp sell-off in bank stocks expected as jittery markets prepare for fallout from First Republic collapse

By Mark Shapland For The Daily Mail

Published: 16:50 EDT, 1 May 2023 | Updated: 16:50 EDT, 1 May 2023

All eyes will be on the markets today amid what is expected to be a sharp sell-off in bank stocks around the globe.

In London, traders and bankers spent the weekend assessing exposure to the fallout of First Republic in what was described by some as a ‘marathon.’

Fears are mounting of contagion, which could expose other lenders. While many investors say that this is not a ‘Lehman’s moment’, others believe that other banks could also now be in trouble.

Aftermath: In London, traders and bankers spent the weekend assessing exposure to the fallout of First Republic in what was described by some as a ‘marathon’

Traders are particularly nervous that central banks are continuing to raise rates in a banking crisis. Nevertheless many experts stressed that First Republic’s travails were a delayed reaction to the turmoil in March rather than the opening of a new phase in the crisis.

Analysts anticipate HSBC, Lloyds, Barclays, NatWest and Standard Chartered will all be sold off after having billions wiped off their share prices already this year.

Last week NatWest posted strong profits but investors were disappointed by the deposit figures which showed billions leaving the bank.

Mid-tier lenders such as Metro Bank will also be monitored, as well as challenger banks such as Monzo, Revolut and Starling Bank.

One trader told the Daily Mail: ‘It was a marathon weekend for many in the City. There is real fear going into the first trading session of the week. There will be a lot of nerves.’

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markets – Latest News

More misery predicted for struggling mortgage borrowers as markets price in two more

More misery predicted for struggling mortgage borrowers as markets price in two more interest rate hikes before the end of 2023

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Aquis Exchange boss Alasdair Haynes is a markets maverick

Pound plummets as markets spooked by recession fears

Rate hikes rattle the market: Growing fears that sharply rising interest rates could push the UK into recession put pressure on pound

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BUSINESS LIVE: Markets await BoE rate hike; Whitbread sales jump

BUSINESS LIVE: FTSE 100 sinks as markets await Bank of England rate hike; Whitbread sales jump; DS Smith volumes remain weak

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MARKET REPORT: Hopes of US debt-ceiling deal lifts global markets

Sharp sell-off in bank stocks expected as jittery markets prepare for fallout

Sharp sell-off in bank stocks expected as jittery markets prepare for fallout from First Republic collapse

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