Interest rate decisions and a packed diary of corporate results mean another hectic session in financial markets.
As well as expected cuts in borrowing costs, the Bank of England and Federal Reserve will update their guidance on the economic outlook.
BT Group, Rolls-Royce, Sainsbury’s and ITV are among the high-profile companies reporting today.
FTSE 100 Live Thursday
- BT cuts revenues guidance
- Grocery sales power Sainsbury's
- Interest rates set to fall
Market update: BT and Auto Trader struggle, Rolls-Royce momentum stalls
10:37 , Graeme EvansA fresh setback for BT and negative reactions to updates by Sainsbury’s and Rolls-Royce today soured the mood ahead of another Bank of England interest rate cut.
The FTSE 100 index stood 10.88 points higher at 8177.56, well short of benchmarks in Europe and despite the 3% post-election bounce seen on Wall Street last night.
London’s jittery performance came ahead of policy statements by the Bank of England and Federal Reserve. Rates are forecast to fall by 0.25% to 4.75% in both cases, with the outlook for cuts in 2025 likely to be the bigger interest for traders.
Companies will welcome some clarity on borrowing costs after a period of uncertainty caused by the Budget and the US election.
BT Group shares fell 6% today after reporting a second quarter revenues decline of 3.1%. This included a 7% drop in the Business division, while the Consumer arm fell 2%.
The performance caused BT to scale back revenues guidance for the year, although it left estimates for profit and cash flow untouched.
Its roll out of full-fibre broadband also continues at an impressive pace after the Openreach arm reached another 2.1 million premises in the half-year.
Today’s decline of 7.9p to 134.2p returns shares to where they were in August.
AJ Bell investment director Russ Mould said: “Chief executive Allison Kirkby faces a difficult task in simplifying and streamlining BT, which with its expensive foray into sports rights in the mid-2010s overextended itself, but she has at least made progress in getting costs and spending under control.”
Rolls-Royce shares have enjoyed another strong year, although they fell back from record levels today after the engines giant released a third quarter update.
It reiterated guidance for profits and cash flow in 2024 while engine flying hours are at 102% of pre-pandemic levels. This is towards the lower end of the forecast range of 100%-110%, contributing to today’s fall 4% or 24.4p to 549.6p.
The shares of Sainsbury’s fell 2% or 6.2p to 261.6p, despite the retailer’s half-year results revealing another strong performance in Grocery. The division’s sales rose 5%, while the second quarter saw improved performances in General Merchandise and at Argos.
Other results-day fallers in the FTSE 100 included Auto Trader, which reversed 48.8p to 794.6p after it said new cars were being advertised for shorter periods of time amid constrained supply conditions.
Kitchens supplier Howden Joinery also fell 27.5p to 820p.
Engineering firm IMI bucked the trend by rising 46p to 1705p, while National Grid lifted 11.4p to 994.6p after half-year underlying profits rose 26%.
In the FTSE 250 index, ITV shares fell 6.15p to 66.1p after it reported an 8% decline in revenues for the first nine months of the year to £2.7 billion.
Wood Group slumped 44% or 54.6p to an all-time low of 70p after its latest trading update revealed the launch of an independent review into contracts.
ITV hails Studios momentum, shares fall
08:57 , Graeme EvansITV shares have fallen after an update by the broadcaster showed an 8% decline in revenues for the first nine months of the year to £2.7 billion.
The performance reflected growth in total advertising revenue, offset by a 20% decline at ITV Studios following the 2023 US writers' and actors' strike.
Rugby World Cup comparatives and Budget uncertainty means total advertising revenues are likely to be down 6-7% in the current quarter.
Despite its revenues decline, ITV Studios is still on track to deliver record adjusted earnings for the year as it benefits from efficiency gains and a significant fourth quarter delivery schedule.
ITV chief executive Carolyn McCall said: “Studios has great creative and commercial momentum as demonstrated in the last few weeks with shows including Rivals for Disney+ and Ludwig for the BBC and is on track to deliver good revenue growth in 2025 and 2026.”
ITVX recorded 14% growth in streaming hours and 15% growth in digital advertising revenue in the nine months to 30 September
Shares fell 9% or 6.5p to 65.75p following the update.
Richard Hunter, head of markets at Interactive Investor, said: “In investment terms, ITV remains a tough watch, weighed down by the endlessly deep pockets of some of its competitors in the streaming space, as well as still feeling the after-effects of the previous writers’ and actors’ strike in Hollywood.”
Rolls-Royce, ITV and Sainsbury's under pressure, FTSE 100 higher
08:34 , Graeme EvansThe FTSE 100 index is 10.41 points higher at 8177.09, despite weakness for several of the companies with updates out today.
Rolls-Royce shares fell 4%, falling 22.4p from this week’s latest record high to stand at 551.6p.
BT Group also surrendered recent gains to fall 4.4p to 137.6p, while Sainsbury’s dropped 2% or 5.6p to 262.2p, Howden Joinery reversed 42.5p to 805p and Auto Trader lost 39.6p to 803.8p.
Outside the top flight, ITV fell 8% or 6.05p to 66.4p and Wood Group slid 29% or 35.8p to 88.7p
Investors liked the update of National Grid after shares rose 13.6p to 996.8p, while National Express business Mobico cheered 7% or 5.15p to 76.5p.
BT shares lower after revenues guidance cut
08:18 , Graeme EvansBT shares are down 5.5p to 136.6p after the telecoms giant cut full-year revenues guidance in today’s interim report.
Hargreaves Lansdown analyst Matt Britzman said: “BT shares are under pressure in early trading as the full-year revenue guide gets cut, but investors can take some consolation in the fact that profit and cash flow guidance has been left untouched.
“The Business division continues to be the problem child. A combination of structural changes, higher costs, and a tough competitive landscape make it a tricky place to operate.”
Sainsbury's food sales offset tough trading at Argos
07:57 , Graeme EvansGrocery sales growth of 5% today helped supermarket chain Sainsbury’s to offset weaker trading at Argos.
Like-for-like sales across the group rose 3.4% in the six months to 14 September.
General merchandise and clothing ranges fell by 1.5%, although Sainsbury’s said the division’s performance returned to growth in the second quarter.
Argos sales were 5% lower, driven by a 7.7% fall in the first quarter. The rate of decline improved to 1.4% in the second quarter, with the improved trend continuing over recent weeks.
Retail underlying operating profit of £503 million rose 3.7% on a year earlier.
Chief executive Simon Roberts said: "Our food business is going from strength to strength and we're making the biggest market share gains in the industry, with continued strong volume growth.”
Interest rates set for second cut of 2024
07:39 , Graeme EvansThe Bank of England is today set to lower its base rate by 0.25 to 4.75%, the second time it has cut borrowing costs this year.
Deutsche Bank expects the Bank’s monetary policy committee to vote 8-1 in favour of a rate cut.
It said: “With activity slowing in recent months, opening up downside risks to the MPC's growth projections, price dynamics have continued to normalise – and normalise faster than what the committee set out in August.”
Economists will also be looking for any reaction to the Autumn Budget and the potential path for rate cuts in 2025.
Average house price hits new peak - Halifax
07:31 , Graeme EvansThe average price of a home in the UK advanced 0.2% in October, mortgage lender Halifax said today.
This represents a fourth consecutive month of growth, resulting in an annual rate of 3.9%.
The average property costs £293,999, passing the previous peak of £293,507 set in June 2022 shortly before Liz Truss’s mini-Budget.
Rolls-Royce backs guidance, flying hours above pre-pandemic level
07:22 , Graeme EvansRolls-Royce today reiterated full-year expectations for a profit between £2.1 billion and £2.3 billion and free cash flow in the range of £2.1 billion-£2.2 billion.
In civil aerospace, large engine flying hours grew by 18% year-on-year to 102% of 2019 levels for the ten months to the end of October.
The engine giant’s turnaround has lifted shares by another 90% this year.
Chief executive Tufan Erginbilgic said: "Our transformation of Rolls-Royce into a high-performing, competitive, resilient and growing business continues with pace and intensity.
“Continued good performance year to date gives us further confidence in the delivery of our 2024 guidance despite a supply chain environment which remains challenging.
He added: “There is more we still need and want to do, as we expand the earnings and cash potential of Rolls-Royce."
BT hails full-fibre rollout progress, cuts revenues guidance
07:16 , Graeme EvansBT today cut annual revenues guidance but said the rollout of full-fibre broadband set a new record in the first half of the financial year.
The 2.1 million build rate in the period means its full-fibre footprint now passes 16 million premises, around half of the UK.
It increased the target for this year to 4.2 million and is on track to reach 25 million premises by the end of 2026.
In today’s half-year results, adjusted revenues of £10.1 billion were 3% lower mainly due to challenging conditions in Business and continued competitive markets in Consumer.
It now expects revenues for the year to be 1-2% lower, with all other guidance unchanged. Shareholders are getting an interim dividend of 2.4p a share, up 4% on the year before.
Pre-tax profit fell 10% to £1 billion, down 10% primarily due to lower revenue, higher specific costs and an increase in finance expenses.
Chief executive Allison Kirkby said: "We have accelerated the modernisation of BT Group in the first half of the year.
“We've ramped up our full fibre build and connections, seen further improvements in customer satisfaction, and our cost transformation contributed to growth in earnings and normalised free cash flow despite revenue declines driven by our non-UK operations and a competitive retail environment.”
FTSE 100 seen slightly higher after US bounce, rate decisions due
07:00 , Graeme EvansThe S&P 500 index last night closed at a record high, having surged 2.5% in reaction to Donald Trump’s election victory.
The Dow Jones rose 3.6% and the Nasdaq Composite jumped 3%, with top performing stocks including Tesla after the electric car maker surged 15%.
Attention now turns to the interest rate decisions of policymakers on both sides of the Atlantic.
The Federal Reserve and Bank of England are seen cutting by quarter points to 4.75%, with the focus also on their outlook for policy in 2025.
The FTSE 100 index is forecast to open 13 points higher at 8180, having surrendered an initial 1% rise in yesterday’s session.
