A jump in UK inflation to a 10-month high of 3% today dealt a blow to hopes of early further interest rate cuts.
Banking giant HSBC and BAE Systems are in the spotlight after posting annual results.
Meanwhile, airline stocks have fallen after Jet2’s warning of margin pressure on summer holiday bookings.
FTSE 100 Live Wednesday
- HSBC unveils cost savings plan
- BAE Systems order book record
- Jet2 flags summer margin pressure
Market update: Airlines struggle in FTSE 100, Glencore reviews London listing
10:36 , Graeme EvansGlencore and airline stocks were among today’s worst performers as investors also digested robust annual results by HSBC and BAE Systems.
The commodity giant slid 5% or 15.9p to 337.7p as weaker energy coal prices meant underlying earnings fell by a bigger-than-forecast 16% to $14.4 billion.
Glencore also sent a chill through the wider London market by revealing it is assessing whether its shares are traded on the right exchange.
The disclosure follows US switches by companies including Flutter Entertainment and CRH, as well as the downgrading of former FTSE 100 miner BHP to a secondary London listing.
Glencore, which listed in 2011, has been trading at its lowest level since 2021 after it paused top-up dividends to focus on reducing post-acquisition debt.
Today’s results included a $1.2 billion base distribution of 10 US cents a share, together with a ‘top-up’ buyback of shares worth $1 billion.
Glencore led the fallers board in a session when Anglo American also lost 1.5% or 41.5p to 2411.5p and Rio Tinto fell by 23.85p to 5057.15p.
The FTSE 100 index, which drifted 3.81 points to 8762.92, was also impacted by the airline sector after Jet2 flagged potential summer margins pressure.
Low-cost carrier and holidays business easyjet retreated 4% and British Airways owner IAG lost 2%, while the AIM-listed shares of Jet2 fell 10% or 161.2p from recent highs to 1403p.
Jet2’s bookings for April, May and June are up by about 7%, but chief executive Steve Heapy said a later booking profile and cost headwinds may mean profit margins in the year ahead “come under some pressure.”
Elsewhere, HSBC and BAE Systems consolidated their recent gains after annual results broadly met City expectations.
Records in the defence and aerospace giant’s figures included an order backlog 11% higher at £77.8 billion and annual sales up 14% at £28.3 billion.
The dividend for the year also lifted 10% as BAE forecast further strong sales growth in the year ahead.
The shares fell 8p to 1328.5p, having risen 15% so far this year on expectations that its order book will continue to swell in the current geopolitical climate.
HSBC shares also consolidated recent gains by adding 4.1p to 902.2p, having reported a rise in annual pre-tax profit to $32.3 billion from $30.3 billion.
It is to target savings of $1.5 billion by the end of 2026 as chief executive Georges Elhedery seeks to create a “more agile, focused bank”.
The bank lifted its final dividend by 16% and said it planned to complete a $2 billion buyback of shares by the time of its first quarter results.
HSBC seeks 8% cut in staff costs as profits rise
09:33 , Graeme EvansBanking giant HSBC is to kick off a round of jobs cuts in the UK and worldwide as it seeks to slash costs by 1.5 billion US dollars (£1.2 billion) by the end of 2026.
The group will look to reduce its staff costs by 8%, with senior managers and those in its newly merged wholesale corporate and institutional arm in focus.
It is also withdrawing from mergers and acquisitions banking activity in the UK, Europe and the US.
Details of the savings came as the UK’s largest bank unveiled a better-than-expected 6.6% rise in profits to $32.3 billion (£25.6 billion) for 2024.
The annual report also showed HSBC plans to increase chief executive Georges Elhedery’s total pay package to a potential maximum of £15.2 million.
Margin pressure clouds Jet2 outlook, shares down 10%
08:51 , Graeme EvansJet2 shares have lost 10% of their value after the airline and package holidays business warned of potential margin pressure due to later booking trends.
For the combined departure months of April, May and June, total forward bookings are up by approximately 7%. The average load factor, which shows how full the company’s planes are, is broadly flat at Jet2’s existing bases.
Chief executive Steve Heapy said: “We continue to believe that our customers cherish their time away from our Rainy Island and want to be properly looked after throughout their holiday experience and we will continue to invest in our business to meet these expectations.
“However, we also recognise the current macroeconomic conditions and the many demands placed on consumer discretionary incomes, which combined with the later booking profile and cost headwinds detailed, may mean profit margins in the year ahead come under some pressure.”
He is pleased with the company’s performance in the financial year to March, which is set to show profits growth of between 8% and 10% to between £560 million and £570 million.
Jet2, which is the largest stock on the AIM junior market, fell 155p to 1410p. Low-cost airline airline easyjet dropped 3% or 15.6p to 502p.
HSBC and BAE shares lower in lacklustre FTSE 100, Glencore down 4%
08:27The shares of HSBC and BAE Systems have fallen back 1% following their annual results, down 10.2p to 887.9p and 13.5p to 1323p respectively.
HSBC is up almost 40% over the past year, with BAE ahead 15% so far this year.
On HSBC, Interactive Investor head of markets Richard Hunter said: “These are comforting numbers which leave HSBC a strong springboard on which to build as the business is reorganised.”
Meanwhile, Hargreaves Lansdown analyst Aarin Chiekrie added on BAE: “Free cash flow guidance for the current year looks a little soft.
“But softening the blow, the three-year free cash flow guidance has been upgraded, implying that investments today are set to reap higher rewards.
“If investors are patient, they look set to benefit from BAE’s long-term growth strategy.”
Mining giant Glencore fell 4% or 14.45p to 339.1p despite announcing a $1 billion top-up buyback alongside its base dividend in annual results.
The FTSE 100 index is 20.01 points lower at 8746.72.
BAE posts record figures amid defence spending boost
07:55 , Graeme EvansBAE Systems today unveiled records for order backlog, sales, underlying earnings and dividend as it benefits from increases in global defence budgets.
Order intake of £33.7 billion lifted the backlog by 11% of £77.8 billion, while 2024 sales rose 14% to £28.3 billion and operating profit improved 4% to £2.7 billion.
The dividend for the year has been lifted 10% to 33p a share. Guidance for 2025 includes sales growth in the range of 7%-9%.
Chief executive Charles Woodburn said: "Based on the exceptional visibility of our record order backlog and sustainability of our value-compounding business model, we remain confident in the positive momentum of our business into the future."
It grew its workforce in the year by 7600, including from the acquisition of Ball Aerospace, to 107,400..
Self-funded R&D spending rose to £357 million in key technology areas including electronic warfare, uncrewed air systems and space solutions.
November marked the 25th anniversary of British Aerospace and Marconi Electronic Systems coming together to create BAE Systems.
School fees and air fares drive inflation to 3%
07:38 , Graeme EvansThe rebound in January’s inflation rate to 3% was larger than expected, driven by air fares, VAT on private school fees and 50% increase in the bus price cap.
Offsetting these factors, the rise in energy prices was lower than 2024’s rate.
Capital Economics said the components of today’s inflation spike shouldn’t have too much of an impact on the Bank of England’s stance on monetary policy.
The consultancy added: “It’s no secret that higher energy prices will push CPI inflation further above 3% over the next seven months.
“We doubt this will prevent the Bank from cutting rates further. Indeed, we still think CPI inflation will fall below 2% in 2026 as the fading of some temporary effects and the weak economy feed through to lower services inflation.
“The risk is that the rise in inflation proves more persistent and rates are cut more slowly than we expect, or not as far.”
HSBC unveils cost savings, 2024 profits rise
07:18 , Graeme EvansHSBC is to target savings of $1.5 billion (£1.2 billion) by the end of 2026 as chief executive Georges Elhedery seeks to create a “more agile, focused bank”.
The move was announced alongside an annual pre-tax profit of $32.3 billion (£25.6 billion) for 2024, up from $30.3 billion (£24.1 billion) in 2023.
The bank lifted its final dividend by 16% to 36 US cents a share and intends to complete a $2 billion buyback of shares by the time of its first quarter results.
Inflation jumps to 3% as fuel bills rise
07:11 , Graeme EvansThe annual rate of inflation today hit 3%, the highest figure since March and above City expectations for a figure of around 2.8%.
It compares with the previous month’s 2.5%, which came in below expectations.
The ONS said the increase was driven by higher fuel bills and air fares and the imposition of VAT of private school fees.
Index set for steady start, gold price near record
07:01 , Graeme EvansThe lacklustre run by the FTSE 100 index is set to continue after IG Index futures pointed to a flat session for London’s top flight.
The index last night edged downwards by one point to finish the day at 8767, whereas benchmarks in France and Germany were about 0.2% higher.
It was a similar story In New York, where the Dow Jones Industrial Average rose 10.26 points and the S&P 500 edged 0.2% higher.
In Asia, the Hang Seng index gave up some of its recent advance with a fall of 0.3% while the Shanghai Composite improved 0.8%.
The pound stood at $1.262 prior to today’s release of UK inflation figures, while gold traded near to last week’s record at $2931 an ounce.
