Pressure on Diageo shares continued today after the drinks giant’s annual sales fell for the first time since 2020.
BP and Standard Chartered shares were higher after their results, with the oil giant boosted by a 10% higher dividend.
The focus is also on whether policymakers in the US and UK will cut interest rates this week.
FTSE 100 Live Tuesday
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Diageo shares sink as sales fall
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BP hikes dividend despite headwinds
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Greggs sales boosted by app use
City Comment: Hawks likely to prevail despite fall in inflation
11:46 , Jonathan Prynn
On Friday it will be the first anniversary of the last Bank of England hike in interests rates in a volley of increases that took the cost of borrowing from 0.1% all the way to 5.25%.
The day before that, the Bank’s rate setting Monetary Policy Committee will reveal whether they will start relieving the pressure on businesses and borrowers by starting the long march back down from the top of the interest rate hill.
City markets and commentators are pretty divided on whether they will, and it certainly looks like a close call. At the start of the summer I was fairly convinced that 1 August would mark the turning point. Now I am not so sure. The new Labour government has just given the economy yet another adrenaline hit of spending power in the form of well-above-inflation pay awards for public sector workers, including 22% over two years for junior doctors. That follows the near 10% increase in the minimum wage back in the spring which is still working its way through the demand side of the economy.
Although food inflation has, thankfully, dropped dramatically since the painful peaks of
18 months ago there are some indications that the shockingly bad weather earlier in the year has disrupted fruit and vegetable production leading to wholesale prices starting to rise again.
Gas and electricity bills will also begin to pop up again in the autumn although hopefully that will be quickly offset by the weak oil price. Meanwhile growth is respectably robust — by recent standards.
Overall it just feels there is not yet enough overwhelmingly compelling evidence that inflation is fully back in its box to persuade three MPC hawks
to discard their talons and convert to doves. So I am afraid it is likely to be another month of waiting after a long drawn out year of mortgage pain. Only savers will be celebrating that anniversary when it comes round on Friday.
Standard Chartered buyback boosts shares, FTSE 250 higher
10:21 , Graeme Evans
St James’s Place today rebounded by 21% after the wealth manager’s half-year net inflows of £1.9 billion easily beat City hopes. It also boosted confidence with an ambition to double underlying profits by 2030.
The recovery of 118.9p to 677.6p helped to drive the outperformance of the FTSE 250 index, which rallied by 0.9% or 192.61 points to 21,444.68.
In contrast, the FTSE 100 index fell by 0.5% or 42.50 points to 8249.85 as London’s top flight succumbed to jitters in a big week for earnings and interest rate decisions.
Big fallers included the accounting software group Sage, which lost 4% or 46p to 1040.5p. The reverse came despite unchanged guidance for the year following a 9% rise in revenues to £1.7 billion in the first nine months.
Croda International also fell 4% or 163.3p to 3940.7p, leaving shares in the speciality chemicals firm down by a fifth this year.
Alongside in-line results, the company highlighted continued destocking by customers in the crop protection sector.
Support for the FTSE 100 came from BP and banking group Standard Chartered, with the latter up by 6% or 41.8p to 768.6p after second quarter profits beat expectations.
Boosted by the results, chief executive Bill Winters upgraded guidance for income growth in 2024 and announced the Asia-focused bank’s largest ever share buyback of $1.5 billion.
Diageo, Croda and Sage under pressure in weaker FTSE 100
08:19 , Graeme Evans
BP shares have risen 2% and Standard Chartered by 5% following the publication of their half-year figures.
Diageo shares are down by 7% or 190p to 2357.5p after annual results revealed a 1.4% drop in sales and a warning that challenging conditions have continued.
The other blue-chip stocks under pressure following updates were speciality chemicals firm Croda International, which declined 5% or 203p to 3901p, and accounting software firm Sage with a retreat of 7% or 79.5p to 1007p.
The FTSE 100 index fell 38.04 points to 8254.31, a worse-than-expected decline of 0.5%.
Diageo shares sink as sales fall for the first time since 2020
08:13 , Simon Hunt
Sales at Diageo have declined for the first time since 2020 as the London-listed drinks giant wrestled with falling demand in Latin America.
The Smirnoff and Johnnie Walker owner also posted a 2% dip in sales in North America, which CEO Debra Crew said was “attributable to a cautious consumer environment and the impact of lapping inventory replenishment in the prior year.”
That news has helped its share price slump as much as 7.5% in the opening minutes of trade.
In Europe sales were more resilient, rising 12%. Sales in the UK were especially strong, with a near 1/3 rise in demand for Guinness.
But the company warned: “The consumer environment continues to be challenging with conditions we saw towards the end of fiscal 24 persisting into fiscal 25.”
Surge in app users helps Greggs to another jump in sales
08:03 , Simon Hunt
A surge in the use of its mobile app has helped Greggs sales post another jump in sales as it opened 99 new stores in the first half of the year.
Britain’s biggest baker said the app’s share of customer transactions at its managed stores had risen to 18.3%, up from 10.6% last year as new offers and loyalty schemes helped drive up user numbers.
The Newcastle-based business posted total sales of £960 million for the first six months of the year, a rise of 13.8% or 7.4% on a like-for-like basis.
Greggs shares rose 2% in the opening minutes of trade.
BP hikes dividend despite headwinds
07:36 , Graeme Evans
BP today increased its dividend for the first time in a year, lifting the payout to shareholders by 10% to eight cents a share.
It reported a bottom line loss of $16 million for the second quarter, but with the underlying replacement cost profit of $2.8 billion (£2.2 billion) up slightly on the previous quarter and a year ago.
The results follow this month’s trading update, which flagged a series of headwinds including impairments and weak refining margins.
The oil giant said today it had reduced net debt to $22.6 billion (£17.6 billion).
Chief executive Murray Auchincloss said: “We are driving focus across the business and reducing costs, all while building momentum in our drive to 2025.”
Car loan firms get more time to respond to wave of complaints on over-charging
07:34 , Michael Hunter
Firms at the centre of the series of complaints about over charging for car loans are getting more time to deal with the problem.
The Financial Conduct Authority said it will extend “the current pause” on the time companies have to respond to complaints until early December 2025.
That is when the regulator will outline its “redress scheme” which will include details over compensation.
The FCA is in the process of deciding if commission paid to car loan brokers was too high, with borrowers sold pricier loans when they could have qualified for cheaper alternatives.
The payouts could be the biggest since the mis-selling scandal over payment protection insurance.
Brent Crude below $80 a barrel ahead of rates decisions
07:24 , Graeme Evans
Brent Crude continues to trade below the $80 a barrel threshold, having fallen to its lowest level since early June in yesterday’s session.
The weaker demand outlook amid the slow recovery of China’s economy has cut the price to $79.45 from above $86 a barrel at the start of July.
Copper has also fallen in ten of the past 11 sessions to a four-month low.
The declines in key commodity prices boost the inflation outlook ahead of this week’s interest rate decisions by central bankers in the UK and US.
Money markets narrowly expect the Bank of England to lower by 0.25% to 5%. The decision will be announced at noon on Thursday.
City firm Peel Hunt said: “Although a rate cut makes sense, in our view, it would not be a total surprise if policymakers cautiously held rates this week and waited until the next meeting on 19 September or even the 7 November meeting to begin the rate cutting cycle.”
Tesla rallies in steady US session, FTSE 100 seen flat
07:08 , Graeme Evans
A flat session for Wall Street’s leading benchmarks last night masked a 1% rise for the Magnificent Seven ahead of this week’s earnings updates.
Tesla’s 6% jump led the rebound in the run-up to tonight’s release of figures by Microsoft and others later in the week by Meta Platforms, Apple and Amazon.
US traders are also awaiting tomorrow’s guidance from the Federal Reserve, with policymakers seen keeping rates on hold for one more month.
The FTSE 100 index gave up initial gains to finish flat last night, with futures trading suggesting that the top flight will be unchanged at the opening bell.
Asia markets have fallen overnight, while the pound has continued its retreat from the $1.30 threshold seen earlier this month to stand at $1.2845.
Recap: Yesterday’s tip headlines
06:51 , Simon Hunt
Good morning from the Standard City desk.
Rachel Reeves officially declared the Labour honeymoon over yesterday with what has been widely trailed as a bleak assessment of the state of Britain’s public finances.
Her statement in the Commons was largely a highly political “kitchen sink” operation of the type often executed by incoming CEOs when they throw in all the bad news, including the kitchen sink, and blame the mess on their predecessor.
She pointed to unexpected blackholes including a £300 million cost overrun on the now-scrapped Rwanda migrant scheme and a “secret” pay offer to teachers pledged by the previous government.
Less than a month on from the election on a glorious summer day just before the recess, Reeves can get away with that. Come the colder days and longer nights of an Autumn Budget, the mood will have changed.
By then Labour will need to have found a message and a strategy that can persuade the electorate there is a credible route out of the economic turbulence, underperformance and mismanagement of recent years. It is not long. The time will come, probably sooner than Team Starmer thinks, when Labour will have to own any new economic misfortune
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Here’s a summary of our top headlines from yesterday: