After the second closing highs in a row on the London stock market, and a new intraday high this morning, it’s time to wrap up.

Here’s today’s main stories, first on the FTSE 100’s big day:

And here’s the rest of today’s news:

Every dog will have its day and here comes the FTSE 100 index, not so much soaring as limping to a record high of 8,076 today.

If that sounds too grumpy, consider that the previous record, 8,047, was set in February last year. In the 14 months it has taken the UK’s premier index to regain its old record level, the S&P 500 index in the US has marched upwards by 22% – and done so in a straight line, more or less, until a slip in the past fortnight.

Also note that the Footsie’s latest push above 8,000 carries a heavy flavour of currency effects at work. The US dollar has been strengthening against most major currencies, including sterling, as markets look at the persistence of inflation in the US and judge that the Federal Reserve may not cut interest rates this year (and could even raise them).

Since 75% of the aggregate earnings of Footsie companies are made in foreign currencies, primarily the US dollar, there is a simple beneficial conversion effect when those profits are expressed in pounds and pence. Rises in the sterling-denominated share prices of Shell and BP, two big dollar earners, account for half of the Footsie’s gains this year.

More here….

Newsflash: The UK’s blue-chip stock index has ended the day at a new closing high, for the second day running.

The FTSE 100 has closed at 8044 points tonight, up 21 points or 0.26% on last night’s closing high.

That’s still some way short of the new intraday record high of 8076 points which the Footsie scaled in early trading this morning, as hopes of rate cuts pushed shares higher.

Stocks have slipped back after Bank of England chief economist Huw Pill indicated that he thinks the first cut in UK interest rates is still a way off.

Retailers were the top risers today, with Primark owner Associated British Foods surging almost 9% today, followed by Ocado (+5.4%) and JD Sports (+3.75%).

Kathleen Brooks, research director at XTB, says the FTSE has fought back after being the wall flower of global stock markets during the Q1 market rally.

Brooks explains:

This is a momentous occasion for the UK index, but the outperformance has been building for the past month. As market volatility has risen, the FTSE 100’s defensive qualities have boosted its attractiveness. It is higher by 1.6% in the past month, even though the S&P 500 has been down by 4.27% in the last four weeks. However, when you adjust for currency effects, the FTSE 100 is lower by 0.66% in the past month.

Thus, the performance of the FTSE 100 depends on what currency you are looking at. In sterling terms it is at a record high, in US dollar-adjusted terms its performance is weaker because of the underperformance of sterling vs, the USD in the long term, as you can see in the chart below. Thus, the FTSE 100 may be lagging its peers because US investors are not so interested in the UK index when returns are lower in USD.

UK banks need to improve their risk management frameworks so they can access the risks from private equity, the Bank of England has warned.

The BoE has written to chief risk officers at UK banks, giving them until the end of August to benchmark their risk management frameworks, and devise a plan to fix any gaps.

This follows a review by the Bank’s Prudential Regulatory Authority, which found that “very few” banks carry out “routine, bespoke and comprehensive stress testing” of their exposure to private equity firms.

That is a concern for the Bank, as the private equity market – which is highly leveraged – has grown considerably over the past decade. Banks’ exposures to the sector have also grown considerably, by offering them a range of financial products.

Rebecca Jackson, executive director for Authorisations, Regulatory Technology & International Supervision at the Bank, says firms need to improve their risk management swiftly.

In a speech to UK Finance this afternon, Jackson explains:

The strong growth and attractive return profile of private equity over the last 10 years has emerged during a period of relatively benign market, economic and liquidity conditions for the sector. Though the economy has seen some major bumps in the road, particularly during covid, we have avoided extended market and economic downturns. While of course this is a very good thing, it does mean that the sector remains untested. Yet the trends that this review has identified; of creeping leverage, large exposures, complicated structures, and poor risk aggregation, all suggest that banks may not be prepared for such a test, if or when it emerges.

And there is the broader and longer-term question of whether developments in the industry constitute a ‘displacement’ – a change in the macro environment or ‘technology’ of Banking, that would be a necessary albeit not sufficient condition for more systemic issues to emerge.

In any event, the need for significant improvements in risk management is clear, and it’s clear that these need to happen now; it’s better, as Shakespeare said, to be 3 hours too soon than a minute too late.

Newsflash: growth across the US private sector has slowed this month, amid signs that demand is weakening as firms cut staff.

That’s according to the latest survey of purchasing managers at American companies, from S&P Global.

The flash US PMI composite output index, which tracks activity across US companies, has dropped to a four-month low of 50.9 this month, down from 52.1 in March. That takes it close to the 50-point mark showing stagnation.

The PMI report shows that firms suffered a drop in new orders for the first time in six months in April. Firms scaled back employment for the first time in almost four years, with business confidence falling to its lowest since last November.

Chris Williamson, chief business economist at S&P Global Market Intelligence, says:

“The US economic upturn lost momentum at the start of the second quarter, with the flash PMI survey respondents reporting below-trend business activity growth in April. Further pace may be lost in the coming months, as April saw inflows of new business fall for the first time in six months and firms’ future output expectations slipped to a five-month low amid heightened concern about the outlook.

The more challenging business environment prompted companies to cut payroll numbers at a rate not seen since the global financial crisis if the early pandemic lockdown months are excluded.

That might dampen speculation that the US Federal Reserve could raise interest rates even higher….

Swedish streaming service Spotify is having a good day, after reporting record income in the last quarter.

Shares in Spotify have jumped by 14% at the start of trading on Wall Street, after it reported record high operating income of €168m in the last quarter.

Spotify, which announced 1,500 job cuts at the end of last year, reported today that monthly active users grew 19% year-on-year to 615 million, in the first quarter of this year

Subscribers increasing by 14% year-on-year to 239 million, while total revenue rose 20% compared with a year before.

Daniel Ek, Spotify founder & CEO, says:

“We’ve talked about 2024 as the year of monetization and we’re delivering on that ambition. Now as we’ve shifted to focus on strong revenue growth and margin expansion, we see a clear opportunity to ensure we are also continuing to grow the top of our funnel.

I feel good about the changes we are implementing and remain very confident in our ability to reach the ambitious plans we’ve outlined.”

Huw Pill appears to have driven the FTSE 100 away from its new alltime high!

The blue-chip share index has now shed all its earlier gains, and is now flat at 8023 points, where it closed last night.

That wipes out all the earlier rally that pushed the Footsie to a new intraday high of 8076 points early this morning.

The FTSE 100 is sliding as the pound strengthens by half a cent, back to $1.24.

That is hitting the share price of mining giants listed in London, as they make their earnings in dollars.

The BoE chief economist seems to have done the damage, by arguing this lunchtime that conditions haven’t changed in the last few weeks. That is dampening hopes of early interest rate cuts, as is Huw Pill’s warning that it would be riskier to cut too early than too late.

Bank of England chief economist Huw Pill predicts that inflation is likely to fall to the Bank’s 2% target, or even lower, in the coming months.

But, he also tells his audience in London that the rate of inflation could bounce back up again.

So we shouldn’t get too excited if CPI falls to 2% or lower, he argues.

He also warns that it could be riskier to cut interest rates too soon, rather than leaving borrowing costs high for too long.

As Pill puts it:

In my view there are greater risks associated with easing too early should inflation persist rather than easing too late should inflation abate.

Newsflash: The Bank of England’s chief economist, Huw Pill, is speaking in London now.

And he says that the first cut in UK interest rates is “somewhat closer” than at his last speech, at the start of March… but mainly due to the passage of time since!

Pill begins by telling his audience at the London campus of the University of Chicago Booth School of Business that he doesn’t believe much has changed since his last speech, on 1st March, when he said the BoE was “some way off” cutting interest rates.

Today, Pill argues that the picture has changed little in the seven weeks since.

He says:

In my view, against the background of a welcome decline in headline inflation, the outlook for UK monetary policy in the coming quarters has not changed substantially since the beginning of March.

Pill outlines how events in the Middle East are a reminder of potential external risks (although they haven’t yet had a major impact on energy prices), while the UK’s inflation rate dipped in March, as expected.

Pill explains that the Bank’s monetary policy committee needs to keep policy sufficiently restrictive to ensure inflation falls to 2% and stays there. But, he add, a cut in Bank Rate from current levels would not entirely undo the restrictive stance of policy.

And in conclusion, Pill hammers home his message that a “lack of news” means little has changed between St. David’s Day (1st March) and St. George’s Day (today).

Against a welcome backdrop of declining headline inflation anticipated by the MPC, the flow of conjunctural data since I last spoke on the monetary policy stance in Cardiff in early March has offered modest relevant news. This suggests little need to amend the assessment of the economic, inflation and policy outlook that I offered then.

In Cardiff, I concluded that, while we are making satisfactory progress in returning inflation to target, in my baseline scenario the time for cutting Bank Rate remained some way off.

That justified my vote to keep Bank Rate unchanged at the MPC’s February meeting and underpinned my subsequent decision to vote similarly in March.

The combination of little news and the passage of time have brought a Bank Rate cut somewhat closer. But the same lack of news gives me no reason to depart from the baseline that I already established on St. David’s Day.

Motorists have been hit by a jump in fuel costs, the AA has warned, with petrol across the UK now averages above 150p a litre for the first time since November.

Data collated by website Fuel Prices Online shows typical pump prices reached 150.1p per litre yesterday.

The average price of a litre of diesel is also at the highest level since November 2023, at 158.3p.

Luke Bosdet, the AA’s spokesman on pump prices, says:

“Inflation has been heading downwards at quite some speed but petrol’s rebound to 150p a litre leaves a big boulder in the road. Government data shows that for the fourth week petrol prices have been higher than at the same time a year ago. This last happened in February 2023.

Five days of falling wholesale costs, with the value of oil coming off the boil, offers hope that pump prices may not get much worse in the short-term. However, road fuel priced above 150p a litre grabs the attention of drivers and will lead some to re-tighten their belts on other spending.”

The monthly purchasing managers index (PMI) is an closely watched barometer of economic prospects; here’s what economists are saying about today’s UK PMI report, showing a pick-up in growth:

Rhys Herbert, senior economist at Lloyds Bank, says:

“Today’s figures suggest that the UK’s economic conditions are continuing to improve.

It’s encouraging to see Service providers recording the fastest growth for nearly a year, and businesses will be hoping that another slight drop in inflation will have a further positive impact on spending power for both households and businesses.

Improving economic activity is telling a relatively optimistic story. While geopolitical tensions may cause some challenges in the months ahead, markets remain optimistic that interest rates have peaked and could begin to fall later this year.”

But…Charles Hepworth, investment director at GAM Investments, points out that factories struggled:

“UK Services PMI data rose more than expected in April to a reading of 54.9, a short term high not seen in almost a year. This reflects the continuing recovery from the slowdown seen in the second half of last year.

However, the strong showing in services was in stark contrast to the contraction still seen in the manufacturing sector which continues to struggle with a contractionary reading of 48.7. Companies surveyed reported that prices they charged went up at the slowest pace in a number of years, less due to declining demand but more through competition.

This may not be seen as good news for the Bank of England who still isn’t comfortable enough that the inflation dynamics are genuinely shifting, and that consumers are reducing demand.”

Overall, the PMIs paint a picture of a recovering economy, says Thomas Pugh, economist at leading audit, tax and consulting firm RSM UK. He adds:

“The robust increase in the flash S&P/CIPS composite PMI in April to 54.0, the highest since May 2023, suggests that the economy continued to pick up steam after last year’s mini-recession.

An acceleration in growth in Q2 would, in theory at least, ease the pressure on the Bank of England (BoE) to cut interest rates. But in reality, with inflation still likely to fall to 2% this month, the labour market rapidly weakening and growth still low, the time for interest rate cuts has come.

A delay in rate cuts beyond the summer would risk harming the economic recovery for no material impact on inflation.

The FTSE 100 has slipped back from its early morning record high, as the news that Britain’s economy is recovering from recession weighs on shares.

While a recovering economy is obviously good for companies, this month’s stronger-than-expected PMI report could make the Bank of England cautious about cutting interest rates quite as quickly as hoped.

Joshua Mahony, chief market analyst at Scope Markets, explains:

The FTSE 100 has started to reverse back from record highs, after a fresh PMI survey that saw the services sector reading jump into the highest level since May 2023.

Crucially, traders are showing signs of concern that this rebound in UK growth could come at a cost, with economy-wide input price inflation rising at the highest level in 11-months. Between strong services sector wage growth, and rising material and transportation costs in the manufacturing sector, we are seeing fears grow over the potential for a more cautious approach from the Bank of England.

With markets essentially viewing the June rate decision as a coin-toss, today’s data raises fears that the BoE will instead hold off until August.

Nigel Farage is urging the public to boycott the government’s planned sale of NatWest shares until the group released a full report regarding the decision to close his account with its private bank, Coutts, last year.

The message came just hours before NatWest is due to hold its AGM at its Gogarburn headquarters in Edinburgh, from 11am today.

In a video release on social media platform X on Thursday, Farage said:

“No member of the British public should put their money and invest in shares in Natwest while they continue to hide the facts, hide the information, to hide the truth about me.

This debanking row is far from over and I still reserve the right to take legal action”

Farage said he had put in a fresh subject access request to NatWest, asking for all the information that related to him, from the independent investigation surrounding last summer’s debanking row. They came back with “over 100 pages of documents” that he says were simply copies of a variety of press articles and not the information he was hoping for.

The debanking controversy started when Coutts – the NatWest-owned private bank for the ultra-wealthy – planned to shut Farage’s bank accounts, and snowballed after Farage obtained internal documents that showed the bank had concerns over his political views. The scandal escalated when it emerged that CEO Alison Rose had discussed Farage’s case with a BBC journalist.

Rose resigned, and was forced to forgo £7.6m in pay from NatWest, although independent lawyers hired by the bank concluded she had made an “an honest mistake” in speaking with the BBC and that concerns over Farage’s political views were not the driving factor in the decision to shut his accounts.

The government’s stake in NatWest dates back to the bailout of Royal Bank of Scotland after the 2008 financial crisis. Jeremy Hunt confirmed in March’s budget that the government plans to sell a chunk of shares in NatWest in the summer.

The sight of the UK’s FTSE 100 index climbing to a new record high this morning could help to buff up the reputation of the UK stock market.

The London stock exchange has taken a battering recently as some major companies have chosen to float on Wall Street instead, such as chip maker ARM.

Others, such as building materials group CRH, have chosen to move their listing from London to New York.

The FTSE 100 has been tarred as a “Jurassic Park” of an index, due to its lack of fast-growing technology companies.

But even if the Footsie is something of a lumbering Brontosaurus, it has still scaled new heights today.

Russ Mould, investment director at AJ Bell, says that Brexit, and political ructions, have also weighed on UK share prices.

Today’s positive showing is “exactly what’s needed to help repair the reputation of the UK stock market”.

He adds:

It’s going to be a slow process but every little helps

“The UK has lived in the shadows of the US stock market for the past decade or more, delivering inferior returns on a relative basis as it has lacked the go-go growth stocks highly desired by investors. The FTSE’s low exposure to the technology sector has diminished the index’s appeal and seen investors look elsewhere for ways to turbocharge their portfolio.

“Brexit and political uncertainty have also weighed on the index, even though approximately three quarters of its constituents earn money overseas. That’s led to cheap valuations and a mountain of unloved stocks. Investors are finally getting the message that a good chunk of these businesses still have a lot to offer, delivering slow but steady profit growth, and they’re available for a fraction of the price of some of their overseas peers.

“The conveyor belt of takeovers continues to trundle along and that has put the spotlight on the market. At the same time, many UK-listed companies are simply getting on with the job at hand, delivering earnings and dividend growth. Investors who take a long-term view are still able to find plenty of opportunities.

Newsflash: the UK economy continues to pull away from last year’s recession.

The UK’s private sector is expanding at its fastest rate since May 2023, according to a new survey of purchasing managers at UK businesses.

Data firm S&P Global’s Flash UK PMI has risen to 54.0 this month, up from March’s 52.8. That’s the highest level since last May, showing a pick-up in growth.

The services sector, which makes up about three-quarters of the economy, is driving the growth, while the manufacturing sector is shrinking slightly this month.

Services companies reported that output is growing this month, helped by a rise in new orders, leading to a small increase in hiring.

The PMI report suggests the economic picture is improving, reports Chris Williamson, chief business economist at S&P Global Market Intelligence. He explains:

“Early PMI survey data for April indicate that the UK economy’s recovery from recession last year continued to gain momentum.

Improved growth in the service sector offset a renewed downturn in manufacturing to propel overall business growth to the fastest for nearly a year, indicating that GDP is rising at a quarterly rate of 0.4% after a 0.3% gain in the first quarter.

We will find out next month whether the UK has officially escaped recession, when the GDP figures for January-March are released. The economy shrank slightly in the third and fourth quarters of 2023, which triggered a shallow technical recession.

Today’s UK public finance figures (see opening post) shows the “difficult inheritance” that will face the Chancellor after the election, explains the Institute for Fiscal Studies:

Engineering firm Rolls-Royce have been the top riser on the FTSE 100 so far this year. Its shares are up 37%, as profits have surged as it recovered from the pandemic.

Chilean miner Antofagasta has gained 29%, lifted by a rise in the copper price this year.

Banks have had a good 2024, with NatWest up 28% since the start of January amd Barclays 25% higher.

Defense stocks have also benefitted from war in Ukraine, and the Middle East, with BAE Systems up 20% this year (on top of a 30% jump in 2023).

Primark’s owner Associated British Foods is the top riser on the FTSE 100 this morning, up over 7%, helping to push the index to new heights.

ABF predicted “significant growth” in profitability this year, and posted a 37% rise in pre-tax profits for the 24 weeks to 2 March, to £881m.

It added:

We expect Primark to continue to perform well in the second half driven by our store expansion programme and the modest levels of like-for-like growth, as we focus on driving volumes.

Other retail stocks are also in the top FTSE 100 risers, including Ocado (+4.1%), JD Sports (+2.2%) and Marks & Spencer (+2%).

Boom! The UK’s blue-chip share index has hit a new alltime high.

The FTSE 100 has jumped at the start of trading to hit 8068 points, up 43 points or 0.55% this morning.

That comfortably clears the previous all-time peak of 8,047 points set in February 2023.

This extends yesterday’s rally, when shares were lifted by rising hopes that the Bank of England will cut interest rates twice this year.

Markets are also more buoyant as fears about an escalating conflict in the Middle East eased.

Jim Reid of Deutsche Bank explains:

Sentiment was bolstered by the lack of any further escalation in the Middle East.

Indeed, yesterday saw Iran’s foreign ministry spokesman say that Israel had received the “necessary response at this stage”. The apparent easing in tensions helped oil prices fall back.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Jeremy Hunt’s hopes of being given more scope for large tax cuts later this year have been dealt a blow by the latest borrowing figures, just released.

Britain borrowed more than £120bn last year to balance the books; over £6bn more than the independent Office for Budget Responsibility had forecast, but £7.6bn less than the previous year.

And that looks to be a blow to Hunt’s ambitions to cut taxes in an autumn fiscal event, as well as pushing up the national debt to the highest since the 1960s.

Ruth Gregory, deputy chief UK economist at Capital Economics, says the chancellor appears to have limited ‘headroom’ to cut taxes and still meet his fiscal mandate (to have debt falling as a share of GDP in five year’s time).

She explains why Hunt may have limited scope for tax cuts:

March’s figures show that public borrowing in 2023/24 came in £6.6bn higher than the OBR predicted only a month ago, casting further doubt on the ability of the government to unveil big tax cuts at another pre-election fiscal event later this year.

Gregory adds:

Just based on the larger-than-expected 2023/24 budget deficit and the recent shift up in market interest rates, he may have even less fiscal ‘headroom’ (perhaps about £5bn) for tax cuts than the £8.9bn left over in March.

It also underlines why the International Monetary Fund was warning against pre-election giveaways last week:

The Office for National Statistics has also reported tha in March alone, the UK borrowed £11.9bn to cover the gap between government income and spending – higher than the £10.2bn which economists had expected.

ONS deputy director for public sector finances Jessica Barnaby says:

“Spending was up about £58 billion, with increased spending on public services and benefits outstripping large reductions in interest payable and energy support scheme costs. But with public sector income up £66 billion, overall, the deficit still fell.

“At the end of the financial year, debt remained close to the annual value of the output of the economy, at levels last seen in the early 1960s.”

Total tax receipts to HM Revenue and Customs rose by £39.1bn in the last year, to £827.7bn, including a £23.7bn increase in takings from Income Tax, Capital Gains Tax and National Insurance Contributions (NICs), while business taxes brought in £10.3bn more and VAT raised an extra £9.5bn.

Inheritance tax brought in £400m more than the previous year, while stamp taxes raised £4.3bn less.

Also coming up today

The UK’s stock market could hit a record peak today, after the FTSE 100 finished yesterday’s session at an alltime closing high of 8,023 points.

That has left the Footsie tantalisingly close to its intraday peak of 8,047 points, which it reached in February 2023.

And in the futures market, the FTSE 100 is currently on track to jump to 8070 points – taking it to a new peak! We’ll find out at 8am….

The agenda

• 7am BST: UK public finances for March and 2023-24

• 8am BST: Kantar’s index of grocery inflation for March

• 9am BST: Eurozone flash services and manufacturing PMI report

• 9.30am BST: UK flash services and manufacturing PMI report

• 12.15pm: Bank of England chief economist Huw Pill gives a speech at the University of Chicago’s Booth School of Business, London

• 2.45pm BST: US flash services and manufacturing PMI report

• 3pm BST: US new home sales for March