Diageo is the biggest faller on the FTSE 100 index this morning, down more than 5% in early trading, and now 3.8% lower on the day.

The world’s biggest spirits maker has slashed its dividend and cut its annual sales and profit forecast for the second time in four months, as the maker of Guinness warned of capacity constraints affecting drinkers of “the black stuff” in London pubs.

Diageo, which owns brands including Smirnoff vodka, Johnnie Walker whisky and Don Julio tequila, reported weak demand in the US and China in the first results released under the new chief executive, Dave Lewis.

The former Tesco chief executive, who earned the nickname “Drastic Dave” as a result of his cost-cutting during almost three decades at the conglomerate Unilever, took the reins at Diageo in January and wasted no time in cutting the company’s shareholder dividend in his attempt to turn around the drinks maker.

Describing his first seven weeks in the role as “pretty intense”, Lewis said in a results webcast it had not been a simple choice to reduce the dividend, halving it to 20 cents a share down from 40.5 cents a year ago.

This is not an easy decision to make, but we believe it is the right one. The North American market is challenged. Our portfolio needs some time and investment to make it more competitive. At the same time, we need to invest in our business, specifically in its capacity and capability.

The chief executive of HSBC has signalled that his planned overhaul of Europe’s largest lender is drawing to a close despite a slide in annual profits.

The bank’s chief executive, Georges Elhedery – who took over in 2024 – said it was “becoming a simple, more agile, focused bank built for a fast-changing world”.

Buffeted by $4.9bn (£3.6bn) in one-off charges, HSBC’s pre-tax profit slipped 7% to $29.9bn last year. That was, however, about $1bn ahead of what City analysts had forecast and came after an unusually strong 2024.

HSBC said it was raising its target for return on tangible equity, a key measure of profitability for banks, to “17% or better” through 2028, up from its “mid-teens” target set for the three years through 2027. Last year it came in at 13.3%.

HSBC shares were leading gains on the FTSE 100 index earlier, up more than 5%, and are now 4.6% ahead.

GSK, Britain’s second-biggest pharmaceutical firm, has struck at $950m (£703m) deal to buy Canada’s 35Pharma to strengthen its respiratory drugs portfolio – its second major acquisition under new chief executive Luke Miels.

The Montreal-based biotech is developing a medicine for pulmonary hypertension, a life-shortening disease marked by high blood pressure in the lungs.

The drug, currently known as HS235, has completed initial clinical trials with healthy volunteers, with studies to start imminently in pulmonary arterial hypertension (PAH) and pulmonary hypertension due to heart failure.

Early symptoms are breathlessness, fatigue and chest pain leading to heart failure as the disease progresses. It affects about 82 million people worldwide across multiple disease forms, yet treatment options remain limited and the five‑year survival rate is only 50%.

By 2032, the global market for PH therapies is forecast to reach $18bn, with activin signalling inhibitors expected to account for half of this.

Given via injection, HS235 targets the activin (a protein) receptor signalling pathway, and potentially lowers the risk of bleeding, which is a key limitation in current PH treatment.

GSK said the underlying mechanism of HS235 also offers the potential for broad metabolic benefits, including fat-selective weight loss, preservation of lean mass, and improved insulin sensitivity, observed in early clinical studies. This could give it additional benefits over Merck’s blockbuster drug Winrevair.

The British drugmaker thinks HS235 could become a multi-blockbuster medication and be available to patients by the early 2030s, if trials are successful.

Tony Wood, the company’s chief scientific officer, said:

Pulmonary hypertension affects millions of people worldwide, yet patients are underserved. We’re delighted to add HS235 to our pipeline, a potential best-in-class medicine with a differentiated profile to reduce risk of bleeding and provide potential metabolic benefits clinically relevant to PH patients.

Ilia Tikhomirov, CEO of 35Pharma, said:

In recent years, we witnessed a revolution in our understanding of pulmonary hypertension and how this life-threatening disease could be reversed. We are pleased to be combining our efforts with GSK, a leader in respiratory and inflammatory drivers of disease.

GSK agreed to buy RAPT Therapeutics for $2.2bn in January, a Californian biotech which is developing a drug to protect against severe food allergies, including allergies to nuts, milk and eggs.

The British drugmaker earlier this week agreed to a $1bn deal to acquire global rights to develop Frontier Biotechnologies’ two small interfering RNA therapies targeting kidney diseases.

Let’s have a look at today’s corporate news.

The British consumer healthcare compay Haleon, which makes Sensodyne toothpaste, Centrum vitamins and Advil and Voltaren pain relief, has forecast 2026 sales growth below its medium-term forecast because of weak consumer confidence in the US, its biggest market.

Its London-listed share price fell more than 5% earlier, and is now down 4%.

The company, which was spun off from GSK four years ago, is forecasting organic revenue growth of 3% to 5% this year, below its medium-term forecast of 4%-6% growth, and compared with analysts’ expectations of 4.4% growth. Revenues grew by 2.1% in the three months to December, down from 3.4% in the previous quarter.

A mild cold and flu season in North America and Europe weighed on sales, as did rising competition that pushed people towards cheaper alternatives, especially in Haleon’s struggling Smokers’ Health range.

Sales in both respiratory and smokers’ health fell in double digits.

The company is targeting annualised gross cost savings of between £175m and £200m over the next two years.

Chief executive Brian McNamara said:

While the consumer environment remains challenging near-term, we are even more focused on driving category growth and increasing our market outperformance.

The biggest savings will be for higher electricity users.

Martin Lewis, founder of MoneySavingExpert.com, said the biggest reduction affects electricity unit rates, while the rates of the cheapest fixes will fall too. Here’s his quick briefing:

New 1 April Price Cap average UK direct debit rates:

• Electricity unit rate 24.67p/kWh (was 27.69p) DOWN 10.9%

• Electricity standing charge 57.21p/day (was 54.75p) UP 4.5%

• Gas unit rates 5.74p/kWh (was 5.93p) DOWN 3.2%

• Gas standing charge 29.09p/day (was 35.09p) DOWN 17.1%
  

The price cap is only on firms’ standard variable tariffs (which over 60% of homes are), the default ones you’re on if you’ve never switched or your fix deal ended and you did nothing. If you’re fixed, or on a special tariff, you’re not on the price cap.

Q. Why is this happening? Most of the reduction is because two policy costs have been taken off bills (ECO scheme ended, and for three years 75% of Renewable obligation will be shifted to general taxation). This is the government’s ‘£150 off bills’ (though in reality it’s a reduction in unit rates so the exact amount saved depends on usage).

Q. What’s happening to fixes? Most existing fixed deals will also fall on 1 April with the cheapest dropping typically 7% to 9%, usage dependent. This unprecedented move is because the change is due to the policy costs which come off all bills.

It’s only ‘most’ because some smaller companies were exempt from the ECO scheme so the reduction on their fixes will be smaller (as they weren’t on it so scrapping it doesn’t change anything there).

Q. Is it time to fix if I’m on the price cap? That’s by far the simplest way to save. The cheapest fixes currently are 14% less than the current price cap. And as they will drop in April by in many cases more than the price cap that differential will remain.

Q. What’s the price cap prediction for the rest of the year? As the reduction of policy costs is ongoing, the April cap is new bench-line. While it’s still crystal ball gazing the further out you go, most analysts are predicting it will stay within a couple of percent of that level for the rest of the year.

The UK prime minister and chancellor have both commented on the drop in the UK energy price cap. Keir Starmer said:

Energy bills are at the front of everybody’s mind, and I know they’ve been too high for too long.

I promised to bring bills down and I meant it. And today – because of the actions this government took at the last budget – the price cap on energy bills has come down by £117.

That means lower energy bills for millions across the country, but I know there is more to do and my government is pulling every lever to bear down on the cost of living and protect the pound in the pockets of working people.

The cut, which will provide some relief to stretched household finances, follows the November budget, in which the chancellor, Rachel Reeves, shifted some green energy costs away from household bills and into general taxation.

She shifted the levies used to support renewable energy projects into general taxation, and scrapped a bill payer-funded energy efficiency scheme.

Reeves said:

Cutting the cost of living is this government’s number one priority and I know energy bills are one of the biggest concerns, that’s why at the budget I said we would bear down on energy bills.

We are cutting the cost of living, cutting the national debt and creating the conditions for growth and investment in every part of the country.
It is the right economic plan to build a stronger and more secure economy.

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

Energy bills in Great Britain will fall by £117 to a typical annual bill of £1,641 from April, the regulator Ofgem announced this morning.

It announced a 7% reduction of the energy price cap for the period covering 1 April to 30 June.

This change amounts to a reduction of about £10 a month for the average household using both electricity and gas, Ofgem said. This is more than £200 lower than a year ago.

Tim Jarvis, director general in charge of markets at Ofgem, said:

Today’s announcement will be welcome news for many households. Wholesale energy prices have fallen in recent months, and we’re investing in our network to safeguard the future energy system. The main driver of today’s reduction is the change to policy costs announced by the chancellor in the budget.

We’re also seeing encouraging signs of greater engagement and competition, with switching increasing by almost 20% year on year. More households are choosing time‑of‑use tariffs that offer cheaper off‑peak rates, and suppliers are offering a wider range of products, including deals with savings at evenings or weekends.

Gold prices climbed 1% as investors sought out out safe-haven assets amid continued uncertainty over new US tariffs. Donald Trump ’s new global tariffs took effect at 10% for 150 days on Tuesday, but Washington was working to raise it to 15%, according to a White House official, as the US president had threatened on Saturday.

Spot gold rose to $5,198 an ounce, after closing more than 1% lower on Tuesday when investors locked in profits.

Iran is edging closer to a deal with China to buy anti-ship cruise missiles, Reuters reported, as Tehran and Washington are set to hold a third round of nuclear talks in Geneva on Thursday.

Trump proclaimed his first year in office a success at the State of the Union address on Tuesday night, even as his presidency is dogged by low public approval ratings before November’s midterm elections in which voters could hand control of Congress back to his Democratic opponents.

He gave the longest-ever State of the Union speech, lasting almost 1 hour and 50 minutes – a speech that was interspersed with falsehoods and exaggerations but light on new policy proposals.

The president briefly set out his case for a possible attack on Iran, saying he would not allow the country to have a nuclear weapon.

The Agenda

• 10am GMT: Eurozone inflation (final) for January

• 2.15pm: Treasury committee to question former OBR chairs Richard Hughes and Sir Robert Chote