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FTSE 100 live: Global stocks hit record highs, Royal Mail jumps on new bid, oil sinks

Published 15/05/2024, 15:53
© Reuters.  FTSE 100 live: Global stocks hit record highs, Royal Mail jumps on new bid, oil sinks
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Proactive Investors -

  • FTSE 100 advances 16 points to 8444
  • Experian (LON:EXPN) tops leaderboard on top-end results
  • Royal Mail (LON:IDSI) owner IDS jumps after new Czech Sphinx offer

Oil dives, hitting the FTSE

Oil prices have dived lower.

Not sure why, as there are reports with comments from Israel PM Benjamin Netanyahu rejecting the UN backing of Palestine's statehood bid and that "discussions about postwar Gaza meaningless until Hamas is defeated".

Nevertheless, the price of a barrel of Brent crude is down by a dollar or 1.2% to $81.38, which is dragging heavily the FTSE 100.

Shell (LON:SHEL) and BP (LON:BP) are down 1.45% and 1.7%, offsetting some of the gains made elsewhere.

Royal Mail owner jumps on new bid

Shares in Royal Mail owner International Distributions Services PLC are up 20% after Daniel Kretinsky, aka the ‘Czech Sphinx’, proposed a new possible offer.

The IDS board said it "would be minded" to accept if an offer is made and recommend it to shareholders.

Kretinsky's EP Group's new bid is 360p per share in cash, plus the final dividend for the past year to March that is expected to be 2p and paid in September, plus a special dividend of 8p per share conditional on completion of the transaction.

This values IDS at roughly £3.5 billion, a 72.7% premium to the valuation before the fist bid on 17 April and a 53% premium to the 12-month average price prior to that date.

IDS chair Keith Williams said in a statement: "The board is minded to recommend this offer price, which it considers to be fair and reflects the value of GLS' current growth plans and the progress being made on change at Royal Mail to adapt the business to a significant fall in the demand for letters and growth in parcels."

US inflation takes pressure off the Fed

Comments are coming in on what the US CPI and retail sales data all means.

"The good news is that CPI hasn’t reaccelerated and, most importantly, it was less-than-expected month-over-month (e.g. 0.3% vs 0.4%), but the bad news is that consumers seem to be reducing their spending," says Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

"On balance, we think it’s a positive that inflation is moderating and although a slowdown in spending could turn into a problem for the economy, in the immediate term it takes some pressure off the Fed and that is what has been moving bond and stock markets the past couple of months."

He notes that in a bull market bad news is largely ignored and he believes we are still in one of those, so the knee-jerk negative reaction on the retail sales miss is likely to be overcome by the relatively good news on the CPI data which is at or below expectations.

Paul Ashworth, Capital Economics' chief North America economist says the CPI is consistent with a September rate cut.

"The slightly more modest 0.3% m/m increase in core CPI in April was even better than it looked, particularly given that we already know the PPI components that feed into the Fed’s preferred PCE deflator measure came in, on balance, weaker than expected."

Digging into the weeds of the report, Ashworth notes that core CPI was boosted by another elevated increase in motor vehicle insurance and an increase in hospital services, while an increase in clothing prices "bears watching" offset by declines in household furnishings and motor vehicle prices.

"All things considered, this is consistent with the Fed cutting interest rates in September," he said.

Traders firm up Fed cut bets

The FTSE 100 spiked slightly when the US CPI number arrived with no apparent bad news attached, but have eased back.

Bigger moves in the US, as you'd expect, with S&P 500 futures jumping, up 0.55%, while Nasdaq futures are now up 0.58% and Dow futures up 0.49%.

Federal Reserve liquidity swaps, which are a way of reading market expectations of US central bank policy, showed markets saw a faster pace of rate cuts in September and December this year.

Traders also slightly added to ECB and Bank of England easing bets this year.

UK rate futures fully price in two 25 bps rate cuts by the BoE's monetary policy committee by November, up slightly from 47 basis points of cuts before the data, while the ECB pricing moved to 73 basis points of cuts in 2024 up from 71 bps before.

As well as the CPI data, US retail sales figures also came out, showing a 3.04% rise, softening from 4.27% the previous month.

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