Proactive Investors -
- Blue-chip index tops 8,000
- BP (LON:BP) attracts takeover speculation
- UK economy grows
10.01am: Gold continues charge in record territory
Gold prices continued a months-long surge on Friday, hitting yet another record of US$2,400 per ounce early on.
According to Finalto analysts, the latest charge has been buoyed by fears of Iranian involvement in Israel and the prospect of America raising further debt to support Ukraine.
By mid-morning, the precious metal had receded slightly to US$2,397, though this was up almost 20% on a year ago.
Miner Fresnillo PLC (LSE:LON:FRES) was up 4.5% at 604.51p on the back of the rally, with a new 10-year high of US$29.20 per ounce of silver also helping.
“Central banks have been busy stocking up on gold and investors have followed suit,” AJ Bell’s Russ Mould added.
“The asset will come in handy if we continue to see a volatile period on the markets as the timing for interest rate cuts is pushed further back,”
9.30am: UK economy at ‘turning point’ - analysts
Deutsche Bank (ETR:DBKGn) analysts have said the UK economy is at a “turning point” after data on Friday morning showed a second consecutive month of growth in February.
“The technical recession is behind us,” the bank commented following the data from the ONS showing 0.1% gross domestic product (GDP) growth in February.
“The outlook is brighter than it was a few months ago. Fiscal offsets are already in motion,” the bank added.
“We expect the MPC to gradually dial down the level of restrictiveness in monetary policy.”
Deutsche forecast UK GDP to climb by 0.5% this year, before growing as much as 1.5% in 2025.
The ONS data showed an uptick in the production and service sectors, fuelled by strong manufacturing activity, alongside transport and storage services respectively.
Construction activity remained muted though, as heavy rainfall took its toll.
EY ITEM Club added momentum should continue to build over the rest of the year buoyed by strong wage growth and falling inflation, prompting a “consumer-led recovery”.
9.15am: FTSE 100 tops 8,000 mark
The FTSE 100 rallied above the 8,000 mark on Friday morning following ONS data showing the UK economy grew in February.
By mid morning, the blue chip index was up 83 points at 8,007 and not far off its record highs.
Gross domestic product (GDP) earlier in the day had shown the UK economy grew 0.1% in February, following a 0.3% increase in January.
Miners buoyed the index, with Fresnillo PLC (LSE:FRES), Glencore PLC (LSE:LON:GLEN), Anglo American (JO:AGLJ) PLC (LSE:AAL) and Rio Tinto (LON:RIO) PLC gaining 5.3%, 3.4%, 3.1% and 2.3% respectively.
BP PLC (LSE:BP.) climbed following reports United Arab Emirates' state-owned ADNOC had recently considered a takeover, while house builders also enjoyed gains.
9.05am: CMA highlights 'real concerns' over AI
Britain’s Competition and Markets Authority (CMA) has warned it of “real concerns” over the development artificial intelligence (AI).
Given just a few firms control development of such foundation models, the competition watchdog argued that companies could exploit their market dominance.
This includes Alphabet (NASDAQ:GOOGL) Inc’s Google, Apple Inc (NASDAQ:AAPL), Microsoft Corp (NASDAQ:MSFT), Meta Platforms Inc, Amazon.com Inc (NASDAQ:AMZN) and chipmaker NVIDIA Corp (NASDAQ:NVDA), the CMA said in a research paper.
“When we started this work, we were curious,” the authority’s chief executive, Sarah Cardell, commented.
“Now, with a deeper understanding and having watched developments very closely, we have real concerns”... Read more
8.50am: The morning so far
The strength of Britain’s economy was the point of focus this morning, with gross domestic product growth matching expectations by growing 0.1% month on month in February, following an upwardly revised 0.3% rise in January.
Production was the top performer, soaring by 1.1% in February, with manufacturing, cars and utilities all showing strength. This data underscored the shallowness of Britain’s technical recession at the end of 2023.
On the company news front, Reuters shocked with a report suggesting that the Abu Dhabi National Oil Company (Adnoc) is exploring a bid for British oil and gas giant BP.
Apparently talks have stalled after Adnoc determined that BP was not the ‘right fit’ for the company; politics were also likely a factor.
But the fact that BP was a takeover target in the first place should give policymakers, politicians and the Square (NYSE:SQ) Mile pause for thought, particularly given that Shell (LON:RDSa) has also hinted at the prospect of a US listing.
It wasn’t enough to rattle the FTSE 100 index though. Blue-chip stocks are currently 70 points higher at 7,995, with 8,000 a mere whisker away.thanks to the optimistic GDP figures.
Elsewhere in company news, AstraZeneca (NASDAQ:AZN) shareholders approved a controversial increase to chief executive Pascal Soriot’s pay package yesterday.
But it was hardly unanimous, with more than a fifth voting against the increase.
In the cryptocurrency markets, bitcoin (BTC) is up around 1.1% against the US dollar today. Meanwhile, gold has smashed another all-time high of $2,394 an ounce.
8.40am: Bitcoin up, gold hits new ATH
Benchmark cryptocurrency bitcoin (BTC) is up around 1.1% against the US dollar today, with gold has smashed another all-time high of $2,394 an ounce.
Gold is seeing large-scale purchases from central banks in Asia due to its ‘safe-haven’ qualities, while bitcoin remains elevated due to the prospect of lower US interest rates this year.
At the time of writing, the BTC/USD pair was swapping for $70,674, which is around $3,000 below its ATH achieved in March.
Back to stocks, the FTSE 100 remains in a strong position, adding 61 points to 7,984 at the time of writing.
8.15am: BP target of takeover speculation by UAE oil major
Could British oil and gas supermajor BP PLC (LSE:BP.) be the next jewel in the crown of the FTSE 100 to be snapped up by a foreign competitor?
According to a Reuters report, the Abu Dhabi National Oil Company (Adnoc) is exploring a bid for the £90 billion corporation, having sought advice from investment banks on the deal.
Apparently talks have stalled after Adnoc determined that BP was not the ‘right fit’ for the company; politics were also likely a factor.
The fact that BP was a takeover target in the first place should give policymakers, politicians and the Square Mile pause for thought.
Depressed valuations of British companies have seen scores of small, mid and big-cap players leave the London Stock Exchange, with even Shell mulling a delisting in favour of a US float.
Adnoc is headed by Sultan Ahmed Al Jaber, the chair of IMI (LON:IMI), which helped to fund the Barclay brothers’ take back of The Telegraph Group from Lloyds (LON:LLOY).
BP shares were buoyant in early Friday exchanges, adding more than 2%.
The FTSE 100 is currently 68 points higher at 7,992.
7.40am: GDP grows in February
Today’s raft of macroeconomic data underscored the shallowness of Britain’s technical recession at the end of 2023.
Gross domestic product growth matched expectations by growing 0.1% month on month in February, following an upwardly revised 0.3% rise in January.
Production was the top performer, soaring by 1.1% in February, with manufacturing, cars and utilities all showing strength.
Services output also grew, though construction offset the data by shrinking 1.9% due to wet weather.
The solid figures are supporting the FTSE 100 this Friday, with stocks poised to add 45 points when markets open.
7.26am: AstraZeneca executive pay gets the nod
AstraZeneca shareholders approved a controversial increase to chief executive Pascal Soriot’s pay package yesterday.
Over 78% of votes gave the £18.7 million salary and bonus package the nod, representing an 11% year-over-year increase.
Some have argued that Soriot’s exorbitant pay package is too high, though others, including some of AstraZeneca’s own shareholders, have pointed to the US as proof that he’s actually underpaid.
Shareholders were offered a sweetener prior to the vote in the form of a 7% dividend hike; a significant increase from prior years.
7.10am Stocks to move higher
The FTSE 100 is expected to recover from yesterday’s losses, with futures contracts pointing to 35 points of gains, bringing the blue-chip index to 7,958 when markets open.
Stocks closed 37 points lower on Thursday after taking a late whacking on the back of comments made by the IMF on early rate cuts.
Analysts are now predicting the first interest rate cut from the Bank of England will come in September rather than August, with only two cuts this year.
This morning’s gross domestic product print showed a -0.2 year-on-year retraction, though this was an upside surprise compared to the predicted -0.4% retraction.
Industrial production vastly outperformed in February, increasing 1.4% compared to the 0.6% forecast.
There are no major company news announcements expected in the UK today, but a raft of US blue chips are coming later- BlackRock (NYSE:BLK), JPMorgan (NYSE:JPM) and Well Fargo.