The FTSE 100 (^FTSE) and Wall Street was lower on Wednesday despite UK inflation falling to its lowest level in two and a half years. It also came as traders awaited the latest decision on interest rates from the US Federal Reserve.
The Consumer Price Index (CPI) slowed to 3.4% in February, down from January’s 4%, the lowest since September 2021, according to figures from the Office for National Statistics (ONS).
Inflation, the rate at which prices rise over time, has been gradually falling since it hit 11.1% in October 2022, its highest rate for 40 years.
London’s benchmark index was 0.1% up by the end of the session
Germany's DAX (^GDAXI) managed to rise 0.2% and the CAC (^FCHI) in Paris headed 0.5% into the red
The pan-European STOXX 600 (^STOXX) closed flat
Bread, milk and cereals help drive down UK inflation
The pound (GBPUSD=X) slipped almost 0.2% against the dollar after the inflation report
Oil retreated from multi-month highs thanks to a strong greenback
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LaToya Harding
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Well that's all we have time for today, thanks for following along.
Be sure to join us again tomorrow when we look at what happened overnight with the US federal Reserve, and await the Bank of England's latest decision on interest rates.
Have a good evening all!
LaToya Harding
Bitcoin hit a two-week low today before paring losses as investors look to the Federal Reserve’s scope to lower interest rates quickly.
The cryptocurrency has declined almost every day since hitting a record high just shy of $73,798 on 14 March.
Demand has since cooled for US spot-Bitcoin ETFs that launched earlier this year on 11 January.
Bitcoin’s slide comes amid uncertainty over whether above-target inflation will lead Fed policymakers to trim rate-cut projections at their meeting.
LaToya Harding
CAA proposing to lower cap on airline passenger charges
The Civil Aviation Authority has said it could lower the proposed cap on passenger charges paid by airlines by 6% for 2025 and 2026.
After a reassessment it is now proposing that per-passenger charges are cut by £1.52 to £23.72 in 2025 and by £1.58 in 2026 to £23.70.
Previously it had said the charge per passenger should be £25.43 in 2024, £25.24 in 2025 and £25.28 in 2026.
Heathrow had previously pushed for an increase to more than £40 a passenger, up from £31.57 in 2023.
The airport said:
“We will review the impact of the CAA’s latest proposals and respond to the consultation in due course.”
LaToya Harding
US markets fall ahead of interest rate decision
Stocks in the US fell after opening on Wednesday as traders await the Federal Reserve’s latest announcement on interest rate policy.
The S&P 500, Dow Jones Industrial Average and Nasdaq Composite were all down after the bell.
Treasury yields held relatively steady in the bond market.
Later today at 6pm, the central bank is expected to hold its main interest rate at a two-decade high, with expectations of cuts three times later this year.
LaToya Harding
Passport fees to rise by more than 7%
Passport fees are set to rise by more than 7% next month, the Home Office has announced.
The cost of online applications made within the UK for people aged 16 and above will increase from £82.50 to £88.50 under the proposals. Passports for children under 16 will cost £57.50, up from £53.50 currently.
There are similar rises in fees for postal applications and those made from overseas. The changes, which are subject to parliamentary approval, are due to come into force from 11 April.
Passport fees rose by around 9% in February last year.
See AlsoHow investors get risk wrongForget the Magnificent Seven Stocks: 1 Magnificent Cryptocurrency Could Soar 635% in 5 Years, According to a Wall Street Analyst | The Motley FoolStock market today: Stocks climb to new records after Fed sticks to the plan on ratesTurks are piling into the dollar, gold and stocks as 67% inflation savages their ‘worthless lira’ | CNN BusinessLaToya Harding
HMRC helpline changes put on hold
HM Revenue and Customs (HMRC) has stopped its plan to scale back its telephone helplines after a loud backlash yesterday.
HMRC chief executive Jim Harra said:
Making best use of online services allows HMRC to help more taxpayers and get the most out of every pound of taxpayers’ money by boosting productivity.
Our helpline and webchat advisers will always be there for those taxpayers who need support because they are vulnerable, digitally excluded or have complex affairs.
However the pace of this change needs to match the public appetite for managing their tax affairs online.
We’ve listened to the feedback and we’re halting the helpline changes as we recognise more needs to be done to ensure all taxpayers’ needs are met, whilst also encouraging them to transition to online services.
❗️ BREAKING: Pleased that HMRC has halted ridiculous planned reduction in its tax helpline, following pressure from us and others.https://t.co/ihQTtvVo7L
— Federation of Small Businesses (FSB) (@fsb_policy) March 20, 2024
LaToya Harding
Train drivers announce fresh strikes
Train drivers at 16 rail companies are to stage a new wave of strikes in a long-running dispute over pay.
Members of Aslef will hold a rolling programme of one-day walkouts between 5 April and 8 April, coupled with a six-day ban on overtime.
The union said it wanted to increase the pressure on the “intransigent” train companies and the “tone-deaf” government following a series of strikes stretching back 20 months.
Train drivers have now not had a pay rise for five years, since April 2019, said Aslef.
Members will also refuse to work their rest days from Thursday April 4 to Saturday April 6 and on Monday and Tuesday, April 8 and 9.
LaToya Harding
Largarde warns on cutting rates too late
European Central Bank (ECB) president Christine Lagarde has warned on acting “too late” on interest rate cuts.
It comes as the ECB has kept its interest rates steady since October, after a series of hikes to tame red-hot inflation.
At a conference in Frankfurt, she said:
“We cannot wait until we have all the relevant information. To do so could risk being too late in adjusting policy.”
The ECB was therefore focusing on “two important pieces of evidence” before deciding its next move: data on eurozone wage growth and the bank’s own economic forecasts.
Policymakers will know “a lot more by June”, Lagarde added. This echoed comments she made after the latest ECB meeting earlier this month.
LaToya Harding
Gold prices dip
Ricardo Evangelista, senior analyst at ActivTrades, said:
“Gold prices dipped slightly in early Asian trading, maintaining a strong foothold above the $2,150 mark. Despite minor fluctuations, bullion markets have experienced relative calmness since Monday, with traders eagerly awaiting the conclusion of today's Federal Reserve meeting.
“While no surprises are anticipated, there remains uncertainty regarding the FOMC's current stance, given the resilience of the US economy and persistent inflation.
"A hawkish stance could entail the intention to prolong the duration of high interest rates beyond previous expectations, potentially bolstering treasury yields and the dollar, which could, in turn, dampen gold prices.”
LaToya Harding
Samsung jumps after Nvidia backing
Samsung's (005930.KS) share price saw its biggest daily gain in more than six months after Nikkei Asia reported that Nvidia (NVDA) is looking to buy its high-bandwidth memory chips. The move marks a milestone for Korea’s largest company.
Nvidia founder Jensen Huang told reporters his company planned to also use Samsung as a high- bandwidth memory supplier.
“I value our partnership with SK Hynix and Samsung very incredibly,” Huang said.
He added that a future generation of HBM chips called HBM4, was likely to be released in 2025 with more customised designs. Samsung is set to take advantage of having memory chips, chip contract manufacturing and chip design businesses "under one roof to satisfy customer needs".
It comes as the firm also expects $100m (£78.8m) or more of revenue from its next batch of advanced chip-packaging products this year.
Samsung's market share in DRAM chips, used in tech devices, reached 45.5% in the fourth quarter last year, according to data provider TrendForce.
See what other tickers are trending here
LaToya Harding
UK companies urged to step up cyber protections
Cyber Minister Viscount Camrose is calling on companies to ramp up their cyber protections as new figures show the majority of larger UK businesses have fallen victim to a cyber security incident over the last 12 months.
The government findings reveal 75% of medium and large businesses, and 79% of high-income charities, experienced some form of cyber security incident in the last year, making the need for greater action to shore up their defences more pressing than ever before.
Viscount Camrose, minister for cyber, said:
“The UK is making remarkable progress in cementing our status as a key global player in cyber. Our cyber sector continues to generate unprecedented employment and business opportunities, but we know that there are still a host of challenges and risks that we cannot ignore.
“This is why I am calling on organisations of all sizes to step up their cyber security plans to guard against threats, protect their customers and workforce, and our wider economy.
“We are working shoulder to shoulder with industry to ensure organisations have a robust plan of action to tackle these threats head-on. From a Code to help leaders toughen up cyber protections to up-skilling the workforce so businesses have in-house expertise, these government-backed measures can support organisations to safely unlock the potential digital technologies offer.”
LaToya Harding
Greggs forced to close stores after IT glitch
Greggs (GRG.L)has been forced to close stores after it was hit by technical problems with payments.
Britain’s biggest bakery chain, which operates more than 2,450 shops across the UK, said: “We are currently experiencing issues accepting payments in our shops. We are working to resolve this as soon as possible.”
Stores across cities such as London, Manchester, Cardiff and Glasgow have reportedly been affected by problems with card payments.
Other outlets asked customers to place orders outside using the Greggs mobile app before food could be given to them.
It is the latest retailer to experience technical problems. McDonald’s in several countries including the UK, Japan and Australia was hit by a “technology outage” on Friday.
Meanwhile on Saturday, outages to payment systems prevented Sainsbury’s and Tesco stores across the country from accepting contactless card payments and issuing home deliveries.
LaToya Harding
Rental prices surge 9%
The average cost of renting a private property increased by 9% in the year to February — an increase from 8.5% in the 12 months to January, the ONS revealed.
Matt Corder, deputy director for prices at the ONS, said:
"Today we’ve published our first set of new rent figures, which utilise more data than before, allowing us to show both rental price levels and growth on a comparable basis, right down to local authority area.
"These new data show that UK rental prices continued to grow strongly in the year to February, at their highest annual rate since records began in 2015."
The ONS revealed that private rent inflation was highest in London (at 10.6%) and lowest in the North East (at 5.7%).
Across the country, average monthly rents increased to £1,276 (up 8.8%) in England in the 12 months to February, to £723 (9.0%) in Wales and £944 (10.9%) in Scotland.
The average private rent was highest in Kensington and Chelsea (£3,248) and lowest in Dumfries and Galloway (£472).
LaToya Harding
Average UK house prices fall 0.6%
More news from the ONS this morning...
Average UK house prices decreased by 0.6% to £282,000 in the 12 months to January. This is up from a decrease of 2.2% (revised estimate) in the year to December.
They were 1.5% down in England to £299,000, had slipped 0.8% in Wales to £213,000, and increased 4.8% in Scotland to £190,000.
In Northern Ireland, property values increased by 1.4% to £178,000 in the year to the fourth quarter of 2023.
LaToya Harding
Pound down against dollar
The pound (GBPUSD=X) was down against greenback on Wednesday morning as the US dollar index climbed higher for a fifth straight session after recent data pointed to a resilient American economy.
It was also around 0.1% lower against the euro at 85p amid hopes that falling inflation will pave the way for interest rate cuts this summer from the Bank of England.
Meanwhile, it rose against the Japanese yen after the Bank of Japan raised its benchmark interest rate for the first time in 17 years.
LaToya Harding
Mortgage borrowers will wait until the summer for rate cut
Peter Stimson, Head of Product at the mortgage lender MPowered, said:
“The latest fall, while good news for the economy overall, means that mortgage borrowers will likely be waiting until at least the summer for a rate cut as the Bank will want to see a more sustained reduction in inflation before acting.
“With about 1.6 million mortgage borrowers seeing their fixed deal end this year, most will see their monthly payments rising by at least one third when their rates reset.
“This is going to mean more pain and hardship for the many millions who are already struggling with the cost-of-living crisis.
“If you’re buying your first home or looking to remortgage, it’s worth seeking out a mortgage broker who can help you move quickly to get the product that’s right for you.”
LaToya Harding
Bank of England poised to keep interest rates on hold
The Bank of England (BoE) is set to keep interest rates unchanged for the fifth time in a row even as new data shows inflation slowing down.
The consensus among traders is that the BoE’s benchmark rate will be kept at 5.25% when its monetary policy committee (MPC) announces its latest decision tomorrow.
It comes as the European Central Bank (ECB) kept rates unchanged earlier this month, while the US Federal Reserve (Fed) is expected to do the same later today.
Nomura Bank noted that central banks might be suffering from the "fear of going first", with the ECB and BoE circling wagons until the US Federal Reserve cuts rates. However, they argue that both central banks can cut rates independently of the Fed.
Read more: Bank of England poised to keep interest rates at 16-year high of 5.25%
See also: When will interest rates fall – and what should you do?
LaToya Harding
Jeremy Hunt on inflation
Responding to the latest figures from the ONS, chancellor Jeremy Hunt has said the "plan was working".
He said inflation had "not just fallen decisively" but is "forecast to hit the 2% target within months".
"This sets the scene for better economic conditions which could allow further progress on our ambition to boost growth and make work pay by bringing down national insurance as we work towards abolishing the double tax on work — but only if we can do so without increasing borrowing or cutting funding for public services".
In the year to February 2024:
▪️ Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 3.8%, down from 4.2% in January.
▪️ Consumer Prices Index (CPI) rose by 3.4%, down from 4.0% in January.— Office for National Statistics (ONS) (@ONS) March 20, 2024
LaToya Harding
UK inflation falls to two-year low of 3.4%
Inflation fell in February to its lowest level in two and a half years, boosting hopes that the Bank of England will cut interest rates in the summer.
The Consumer Price Index (CPI) slowed to 3.4% in February, down from January’s 4%, the lowest since September 2021, according to figures from the Office for National Statistics (ONS).
Inflation, the rate at which prices rise over time, has been gradually falling since it hit 11.1% in October 2022, its highest rate for 40 years. However, a fall in inflation doesn't mean prices are coming down — but that they're rising less quickly.
ONS chief economist Grant Fitzner said:
“Food prices were the main driver of the fall, with prices almost unchanged this year compared to a large rise last year, while restaurant and café prices also slowed.
"These falls were only partially offset by prices rises at the pump and a further increase in rental costs.
As well as food prices, the biggest downward pressures came from non-alcoholic beverages, and restaurants and hotels.
The drop is the fastest inflation fall in nearly half a century , according to The Resolution Foundation. The think tank believes the figures suggest the UK is on track to hit 2% by April.
Read the full article here
LaToya Harding
Asia and US stocks
Stock markets in Asia were mostly higher overnight ahead of a decision from the US Federal Reserve on the timing of its cuts to interest rates.
The Hang Seng (^HSI) rose 0.1% in Hong Kong while the Shanghai Composite (000001.SS) was almost 0.6% higher by the end of the session.
Tokyo markets were closed for a holiday after the Bank of Japan (BoJ) hiked its benchmark interest rate for the first time in 17 years on Tuesday, raising the rate to a range of zero to 0.1% from -0.1%.
Meanwhile, China left its benchmark lending rates unchanged as expected as its economy showed signs of improvement amidst a struggling property market.
Across the pond, the S&P 500 (^GSPC) rose to a record on Tuesday, up 0.6% to 5,178.51, topping its all-time high set last week.
The Dow Jones Industrial Average (^DJI) jumped 0.8% to 39,110.76, and the Nasdaq Composite index (^IXIC) gained 0.4% to close at 16,166.79.
The yield on 10-year US Treasury bonds dipped to 4.29% from 4.33% late on Monday.
Watch: How does inflation affect interest rates?
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