Latest news with #FTSE-100
CNBC
6 hours ago
- Business
- CNBC
CNBC's UK Exchange newsletter: Strong Footsie, strong UK? Not necessarily
Ian Holloway, one of the most eccentric managers in British football, is famous for his idioms and sayings. One of his most celebrated came when, in May 2004, his Queens Park Rangers team had secured promotion to England's second tier: "They say every dog has his day — and today is Woof Day. Today I just want to bark." Lately, the FTSE-100, long a dog among equity indices, has been enjoying its very own Woof Day. Britain's premier stock index is up 11% so far this year and has this month achieved a couple of notable benchmarks. The index, launched on Jan. 3, 1984, with a value of 1,000, hit the 9,000 milestone for the first time on July 15 and followed that up on Thursday last week by hitting the latest in a string of all-time closing highs of 9,138.37. It has taken just two years to go from 8,000 to 9,000 compared with the seven painstaking years it took to rise from 7,000 to 8,000. The Footsie's year-to-date performance is one of the best in global stock markets. It has outperformed other well-known benchmarks such as the S&P 500, the Nikkei 225 and the CAC-40, with the DAX-40 in Germany one of the few peers to have eclipsed it. This outperformance of the S&P 500, should it be sustained, is pretty rare. The Footsie has only outdone the U.S. benchmark twice over the course of a year — in 2016 and 2022 — since the eruption of the global financial crisis 18 years ago. That reflects not only the dynamism and growth potential of the S&P's constituents, chiefly the tech sector, but also the Footsie's over-weighting in what are perceived by many investors as stodgier, defensive sectors, such as financials and consumer staples, and highly cyclical sectors such as energy and mining. Accordingly, even after the recent performance, it is still sitting on a price/earnings multiple only just above its long-term average of 15 whereas the S&P — which, we should not forget, also hit a record last week — still trades on a multiple of almost 30. Those ratings reflect the very different factors that have driven returns. While capital appreciation has driven just over two-thirds of the S&P's total return over the years, roughly half of the Footsie's total return has come from dividends. The attachment of U.K. investors to dividends, something regularly disparaged as 'coupon clipping' down the years, is pronounced. The Footsie's solid showing last week was for similar reasons to the rallies elsewhere: relief at the U.S. achieving a deal with Japan over tariffs and optimism that something similar can be achieved with the European Union, although the latter has proved disappointing, at least so far as European equity markets have been concerned. But there have been other, broader factors also at play during 2025. The Footsie's heavy gearing toward defensive stocks has played well this year as investors seek a shelter from Trump-induced volatility. There is also a lot of anecdotal evidence that it has benefited from some investors taking their money outside the U.S. — something that was particularly evident in the first four months of the year and summed up in the expression, which first appeared in the Wall Street Journal on May 19, the 'ABUSA (Anywhere But USA) trade'. And there have been important boosts for individual sectors, most notably defense, following commitments from a number of Western governments to raise defense spending. Rolls-Royce, the aircraft engine manufacturer which also has a substantial defense business, has seen its shares rise by 75% so far this year. BAE Systems, the U.K.'s biggest defense contractor, is up 59% since the beginning of the year. The pair are now respectively the sixth and 11th biggest companies in the index. Specific elements on the day the Footsie hit its most recent record last week included strong earnings updates from a host of constituents, most notably Reckitt, the household products group; Howden Joinery, the kitchen and joinery supplier and Lloyds Banking Group. Even BT, a serial disappointment, rose sharply after quarterly results proved no worse than expected. That day also saw a decline in the pound — a factor that often benefits the index because Footsie constituents derive four-fifths of their earnings overseas, mainly in U.S. dollars and euros. This was a point not greatly appreciated by some investors until the U.K. voted to leave the EU on June 23, 2016, and the pound fell by 10% against the greenback in a matter of hours. Initially, the Footsie fell sharply, in line with other U.K. assets. However, as realization dawned that a weaker pound translates into higher earnings from overseas revenues, the index rallied and, a week later, it was some 2.6% higher than it had been before the referendum. And this, in turn, leads to probably the most significant fact lost on many ordinary British investors. The Footsie is commonly perceived to be a barometer of U.K. economic — and, certainly, corporate — health. The truth is that it is not in the slightest bit reflective of the U.K. economy. Yes, there are some companies — BT and Lloyds being good examples — that derive the majority of their earnings in the U.K. However, the Footsie is also packed with companies that do little or no business in the U.K., such as Antofagasta, a Chilean copper miner; Fresnillo, a Mexican silver miner; Mondi, a global leader in paper and packaging with 100 production sites around the world but none in Britain; and Ashtead Group, a plant and tool hire company that derives more than 90% of its earnings from the U.S., where it trades under the name Sunbelt Rentals — the name it will take when it moves its primary stock listing early in 2026. Even a number of businesses traditionally seen as quintessentially British to the extent that they have (or have had) the word in their company moniker, such as BP, BAE Systems and British American Tobacco, derive the majority of their earnings outside the U.K. Of the 20 biggest companies in the Footsie, only Lloyds Banking Group and NatWest Group, another lender, make the majority of their earnings in the U.K. It did not always used to be this way. At its launch, 41 years ago, the Footsie was full of companies that made the majority, if not all, of their sales and profits in the U.K., including a clutch of domestically oriented brewing, pub and hotel operators in Scottish & Newcastle, Bass, Whitbread, Grand Metropolitan and Allied Lyons; two flat pack furniture and joinery companies in Magnet & Southerns and MFI; and a whole host of then U.K.-focused retailers, including Burton Group, House of Fraser, Sears (no relation to the U.S. retailer of the same name), British Home Stores, Marks & Spencer and Great Universal Stores. With globalization yet to take off — this was, of course, before the fall of the Berlin Wall — even those financial services companies in the Footsie were largely domestically focused, including the insurers Commercial Union and General Accident (now both part of Aviva Group), Prudential and Sun Life and lenders such as Royal Bank of Scotland, Midland Bank (now part of HSBC) and Barclays, which was yet to embark on its push into the wholesale and investment banking activities with which it is most closely associated these days. At its birth, the Footsie contained only a handful of companies that could be regarded as genuinely international in scope, including a couple which dated back to the old British Empire: Consolidated Gold Fields, founded in South Africa in 1887 by the imperialist Cecil Rhodes and Harrisons & Crosfield, now the specialty chemicals company Elementis but then best known for owning Malaysian rubber plantations. Then came globalization and, with it down the years, a string of IPOs of foreign companies, particularly from South Africa, wishing to tap into London's more liquid capital markets. In being so internationally focused, the Footsie is no different from the DAX-40, whose members derive around four-fifths of their earnings from outside Germany or the CAC-40, whose constituents make around three-quarters of their earnings from outside France. But it certainly should not be taken as a barometer of corporate Britain's health — however good it makes some of us feel on days when it hits new Chief Financial Officer Katie Murray discusses the British bank's earnings, its share buyback and the current U.K. economic picture. CNBC's Silvia Amaro reports on European leaders voicing their frustrations with the terms of the U.S.-EU trade deal and the pressure it will put on the bloc's economy. Storm Uru, fund manager at Liontrust Asset Management, discusses recent tech earnings and explains some of the company's contrarian calls on the Magnificent EU-U.S. trade deal could have one unexpected winner: The UK. The European Union is facing a higher U.S. tariff rate than the U.K., which could put the country at an advantage compared to the bloc. Barclays second-quarter profit beats estimates as investment banking revenues swell. The British lender also announced a £1 billion ($1.33 billion) share buyback, while market volatility boosted investment banking revenues. UK pushes Apple and Google for mobile changes to curb market power. The U.K.'s Competition and Markets authority proposed designating the two companies as having "strategic market status."U.K. stocks have largely maintained their upward momentum, with the FTSE 100 remaining above the 9,000 point threshold it surpassed for the first time last week. Gains over the last week totaled around 0.6% as of Tuesday, though this lagged the broader Stoxx 600 index up 1.4%. The British pound on Monday logged its biggest session gain against the euro since April, climbing 0.66%, as investors assessed the EU-U.S. trade deal. ING analysts said that while some would attribute the move to the U.K.'s relatively better deal with the White House, there also appeared to be some short-term unwinding of the long euro-sterling trade that has been popular this summer.
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Scotsman
2 days ago
- Business
- Scotsman
From little acorns: many a mickle makes a muckle
Ben Kumar | Supplied Ways to grow your money, with Ben Kumar, head of equity strategy at investment firm 7IM Sign up to our Scotsman Money newsletter, covering all you need to know to help manage your money. Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... When it comes to saving money, I always tell people that even a little makes a big difference – and getting into good habits early can help even more. It's a curious thing about human behaviour, but once we start doing something, we find it hard to stop – so start saving now. Advertisement Hide Ad Advertisement Hide Ad But how much should you save? Well, as financial technology has improved, even tiny amounts can be invested, so honestly, anything goes. Let's start our example with a 25 year-old saving £10 a month until they turn 65, and assuming a return of8 per cent per annum (over the last 40 years, the FTSE-100 has returned about8 per cent a year, once you include and reinvest the dividend payments). After 40 years, our example would have invested £4,800, but it would have grown in value to more than £32,000. But if our subject had saved £20 a month, they would have invested £9,600, but it would now be worth £65,000. Or if they had made the leap to £50 a month, our example would have invested £24,000, and seen it grow to £163,000. Advertisement Hide Ad Advertisement Hide Ad But what if you can't find the extra £20 or £50 each month? What about increasing the rate at which you save over time, just by adding a pound or two each year to your monthly contributions? Let's start with £1. So in your second year, you're saving £11 per month. Third year, £12 per month. Fourth year, £13. And so on, up to your 40th year, where you'll be saving £ this course of savings action would mean you've saved £14,000, and it would have turned into £67,000. Or, if you can add £5 per year (so £10 a month in year one, £15 a month in year two, £20 a month in year three, etc, etc), things get really interesting. Over 40 years, you will have saved £50,000 – in your final year you will be saving £210 per month – but you will have got there in nice easy steps.
Scotsman
6 days ago
- Business
- Scotsman
Bank of Scotland owner Lloyds unveils profit and dividend hike but caution prevails after 40% share rise
'The big unknown remains the inquiry into mis-sold car financing products - and Lloyds is one of the most exposed financial institutions' – Zoe Gillespie, RBC Brewin Dolphin Sign up to our Scotsman Money newsletter, covering all you need to know to help manage your money. Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... Bank of Scotland owner Lloyds Banking Group has unveiled better-than-expected first-half profits as it benefited from a jump in lending and savings balances. The FTSE-100 group, which ranks as the UK's largest mortgage lender and also incorporates Halifax and Scottish Widows, reported a pre-tax profit of £3.5 billion for the first six months of the year - 5 per cent higher than a year ago. Earnings for the first half also came in ahead of the £3.2bn analysts had anticipated. Advertisement Hide Ad Advertisement Hide Ad Lloyds said total lending to customers increased by £11.9bn over the period, or 3 per cent, driven by UK mortgages with some 33,000 first-time buyers borrowing on a home. The landmark Scottish headquarters of Bank of Scotland/Lloyds Banking Group on The Mound, Edinburgh. Picture by Jane Barlow Customer deposits grew by £11.2bn, or 2 per cent, following a strong season for ISAs, while more people moved money out of current accounts and into savings. Meanwhile, Lloyds confirmed there had been no change to its motor finance provision, having set aside some £1.2bn to cover potential costs and compensation related to commission arrangements. The group is exposed to the motor finance market through its Black Horse business. Group chief executive Charlie Nunn told investors: 'We have shown sustained strength in our financial performance in the first half of 2025, with income growth, cost discipline and robust asset quality, driving strong capital generation and increased shareholder distributions, with a 15 per cent increase in the interim ordinary dividend. Advertisement Hide Ad Advertisement Hide Ad 'We continue to make great progress in our purpose-driven strategy, building differentiated customer outcomes and delivering growth across our business as we build towards our ambitious targets for 2026.' Zoe Gillespie, wealth manager at RBC Brewin Dolphin, said: 'Lloyds has delivered another strong set of results, with profits and income beating expectations. Despite interest rates being on a downward trajectory, the bank has also managed to strengthen its net interest margin and secure more customer deposits in a competitive UK banking environment. 'That said, the big unknown remains the inquiry into mis-sold car financing products - and Lloyds is one of the most exposed financial institutions. The shares are up more than 40 per cent in the year to date, which reflects the solid progress made in its core business, but the car finance issue may put a brake on the bank until its impact is clearer.' Chris Beauchamp, head of market analysis at IG Group, sounded a note of caution, saying: 'After a 40 per cent share price rise this year, the reference to 'economic deterioration' in today's Lloyds' numbers looks like commendable caution. There's still much to like in the figures overall, not least the bigger dividend, and the 2015 highs in the share price still look attainable, but it wouldn't be surprising to see some consolidation for the time being.' Advertisement Hide Ad Advertisement Hide Ad Garry White, chief investment commentator at Charles Stanley, added: 'Lloyds' results paint a picture of resilience, despite revenue coming in modestly below expectations. The second half of the year could get more difficult, but right now it seems Lloyds is holding on a steady course.'
CNBC
23-07-2025
- Business
- CNBC
CNBC's UK Exchange newsletter: Britain's £72 billion under-the-radar success story
One of the City's most prominent investment bankers recently spelled out to me the challenges, as he saw them, faced by the U.K. economy. He argued that, as a country, Britain does not really make much that the rest of the world wants to buy from us these days, aside from a few honorable exceptions, including cars, luxury goods, aerospace and defense components and Scotch whisky. Meanwhile, he went on, sectors where the U.K. was once a world leader, such as financial services, have not really recovered from the global financial crisis (although he might have added, in the wake of last week's Mansion House speech, that the government has at least recognized the extent to which post-crisis regulation is holding back the sector). So what, he asked, are the strengths that the U.K. economy still enjoys? Put on the spot, I suggested a world-class life sciences sector, a world-leading legal and professional services sector and some of the globe's greatest universities. Ironically, these sectors are all customers for one of the U.K.'s most successful companies, which happens to publish its half-year results on Thursday this week. And, shockingly, there is a chance you may not even have heard of it. Yet, RELX is now the seventh-largest company in the FTSE-100 and, with a market capitalization of £71.9 billion ($96.8 billion), valued roughly as much as the combined value of Tesco, Vodafone, International Airlines Group (the parent of British Airways) and Schroders. This "global provider of information-based analytics and decision tools for professional and business customers," as it styles itself, has achieved this heady valuation — it currently trades on a price-earnings ratio of around 32 times historic earnings — thanks to years of consistently delivering sales and earnings growth and solid cash generation. RELX has also grown its EBITDA (earnings before interest, taxation, depreciation and amortization) margin, which currently stands at a healthy 39.5%, in four of the last five years. Its total shareholder returns over the last decade or so is the best in the FTSE-100. The London-based company operates in four market segments, of which the biggest and most profitable, for now, is risk. Its LexisNexis Risk Solutions business provides data and analytics services to customers in 180 countries around the world, including 85% of the Fortune 500, nine of the world's top 10 banks and 23 of the world's top 25 insurers. Next up is the Amsterdam-based Scientific, Technical & Medical (STM) division, which supplies analytical tools and scientific and medical information to researchers and healthcare professionals. The third-largest segment is legal: New York-based LexisNexis Legal & Professional hosts more than 161 billion legal and news documents and records accessed by some 1.1 million legal professionals. Last but not least is Exhibitions, currently growing sales and profits faster than any other part of the business, which may reflect — even years on — continued pent-up demand from the Covid-19 lockdowns. It runs a diverse array of events including New York Comic Con, the China Medical Equipment Fair, the London Book Fair and JCK, the world's largest jewelry industry trade show, which takes place annually in Las Vegas. One of the more remarkable things about this company is where it has come from. Previously called Reed Elsevier (it rebranded itself as RELX in February 2015), it was formed in 1993 by the merger of Elsevier, a Dutch scientific publisher with Reed International, a British company which in the 1970s was best known as one of the country's biggest publishers of newspapers — including the Daily Mirror — magazines and comics. The latter included titles such as Whizzer and Chips and Roy of the Rovers that generations of British schoolchildren grew up reading. Remarkably, at the turn of the century, it was generating nearly two-thirds of its revenues from print products, but over the subsequent decade migrated most of its business to electronic media. Print now accounts for just 4% of revenues. The journey has not been without bumps in the road, most notably when, in November 2009, it replaced Ian Smith, its then chief executive, just eight months after he had succeeded Crispin Davis, the long-running CEO who had begun equipping the business for the digital era. Smith's successor Erik Engstrom, a former Elsevier CEO, has been in the job ever since and has built the business both organically and by regular bolt-on acquisitions, including five last year alone. He has also been unafraid to dispose of businesses at times. What has really excited investors is that the business is seen as one of the big winners from the artificial intelligence boom. It began incorporating AI into its products more than a decade ago and AI is now embedded in many of them. For example, at the full-year results in February, Engstrom noted that, in the risk division, more than 90% of divisional revenues come from machine-to-machine interactions. In legal, it is busy rolling out Lexis+AI, which it claims is the world's first generative AI platform for the legal profession. Similarly, in STM, the company has launched a workflow product called ScienceDirect AI, which helps researchers instantly access relevant copy from peer-reviewed research articles and book chapters as they conduct investigations. It is also helping scientific publishers tackle integrity issues — something increasingly important in a world where misinformation and disinformation risk undermining confidence in research. All this investment — it is one of the top 10 spenders on research and development in the FTSE-100 — gives the company a legitimate claim to be one of the U.K.'s biggest tech companies even though it is traditionally thought of as a publisher. Yet, there is also an argument that RELX, like competitors such as Wolters Kluwer (in scientific publishing) and Thomson Reuters (in risk and legal) needs to keep investing heavily to stay ahead, while in science in particular there is growing competition from open-source repositories such as arXiv and SSRN. Corners of academia have long groused about the amount of money university libraries must pay companies like RELX and a campaign, the Cost of Knowledge, was organized some years ago in an attempt to get academics to boycott Elsevier. The University of California Los Angeles briefly cancelled its contract with the company in 2019. All that said, RELX is still the very definition of what investors call a "quality compounder" — a business that consistently reinvests at a high return on capital. Other examples in the FTSE-100 include Experian, another global data provider and Halma, the safety and healthcare technology company. They are exactly the kind of businesses with which the U.K. is earning its living in the world in the 21st London Stock Exchange trading be open 24 hours? The London Stock Exchange is reportedly looking into the practicalities of launching 24-hour trading, but would the increased access to the U.K. market fuel extra demand from investors? UK's Reeves calls on regulators to do more in supporting growth CNBC's Ritika Gupta reports from London after the U.K. Chancellor of the Exchequer delivered her key Mansion House speech. More good news for Burberry predicted, Bernstein analyst says Bernstein's Luca Solca discusses Burberry's half-year earnings following the firm's upgraded rating of the luxury UK gives 16-year-olds the right to vote. Brace for the political TikToks — the change means British political parties now face the challenge of engaging younger voters in the social media age. Brexit made businesses abandon the UK — Trump's hefty EU tariffs could bring them back. The U.K. finds itself in something of a sweet spot when it comes to trade, given it has deals with both the U.S. and European Union. The world's 'football' is America's 'soccer.' But U.S. President Donald Trump signaled hinted he could sign an executive order to change the name "soccer" to "football."U.K. stocks have continued to be favorable with investors over the past week, with the FTSE 100 gaining around 1.2%. The index also closed above the psychological noteworthy threshold of 9,000-points on Monday. The U.K. government borrowed £20.7 billion in June, significantly more than expected, largely due to higher interest costs. Gilt yields, however, have marginally declined over the past week owing to global macro-economy factors such as the uncertainty caused by the U.S. tariffs.
The Herald Scotland
21-07-2025
- Business
- The Herald Scotland
Scotch whisky chief pays price as turmoil hits industry
The development was perhaps the inevitable conclusion of a turbulent spell for the FTSE-100 player, which had seen its share price gradually fall during the course of Ms Crew's tenure. But it could certainly be argued that Ms Crew was unfortunate to have been in charge during such a tumultuous era, which began in the immediate aftermath of the pandemic in June 2023 (when she succeeded the late Ivan Menezes) and spanned an era that has seen Russia's full-scale invasion of Ukraine, war in Gaza, and the return of Donald Trump to the White House. An eventful two years in charge saw Diageo issue a profit warning in June 2024 following a slump in sales in Latin America as the post-pandemic spirits boom began to fade, and in May this year the company warned that US tariffs may hit profits by $150 million per year. I love Scotland but returning from holiday made my heart sink Tourist chiefs call out Edinburgh on 'unworkable' visitor levy Edinburgh firm outguns forecasts after snubbing £1bn takeover approach Former Rangers chief bidding to 'reset' renowned Scottish retailer An efficiency plan has been launched in a bid to slash costs by around $500m in the next three years against a backdrop of macroeconomic and geopolitical upheaval, which has weighed on demand for premium spirits across the board. This pressure has been felt by other major Scotch whisky producers too, including Pernod Ricard, owner of Dumbarton-based Chivas Brothers, and Remy Cointreau, owner of the Bruichladdich Distillery on Islay. Remy cited the uncertain market conditions as it scrapped a long-term sales target in June. And the turmoil has not just been felt by the major players, with smaller distillers feeling the impact of global events as well as rising operational costs and subdued consumer demand. Diageo announced this week that chief financial officer Nike Jhangiani had been appointed chief executive on an interim basis while it conducts its search for a permanent successor for Ms Crew. Chairman John Manzoni acknowledged that Ms Crew had been in charge during a difficult period. He said: 'On behalf of Diageo and the board, I would like to thank Debra for her contributions to Diageo, including steering the company through the challenging aftermath of the global pandemic and the ensuing geopolitical and macroeconomic volatility. On behalf of all Diageo colleagues, I wish her every success in the future. The board's focus is on securing the best candidate to lead Diageo and take the company forward. We strongly believe Diageo is well placed to deliver long-term, sustainable value creation.' Elsewhere this week, Scottish legal giant Brodies served up a strong set of financial results. The firm reported a 15th consecutive year of growth despite challenging conditions domestically and internationally, with operating profits edging up above £50 million in the year ended April 30. Revenue climbed by 11% to £126.7m, driven by growth across all of the firm's core practice areas. Managing partner Stephen Goldie said: 'Achieving progress amid continuing domestic and global headwinds reflects the resilience and ambition of our clients in Scotland, across the UK, and internationally. Their trust in us to deliver results on complex and exciting mandates inspires us to work harder and smarter every day. 'Recording our fifteenth consecutive year of growth is testament to the strength of those relationships and the dedication of our colleagues to deliver exceptional legal services.' It was a good week, too, for Craneware, the Edinburgh-based company that provides revenue management software to the US healthcare market. On Wednesday, shares in the company leapt by more than 10% after telling the City it had been profit expectations and delivered a bullish assessment of its future prospects. It was the first update from Craneware since it rebuffed a takeover approach from US-based Bain Capital that valued the business at nearly £1 billion. The company expects to deliver a 12% rise in underlying profits to more than $65m in the year ended June 30. Chief executive Keith Neilson, pictured, said: 'We are pleased to see our growth rates accelerating and profitability exceed expectations, with this year's performance supporting a move to sustainable, double-digit growth.' Craneware has about 200 employees in the UK made up mainly of product developers and engineers.
