FTSE 100 Live 17 June: Index seen higher, Japan's Nikkei 225 slides 2%

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LIVE – Updated at 07:54

London back on top of France, at least on the stock market

07:54 , Simon English

London had regained its crown as Europe’s biggest stock market, just two years after losing that status to Paris.

French stocks have suffered from the shock election called by President Emmanuel Macron last week which hit bank shares in particular.

Meanwhile, London shares after a long period in the doldrums are showing renewed signs of life with bankers saying clients are looking to get deals moving again, leading to floats and share price boosts.

The FTSE 100 is up 7% in the last year and opens today at 8147.

Investors say that stability – steady inflation and interest rates and the clear likelihood of a Labour victory in the coming election – at least give them some confidence about what is coming next,.

Bloomberg first reported the shift this morning.

“We like UK stocks for valuation reasons but also as a portfolio diversifier given their attractive sector profile,” said Ulrich Urbahn, head of multi-asset strategy and research at Berenberg. “On top of that, the political uncertainty seems to be higher elsewhere, at least for the moment.”

More trouble for Home REIT as it fails to refinance debts

07:51 , Daniel O'Boyle

Troubled affordable housing investment trust Home REIT says it has failed to secure refinancing, and must now sell properties to repay its debts.

The business announced in February that it had started a refinancing process. However today it said “the Board has now concluded that it will not be able to secure a re-financing of the existing facility with the company's lender, Scottish Widows, on terms that it could recommend to shareholders, despite extensive and advanced discussions with a potential lender”.

Home REIT said it was continuing to engage with Scottish Widows, which is seeking “repayment of the loan balance in the short term”.

It will aim to repay the balance “in a timely manner” by selling more properties.

Home REIT had £131.8 million of borrowings as of 31 May, but this is set to decline to £105 million after recently agreed property sales close. The trust owns 1,765 properties, worth £314.1 million.

Home REIT has struggled since floating in 2020, amid misses rent payments from its tenants. Trading in its shares has been suspended for more than a year.

Bank of England rates decision on Thursday

07:51 , Graeme Evans

The UK’s interest rate is set to be kept at 5.25% when Bank of England policymakers conclude their latest two-day meeting on Thursday.

The Bank is likely to want to see more evidence that services inflation and wage growth are slowing. The meeting also comes in the backdrop of the UK election campaign.

Economists at Bank of America expect a 7-2 decision, with August the most likely date for the first of two rate cuts in 2024.

Australia’s central bank makes its latest decision tomorrow followed by the UK, Switzerland and Norway on Thursday.

B&Q owner Kingfisher's CFO to go

07:27 , Michael Hunter

Kingfisher, the owner of the B&Q home improvement chain, announced the departure of its chief financial officer this morning.

Bernard Bot will “retire” and his successor will be  Bhavesh Mistry, who is currently the CFO of British Land and was deputy CFO of Tesco between 2018 and 2021.

Bot was appointed to the job in 2019. After a surge in sales during the pandemic, B&Q has struggled with a string of profit warnings, putting pressure on management, including Thierry Garnier, its chief executive.

He said today: “Bernard has been integral to the transformation of our business ... and played a key role in leading us through the challenges of the pandemic.”

Bot said: “t has been a privilege to serve as CFO and I would like to thank Thierry and the Board for their confidence and support. ... There is still a lot to do in the coming months and I look forward to my remaining time at Kingfisher and supporting a smooth transition to Bhavesh in due course."

Mistry said: “The pace of change at Kingfisher in recent years has been impressive and I am looking forward to working with its talented teams.”

FTSE 100 seen higher but Nikkei 225 slides nearly 2%

07:20 , Graeme Evans

Japanese stocks took a hit today as traders weighed up the outcome of last Friday’s central bank meeting,

Policymakers kept rates near 0.1% but said they would use next month’s meeting to consider whether to scale back their bond purchases.

The Nikkei 225, which topped 40,000 as recently as late March, fell 1.8% to 38,102 near the end of today’s session. The Hang Seng index in Hong Kong was broadly flat.

In London, the FTSE 100 index is forecast to follow last week’s 1.2% decline by opening about 44 points higher at 8190.

Oil prices have started the week slightly lower, with Brent Crude trading at $82.27 a barrel this morning.

Recap: Friday's top stories

07:12 , Simon Hunt

Good morning from the Standard City desk.

About 33 years ago Robert Maxwell fell off his boat. (Or jumped, or was pushed, if you prefer.)

The human pain he left in his wake was quite something, and continues.

After he died, one of the things that emerged was that he had embezzled hundreds of millions of pounds from the pension funds of his publishing empire.

Back then, the rules on pensions were, erm, a bit slack.

They have since been tightened, rightly, but perhaps too much, in ways that are now hurting the economy and that can’t all be blamed on Ján Ludvík Hyman Binyamin Hoc (Maxwell’s original name).

His frauds were part of what pushed regulators into making pension funds play safe. They had to show that their assets could meet their liabilities at short notice.

In 2000 an accounting change, aimed at safety, pushed big pension funds out of shares and into UK bonds.

That hasn’t been all bad, since it created a massive market for government debt at a time when the government needed to borrow like almost never before.

Perhaps it is time to move on. Archie Norman, the chair of M&S thinks so.

Pension funds avoiding the stock market has just led to a dearth of capital for entrepreneurial companies of all sizes and increased pension deficits, since the return on bonds is bound to be lower than that from shares, in the long run, which is what pensions are all about.

“Most large corporate pension funds are invested for low risk and low return,” he notes. The situation in Europe is different, where funds are willing to invest for the longer term “creating a deep pool of capital, a thriving stock market and the growth of private companies”.

That sounds like a good thing to have. How about it Keir?

~

Here’s a summary of our top headlines from yesterday:

• Tesco says it is fending off the challenge from Aldi and Lidl as first quarter sales surge 4.6% in UK - but CEO Ken Murphy faces a backlash over his pay deal at the AGM later today
• Crest Nicholson reject £650 million takeover approach from rival housebuilder Belway
• Royal Ascot races to net zero by hiring firm to remove 138 tonnes of carbon from the atmosphere, equal to the amount set to be created by the event next week

And in City Spy...