• FTSE 100 closes up 9 points at 7,474

• Prudential climbs as profit rises, new strategy

• Mortgage approvals fall more than expected in July

4:40pm: FTSE 100 makes it six winning days in a row

The FTSE 100 made it six winning days in a row on Wednesday holding in the green despite closing off early highs.

At the close London’s lead index was up 8.68  points, 0.1%, at 7,473.67 while the FTSE 250 advanced 95.93  points, 0.5%, at 18,564.52.

Michael Hewson at CMC Markets UK noted the market was “helped by some of the factors that drove yesterday’s momentum, as lower yields and softer economic data reinforced hopes of a US rate pause next month.” 

“House builders are having another decent day after yesterday’s strong session which appeared to be driven by the announcement that the government would be watering down EU environmental rules, which could help speed up the planning process for new build homes. Persimmon, Taylor Wimpey, and Barratt Developments appear to be leading the gainers in the sector,” he noted.

Elsewhere, Prudential’s results impressed the City while news of a new chief executive boosted shares at Direct Line.

But Kingfisher failed to join in the fun, down 2.2%, as JP Morgan suggested there was a downside risk to consensus forecasts.

3:50pm: HSBC introduces 40-year mortgages

Back to the mortgage market and HSBC is to offer a 40-year mortgage to home buyers, the first time it has ever launched home loans over that length of time.

Traditionally, mortgage loans have been available for 20 or 25-year periods, but with rates on loans rising, the bank said it wants to attract customers who want lower monthly payments but over a longer period.

Initially available via brokers, the 40-year loans will be available directly from HSBC on 13 September.

Andrew Matson, head of mortgages at HSBC UK, said: “We know that home ownership is a key life ambition for many people, but affordability can be an issue.

3:10pm: German inflation slows less than expected

Signs sthat the war against inflation is far from won. 

German inflation slowed less than expected in August, adding to worries that sticky price pressures will push the European Central Bank to keep raising interest rates next month.

The harmonised index of consumer prices in Europe’s largest economy rose 6.4% in the year to August, down from 6.5% in July, the federal statistical agency said, but less than the 6.2% economists had looked for. 

Excluding food and energy, inflation was steady at 5.5%. Services inflation dipped slightly to 5.1% and food inflation fell to 9%, but energy inflation reversed recent declines, rising to 8.3%. Goods inflation rose overall to 7.1%.

2:45pm: Steady start across the pond

US stocks made cautious early progress on Wednesday as investors mulled weaker-than-expected jobs and GDP figures.

Shortly after the opening bell, the Dow Jones Industrial Average as up 74.70  points, 0.2%, at 34,927.37, the S&P 500 was up 5.46  points, 0.1%, at 4,503.09 and the Nasdaq Composite was up 8.38 points, 0.1%, at 13,952.13. 

The weaker data fuels hopes that US interest rates may have peaked as investors continue to look for an economic soft landing.

Ian Shepherdson at Pantheon Macroeconomics noted the ADP payroll figures are in line with the recent trend in private payrolls although he believes the ADP number “is not a reliable indicator.”

HP Inc (NYSE:HPQ) shares tumbled 11.6% after last night’s quarterly earnings report revealed sluggish demand for PCs and printers.

Quarterly financial metrics showed revenue of $13.2 billion, down 10% year-over-year and short of the $13.4 billion expected by analysts. Adjusted earnings were $0.86 per share, in line with Street expectations.

2:30pm: US GDP and jobs figure weaker than forecast

Over to the US and news that job growth in the US private sector slowed significantly in August, according to the ADP National Employment Report.

Private sector employment increased by 177,000 jobs in August, below the FXStreet consensus of 195,000 jobs, and well below July’s figure of 371,000 jobs.

“This month’s numbers are consistent with the pace of job creation before the pandemic. After two years of exceptional gains tied to the recovery, we’re moving toward more sustainable growth in pay and employment as the economic effects of the pandemic recede,” said Nela Richardson, chief economist at ADP.

The slowdown was driven heavily by leisure and hospitality where job creation by hotels, restaurants and other employers in the sector fell to 30,000 in August after months of strong hiring.

Remember, yesterday there was a drop in job vacancies while US non-farm payrolls are due Friday.

Meanwhile, separate figures showed real gross domestic product (GDP) increased at an annual rate of 2.1% in the second quarter of 2023, according to the “second” estimate.This was below the 2.4% reported in the “first estimate” and less than Street expectations of remaining unchanged.

In the first quarter, real GDP increased 2.0%. 

1:35pm: Here’s a recap of some of today’s movers

Shares in Belluscura PLC (AIM:BELL) were pumped 14% higher to 47.02p after the company struck a new 10-year deal for its portable oxygen concentrators with its Chinese manufacturing partner.

Shenzhen-based InnoMax Medical Technology has acquired the exclusive right to manufacture and distribute not just its X-PLOR device but also the DISCOV-R, “next-generation ambulatory dual flow portable oxygen concentrator” in China, Hong Kong, Macau and Singapore

Shares in Provexis (AIM:PXS) PLC jumped by 5% on Wednesday to 0.66p after the company announced partner BYHEALTH has applied to sell the former’s Fruitflow health food ingredient in China.

BYHEALTH submitted the application aimed at obtaining a new permit on Tuesday, Provexis (AIM:PXS) said in a statement, after having worked on the project since 2015.

TheWorks.co.uk PLC (LSE:WRKS) slumped by over 12% on Wednesday to 28.2p after reporting a drop in profits and announcing the departure of chief financial officer Steve Alldridge.

Underlying profit fell 46% to £9 million, as product profit margin declined due to a “strategic change” in sales mix to increase the weighting of front-list books and higher freight costs, along with a rise in business rates costs.

1:10pm: Prudential looks to Asia and Africa to drive growth

Back to Prudential PLC (LSE:PRU) and some reaction to its new stratgey and results.

The new strategy called ‘For Every Life, For Every Future’ aims to build a sustainable growth platform, through targeted investment across Asia and Africa.

It is clear why. As Richard Hunter, head of markets at interactive investor noted “now fully focused on Asia and Africa, the group is fully aware that such major continents bring significant opportunities.”

He pointed out that in Asia, for example, household wealth “was over $150 trillion in 2021, broadly similar to North America and well in excess of Europe, while it is expected that by 2030 Asia and Africa will house three-quarters of the global working age population.”

“The insurance and health protection markets within Prudential’s target geographies provide a rich seam of opportunities alongside increasingly wealthy populations with evolving financial needs,” he thinks.

“The company has pointed to an expected middle class population of 1.5 billion across Asia by 2030, with an estimated health protection gap of $1.8 trillion.”

“The potential spoils are enormous and Prudential has a strong reputation in these regions,” Hunter added.

As for the results, Bank of America’s Andrew Sinclair said Prudential delivered small beats across the board.

In a BofA research report Sinclair noted IFRS17 operating profits of $1,462 million were 6% ahead of expectations, new business volumes were up 42% to $3.0 billion on an annual premium equivalent basis, 3% ahead of expectations and new business profits were up 39% to $1.5 billion, 2-4% ahead of expectations.

Within this Hong Kong beat expectations on volumes and margins but mainland China JV was weaker. Indonesia, Malaysia and Singapore were “bang in-line,” he added.

Sinclair thinks the new targets provided for 2022-27 by Wadhwani “should provide confidence in growth of new business profits and free surplus generation (a proxy for cash) for years to come.”

“We think this can help reverse the malaise in Pru’s share price,” he added.

Sinclair said Prudential’s strategy update includes no obvious ‘clean-up’ or strategic overhaul, with a recommitment to its existing key markets and products, with perhaps an increased weight on health.

“Importantly, there does not appear to be any plan to increase JV stakes in the China or India in the foreseeable future,” he said.

“This should all be well-received,” in Sinclair’s opinion.

Sinclair has a buy recommendation and 1,350p price objective on Prudential.

12:35pm: Consumers borrowing less, BoE report shows

Figures from the Bank of England showed net borrowing of consumer credit by individuals fell to £1.2 billion in July, down from £1.6 billion in the previous month.

The data, came alongside figures which showed a bigger than expected drop in mortgage approvals in July.

The BoE said during July, households deposited an additional £0.4 billion with banks and building societies, compared to £3.8 billion of deposits in June.

This was mainly driven by net flows of £10.1 billion into interest-bearing time deposit accounts.

Net flows into ISAs saw an increase to £4.3 billion in July, from £2.9 billion in June but these inflows were mostly offset by net outflows from interest bearing and non-interest bearing sight accounts of £10.2 billion and £0.8 billion respectively.

Ashley Webb, a UK economist at Capital Economics said: “The drag from higher interest rates on bank lending grew further in July, particularly in the housing market.”

“We think this effect will intensify as the Bank of England presses ahead with another 25 basis points interest rate hike, from 5.25% to 5.50%, in September and keeps rates there until the second half of 2024.”

“And the subdued £0.4bn increase in households’ bank deposits is much smaller than the pre-pandemic average and may suggest that households finances are becoming more stretched.”

12:03pm: US futures steady ahead of jobs and GDP data

US futures are pointing to a flat start on Wall Street, although data released ahead of the opening bell should provide direction.

In pre-market trading, futures for the Dow Jones Industrial Average were little changed, while those for the S&P 500 eased 0.1%, and contracts for the Nasdaq 100 futures were down 0.2%.

In a data heavy week, ADP will release its US employment report for July, which will give insight into the labour market before the official government figures on Friday.

Private payrolls are expected to have added 195,000 jobs in August, a slowdown compared with the 324,000 jobs added in July.

On Tuesday, data from the US Bureau of Labor Statistics showed there were 8.827 million job vacancies in July, down from 9.165 million in June, and below a FXStreet-cited consensus of 9.465 million. 

It was the smallest number of openings since March 2021.

Deutsche Bank’s Jim Reid said the US figures “put an abrupt stop to the growing narrative that the Fed would still deliver another rate hike in the current cycle.”

“Indeed, the chance of another rate hike by November fell from 71% immediately before the JOLTS report to 51% by yesterday’s close,” he pointed out.

Elsewhere, there will be a health check on the US economy with a second quarter GDP reading.

Economists expect the second estimate for second-quarter economic growth to come in at 2.4%, unchanged from the advance figure, and up from a 2% rise in the first quarter.

In company, Salesforce.com reports numbers after the closing bell, while Jack Daniel’s maker Brown Forman is expected to report earnings before the open.

Stocks to look out for include HP Inc (NYSE:HPQ) (HP Inc (NYSE:HPQ)) where shares are down around 9% in pre-market, after last night’s quarterly earnings report revealed sluggish demand for PCs and printers.

11:33am: Drop in mortgage approvals show impact of rising rates

 A bit more on the drop in mortgage approvals reported by the Bank of England.

Martin Beck, chief economic advisor to the EY ITEM Club, thinks the figures show “the effect of early-June’s rise in mortgage rates.”

he pointed out the fall in ppprovals for house purchases to 49,444 from June’s 54,605 was the lowest since February and almost 22% down on a year earlier.

Net mortgage lending rose slightly, but the increase of £0.2 billion was marginal, he said, and disguised a sizeable fall in gross home loans to £18.7 billion from £20.4 billion in June. 

“The fact that market interest rates have started to retreat following signs that the economy is weakening should take some of the pressure off weak mortgage demand,” in beck’s opinion.

Andrew Wishart, senior property economist at Capital Economics agreed. 

“The decline in mortgage approvals to a five-month low in July showed the renewed surge in mortgage rates since April has begun to take its toll,” he said, adding “but given the lag between quoted mortgage rates and approvals, the full impact is unlikely to become clear until September.” 

10:59am: Aviva loses top exec as Direct Line unveils new boss

A bit more on the new boss at Direct Line.

Shares in Direct Line have risen 0.7% after it announced the appointment of Adam Winslow as chief executive.

Winslow will join Direct Line from Aviva where he is currently CEO of UK and Ireland general insurance. Prior to that he was CEO of Global Life at AIG Life and Retirement.

Victoria Scholar at interactive investor said Winslow “boasts an impressive CV,” while analysts at Jefferies pointed out that Aviva’s UK&I GI business demonstrated “remarkable resilience during a very tough period for the market in 2022.”

Russ Mould at AJ Bell felt he looked “like a safe pair of hands,” being “well versed in the challenges facing the UK general insurance market.”

Mould noted “Direct Line has struggled over the past year or so due to unfavourable weather causing a spike in home insurance claims and inflationary pressures making it more expensive to support car insurance customers.”

“Winslow will need to find ways to improve Direct Line’s balance sheet and reinvigorate the brand.”

Winslow will succeed acting CEO John Greenwood who himself took over the reins from Penny James, who resigned in January.

Shares in Direct Line are up 0.6% at 161.72p but are 29% year-to-date.

10:32am: Airlines face £100 million billl from air traffic control chaos

The airline industry will bear costs of as much as £100 million because of the UK air traffic control collapse on Monday, according to the former chief executive of British Airways’ owner who now leads the industry’s lobby group.

Willie Walsh, director general of the International Air Transport Association (Iata), said that 1,100 flights were cancelled and hundreds of thousands of passengers had their journeys affected.

He told BBC Radio’s Today programme: “We’re looking at costs in the tens of millions, probably at this stage – too early to estimate fully – but I would imagine at an industry level we’ll be getting close to £100m of additional costs that airlines have encountered as a result of this failure.”

Shares in airlines which shrugged aside the disruption on Tuesdare have weakened today.

Shares in IAG, the owner of British Airways, are down 1.7% and easyJet PLC is down 0.5%.

10:00am: Mortgage approvals fall more than expected

Further signs of a slowing housing market as the Bank of England reports net mortgage approvals decreased from 54,600 in June to 49,400 in July, although approvals for remortgaging slightly increased from 39,100 to 39,300 during the same period.

The figure was below market expectations of a drop to 51,000.

The BoE said the ‘effective’ interest rate, the actual interest rate paid, on newly drawn mortgages rose by a further 3 basis points, to 4.66% in July.

Net borrowing of consumer credit by individuals fell to £1.2 billion in July, down from £1.6 billion in the previous month.

Alice Haine, Personal Finance Analyst at Bestinvest thinks “Mortgage lending is likely to remain weak over the coming months as buyer demand and spending power continues to get pummelled by soaring interest rates and high living costs.”

“Average mortgage rates may have now softened from their July peak, but that will do little to ease the stress and anxiety for new buyers desperately trying to secure their first deal or those looking to refinance who face significantly higher repayment levels,” Haine added.

“As affordability challenges mount, property prices will come under increasing pressure, forcing sellers to market their homes more competitively if they want to secure a sale.”

9:45am: JP Morgan sees downside risks to Kingfisher forecasts

Shares in Kingfisher PLC (LSE:KGF) has not joined in the equity rally, down 1.8%.

Investment bank JP Morgan has cut its price target to 220p from 230p, reiterated an underweight rating and just to rub salt in the wounds placed the retailer on negative catalyst watch.

“Whilst data for UK and French home improvement has remained strong, both countries slowed in July, and housing markets have softened,” the bank noted.

“In our view, FY 25 B&Q sales forecasts are at least 7% too high in light of recent trends in the UK housing market,” it added.

“Combined with our view that we could see more promotional behaviour from competitor Leroy Merlin (as it targets regaining share) we continue to see downside risk to forecasts,” JPM said.

The investment bank said it sits 5% and 9% below consensus for pre-tax profit for the next two financial years.

9:10am: Stocks extend gains on US rate hopes

Stocks continue to push ahead on Wednesday with the FTSE 100 now back above 7,500, up 39 points.

Susannah Streeter, head of money and markets, Hargreaves Lansdown explained: “’What appears to be bad news for the US economy is being notched up as good news for equities with a weakening jobs snapshot and slide in consumer confidence lifting indices.”

“Signs of America’s cooling economy have raised hopes that the pause button will be pushed on punishing interest rate hikes.”

“Data is king right now in terms of market sentiment and the non-farm payrolls snapshot out on Friday will crown the week. If it points to a fresh slowdown in hirings, we could see another spurt in stock prices,” she thinks.

Ahead of those figures, ADP private payrolls figures will be released today and weekly jobless claims figures on Thursday which will give further clues as to whether the jobs market is softening, and if so, how fast.

Remember, the ideal scenario, the goldilocks ‘soft landing’ where the economy cools, but not much, bringing inflation lower without a recession.

Prudential remains top of the FTSE 100 risers after its numbers while housebuilders remain in favour after the relaxation of environmental rules by the Government on Tuesday.

Persimmon PLC (LSE:PSN) is up a further 1.8% and Taylor Wimpey up 1.4%.

Elsewhere, TheWorks.co.uk PLC (LSE:WRKS) slumped by over 10% in early trading on Tuesday after announcing the departure of Steve Alldridge as chief financial officer.

Heading the other way was Instem PLC (AIM:INS), up 41%, after agreeing a £203 million takeover offer from healthcare-focused private equity group Archimed.

8:38am: Home sales on track for worst year since 2012

Away from the world of insurance and more downbeat news on the UK housing market.

Property website Zoopla reckons the number of UK homes sold this year will fall to the lowest level in more than a decade, as soaring mortgages rates deter homebuyers.

House sales reaching completion are expected to fall 21% year-on-year to about 1 million in 2023, the lowest level since 2012. 

“Clearly, the impact of higher interest rates and cost of living is affecting people’s desire to move home,” said Richard Donnell, head of research at Zoopla.

The study estimated a year-on-year fall of 28% in mortgage-backed sales, although cash purchases were forecast to drop by 1% compared with 2022, accounting for one in three sales.

Donnell said transaction volumes were “feeling the pinch, and it’s no surprise it’s the mortgage market where the biggest squeeze is being felt”.

Victoria Scholar, head of investment, interactive investor said: “Getting onto the housing market was already a daunting challenge for most because the average UK house price is many multiples above average earnings.”

“And while house prices have eased, more than offsetting this benefit has been the jump in mortgage costs, making it much more challenging for first-time buyers,” she added.

8:12am: FTSE follows US higher, Prudential and Direct Line rise

The FTSE 100 advanced in early trading boosted by gains in the US after soft jobs data boosted hopes that interest rates may have peaked across the pond.

At 8:12am, London’s lead index was up 19.67  points, 0.3%, at 7,484.66 while the FTSE 250 was 27.18 points to the good, 0.2%, at 18,495.77.

Deutsche Bank’s Jim Reid said the US figures “put an abrupt stop to the growing narrative that the Fed would still deliver another rate hike in the current cycle.”

“Indeed, the chance of another rate hike by November fell from 71% immediately before the JOLTS report to 51% by yesterday’s close,” he pointed out.

“For equities, the prospect of fewer rate hikes outweighed any concerns around the data being weak,” he noted.

Back in London, and results from Prudential PLC (LSE:PRU) took centre stage with the insurer reporting a modest rise in operating profit alongside a new strategic vision.

Matt Britzman, equity analyst at Hargreaves Lansdown said: “There might be trouble in China, but that’s not caused any major hiccups with Prudential’s performance.”

Shares rose 2.6% and Britzman added: “Market share performance was encouraging, especially given the tough competitive landscape in the region.” 

But he said the strategic update didn’t look “like a major overhaul.”

Direct Line Insurance Group PLC (LSE:DLG) named Aviva’s Adam Winslow as its new chief executive, lifting shares 1.9%.

Peel Hunt said the appointment “brings a welcome resolution to lengthy search process during a challenging period for the insurer.”

Elsewhere, shares in fashion retailer Superdry were suspended after it said that its full-year results aren’t ready for publication.

The company, which was required to publish audited results for the financial year ended 30 April by 29 August, said it has taken longer than expected for its auditor RSM UK Audit to complete the final technical points of the audit.

7:48am: Prudential’s profit boosted by rebound in China

Continuing the insurance theme, and results have hit the wires from Prudential PLC (LSE:PRU) which has reported a modest increase in operating profit and unveiled a new strategy that includes “targeted investment in structural growth markets” across Asia and Africa.

Adjusted operating profit in the six months to June 30 rose 6% (on constant exchange rates) to $1.46 billion from $1.41 billion while new business profit jumped 39% to $1.49 billion with 17 of its life markets delivering growth, 16 of which by double digits.

The FTSE 100-listed firm said in Hong Kong, both domestic and Chinese mainland visitor segments performed particularly well with annual premium equivalent sales from the domestic segment up 68% while the Chinese mainland visitor segment saw a significant increase in sales following the opening of the border with the mainland in February 2023.

Alongside the results, Wadhwani announced a new strategy called “For Every Life, For Every Future” aiming to build a sustainable growth platform, through targeted investment across Asia and Africa.

The firm is targeting growing new business profit at 15-20% compound annual growth between 2022 and 2027 and achieving double-digit compound annual growth in operating free surplus generated from in-force insurance and asset management business between 2022 and 2027.

7:25am: Direct Line names Aviva’s Winslow as new chief executive

It’s an insurance kind of day, with news of results from Prudential to come.

But first, Direct Line Insurance Group PLC (LSE:DLG) has confirmed that Aviva PLC executive Adam Winslow will become its new chief executive officer.

Winslow is expected to take up the role in the first quarter of 2024, succeeding Jon Greenwood who has been acting CEO since January 2023.

Since May 2021, Winslow has led Aviva’s UK and Ireland general insurance business and prior to that was CEO of Global Life at AIG Life and Retirement.

The appointment was flagged recently by Sky.

7:05am: FTSE set to follow US and Asia higher

It looks like another bright start for the London’s blue chips although not quite on the magnitude of yesterday’s stellar gains.

Spread betting companies are calling the FTSE 100 up by around 27 points after closing up 126.41 points at 7,464.99 on Tuesday.

US markets made strong gains after soft jobs vacancy figures and a fall in consumer confidence reduced the pressure on the US central bank to increase interest rates further.

Ipek Ozkardeskaya at Swissquote Bank said: “Yesterday was a typical ‘bad news is good news’ day.”

“Risk sentiment in the US and across the globe was boosted by an unexpected dip in US job openings to below 9 mio jobs in July, the lowest levels since more than two years, and an unexpected fall in consumer confidence in August.”

“The weak data pushed the Federal Reserve (Fed) hawks to the sidelines, and bolstered the expectation of a pause in September, and tilted the probabilities in favour of a no hike in November, as well,” she added.

The Dow Jones Industrial Average up 0.9%, the S&P 500 up 1.5% and the Nasdaq Composite up 1.7%.

The gains extended to Asian markets where the Nikkei 225 rose 0.4% and the Hang Seng rose 0.5%. In China, the Shanghai Composite was up 0.1%.

Back in London, and the early focus will be results from insurer Prudential while a property survey from Zoopla showing UK house sales this year are ‘on track to be lowest since 2012’ will also grab the headlines.