The FTSE 100 closed up 67.35 points at 8272.46. The Bank of England’s Monetary Policy Committee voted by a margin of seven-to-two to keep interest rates at 5.25 per cent. Two members of the MPC voted to reduce the base rate by 0.25 percentage points to 5 per cent. 

Among the companies with reports and trading updates today are NatWest, Sainsbury’s, YouGov and Tate & Lyle. Read the Thursday 20 June Business Live blog below.

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FTSE 100 closes up 67.35 points at 8272.46

Looming election a ‘get out of jail card for the BoE’

Hetal Mehta, head of economic research at St James’ Place:

‘Today’s meeting was – thanks to the snap election – a ‘get out of jail’ card for the BoE.

‘With no speeches or public statements during this period, it made sense for MPC members to keep votes unchanged and avoid a communications gap.

‘Moreover, recent strong wage data and still hot services inflation was not consistent with the dovish direction of travel.

‘With GDP showing positive momentum – notable that the BoE revised up its Q2 forecast – inflation pressures will be slow to fade.

‘Despite this, there seem to be some MPC members who voted for no change that are close to voting for cuts. We think any interest rate cuts in the coming months should be seen as a policy normalisation rather than a marked easing cycle.’

Here’s what the Bank’s MPC had to say

In its latest report, the Bank of England’s Monetary Policy Committee, said: ‘At this meeting, the Committee voted to maintain Bank Rate at 5.25%.

‘Headline CPI inflation has fallen back to the 2% target.

‘The restrictive stance of monetary policy is weighing on activity in the real economy, is leading to a looser labour market and is bearing down on inflationary pressures.

‘Key indicators of inflation persistence have continued to moderate, although they remain elevated.

‘Monetary policy will need to remain restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term in line with the MPC’s remit.

‘The Committee has judged since last autumn that monetary policy needs to be restrictive for an extended period of time until the risk of inflation becoming embedded above the 2% target dissipates.’

‘We still believe rate cuts remain firmly in view with at least one rate cut before the end of the year’

Adam Ruddle, chief investment officer at LV=:

‘The Bank of England maintaining interest rates at 5.25% is in line with our expectations.

‘The Bank was largely expected to hold rates as we near the election despite headline inflation falling within the Bank’s 2% target. We still believe rate cuts remain firmly in view with at least one rate cut before the end of the year.

‘Although the headline inflation rate has fallen, people are continuing to face higher living costs and would welcome a rate change to help reduce their outgoings.

‘According to LV= research, one in four mortgage holders are worried about the impact of rate rises on mortgage repayments.

‘Inflation has fallen significantly but we believe some persistent drivers of inflation will hamper a smooth decline of inflation going forward which likely indicates that several future rate cuts are unlikely. Interest rates will most likely remain at an elevated level for longer.’

Breaking:Bank of England holds base rate at 5.25%

The Bank of England’s Monetary Policy Committee has voted by a margin of seven-to-two to keep base rate at 5.25 per cent.

Two members of the MPC voted to reduce base rate by 0.25 percentage points to 5 per cent.

YouGov shares plummet 30% after profit warning

YouGov shares fell sharply on Thursday after the market research group warned its annual profits and revenue would be lower than expected.

The firm, which has made headlines lately with general election polling data, flagged sluggish demand in its data products division, as well as ‘challenges’ in its European, Middle East and African markets.

YouGov said sales bookings had been lower than expected since posting its half-year results.

‘The acquisition allows NatWest to diversify its offerings and tap into Sainsbury’s established customer base’

Will Howlett, financials analyst at Quilter Cheviot:

‘In the landscape of UK banking, NatWest’s acquisition of Sainsbury’s banking division is a modest one, with Sainsbury’s holding approximately £2.5 billion in assets compared to NatWest’s near £700 billion. However, it’s the strategic implications that are of interest here.

‘This move is indicative of the ongoing consolidation trend within the banking sector, which we have been anticipating. The acquisition allows NatWest to diversify its offerings and tap into Sainsbury’s established customer base, potentially leading to a more integrated financial services model within the retail space.

‘While the scale may be small relative to NatWest’s existing operations, the long-term potential for cross-selling and deepening customer relationships could be significant.’

Tate & Lyle agrees to buy ‘mouthfeel’ ingredients maker CP Kelco

Tate & Lyle has entered into an agreement to buy US-based CP Kelco for $1.8billion, or around £1.4billion, from JM Huber Corporation.

The proposed transaction is expected to drive revenue growth and an improvement in adjusted core-profit margin over the next few years, Tate & Lyle told shareholders on Thursday.

CP Kelco is a provider of pectin, specialty gums and other nature-based ingredients.

Sainsbury’s will PAY NatWest £125m to take on the bulk of its banking arm

Sainsbury’s has struck a deal to sell the bulk of its banking assets to NatWest in a move that will see the lender take on around another million customer accounts.

The supermarket giant will pay NatWest £125million upon completion of the deal, which will see the lender acquire £1.4billion of unsecured personal loans, £1.1billion of credit card balances and approximately £2.6billion of customer deposits.

It will see NatWest take on Sainsbury’s core banking assets and liabilities, although the final consideration will be confirmed when the deal is expected to be completed in March next year.

Sainsbury’s said there would be no immediate changes to its banking customers’ terms and conditions, adding they ‘do not need to take any action’.

Market open: FTSE 100 flat; FTSE down 0.1%

London-listed stocks are treading water in early trading with investors taking a cautious stance ahead of a highly anticipated interest rate decision by the Bank of England.

While it is widely anticipated that the BoE will hold the interest rates steady when its decision is announced at 11am, all eyes will be on the vote-split and the comments from officials to assess the future trajectory of borrowing costs in Britain.

Traders are currently pricing in less than a 30 per cent chance of an initial rate cut in August. This figure could dramatically shift in either direction following the vote.

Among individual stocks, Sainsbury’s has jumped 2 per cent after NatWest struck a deal to acquire most of the banking business of the British retailer.

CMC Markets has soared 8 per cent after the trading platform posted a 52 per cent jump in its annual adjusted pre-tax profit.

Blow for borrowers as summer interest rate cut hopes fade despite inflation falling

Hopes of a summer interest rate cut faded further yesterday despite inflation falling to its 2 per cent target for the first time in nearly three years.

The Bank of England is widely expected to leave rates on hold when officials meet today.

And despite the cheer provided by yesterday’s inflation figures, markets are increasingly convinced they will remain at the same level at their next meeting in August.

Bankers bonanza as JP Morgan lifts bonus cap to ten times an employee’s base salary

UK bankers at JP Morgan could be paid bonuses worth up to ten times their salary as it becomes the latest to lift its cap on bonuses.

The Wall Street titan has scrapped previous rules which were introduced by Brussels that limited bonuses to two times an employee’s annual salary.

It means an employee earning a salary of £200,000 a year at JP Morgan might receive a pay out on top of that of up to £2million as opposed to the previous £400,000 cap.

Tate & Lyle eyes US takeover

Tate & Lyle has announced a deal to buy food and drink ingredients business CP Kelco in a roughly £1.4 billion deal.

The FTSE 250 firm told investors it has agreed to buy the pectin and xanthan gum maker from US firm JM Huber.

Nick Hampton, chief executive of Tate & Lyle, said:

‘Following on from the announcement of the proposed sale of our remaining interest in Primient last month, the proposed combination with CP Kelco represents a significant acceleration of our growth-focused strategy.

‘It creates a leading, global speciality food and beverage solutions business, ideally placed to benefit from the structural trends towards more plant-based, clean-label and sustainable ingredients and solutions.

‘The growth potential of the proposed combined business is significant and we look forward to the future with confidence and excitement.’

YouGov profit warning

Polling giant YouGov has warned full-year profits and revenues are set to come in below previous expectations.

YouGov told shareholders on Thursday it had seen ‘lower sales bookings than anticipated’, and it therefore now expects reported revenues to 2024 to come it at £324million to £327million.

It also said that while growth had shown improvement in the second half it had disappointed expectations. YouGov’s adjusted operated profit is now expected at £41million to £44million.

YouGov said: ‘As we move into FY25, we will focus on optimising our cost base and prioritising investment in key growth areas such as upgrading our Data Products, continuing to build out our AI capabilities and enhancing our sales organisation to further capitalise on YouGov’s unique asset: its high-quality global panel and proprietary dataset.’

Hargreaves Lansdown’s co-founder ‘bittersweet’ over £5.4bn sale to private equity consortium

Hargreaves Lansdown’s co-founder has described its sale to private equity buyers as ‘bittersweet’ as he voiced concerns about their intentions.

Stephen Lansdown, who has a 5.7 per cent stake in the investment platform, has backed the £5.4billion offer by a consortium of investors led by buyout giant CVC.

His comments came after HL’s board said this week it would accept the £11.40 per share deal.

NatWest to buy Sainsbury’s Bank assets

NatWest will acquire most of the banking business of Sainsbury’s, thereby growing the British lender’s assets by £2.5billion in the first major transaction executed by boss Paul Thwaite since formally taking the role last year.

The takeover will also see its customer accounts rise by around 1 million, in line with the lender’s strategy to ramp up its retail banking business.

The deal is the latest banking business disposal by a major British retailer, after rival supermarket chain Tesco offloaded most of its banking activities to Barclays in a 600 million pounds deal earlier this year.

‘As well as a complementary customer base, the transaction is expected to add scale to our credit card and unsecured personal lending business within existing risk appetite,’ Thwaite said in a statement.

‘NatWest Group has a strong track record of successful integration, and we are focussed on ensuring a smooth transition for customers.’

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