FTSE 100 Live Tuesday
- OECD cuts GDP forecast
- KKR ends Thames Water deal
- BAT lifts revenue guidance
Market update: FTSE 100 lower on OECD outlook, miners struggle
10:02 , Graeme EvansA slower global growth projection by the OECD today dampened investor sentiment during a lacklustre session for the FTSE 100 index.
The group expects GDP expansion of 2.9% for this year and 2026, down from 3.3% in 2024 and previous estimates of 3.1% and 3% respectively.
It highlighted a number of significant risks to growth, including substantial increases in trade barriers and weakened business and consumer confidence.
US growth is set to be 1.6% this year, down from 3.3% in 2024, while the OECD’s estimate for the UK has been scaled back to 1.3%.
European markets stuttered on the back of the release, with the FTSE 100 index surrendering initial gains to stand 6.98 points lower at 8767.28.
Mining stocks led the fallers board amid fears over the weaker demand outlook, with Glencore and Rio Tinto among those down 2%.
A reversal of yesterday’s gains in the price of copper meant Antofagasta fell 52.5p to 1752.5p and Anglo American lost 63.5p to 2156.5p.
On the risers board, British Gas owner Centrica jumped 3% or 4.8p to 161.95p while BAE Systems continued its strong run with a gain of 23p to 1942.5p.
British American Tobacco drifted 5p to 3337p, having performed strongly in the run-up to today’s half-year trading update.
The Lucky Strike and Velo business now expects full-year revenues growth of between 1% and 2%, up from a previous estimate of 1%.
In new categories, the company reported low-single digit revenue growth but said product innovation should mean this accelerates to a mid-single digit in the full year.
Among other companies reporting today, South West Water owner Pennon fell 8p to 500.5p after reporting a wider loss of £72.7 million for the year to March.
At the other end of the FTSE 250 index, construction group Kier rose 3% or 5.8p to 174.2p after lifting its long-term margin target to more than 4%.
Peel Hunt has a price target of 200p. It said: “Markets remain supportive, and the higher margin target displays confidence.”
South West Water firm reports deeper annual loss
08:49 , Graeme EvansSouth West Water owner Pennon has reported a pre-tax loss of £72.7 million for the year to the end of March, up from the £9.1 million loss reported last year.
Dealing with a parasite outbreak in south Devon cost it about £21 million, while it also took a £15.8 million hit in relation to restructuring actions over the year.
The group is targeting £3.2 billion worth of investment by 2030, incorporating work to build new reservoirs, fix storm overflows, meet its net zero commitments and improve services for customers.
Bills for South West Water customers surged by 28% on average from April.
Pennon shares fell 3% or 15.5p to 493p following the results.
FTSE 100 falls back, Centrica shares up 3%
08:32 , Graeme EvansThe FTSE 100 index has surrendered initial gains to stand 18.11 points lower at 8756.15.
Mining stocks are among those under pressure, with Glencore and Rio Tinto down by 2%. Marks & Spencer also weakened 2.2p to 378.1p and GSK fell 6.5p to 1510.5p after Berenberg removed its Buy rating on the drugs giant.
The shares of British Gas owner Centrica have jumped 3% or 5.3p to 162.45p, while BAE Systems has continued its strong run with a rise of 20.5p to 1940p.
British American Tobacco shares are 22p lower at 3322p, despite a modest upgrade to revenue growth guidance for the year.
OECD forecasts slower global growth
08:24 , Graeme EvansGlobal GDP growth is projected to slow from 3.3% in 2024 to 2.9% this year and next, according to the latest OECD economic outlook.
The organisation warned that substantial increases in trade barriers, tighter financial conditions, weakened business and consumer confidence, and elevated policy uncertainty all pose significant risks to growth.
The OECD said: “If these trends continue, they could substantially dampen economic prospects.”
The growth forecasts for 2025 and next year represent downgrades from previous estimates of 3.1% and 3% respectively.
In the UK, the OECD said GDP growth is projected to reach 1.3% in 2025 before slowing to 1% in 2026.
This represents a further downgrade to UK prospects after forecasts were cut in March to 1.4% and 1.2% respectively. The OECD said its latest revision reflects heightened trade tensions, tighter financial conditions and elevated uncertainty.
It added: “Inflationary pressures will initially linger, due to higher import prices and robust wage growth in 2025, but subside over 2026, as spare capacity emerges and the labour market loosens.”
KKR pulls out of Thames Water equity raise
07:28 , Graeme EvansThames Water today said private equity giant KKR has ended its involvement in a potential fundraising plan for the troubled utility.
The lapsing of KKR’s preferred partner status means Thames Water will progress discussions on the senior creditors' plan with Ofwat and other stakeholders.
Thames Water chair Adrian Montague said: "Whilst today's news is disappointing, we continue to believe that a sustainable recapitalisation of the company is in the best interests of all stakeholders and continue to work with our creditors and stakeholders to achieve that goal.
“The company will therefore progress discussions on the senior creditors' plan with Ofwat and other stakeholders. The board would like to thank the senior creditors for their continuing support."
BAT lifts revenue guidance, US trading improves
07:14 , Graeme EvansBritish American Tobacco today nudged up revenue guidance after reporting a first-half performance slightly ahead of expectations.
The Dunhill and Lucky Strike business now sees sales growth in the region of 1-2%, up from 1% previously.
In the US, the group is set to return to revenue and profit growth this year after seeing a recent stabilisation in its performance.
In new categories, the company reported low-single digit revenue growth but said this is expected to accelerate to a mid-single digit for the year as a whole.
Chief executive Tadeu Marroco said: “2025 is a deployment year and, as previously highlighted, we expect our performance to be second half weighted, mainly driven by the roll-out of new category innovations in key markets from the middle of the year.
In the US, combustibles industry volumes remain under pressure following a 9% year-to-date decline.
Morocco added: “We have stabilised our total industry volume and value share. Excluding the deep discount segment where we are not present, we are gaining share, driven by Natural American Spirit and Lucky Strike.”
FTSE 100 set for steady start, Hang Seng index rallies
07:00 , Graeme EvansThe subdued run by the FTSE 100 index is set to continue, with IG Index futures pointing to a rise of about 0.1% at the opening bell.
Stronger defence and gold stocks yesterday helped the FTSE 100 index to close marginally higher at 8774.26.
The S&P 500 index rose 0.4% and the Nasdaq Composite lifted 0.7%, ahead of the 0.1% improvement by the Dow Jones Industrial Average.
In Asia, the Hong Kong-based Hang Seng index has recovered from yesterday’s heavy fall by adding 1.3%. The Nikkei 225 in Tokyo is slightly higher.
The dollar has steadied to leave the pound trading at $1.352.
