FTSE 100 Live Monday
- Diageo flags tariffs impact
- Ryanair eyes stronger year
- Energy bills set to fall
Market update: FTSE 100 falls on US downgrade, Diageo shares give up gains
09:54 , Graeme EvansCompanies with US exposure led the FTSE 100 index into negative territory today as investors braced for a poor start to the week on Wall Street.
The tone was set by the Moody’s downgrade of the US credit rating, reflecting concerns over rising debt servicing costs and still-high interest rates.
The agency’s move on Friday removed the US government’s last remaining AAA rating after downgrades by S&P in 2011 and Fitch in 2023.
Having just returned to positive territory for the year after a five-day winning run, the S&P 500 index is seen falling by about 1.3% at today’s opening bell.
The FTSE 100 fallers board included 2% declines for Scottish Mortgage Investment Trust and Polar Capital Technology Trust, as well as the US-focused Sunbelt plant hire business Ashtead.
BAE Systems also lost 26p to 1736.5p, hotels group IHG fell 168p to 8906p and global catering company Compass reversed by 43p to 2592p.
The FTSE 100 index fell 42.54 points to 8642.02, a decline in line with other leading European benchmarks.
Diageo shares were initially among the frontrunners after the company’s third quarter update showed organic net sales growth of 5.9%.
The Guinness and Smirnoff owner also provided reassurance over tariffs after estimating that it expects to mitigate about half of the $150 million impact.
The company’s tequila and Canadian whisky brands are exempt from levies while it said tariffs between the US and China do not have a material impact on its business.
Diageo also disclosed a $500 million cost savings programme as part of a wider plan to boost cash flow and margins, helping shares to rise by an initial 2%.
The stock later fell back to stand 1.1p lower at 2150.9p as it also emerged that four percentage points of the sales improvement was due to one-off effects.
The FTSE 100 risers board included easyJet, which lifted 4.8p to 547.6p on the read-across to today’s annual results by low-cost rival Ryanair.
The Dublin-based carrier reported a 16% drop in annual profits but expects an upturn this year amid hopes that it will recover most, but not all of the past year’s 7% average fares decline.
FTSE 100 opens lower, Diageo update lifts shares
08:20 , Graeme EvansThe FTSE 100 index is down 0.4% or 37.43 points to 8647.13, with BP among the biggest fallers after a decline of 2% or 6.4p to 366.4p.
Diageo shares rose 2% or 51p to 2203p after its third quarter update and guidance on the impact of tariffs reassured investors.
It also revealed a $500 million cost savings programme as part of a wider plan to boost cash flow and margins.
Wealth Club manager Charlie Huggins said: “With pressure mounting on chief executive Debra Crew, restoring investor confidence is paramount.
“The increased focus on margins and cash is a step in the right direction and buys her a bit more time in what remains a challenging market backdrop."
Household energy bills set to fall
07:35 , Graeme EvansAnnual energy bills are forecast to fall by £129, or around 7%, when the Ofgem energy price cap is reset in July.
According to Cornwall Insights, the fall in the cap on default tariffs will reduce the typical gas and electricity bill to £1720 a year from July.
It expects bills to come down again in October and January, although these moves could be affected by “changing weather patterns, the relaxation of EU gas storage rules, ongoing debates around US tariffs and the continuing impact of the war in Ukraine.“
Diageo reveals tariffs impact, guidance unchanged
07:28 , Graeme EvansDrinks giant Diageo revealed the “unmitigated impact” of recent tariff developments at about $150 million on an annual basis.
The Guinness and Smirnoff firm said: “We expect that given the actions that we have in place already, before any pricing, we will be able to mitigate around half of this impact on operating profit on an ongoing basis.
“Looking ahead, we will continue to work on measures to mitigate this impact further.
“Our long track record of managing international tariffs gives us confidence in our ability to navigate this successfully.”
The update came as the group reported a 2.9% increase in net sales to $4.4 billion in the third quarter, with unchanged guidance for the year.
The company’s calculations are based on assumptions that the current 10% tariff remains on both UK and European imports into the US and that Mexican and Canadian spirits imports into the US remain exempt.
Tariffs between the US and China do not have a material impact on the business.
Performance in the quarter was supported by favourable phasing, which the company estimates contributed four percentage points of the third quarter organic net sales growth of 5.9% and is expected to reverse in the current period.
The update also disclosed the company intends to make $500 million of annual cost savings as part of a wider drive to achieve a more “agile operating model”.
Ryanair profit drops, forecasts return to growth in 2025/26
07:17 , Graeme EvansRyanair today reported a 16% drop in annual profit to 1.61 billion euros (£1.35 billion) but said it expects a return to growth in the current year.
Total revenues rose 4% to €13.95 billion (£11.7 billion) after a 7% decline in average fares led to traffic growth of 9% to just over 200 million passengers.
It expects traffic in the current financial year to grow by 3% to 206 million passengers, reflecting the impact of delayed deliveries of new Boeing planes.
The company expect to recover most, but not all of last year’s 7% fares decline, which should lead to “reasonable net profit growth” in the 2025/26 year.
US stocks seen lower after US downgrade, FTSE 100 set to fall
07:04 , Graeme EvansFutures trading points to a weaker session on Wall Street later after confidence was hit by the decision of Moody’s to downgrade US debt.
The move, which follows similar moves by two other credit rating agencies, was disclosed after Friday’s closing bell.
The Dow Jones Industrial Average closed up 0.8% and the S&P 500 index rose 0.7% for a fifth day in a row of gains, leaving the benchmark higher year-to-date.
It is expected to open about 1% lower later today, while the FTSE 100 index is forecast to fall by about 0.3%.
The top flight closed on Friday up 46.01 points at 8,679.76, above where it stood before Donald Trump’s tariffs announcement in early April.
