BUSINESS LIVE: BoE expected to keep rates on hold; Thames Water names new boss; Currys sales slump

Gurpreet Gill, macro strategist for global fixed income at Goldman Sachs Asset Management:

‘Momentum in UK economic activity has stalled, with weakness across most sectors including consumer-oriented services—a pivotal driver of growth.

‘We have also seen a noteworthy deceleration in wage pressures.

‘The confluence of sluggish growth momentum and abating underlying inflation pressures mean we expect the Bank of England to initiate rate cuts from May 2024.

‘We expect further easing throughout the year, culminating in a Bank Rate of 3.75% by the end of 2024.’

It might be less than two weeks to Christmas, traditionally a time to splash the cash, but luxury stocks are still out of fashion.

That’s according to bankers at JP Morgan, who have warned investors to stay clear of the likes of Burberry, LVMH and Kering.

Libertarian Argentinian president Javier Milei has begun his ‘shock therapy’ for the South American country’s economy by devaluing its currency and announcing aggressive public spending cuts.

The government led by Milei, who was sworn in on Sunday after his surprise election victory last month, has launched its plan to tackle the worst economic crisis in decades.

The boss of Aviva has said sexism in the financial services sector is worse than in wider society.

Amanda Blanc, who became the insurer’s first female chief executive in 2020 and sits on BP’s board, told MPs that while she had some ‘very positive experiences’ in the industry, she said that ‘many women do not’.

Susannah Streeter, head of money and markets, Hargreaves Lansdown:

‘There is enthusiasm in the air that the punishing rate hikes of the last two years will start being reversed, sooner rather than later.

The Fed’s acknowledgement that cuts will come in 2024 has fuelled positivity.

‘The FTSE 100 has surged on the open, with housebuilders making strong gains amid hopes that relief is on the way for the housing market. Energy giants are also making strides as oil prices recover.

‘As the 24 hours of crucial central bank decisions ticks down, policymakers are expected to keep showing more dovish tendencies but are still set to stay behind the market curve when it comes to expectations of looser monetary policy.’

London-listed stocks have started the day strongly after the US Federal Reserve on Wednesday signalled an end to rate hikes and the outlook for cuts next year.

Miners of both industrial and precious metals have rallied 4.1 and 6 oer cent, respectively, as most metal prices jump.

The Fed left interest rates unchanged on Wednesday. Fed Chair Jerome Powell said the historic tightening of monetary policy is likely over as inflation falls faster than expected, with a discussion of cuts in borrowing costs coming ‘into view’.

Rate-sensitive real estate, real estate investment trusts and homebuilders jumped between 5.7 and 3.7 per cent.

Focus would now shift to the Bank of England and the European Central Bank, with both scheduled to announce their respective verdicts on monetary policy later in the day.

Both central banks are widely expected to hold their rates steady.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown:

‘There’s no getting around it, Currys finds itself in a sticky spot. Consumers are simply struggling to justify as much discretionary spending on TVs and gadgets amidst a cost-of-living crisis, despite Christmas being just around the corner.

‘That’s led to a small decline on the top line, with like-for-like sales falling 4% in the first half. And in the Nordics region, the group’s second-largest segment, the market remains extremely tough. Almost all categories saw sales declines and inflationary cost pressures remain a force to be reckoned with.

‘While there’s no magic wand to fix all the headwinds, finding a new home for its Greek electronics retailer, Kotsovolos, should ease some of the pressure in the short term. The £156mn of net cash Currys expects from this sale will provide a welcome boost to the group’s balance sheet, as well as allow management to sharpen its focus on the remaining regions.

‘Currys’ services channels remain a beacon of light in these dark times. Its services typically have higher margins than goods sales, so can help to relieve some of the pressure of the group’s falling revenues. The focus now swings to the all-important Christmas trading period. Santa delivered some strong growth for the domestic business in the last peak sales period, but it’s a tough ask to expect the same again this year.’

Paula Bui knew the difficulties that come with launching a small business, having already run a restaurant with her husband during the pandemic.

So when she launched her artisan chocolate business in 2021 she thought she knew how to navigate the peaks and troughs of being an entrepreneur.

BP last night concluded former chief executive Bernard Looney was guilty of ‘serious misconduct’ after a scandal over past relationships with colleagues.

The oil giant’s board led by industry veteran Helge Lund decided to strip Looney of £32million in pay and bonuses.

Looney quit in September after the scandal first erupted.

Currys sales slumped 7 per cent year-on-year in the first half as the electricals retailer suffered subdued market for discretionary spending and particular weakness in its Nordics business.

The group posted an adjusted pre-tax loss of £16million for the six months to 28 October, versus a loss of £17million in the same period last year, on revenues of £4.2billion.

Currys said trading since the period end had been consistent with the board’s expectations, with analysts pointing to a full-year adjusted pretax profit of £103million, down from £119million last year.

The seller of ovens, fridges, washing machines, TVs, computers and mobile phones had already warned that the outlook for its 2023/24 year would be tough as consumers grapple with less disposable income.

Embattled utilities group Thames Water has named Chris Weston as its new chief executive, with the former boss of Aggreko taking up the role on 8 January.

Sir Adrian Montague, chairman, said: ‘I am delighted that Chris will be joining the business. He has a proven track record working in regulated environments, turning round business performance and improving customer experience.

‘He brings strong operational and strategic expertise as we enter this crucial period of delivering our refocused turnaround plan and providing the service that customers rightly expect of us.

‘I would also like to express my gratitude to Cathryn Ross and Alastair Cochran for their hard work and the progress they have made over the last few months whilst leading Thames Water as Interim Co-CEOs.’

Zara owner Inditex posted a slowdown in sales growth just weeks before Christmas in another gloomy episode for retail.

It comes as recent sales data has sounded alarm bells that the UK High Street is struggling to entice consumers to part with cash.

The world’s largest fashion retailer said its sales in stores and online grew 11 per cent over the nine months to October 31, hitting £22billion.

The Bank of England’s Monetary Policy Committee is expected to keep base rate on hold at 5.25 per cent in an announcement at midday today.

It follows evidence of easing inflation, with wage growth moderating, and slowing economic growth after fresh data on Wednesday showed GDP contracted 0.3 per cent last month.