BUSINESS LIVE: Bank of England expected to hike base rate

London Stock Exchange Group has posted total income growth of 11.9 per cent year on year to £4.2billion for the first half, with the exchange telling investors revenues are set to come in at the top end of expectations.

‘Data & Analytics is growing faster than it has for many years, with the ongoing improvements to our offering and strengthened customer relationships increasingly reflected in financial performance,’ Chief executive David Schwimmer said.

‘We are progressing well with the implementation phase of our transformational strategic partnership with Microsoft, with customers beginning to see the benefits from next year.’

Aarin Chiekrie, equity analyst at Hargreaves Lansdown:

‘Next has got into a habit of beating market expectations on the upside lately, and today’s second-quarter trading statement continued the hot streak.

‘Full-year pre-tax profit guidance got another bump up today, now expected to come in £10m higher at £845m. Online sales were the main driver of this upgrade, with sales in this channel growing at double-digit rates.

‘End-of-season sales were ahead of group expectations in the period, adding to the positive tailwinds that Next seems to be catching lately. The group still has a strong high street presence too, with sales here also heading in the right direction. Next’s certainly weathering the storm of economic uncertainty admirably, and looks well-placed to prosper further when the cycle turns.’

Global markets suffered a mass sell-off after the US government’s credit rating was downgraded following a debt ceiling crisis earlier this year.

Credit rating agency Fitch, one of the industry’s ‘Big Three’ alongside Moody’s and Standard & Poor’s, lowered its rating on the US to AA+ from AAA, saying the tussle over the country’s borrowing limit in May could threaten its ability to pay its bills.

The firm also predicted the country’s fiscal situation would deteriorate over the next three years as increased polarisation between the Democrat and Republican parties was likely to lead to further stand-offs in the future.

Rolls-Royce has told investors it expects to pay out £100million this year ‘in respect of the outcome of a legal judgment’.

On other costs ahead, Rolls said: ‘We continue to anticipate a year-on-year headwind of c.£200m associated with legacy Boeing original equipment concessions, an increased £150million adverse impact due to fires at two suppliers’ premises, and a new expected outflow of c.£100million in respect of the outcome of a legal judgment.’

Next has raised its guidance for annual profit by £10million to £845million, after full price sales and the end-of-season summer sale came in ahead of forecasts.

It comes just six weeks after the retailer’s last upgrade and shows shoppers continue to defy tough economic conditions.

Next’s forecast for profits of £845million means they will come in 2.9 per cent lower than it made last year.

Isabel Albarran, investment officer at Close Brothers Asset Management:

‘Given the recent drop in inflation data, we expect to see a 25bps rate hike by the Bank of England today. We believe last month’s surprise double hike was likely an anomaly, an emergency response to the disorderly moves in market pricing of rates and inflation, which have to some degree normalised.

‘However, at a time when the Fed have stepped back from hiking at every meeting and the ECB’s language suggests the Council is considering adopting a similar approach, the Bank of England is a hawkish outlier. When will a break be on the horizon for the UK?

‘The BoE is clearly still concerned about changes to the UK mortgage market, and how this will affect the transmission of monetary policy, and the labour market remains tight. However, super-strong wage growth appears to be lagging falling inflation and broader employment indicators show signs of easing. We will be closely watching the announcement today for any signals that the end of the hiking cycle is near.

‘For assets, confirmation that the Bank is close to the end of hiking will be a boon. We have already seen this dynamic play out in the US, where equity sector behaviour suggests investors are already looking past the peak to expected rate cuts.’

The Bank of England’s Monetary Policy Committee is expected to hike interest rates later today.

Market pricing is currently leaning towards a 25 basis point hike to 5.25 per cent, but some forecasters predict the MPC will instead opt for a bigger 50bps hike to 5.5 per cent.