FTSE 100 live: BT jumps on takeover talk, THG sell-off worsens, Entain crashes as DraftKing drops bid

·15 min read
 (ESI)
(ESI)

The FTSE 100 index is trading at an 18-month high but events on Wall Street continue to be the main focus after Tesla's $1 trillion valuation and ahead of results later today from Twitter and Google owner Alphabet.

Elon Musk’s Tesla reached the landmark after an order from Hertz for 100,000 electric cars sent its shares up 13% last night.

In London, the main focus is on updates from Premier Inn owner Whitbread and consumer goods giant Reckitt Benckiser.

Key Points

  • Tesla hits $1 trillion valuation

  • THG bolsters board in effort to repair relations with the City

  • Facebook misses revenue forecasts and warns on weak fourth quarter

  • Bank of England rate setter damps down rate rise speculation

  • Petrofac raises $275 million to pay SFO fine

  • Cazoo posts 267% jump in sales

  • DraftKings abandons bid for Ladbrokes-owner Entain

FTSE ends higher on another grim day for THG

17:18 , Oscar Williams-Grut

The FTSE 100 has ended up 55 points or 0.7% at 7277. The index was boosted by strong corporate results from Reckitt Benckiser and Whitbread. BT topped the index, up 5.9%, as takeover speculation mounts. Sky News reported that the telecoms company has hired Robey Warshaw, the advisory firm of former chancellor George Osborne, to help it fend off any bid from Patrick Drahi. French billionaire Drahi has built a £2 billion stake in BT but has pledged not to make any bid for the company until at least early December.

Elsewhere, it was another dreadful day for THG. The troubled e-commerce company slumped another 21% after another update on performance.

That’s all from us today, join us again on the blog tomorrow.

Tesla’s $1 trillion landmark

07:42 , Graeme Evans

Europe's markets are set to open higher today after Wall Street was lifted by Tesla's $1 trillion valuation and social media giant Facebook's $50 billion shares buyback.

The S&P 500 hit a new record after Tesla's shares rose 12% to over the $1 trillion threshold, buoyed by hire company Hertz placing an order of 100,000 cars by the end of 2022.

Tesla investors were also cheered by an announcement of a new prototype battery that Panasonic believes will help the car maker lower its electric vehicle production costs.

Tesla's third quarter results last week revealed record net income, operating profit and gross profit, one of many big Wall Street companies to reveal better-than-expected figures during the current earnings season.

The trend continued last night when Facebook beat on third quarter profits, but this was offset by a downgrade to revenues guidance in the current quarter as it deals with the impact of privacy software updates recently introduced by Apple. The shares were boosted in after hours trading, however, by the announcement of the $50 billion buyback.

The earnings season in the tech sector continues later today with figures from Google owner Alphabet, as well as Twitter and Microsoft.

Investors are also watching the oil price closely after a rebound for Brent crude to over $86 a barrel yesterday lifted oil stocks BP and Royal Dutch Shell and helped the FTSE 100 index close 0.3% higher. Analysts at Liberum noted this morning that shares in the energy have risen 32% in the past month, compared with 13% for banks as the next best performers.

With Brent today trading at just below $86, the FTSE 100 index is forecast to open 10 points higher at 7233.

Bank policymaker urges labour market caution

08:11 , Graeme Evans

Markets expect the Bank of England to increase the UK base rate to 0.25% next week, although at least one policymaker is wary about acting too quickly.

Monetary policy committee member Silvana Tenreyro said in a speech yesterday that it is important to see how the labour market reacts without the support of the coronavirus job retention scheme, which came to a close at the end of September.

She also told the Centre for Economic Policy Research that supply chain disruption should be temporary and unwind over time. The Bank has forecast a peak for inflation of 5% amid hopes that it will then fall back towards 2% by mid-2022 as comparisons ease.

But with governor Andrew Bailey highlighting the possibility that inflationary pressures may last longer than expected, the Bank's meeting on 4 November is likely to see a rate rise from 0.1%.

Reckitt and Whitbread shares rally

08:29 , Graeme Evans

The FTSE 100 index continues to trade at a post-pandemic high after updates from consumer goods giant Reckitt Benckiser, outsourcing group Bunzl and Premier Inn owner Whitbread sent shares in the trio up by more than 2%.

Reckitt's shares got the biggest support from investors after the owner of brands including Clearasil, Durex and Nurofen upgraded its full-year revenues guidance and said it continued to weather the storm around rising costs. Shares lifted 227p to 5698p.

Whitbread shares improved 73p to 3228p after its interim results showed the company's sales recovery is running ahead of expectations. The leisure business beat analyst estimates with six-month revenues of £661 million, but it is remaining cautious on profits guidance until there is “visibility” over supply chain and labour shortages.

The FTSE 100 index stood 19.77 points higher at 7242.59.

IG Design Group warns supply chain woes will hit profits

08:36 , Joanna Bourke

IG Design Group has issued a profit warning, with supply chain disruption hitting earnings at the stationery, gift packaging and craft products firm.

Paul Fineman, chief executive of the AIM-listed designer and manufacturer, said: “It is more than frustrating to have to report a decline in expected earnings at a time when demand from our customers remains so positive.”

Read more HERE.

Facebook’s mixed message

09:08 , Graeme Evans

Facebook shares have fallen more than 10% since early September, with last night's results highlighting a few reasons why the social media giant has been under pressure recently.

Third quarter net income came in ahead of expectations at $9.19 billion (£6.7 billion), a rise of 17% on a year earlier even though revenues were short of Wall Street hopes at just over $29 billion (£21.1 billion).

The Instagram and Whatsapp owner's guidance for the fourth quarter also disappointed amid headwinds from privacy setting changes to Apple's operating system, which have made it harder for advertisers to track iPhone users.

Facebook, which reported a 6% year-on-year rise in its number of daily active users to 1.9 billion, is also under greater scrutiny following whistleblower allegations over how its deals with inappropriate content.

The company's shares were about 1.5% higher in after-hours trading, buoyed by plans to repurchase another $50 billion (£36.3 billion) of stock.

THG continues to repair relations with the City

10:24 , Oscar Williams-Grut

Under pressure e-commerce group THG today beefed up its board and shared more detailed information about its controversial platform business Ingenuity as it tried to soothe investor nerves about plans to refocus efforts on the division.

THG said in a third quarter trading update that sales at Ingenuity were up 44% to £51 million in the period. Momentum in the division helped drive a 34% growth in underlying revenue to £507.8 million.

The company said Ingenuity now had 163 customers, up from 133 in the second quarter, and was targeting 400 by the end of next year. Recent sign-ups include Molton Brown owner Kao Group.

THG today also appointed a new non-executive director: SoftBank MD Dr. Andreas Hansson. The company said headhunters Russell Reynolds Associates have been hired to hunt for an independent chair.

The bolstered board is part of efforts by THG to repair relations with the City, which have broken down in recent weeks amid concerns about THG’s plans to refocus its business solely on Ingenuity. Shares sunk 35% in a day a fortnight ago.

Read more.

Blue chip momentum continues

10:38 , Graeme Evans

Trillion dollar Tesla and the falling of more Wall Street records put London investors in a buying mood today as the FTSE 100 index climbed to its own post-pandemic high.

Blue-chip risers included Scottish Mortgage Investment Trust after its 4% stake in Tesla reached new heights with the car maker's stock market valuation now above $1 trillion.

The latest buying frenzy around Tesla followed the receipt of its biggest ever order as rental giant Hertz said it would buy 100,000 cars by the end of 2022. Shares in Tesla rose 13% to make Elon Musk's company the sixth to pass the trillion landmark.

Facebook is among the others, although the social media platform is currently below the threshold after falling by more than 10% in a difficult month that has seen whistleblower allegations over how it deals with inappropriate content.

Results last night from the Instagram and Whatsapp owner also highlighted the advertising impact of recent changes to privacy settings on Apple's operating system.

Despite increased uncertainty over the fourth quarter, shares rose in after-hours trading thanks to better-than-expected earnings figures and a $50 billion buyback of stock.

The earnings season overall has been robust enough to keep inflation fears at bay, meaning the S&P 500 and Dow Jones Industrial Average set fresh records last night. The FTSE 100 index put on a fresh spurt to climb above its recent post-pandemic record, before later settling 46.81 points higher at 7269.64.

Results-day share price rises of more than 3% for Reckitt Benckiser and Premier Inn owner Whitbread played a big part in London's improvement, with the latter's performance tempting investors to buy shares in InterContinental Hotels.

Scottish Mortgage's shares were 2% higher, while top flight housebuilders fared well after gains of 66p to 2695p for Persimmon and 19.6p to 665.6p for Barratt Developments.

The FTSE 250 index was 166.44 points higher at 23,107.05, with Cineworld, Trainline and easyJet up 4% amid renewed appetite for consumer-focused stocks.

Mend these broken wings

11:44 , Simon Freeman

Flybe today called in an aviation turnaround specialist to pilot its return to the skies following its collapse as an early casualty of the pandemic.

David Pflieger, who has held executive roles at seven carriers from Fiji Airways to US giant Delta, has been appointed CEO of the regional airline which fell into administration in March 2020.

Flybe was bought for a nominal sum by global private equity firm Cyrus Capital last year in the first ever rescue of a British airline from insolvency.

Petrofac raises cash for Serious Fraud Office fine

11:52 , Oscar Williams-Grut

Oil services company Petrofac has this morning announced a heavily discounted fundraising to help pay for a Series Fraud Office (SFO) bribery fine and pay down debts.

Petrofac said this morning it was launching a fully underwritten $275 million placing and open offer. Shares are on offer at 115p, which is a 27.2% discount to Monday’s closing price.

Funds from the share sale will be used to pay off debts and to pay a $106 million fine levied by the SFO. Petrofac settled an investigation with the SFO in September, pleading guilty to seven counts of failing to prevent bribery by agents it used in between 2012 and 2015 in Iraq, Kingdom of Saudi Arabia and the UAE. Chairman René Medori called it a “deeply regrettable period of Petrofac’s history” at the time and said the company had “fundamentally overhauled our compliance regime, as well as the people, and the culture that supports it.”

Today’s open offer is part of a broader refinancing. Medori said today: “Support from all our shareholders and debt providers in the refinancing plan will provide the company with a stable platform from which to grow and look to the future with confidence. I welcome the continuing support of our largest shareholder and fellow Board member Ayman Asfari, as Petrofac moves on to the next chapter of its history.”

Shares in Petrofac sunk 30.6p or 19% to 127p.

THG’s update falls flat

12:15 , Oscar Williams-Grut

THG has been trying to soothe investor concerns around corporate governance and strategy. The company shared new details about its Ingenuity business, which it hopes to focus on, and beefed up its board this morning.

Clearly it hasn’t hit home with investors. Shares are down 13% this morning to 268p. The stock has slumped 60% so far this year and is well below its 500p float price.

Read more about this morning’s update.

Ikea to open major new store where Topshop Oxford Street once was

12:58 , Joanna Bourke

The boss of Ikea UK has revealed plans to open a new store where the huge Topshop Oxford Street flagship was, after a £378 million deal for the site was inked.

In a move that will see meatballs, lamp shades and other goods available moments from Oxford Circus tube station, a conditional purchase has been agreed by Ingka Investments.

Read the full story HERE.

Entain sinks as DraftKing’s abandons bid

13:54 , Oscar Williams-Grut

Shares in Ladbrokes owner Entain have crashed 7% after DraftKings, the US fantasy sports website, pulled plans to buy the company.

DraftKings CEO Jason Robins said: “After several discussions with Entain leadership, DraftKings has decided that it will not make a firm offer for Entain at this time. Based on our vertically-integrated technology stack, best-in-class product and technology capabilities and leading brand, we are highly confident in our ability to maintain a leadership position and achieve our long-term growth plans in the rapidly growing North America market.”

Entain said in a statement: “The Board strongly believes in the future prospects of Entain, underpinned by its leading market positions, world class management team and industry-leading proprietary technology.”

Shares in Entain surged last month after DraftKings made a preliminary cash and stock bid, reported to be worth $20 billion.

14:53 , Simon Freeman

Cazoo has reported a sales leap (Cazoo)
Cazoo has reported a sales leap (Cazoo)

Shares in Cazoo lifted by more than 8% on the Nasdaq this afternoon as web tycoon Alex Chesterman’s used-car start-up reported a 267% rise in third-quarter revenue to £174 million.

The group, which launched in 2018 and reversed on to the New York exchange through a so-called SPAC takeover valued at £6 billion in August making it the most valuable UK firm ever to launch on Wall Street.

Total vehicle sales hit 13,074 in the three months to September 30, up almost 9,000 on the same quarter in 2020, taking gross profit to £11.8 million.

Gross profit per car sold is up to £801 as it benefits from operational efficiencies.

The company said its proposition continues to grow “strongly” despite a global shortage of cars for sale - blamed on the microchip crunch - which has seen second-hand prices soar.

It bought up SMH, one of the biggest vehicle valeting and storage businesses for £70 million last month, to take reconditioning in-house.

Chesterman said “It is very clear that our proposition is resonating strongly with consumers and that the shift to online car buying is accelerating.

“The biggest constraint to growth remains our ability to recondition cars fast enough to meet demand.

Bringing that process in-house has led to a recent dip in vehicles available for sale during the transition and we firmly believe that greater stock levels would have resulted in even higher retail sales over Q3.

"We currently have lower levels of vehicles available for sale than we consider optimal and we continue to make solid progress on ramping up our reconditioning output following our acquisition of SMH.”

It forecasts full-year 2021 revenues of over £650 million. Shares rose 8.75% to $8.67.

COP26: A reality check on green finance

15:28 , Simon English

With the clock ticking down to COP26, it’s been hard in the past months to avoid the noise around ESG and sustainable finance. On one side, the banking and finance industry has been busy arguing that it is on the side of the angels when it comes to climate change and that ESG investment and green finance will save the planet. And on the other, NGOs and other sceptics (like Al Gore) have been busy arguing that a lot of this is ‘greenwash.

Read more here

THG sell-off worsens

15:51 , Oscar Williams-Grut

There’s no let up for embattled e-commerce group THG: the company’s stock is down 20% now as investors react to this morning’s update.

THG announced the appointment of a new non-executive director and shared details about its e-commerce platform Ingenuity. Investors have had concerns about plans to focus all the company’s energy on Ingenuity, which added to simmering tension around corporate governance at the company.

Read more about THG’s disastrous day here.

THG sell-off worsens

15:51 , Oscar Williams-Grut

There’s no let up for embattled e-commerce group THG: the company’s stock is down 20% now as investors react to this morning’s update.

THG announced the appointment of a new non-executive director and shared details about its e-commerce platform Ingenuity. Investors have had concerns about plans to focus all the company’s energy on Ingenuity, which added to simmering tension around corporate governance at the company.

Read more about THG’s disastrous day here.

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