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FTSE 100 Live: Index closes flat, Rolls-Royce up 5% on new long-term goals

FTSE 100 live (Evening Standard)
FTSE 100 live (Evening Standard)

Rolls-Royce shares have continued their strong run after chief executive Tufan Erginbilgic set out his mid-term profit ambitions for the engines giant.

The latest strong performance by Rolls came during another lacklustre session for the FTSE 100 index.

In the FTSE 250 index, shares in Pets at Home and easyJet are in focus after their results-day updates.

FTSE 100 Live Tuesday

  • EasyJet upbeat despite quarterly loss

  • Profit targets boost Rolls-Royce shares

  • Loungers planning 1000 new roles

FTSE recovers from early 60-point fall to close flat

16:36 , Daniel O'Boyle

The FTSE 100 closed roughly flat today at 7,455.24, after recovering from an early 60-point fall.

The index hit a low of 7403 within the first hour of trading, but picked up some momentum as the day went on.

Rolls-Royce was the top riser of the day, continuing its exceptional run this year. Pearson was the top faller.

Bank of England interest rate-setter: 'Nobody could have forseen' double-digit inflation spike in 2021

16:29 , Daniel O'Boyle

Bank of England Monetary Policy Committee member Jonathan Haskel says it was “appropriate” for the Bank “not to react” in 2021, even as inflation climbed to 5% and interest rates remained at historic lows.

Speaking at Warwick University, Haskel - one of the nine economists tasked with setting interest rates in the UK - looked at why inflation spiked to 11% last year, and whether it will continue to come back down.

Haskel said he wanted to address “one oft-stated backward-looking narrative holds that the Bank of England was wrong to treat rising inflation during the recovery from the pandemic over 2021 as transitory”.

Read more here

Barclays axing 900 staff

15:51 , Daniel O'Boyle

Banking giant Barclays is cutting 900 jobs in its UK business as it looks to slash costs in a “disgraceful” pre-Christmas move, trade union Unite has said.

Unite said the jobs would go across a number of back-office divisions, including compliance, finance, legal, policy, IT and risk.

Affected staff were told at lunchtime on Tuesday, according to the union.

A spokesman for Barclays said: “We are taking a number of actions to simplify and reshape the business, improve service, and deliver higher returns.

“This includes changes to our headcount as management layers are reduced and the group improves its technology and automation capabilities.

“We are committed to supporting impacted colleagues through these changes.”

Read more here

Lush co-founder Mark Constantine sees plenty to be optimistic when it comes to London stores

14:53 , Daniel O'Boyle

When Lush opened the doors to its new Covent Garden store earlier this month, there were plenty of shoppers that braved the rain to smell the sweet scent the chain is known for and snap up bath bombs, shampoo bars and face masks. A free gift for the first 100 paying customers was obviously also a good enticement. But one face not present was Mark Constantine, who co-founded the beauty retailer in 1995. He says light heartedly: "I'm not allowed to go to launch days because I always look too serious."

Speaking ahead of Lush's 16th London site welcoming consumers for the first time, he adds: "I always worry, you know, that all the things I have planned and did are not quite right.... no customer wants to come in with me looking like that."

The branch marks a Lush return 10 years on to Covent Garden- its former shop in the area operated between 1998-2013. When 71-year-old Constantine does head to Long Acre he will hopefully be relaxed and pleased at what has been unveiled.

Read more here

US stocks set to dip

14:00 , Daniel O'Boyle

Stocks on Wall Street are set to follow Europe down,, though more modestly, when markets open in the US.

Dow Jones futures are down 31 points to 35,342, while S&P 500 futures are down 0.2% to 4,551.75. Nasdaq futures are also down 0.2%, to 15,976.50.

Londoners have more work-from-home flexibility than Parisians

13:51 , Daniel O'Boyle

Londoners have more freedom to work from home than employees in Paris, according to a survey by Bloomberg Intelligence, suggesting that UK workers have more bargaining power in its tight job market.

The survey, conducted Nov. 15, found that 20% of workers in Paris are not allowed to work from home, while in London the number is 4%. The results from 500 office workers in the UK and 250 in France showed that Londoners have more flexibility overall to work from home, with most having hybrid setups.

Flexible working setups became a way of attracting talent during and after the pandemic when it was hard to recruit. The UK jobs market has shown signs of cooling, with vacancies

falling and unemployment rising, but remains tighter than in France. The unemployment rate in July in the UK was 4.3% against France’s 7.4%.

Read more here

Revolut mulls auditor switch as banking licence decision looms

13:06 , Daniel O'Boyle

London fintech giant Revolut has been considering switching auditors after its last annual accounts were only signed off with a health warning, the Standard understands.

BDO’s audit report in March included a note in which it flagged concerns about the “completeness and occurrence” of £477 million of the debit card provider’s revenues. The accounting firm warned that revenues “may be materially misstated”, citing IT controls issues.

Executives at Revolut were furious at the audit qualification and media coverage of BDO’s remarks, going as far as to instruct lawyers Schillings in a bid to change the Financial Times’ reporting of it, according to the newspaper.

Sources have told the Standard that execs have since begun to explore options for dropping BDO in favour of a new auditor, although the company is understood to be sticking with BDO at least until the end of its 2023 financial year.

Read the full story here

City Voices: Sustainable fuel flight is big step, but now it's Government's turn

12:18 , Daniel O'Boyle

Matthew Fell of BusinessLDN writes that the Watershed transatlantic flight powered by sustainable aviation fuel should be a cause for celebration and a catalyst for more to come

As we approach the 120th anniversary of the Wright Brothers pioneering efforts, the first transatlantic flight powered by sustainable aviation fuels takes off from London Heathrow later this week bound for JFK in New York.

It’s another big moment. Not just for the aviation sector, but for jobs, the environment, growth and competitiveness across London and wider UK economy.

As an island nation we depend and thrive on our links with the rest of the world. Connectivity makes our capital tick. Unparalleled international links bring together the people, capital and ideas that make up the world’s most dynamic business centre. Similarly, global tourists contribute so much to our retail, hospitality and leisure sectors.  And contrary to predictions, post-pandemic demand for international travel has proven to be remarkably robust: Heathrow alone welcomed almost 7 million passengers last month – higher than the equivalent period pre-pandemic – while Gatwick, Stansted and others are also seeing strong passenger numbers.

Read more here

City Comment: Economics trumps politics, so could we return to the EU Single Market?

12:05 , Daniel O'Boyle

Jonathan Prynn asks whether reality will continue to chip away at the rougher edges of Brexit

It is approaching three years since the UK and the EU finally sealed the deal that would, supposedly, protect free trade across the Channel.

The so called Trade and Cooperation Agreement hammered out by Boris Johnson and Ursula von der Leyen on Christmas Eve 2020 was a lot better than the “hard Brexit” alternative, but self evidently desperately poor compared with what had gone before. A survey today from Bibby Financial Services reveals that 58% of SMEs — the bedrock of the British economy — that trade internationally are struggling with tariffs, customs and other barriers. It is the single most frequently cited challenge, ahead of the cost of doing business oversas and currency fluctuations.

The survey does not break down which countries the respondents export to, but given the EU still accounts for almost half the total, it is fair to assume a good chunk is heading to our nearest neighbours.

Read more here

Market snapshot: Rolls-Royce leads risers, FTSE 100 slips further

11:18 , Daniel O'Boyle

Take a look at today's market snapshot, with Rolls-Royce leading the risers

Lord Mayor: Police must raise their game to fight fraud

10:42 , Daniel O'Boyle

The new Lord Mayor of London today urged the police and councils to step up their efforts to tackle fraud and other financial crimes.

Speaking at the Financial Crime 360 Conference in central London, Professor Michael Mainelli said that behind “dry statistics are ruined lives, mental anguish, and the erosion of the trust that allows society to function.”

Fraud accounted for an estimated 40% of all crime in England and Wales in 2022, while economic crime is “increasingly recognised as a national security threat”, in particular “when technological developments, such as advances in AI, present more opportunities for deception and disruption”.

Fondness for treats keeps Pets at Home perky

10:33 , Simon English

Britain’s pets can expect a joyful Christmas of winter coats, food treats and other goodies according to Pets At Home CEO Lyssa McGowan.

Fears that the pandemic-led pet boom might be over seem overdone on the basis of today’s numbers from the company, which is expanding.

Half-year revenues grew from 6.5% to £774 million. Profits fell 35% to £35 million, though that was attributed a new distribution office and the writedown of an investment in Tailster.

Pets at Home shares were steady today at 286p. Jocelyn Paulley, Co-Head of the Retail Sector (UK) at Gowling WLG, said that “VIP members for the pet specialist have been steadily growing and meant more customers are purchasing a product and a service from the company”.

But she added that the rest of the year will be a test “managing increased costs due to rising inflation and recent issues at its distribution centre.

“The company needs to address these challenges if it is to ensure it remains the pick of the litter for investors.”

Rolls-Royce shares jump, Diageo and Burberry struggle

10:26 , Graeme Evans

Rolls-Royce shares are up another 16.5p to 259.7p after chief executive Tufan Erginbilgic revealed ambitious targets for the engines giant.

His medium-term goals include operating profits of between £2.5 billion and £2.8 billion, fuelled by the rebuilding of civil aerospace margins from 2.5% to the mid-teens.

Erginbilgic, who joined the company at the start of this year, told an eagerly-awaited presentation to analysts and investors that Rolls was at a “pivotal point in its history”.

He added: “We are creating a high performing, competitive, resilient and growing Rolls-Royce that will have the financial strength to control and shape its own destiny.”

The 2027 targets for free cash flow and margins came in well above City expectations, offsetting any disappointment that guidance for 2023 results had been left unchanged.

The FTSE 100-listed stock is up by more than 160% this year, having jumped in July after Erginbilgic revealed faster-than-expected progress in the company’s turnaround.

The strong performance by Rolls was one of the few highlights in another dour session for London’s top flight, which shed 31.77 points to 7428.93.

Big fallers included luxury goods group Burberry, which hit a fresh low for the year with a decline of 35p to 1469p. It was a similar story for drinks giant Diageo, which reversed another 49.7p to stand at its lowest level in three years at 2758.8p.

Lloyds Banking Group shares were the pick of the financial sector after analysts at Morgan Stanley increased their price target to 64p. Shares rose 0.3p to 42.3p.

B&M European Value Retail also improved a penny to 551.8p after Citigroup recommended buying the discounter’s shares.

The FTSE 250 index fell by 0.6% or 105.40 points to 18,333.15, with Royal Mail business International Distributions Services among the fallers following a decline of 5.3p to 245.1p.

Topps Tiles shares eased half a penny to 45.5p, despite reporting a third consecutive record year of sales and achieving a 20% market share goal two years ahead of schedule.

Cost inflation pressures contributed to adjusted profits falling by 19.9% to £12.5 million, with sales down 3% in the first eight weeks of the new financial year.

Topps Tiles cautions over sliding sales as annual profits slump

09:59

Retailer Topps Tiles has seen annual profits tumble by more than a third and warned over weaker recent trading amid a housing market slowdown and consumer spending woes.

The tile chain reported a 38% plunge in pre-tax profits to £6.8 million for the year to September 30 as soaring costs offset a 6.3% rise in group revenues.

Its main Topps Tiles brand saw comparable store sales lift 3.1% over the year.

The group cautioned over a “weakening of discretionary consumer spending” that is impacting trading so far in its new financial year, with like-for-like Topps Tiles sales down 6.1% in the first eight weeks.

Read more here

Loungers to fill 1,000 more roles as strong sales growth fuels expansion

09:18 , Simon Hunt

Loungers is seeking to fill 1,000 new roles as the bar and cafe group posts another solid set of results.

The firm said it was on track to open 34 new sites in 2023 with plans for more in the new year.

Revenue jumped by almost a quarter in the six months to October, while pre-tax profits rose by around 40% to £3.9 million.

CEO Nick Collins told the Standard: "Every time we open a new site that's a £1 million investment and 30 new jobs in a local community.

"Our bread and butter has been converting former retail premises but we're often doing banks and new developments."

 (Loungers)
(Loungers)

Panama Canal drought threatens to disrupt Christmas

08:58 , Daniel O'Boyle

A drought 5,000 miles from home threatens to disrupt Christmas for millions of Brits, as shipping experts warned a decision to slash the number of boats allowed through the Panama Canal could lead to delays or shortages of popular tech products.

Panama’s worst drought in 70 years has led to low water levels in the channel that connects the Atlantic and Pacific Oceans, making it more difficult for large container ships to pass through.

As a result, the Panama Canal Authority, an agent of the Central American country’s government, has is set to cut the number of daily sailings permitted by almost 40% to just 22 from Friday.

That’s likely to make goods sent from the US west coast to the UK, especially tech products such as Apple’s latest iPhone, more expensive or harder to obtain.

David Jinks, head of consumer research at ParcelHero, said: “‘How might the Panama crisis affect Christmas here in the UK? 40% of container traffic to the US uses the canal.

“The result could be shortages of goods and increased prices as retailers fight over available stocks.”

Market snapshot with FTSE 100 lower

08:31 , Daniel O'Boyle

Take a look at today's early morning snapshot

New targets boost Rolls-Royce shares, easyJet higher

08:15 , Graeme Evans

Rolls-Royce shares are 4% higher after the company’s boss Tufan Erginbilgic revealed a medium-term target to deliver operating profits between £2.5 billion and £2.8 billion.

Ahead of the company’s capital markets day, he said: “We expect a progressive, but not necessarily linear, improvement year-on-year, and if we can accelerate the achievement of our ambitions we will.”

The shares opened 10.6p higher at 253.8p, having risen by more than 150% so far this year as Erginbilgic’s turnaround plans continue to gather momentum.

The FTSE 100 index fell 30.21 points to 7430.49, with the FTSE 250 index down 34.05 points to 18,404.50.

Pets at Home rose 1.6p to 288.8p and easyJet lifted 10.75p to 415.75p after the mid-cap pair reported results.

Israel-Gaza conflict hits easyJet despite record second-half profits

07:34 , Daniel O'Boyle

EasyJet warned that it was set to make a loss of about £133 million this quarter as the conflict in the Middle East dampens the post-pandemic travel boom.

The low-cost airline made a record second-half profit of £455 million in the six months to 30 September, thanks to an emphatic rebound of holiday travel over the summer.

Johan Lundgren, easyJet's Chief Executive Officer, said: "Our record summer performance demonstrates the success of our strategy and that demand for easyJet remains strong as customers choose us for our network and value.”

But this quarter, the conflict in Israel and Gaza hit the business. EasyJet suspended its flights to Israel and Jordan, which make up 4% of its capacity and 10% of its available seat kilometres.

That meant it now no longer expects to improve upon its £133 million loss for the first quarter of 2023-24. The winter period is typically weaker for the budget carrier, but last year’s figure was also affected by the covid hangover.

However, the business added that “the present booking strength for summer 2024, coupled with supply constraints in Europe, provide a positive outlook for the year as a whole.”

easyJet holidays 'to be biggest in UK' (easyJet)
easyJet holidays 'to be biggest in UK' (easyJet)

Dollar remains under pressure, oil above $80 a barrel

07:20 , Graeme Evans

The dollar remains under pressure after weak US economic data reinforced expectations that the Federal Reserve is done raising interest rates.

The dollar index is at its lowest level in three months, while the pound is now above $1.26 after Bank of England policymakers reiterated the need for UK rates to stay high.

A weaker dollar has contributed to the recent rally in the price of gold, which today stood at a six month high of $2016 an ounce.

US markets were slightly lower last night, in line with the FTSE 100 index after London’s top flight retreated 27.50 points to 7460.70.

CMC Markets expects another subdued session today, particularly with further speeches by Federal Reserve policymakers set to keep the focus on the interest rate outlook.

The price of Brent Crude stood at just above $80 a barrel this morning, with the focus on the potential for further production cuts at Thursday’s meeting of the OPEC+ alliance.

Recap: Yesterday's top stories

Monday 27 November 2023 19:40 , Simon Hunt

Good morning. Here's a summary of our top headlines from yesterday: