HSBC boss Noel Quinn believes “the lows of recent quarters are behind us” after the banking giant today revealed a 75% jump in third quarter profits to $5.4 billion (£3.9 billion).
London-listed HSBC, which also announced plans to buy back $2 billion of shares, is one of a number of blue-chip companies reporting quarterly results this week.
The main event, however, is likely to be Wednesday's Budget and three-year Spending Review, when Chancellor Rishi Sunak will reveal a new set of fiscal rules alongside spending plans and an updated assessment on the outlook for the battered public finances.
FTSE 100 Live Monday
Brent crude above $86 a barrel
Commodity giants lift FTSE 100 index
Bank deals in the offing as TSB turns down the Co-op
12:17 , Simon English
CO-OP Bank today confirmed weekend reports that it put in a bid for rival TSB, opening up the prospect of other deals in the sector.
While that offer, to TSB’s Spanish owner Sabadell was rejected, others now seem possible.
Entrepreneurs: Meet the founders of London start-up Stitch & Story
11:21 , Joanna Bourke
The founders of London-headquartered start-up Stitch & Story discuss high demand for knitting kits, expansion and supply chain snags.
You can read more HERE.
ITV goes green
11:14 , Oscar Williams-Grut
ITV is axing petrol and diesel cars from its on-screen giveaways as part of plans to go green. ITV today said it would only offer hybrid or electric vehicles as competition prizes from next spring, with only electric vehicles offered in giveaways from 2023 if supply permits.
ITV said it is “reviewing all opportunities” to switch to hybrid and electric vehicles across the company’s own fleet of vehicles. The plans are part of the broadcaster’s climate action plan, which was first announced last year. ITV is aiming to reduce its emissions by almost half within the next 9 years to put it in line with the UN’s goals on limiting climate change.
ITV today said it would link executive bonuses to climate targets and write climate and emissions targets into future debt deals. New programmes will be audited for their carbon footprint and shows will feature coverage of environmental issues. ITV is also pressing its suppliers to come up with their own climate plans, threatening to stop working with them if they fail to develop plausible plans to reach net zero.
Petrol price hits record
10:37 , Graeme Evans
The recent surge in oil prices is being reflected on the forecourt, with motorists paying record levels for fuel over the weekend.
The AA said the average UK price of petrol hit 142.94p a litre on Sunday, beating the record set in April 2012 by 0.46p.
Diesel prices reached 146.5p a litre on Sunday, just short of the all-time high of 147.93p.
AA fuel price spokesman Luke Bosdet said: “Whether it’s down to oil producers, market speculators, Treasury taxes or struggling retailers trying to balance their margins, record pump prices must be saying to drivers with the means that it is time to make the switch to electric.
“As for poorer motorists, many of them now facing daily charges to drive in cities, there is no escape. It’s a return to cutting back on other consumer spending, perhaps even heating or food, to keep the car that gets them to work on the road.”
Just Eat activist calls for GrubHub sale
10:31 , Graeme Evans
An activist shareholder today stepped up pressure on Just Eat Takeaway by urging the food delivery giant to take “immediate action” over its ownership of US venture GrubHub.
Cat Rock Capital, which holds 6.5% of Just Eat shares, wrote to the board saying that the industrial and financial logic for a sale or spin-off of GrubHub could not be clearer.
It said Just Eat's share price rose 329% from its 2016 IPO to the day before the GrubHub acquisition in June 2020, but has underperformed the MSCI World Index by 69% since then.
Cat Rock's founder and managing partner Alex Captain said GrubHub's future lay with the likes of Amazon, Walmart or Instacart as they look to match the converged food and online grocery offerings of DoorDash and UberEats.
He added: “A deeply depressed stock price poses a real risk to Just Eat's business, limiting its financial and strategic flexibility, inviting competitors to invest in its markets, and leaving the company vulnerable to takeover bids well below its long-term intrinsic value.”
Just Eat shares rose 31p to 5722p today but Captain believes a sale or spin-off could drive a 100% appreciation as the stock is returned to its rating before the GrubHub deal.
Elsewhere in London, mining and oil stocks rallied by as much as 2% today to help the FTSE 100 index to improve by 37.05 points to 7241.67, a gain of 0.5%.
Tesco shares were 2.75p higher at 273.5p despite an attempted hack on its website and app that left customers unable to place orders with Britain’s largest grocer. Its online operations are now fully restored.
In the FTSE 250 index, AI cybersecurity firm Darktrace slumped 12% after analysts at Peel Hunt recommended selling shares following their strong run since listing in April.
They wrote: “While we believe strong growth rates will continue, we also see a disconnect between the valuation and the ultimate revenue opportunity.”
Shares made their debut at 250p and went as high as 985p last month, but Peel Hunt now has a target price of 473p. The stock slumped 117p to 828.5p but the FTSE 250 index rose 14.09 points to 22,945.63.
Catering giant Compass beefs up board
09:19 , Joanna Bourke
Compass, the FTSE 100 catering firm which provides meals in schools, offices and football stadiums, has named two new non-executive directors.
The firm said Arlene Isaacs-Lowe and Sundar Raman will join respectively from November 1 and January. They will also join the audit, corporate responsibility, nomination and remuneration committees.
Isaacs-Lowe is currently special advisor at Moody’s Corporation and was formerly the global head of corporate social responsibility there.
Raman is global CEO of fabric and home care, Procter & Gamble’s largest business, where Compass said he is responsible for “delivering growth through innovation, a synchronised supply chain, brand building and sales”.
Ian Meakins, chairman of Compass, said: “We look forward to benefitting from their backgrounds and experience in board deliberations over the coming years."
Oil giants surge
08:45 , Graeme Evans
The latest surge in oil prices pushed BP and Royal Dutch Shell towards the top of the FTSE 100 index risers board during a strong start to the week for the London market.
BP rose almost 2% and Shell was 1.2% stronger, while mining giants BHP and Glencore also added more than 1% to help the FTSE 100 index improve 21.16 points to 7225.71.
HSBC shares were 2.3p higher at 437.1p after its quarterly results and buyback announcement.
The FTSE 250 index improved 35.39 points to 22,967.05, despite a 6% fall for Darktrace after a sell note by Peel Hunt interrupted a strong run for shares in the AI-focused cyber security company.
Urban Logistics collects nearly all rent due
08:39 , Joanna Bourke
Urban Logistics has demonstrated how the warehouse property sector has performed well during the pandemic, by reporting that it collected more than 99% of rent due in the first half.
While many retail landlords and some office owners have seen lower rental income during the Covid-19 crisis as lockdowns bit, firms that own warehouses have seen high demand for space. Many online retailers have needed extra transport and storage facilities to cope with strong order levels.
Urban Logistics said in the six months to September 30 it had 99.4% occupancy across 91 properties.
Read more HERE.
Co-op Bank cools TSB speculation
08:30 , Graeme Evans
The Co-op Bank has issued a statement saying that “no talks” are taking place over its reported £1 billion buy-up of TSB from Spanish owner Sabadell.
Co-op's approach, first revealed by Sky News at the weekend, took place last month and would have created a high street lender with more than eight million customers.
The bank confirmed today that a letter was sent but added that no discussions in relation to a potential transaction are currently taking place with Sabadell.
Sunak to announce new fiscal rules
08:11 , Graeme Evans
Chancellor Rishi Sunak goes into Wednesday's Budget boosted by public finances that are nowhere near as bad as the forecasts made by the Office for Budget Responsibility in March.
But Paul Dales of Capital Economics says all the signs are that the Chancellor will want to reduce borrowing as much as possible and as fast as possible.
“To ensure that happens, he may set himself some fairly stringent fiscal rules that will prevent any major net giveaways being announced on Wednesday,” Dales said.
Deutsche Bank thinks one of the Chancellor's rules will be a current budget balance by the end of parliament, meaning borrowing only to support public sector investment. “And on debt, we think the Chancellor sticks to bringing debt-to-GDP on a downward trajectory.”
Brent crude up to $86
07:56 , Graeme Evans
Oil prices have resumed their upward momentum to leave Brent crude trading at a fresh three-year high of $86 a barrel today.
Economies rebuilding after the pandemic and busier airline flight schedules have put more pressure on supplies at a time when inventories are at their lowest level since 2015. High natural gas prices in Asia and Europe have also driven momentum in the crude oil price.
UBS's wealth management analysts last week raised their estimate for the December to March period to $90 and to $85 over the remainder of 2022.
They said recent comments from Saudi, Russian, and UAE officials suggest that the Opec group has no plans to increase production at a faster pace when it meets next month.
HSBC plots $2bn share buyback deal
07:34 , Simon English
Profit in the last quarter at HSBC near doubled to $4.2bn as Covid losses come in much lower than expected.
That’s in line with City expectations and rivals that have lately seen returns boom.
In the UK, profits rose from $1bn to $1.5bn.
CEO Noel Quinn said: “While we retain a cautious outlook on the external risk environment, we believe that the lows of recent quarters are behind us. This confidence, together with our strong capital position, enables us to announce a share buyback of up to $2bn, which we expect to commence shortly."
HSBC unveils $2 billion buyback
07:32 , Graeme Evans
HSBC has kicked off a busy week for UK corporate results with a big jump in third quarter earnings to $5.4 billion (£3.9 billion), aided by the release of loan loss provisions taken at the height of the pandemic. Revenues rose 1% to $12 billion (£8.7 billion).
Chief executive Noel Quinn said: “While we retain a cautious outlook on the external risk environment, we believe that the lows of recent quarters are behind us.”
His confidence and the company's strong capital position means HSBC is in a position to buy back $2 billion (£1.45 billion) of its shares.
This week will also see results and updates from blue-chip companies including Lloyds Banking Group, NatWest, Royal Dutch Shell and GlaxoSmithKline. Wall Street companies have already set a high benchmark after a flurry of better-than-expected performances.
A further 76 S&P 500 companies are due to report this week, with reporting highlights in the tech sector set to include tonight’s resuts from Facebook and Google owner Alphabet tomorrow.
Michael Hewson, chief market analyst at CMC Markets, said: “One of the more notable takeaways from the earnings reports seen so far has been the ability of companies, for the most part, to pass on increases in prices onto their customers without seeing a drop in sales.
“However investors are also having to cope with an everchanging backdrop when it comes to what the economy might look like as we head into year end.”
After Friday’s strong finish on Wall Street, Hewson is forecasting a positive start to trading in Europe as the FTSE 100 index is poised to improve 22 points to 7226.
Confidence will be tested later in the week by GDP figures for the EU and US, interest rate meetings at the European Central Bank and Bank of Japan and the Chancellor's Budget and spending review on Wednesday.