Collapsed country fashion brand Joules is set to be bought up by retail rival Next. Joules was set to appoint administrators last month after failing to agree a financing deal to rescue the business, putting around 1,600 jobs at risk.
The mini-Budget’s house market impact was revealed today as Nationwide reported the biggest drop in prices since June 2020. November’s decline of 1.4% has reduced the annual rate of growth to 4.4% from 7.2% the previous month.
Stock markets, meanwhile, have been lifted by the boss of the Federal Reserve signalling that a slowdown in the pace of US interest rate rises is on the way.
FTSE 100 Live Thursday
House prices in biggest drop since June 2020
Rate rise optimism lifts technology stocks
Broker Peel Hunt reports profits slide
US stocks open higher on robust consumer spending
14:44 , Simon Hunt
Stocks opened higher in the opening minutes of trading on Wall Street as investors welcomed news of robust consumer spending in October, as well as signs of a drop in the rate of inflation.
The S&P 500 index rose 0.2% to 4,087, while the Nasdaq rose 0.1% to 11,475.
Streaming service Netflix led the games, up 8.85% as the firm’s turnaround plan to attract new customers with cheaper tiers of membership appeared to please investors.
Next to buy collapsed retailer Joules
13:25 , Simon Hunt
Collapsed country fashion brand Joules has been bought up by retail rival Next, administrators have said, in a deal that will see 133 of its staff being laid off.
The retailer has acquired around 100 Joules stores, with approximately 1,450 employees across these stores and head office transferring as part of the transaction.
Under the terms of the deal, Joules’ head office in Leicestershire has also been acquired while 19 stores will be closed immediately.
Will Wright, head of Restructuring at Interpath Advisory and joint administrator, said: “Following a highly competitive process, we are pleased to have concluded this transaction which secures the future of this great British brand, as well as safeguarding a significant number of jobs.
“To have achieved this in such a short timetable is testament to the support we’ve received from employees, suppliers and other key stakeholders throughout the administration process, so we’d like to express our profound thanks to everyone involved.”
City comment: employers need to think about both class and race when recruiting
12:27 , Simon Hunt
Naomi Kellman, founder of the Target Oxbridge programme, offers her comments on diversity in recruitment amongst City employers:
“Working class people face invisible barriers to progress in the Square Mile, according to the City of London Corporation, which reported this week that banks and other City firms need to do more to nurture those who don’t have posh accents or privileged parentage.
“No sensible person would argue against this. Even so, the adage that ‘it’s all about class, not race’ has become a little too popular lately in public discussions about social mobility. The truth is that it’s not an either/or – as I know, having spent ten years helping Black students, many of them also from lower-income households, get into Oxford and Cambridge, and then to City firms.
“The consistent message from speaking to these students is clear - both class and race affect their ability to access top universities and the most desirable jobs.”
That’s a wrap: film firm snapped up by rival
11:02 , Simon Hunt
London-based film services and equipment company Location One is being snapped up by a rival firm, Facilities by ADF, in a deal worth almost £9 million.
The company was founded in 2008 in the garage of its managing director, former location manager Crispin Hardy, with just “ two bowsers, some tables and chairs and battery lights.”
Barking-based Location One now has 80 staff and has gone on to work on a string of blockbusters, from The Crown, above, on Netflix to the BBC’s Peaky Blinders as well as My Lady Jane and The Gentleman. It has grown into the UK’s biggest integrated TV and film location services firms.
ADF says the deal will take it towards being a one-stop shop for the UK’s fast-growing high-end TV and film industry. The country is now Netflix’s third-biggest filming venue after the US and Canada.
Rates outlook lifts tech stocks, buy note boosts Deliveroo
10:13 , Graeme Evans
Deliveroo shares were boosted today after a City firm backed the online food delivery sector to weather the cost of living crisis.
The note by Jefferies said current valuations for Deliveroo and other players including Just Eat Takeaway.com mis-priced the potential of their “sustainable” earnings streams.
Jefferies added: “Deliveroo remains the most under-appreciated equity in the sector. It has consistently led on big sector themes and strategy, all of which is now observable in its leadership on growth.”
Deliveroo listed at 390p in March 2021 but languished at 73p in October due to fears over rising costs and expectations for a big fall in takeaway demand.
The shares today rallied by 5% or 4.3p to 91.5p after Jefferies highlighted a potential 80% upside to 155p. Just Eat also improved 2% or 39.2p to 1903.4p.
Their performances were aided by renewed market hopes that the worst of the recent run of interest rate rises are out the way.
Wall Street surged last night as Federal Reserve chair Jerome Powell signalled a slackening in the pace of tightening after four successive hikes of 0.75%.
The FTSE 100 index followed November’s 7% rise by adding another 14.98 points to 7588.03, consolidating its position at the highest level since June.
It was outgunned by the FTSE 250 index, however, as the UK-focused benchmark benefited from a stronger pound to lift 0.7% or 126.58 points to 19,289.91.
Other technology-focused stocks to benefit from the rate rise outlook included Ocado, which jumped 6% or 37.4p to 660p in the FTSE 100. ASOS and Cazoo investor Molten Ventures rose 34p to 665.5p and 16.4p to 406.4p respectively in the FTSE 250.
Auction Technology Group bucked the trend, however, as its shares fell 123p to 734p despite reporting annual profits in line with previous guidance.
City Comment: Stock trading is not like Call of Duty
09:45 , Simon English
Two snapshots of how the financial services sector is doing today – and two very different outlooks.
City broker Peel Hunt reports profits down 99% (ninety-nine per cent, the vidiprinter doing the football scores might have felt the need to clarify).
That’s a function of nerves in the Square Mile and among corporate clients. No one wants to float or do risky deals in the teeth of a recession.
Over at AJ Bell, a brilliant business which punts shares to retail investors, things are going swimmingly. New customers are pouring in. Revenues and profits are up smartly. Growth seems easy to come by.
The risk here must be that the City broker is ahead of the game. Retail investors are blithely carrying on, unaware of the turmoil that has left many professionals running scared.
When the retail market plays catch-up with the City, there shall be brunt fingers for tea.
Into this noise marches the Financial Conduct Authority, which is seriously worried about the “gamification” of share trading.
A new breed of apps – not AJ Bell, let’s be clear – are offering incentives to trade as if they were the Tesco Clubcard.
There are points and celebratory messages for making a trade, something that encourages the armchair punter to treat the stock market as if it were Call of Duty.
During lockdown a “meme-stock” trading frenzy encouraged some small investors into the delusion that they could bet against, and beat, giant US hedge funds.
The delusion will be corrected, one way or the other.
FTSE 250 up 0.9%, ASOS shares surge 5%
09:05 , Graeme Evans
The FTSE 100 index is 6.35 points higher at 7579.40, keeping London’s top flight at its highest level since June. Big risers included Ocado, which lifted 6% or 39.6p to 662.2p, and insurer Prudential after a gain of 3%.
Some of the stocks behind this week’s strong performance gave up some of their gains, including Rolls-Royce as the engines giant weakened 1.4p to 89.5p. Oil giants BP and Shell were also down by around 1.5%.
The FTSE 250 index, which has lagged the performance of blue-chip stocks so far this year, added 0.9% on the back of a stronger session for the pound.
The UK-focused benchmark rose 173.33 points to 19,336.66, led by private equity firm Bridgepoint after its shares rallied 6% or 12.7p to 209.2p. Fash fashion business ASOS also improved 5% or 37p to 668.5p and publisher Future gained 75p to 1480p in the wake of yesterday’s annual results.
Hotel Chocolat sinks into the red over botched Japan expansion
08:23 , Simon Hunt
Hotel Chocolat posted a full-year loss of £9.4 million this morning after its botched Japan expansion plan led to tens of millions of pounds being written off.
The Hertfordshire-based confectioner was forced to write off almost £30 million after its Japanese business went through insolvency.
Hotel Chocolat boss Angus Thirlwell told the Standard: “We thought we should take that on the chin and write the cost off and change the way we approach international opportunities and contain the capital spend and work with partners rather than try to do it ourselves.
“Nobody gets international right the first time straight out of the blocks – it’s very much a case of adapting and taking the learnings and making your work smarter as you go on.”
Hotel Chocolat shares rose 1%.
Inflation hopes fuel strong month for markets
08:18 , Graeme Evans
November was a very strong month for markets, with the FTSE 100 up by around 7% to its highest level since June.
Deutsche Bank reported progress for 35 of the 38 non-currency assets in its coverage, the highest number so far in 2022 and a change from the mood for much of this year.
The bank’s strategists said the positive momentum was propelled by a number of factors, including signs that inflation is beginning to ease across key economies.
There was also further encouragement that China is inching away from its zero Covid strategy, leading to a massive outperformance from Chinese assets.
One asset that struggled was the US dollar, with the unwinding risk premium meaning it experienced its worst month in over a decade.
House prices down 1.4% in mini-Budget fallout
08:06 , Graeme Evans
Building society Nationwide today reported the biggest monthly drop in house prices since June 2020.
The month-on-month fall of 1.4% follows a decline of 0.9% in October and reduces the annual rate of growth to 4.4% from 7.2% the previous month. The average price stood at £263,788.
Robert Gardner, Nationwide's chief economist, said the fallout from the mini-Budget continues to impact the market.
He said: ““While financial market conditions have stabilised, interest rates for new mortgages remain elevated and the market has lost a significant degree of momentum.
“Housing affordability for potential buyers and home movers has become much more stretched at a time when household finances are already under pressure from high inflation.”
ITM Power’s new CEO delays trading update
07:59 , Michael Hunter
ITM Power, which helps industry decarbonise, has delayed its next trading update as its new CEO takes up the reins at the the AIM-listed clean fuel company.
The move will gove Dennis Schulz, who is succeeding Dr Graham Cooley today, “sufficient time to properly assess the company’s operations and identify his near-term priorities”, it said today. It was originally planned for December 8. Its half-year results are due by the end of January, when it said it would “provide an initial strategic and operational update”.
Schulz moved over from Linde, the German chemical giant that is one of ITM’s biggest backers. Cooley ran the Sheffield-based firm for 13 years.
Three promoted in FTSE 100 reshuffle
07:44 , Graeme Evans
Investment group Abrdn and engineer Weir have secured promotion back to the FTSE 100 after the results of December’s quarterly review were confirmed last night.
Specialist insurer Beazley is also set for top flight status, with the North Sea production firm Harbour Energy, vet products business Dechra Pharmaceuticals and private equity group Intermediate Capital the three stocks dropping into the FTSE 250 index.
Abrdn lost its FTSE 100 place in the previous reshuffle while Weir suffered relegation in September 2021. The changes come into effect on 19 December.
Bonuses in doubt at Peel Hunt
07:44 , Simon English
PROFITS at Peel Hunt crashed 99.7% in the half-year, a brutal sign of how tough life has been for City brokers this year.
With the market for flotations basically halted and clients sitting on their hands while they prepare for a likely recession, brokers and fund managers have found conditions difficult.
The plunge in profits from £29.5 million to just £100,000 is a stark sign of the City strife – and an indicator that for bankers at Peel Hunt and else where bonuses this year as likely to be negligible or non-existent.
Peel Hunt’s own IPO saw it join the stock market in September 2021 on the back of a pandemic trading boom that saw thousands of new punters open share trading accounts.
The firm was worth £280 million on float, with chief executive Steven Fine’s 7% stake worth £20 million.
Peel Hunt shares are down 60% this year and open today at 83p, valuing the business at around £100 million.
Revenues in the six months to September are down 42% to £41 million.
But the broker says it is luring new clients. It now has 165 investment banking clients with an average market cap of £555 million.
Fine says: “"Challenging market conditions have persisted throughout our first half as the macroeconomic and geopolitical backdrop has continued to have an adverse impact on markets and investor sentiment. Equity capital markets activity has been at a multi-decade low and market volumes have reduced materially during this period. This is due to several factors including investor redemptions, institutional investors building up cash positions and retail investors being more cautious as equity markets responded to rising inflation, the cost-of-living crisis and the possibility of a lengthy UK recession.”
Peel Hunt says it has made “good progress” on setting up a European office.
Tesla to recall over 400,000 cars in China
07:37 , Simon Hunt
Tesla is set to recall over 400,000 cars in China over software faults, the Chinese regulator said today.
Model 3 and Model Y cars are to update to fix an error which caused clearance lamps to fail to work, which could lead to the risk of collision in some circumstances.
Tesla said it would be updating the cars’ software remotely to fix the problem.
Powell speech boosts Wall Street, FTSE 100 seen higher
07:32 , Graeme Evans
The FTSE 100 index rose more than 6% in November and is expected to start the new month on the front foot after big gains on Wall Street last night.
Europe’s softer inflation print and last night’s comments from Federal Reserve chair Jerome Powell on a potential rate rise slowdown have boosted the mood.
The Dow Jones Industrial Average finished 2.2% higher last night and the S&P 500 rallied 3.1% following Powell’s speech in Washington.
With a smaller interest rate rise of 0.5% expected this month, the question for markets now is how many more hikes are likely to follow and whether the peak will be above 5%.
Cracks are already starting to show in the US economy, with figures yesterday showing that private companies created the smallest number of jobs since early 2021.
CMC Markets expects the FTSE 100 index to open 40 points higher at 7,613, having risen by 0.8% in yesterday’s session.
Daily Mash owner Digitalbox adds to online satire empire with The Poke acquisition
07:25 , Simon Hunt
Daily Mash owner Digitalbox has added to its online satire empire with the acquisition of The Poke.
The Poke handpicks the funniest content on the web to enable its users to spend” time well wasted”. It generated revenue of c.£0.17m in its financial year to November 2021.
The terms of the deal were not disclosed.
James Carter, CEO, Digitalbox, said: "The Poke is another excellent addition to our growing portfolio of exciting digital assets. We have a proven and successful approach to integration which releases value from the assets we acquire. The inclusion of The Poke, alongside The Daily Mash and The Tab, creates opportunities to grow our audiences across the sites and strengthen the Company’s market position which is led by Entertainment Daily.”