FTSE 100 Live: Oil price holds gains after OPEC move, Imperial Brands plans £1bn buyback

 (Evening Standard)
(Evening Standard)

Brent crude futures remained near $93 today as traders evaluated OPEC’s controversial move to cut oil production by two million barrels a day from next month.

The largest reduction since the height of the pandemic was condemned by the Biden administration and led to forecasts for prices around $100 a barrel later this year.

In today’s corporate news, tobacco firm Imperial Brands said trading had been in line with expectations as it unveiled plans for a £1 billion shares buyback.

New York stocks unsettled as attention starts to turn to jobs report’s impact on rate outlook

16:13 , Michael Hunter

Wall Street’s S&P 500 were uncertain in morning trade, after private sector jobs data came in marginally ahead of forecasts ahead of the full September jobs report due on Friday.

The broad New York stock index slipped 13 points to 3770.0, easing 0.4%.

ADP private sector payrolls rose by 208,000 in September, opening the way for another potentially strong reading for the wider non-farm payroll numbers, one of the most influential data readings of the month. It is expected to show the creation of 250,000 jobs outside the agricultural sector, and will influence thinking on the amount of room the Federal Reserve has to fight inflation with rate hikes without damaging the economy.

Diageo drinks to sales uptick across all markets

15:15 , Mark Banham

Drinks giant Diageo owner of Guinness, Johnnie Walker, Tanqueray gin and Smirnoff has flagged sales growth across all regions in a trading update and a “good start” to its fiscal year.

Boss of the brewer and distiller Ivan Menezes, said that the business had “continued investment in brand building” and praised its “agile supply chain and culture”.

However he addressed current stormy economic conditions.

“We expect the operating environment to remain challenging with ongoing volatility due to geopolitical uncertainty, a weakening of consumer spending power, inflationary pressures and disruption related to Covid-19,” he said, but that he was “confident in the resilience” of the company and its vision to focus on its strategic priorities.

“We remain well-positioned to deliver our medium-term guidance for fiscal 2023 to fiscal 2025 of organic net sales growth consistently in the range of 5% to 7% and organic operating profit growth sustainably in the range of 6% to 9%,” Menezes added.

Wall Street stocks set to slip after payroll data plays into rate expectations

14:20 , Michael Hunter

More robust jobs data from the US has played into market expectations that the Federal Reserve has room to persevere with its aggressive interest rate rises.

According to futures trade, the S&P 500 will slip by about 13 points to 3781.50. It came after private sector payroll data was stronger than forecast, showing the creation of 208,000 jobs in September. It came out a day before the Labor Department’s full non-farm payroll report for the month, one of the most-watched datapoints on the calendar.

Chemring shares rocket as order book swells

12:33 , Michael Hunter

Shares in FTSE 250 defence contractor Chemring took off after it revealed an order book worth almost £680 million, enough for it hit its profit guidance for the current financial year.

The Hampshire-based missile defence provider also said its orders for 2023 were “building”, with Its countermeasures unit already covering 90% of its expected revenue for the next year. The same figure at its sensors business reached 60%.

Chemring provides the Ministry of Defence with new radar technology designed to address the threat of hypersonic missiles. With a major subsidiary in the US, the weak pound flatters its revenue when it translates dollar revenue into profits reported in sterling. It said 40% of its order book’s value was “attributable to FX translation.”

Its shares rose 17p to 321p, a rise of over 5%.

FTSE 100 steady, 12% jump for bathrooms firm

10:30 , Graeme Evans

Consumer spending worries were put to one side today as better-than-expected updates triggered a rush to buy shares in Victorian Plumbing and energy efficiency stock Volution.

The online bathroom retailer disclosed a 5% rise in half-year revenues and improved margin trends during a stronger-than-expected finish to its financial year.

AIM-listed Victorian has lost almost two-thirds of its value this year, but rallied 12% or 4.4p to 40p after the update by the Skelmersdale-based company.

FTSE 250-listed building ventilation business Volution also impressed investors after its full-year numbers came in ahead of expectations and it highlighted further progress over recent weeks as attention turns to keeping homes warm this winter.

Volution said the energy crisis had focused customers’ minds on the importance of heat recovery ventilation systems, which now account for over 30% of its revenues.

As well as a desire to cut heating bills, it has benefited from tighter regulations on carbon reduction in buildings and the greater post-Covid awareness of air quality to health.

Volution shares have fallen by a third this year amid a de-rating for the wider building materials sector, but rallied 11% or 33.5p to 340p today after the company reported a 14.5% rise in annual adjusted profits to £60.9 million.

Its shares led the FTSE 250 index, which stood 56.14 points higher at 17,618.90.

In the FTSE 100 index, shares in electrical components supplier RS Group lifted 2% or 19p to 1025p as it said full-year revenue and profit were slightly ahead of expectations.

Drinks giant Diageo also reassured on current trading in an AGM update, but shares in the Guinness and Smirnoff firm still fell back 11p to 3770.5p. The overall blue-chip index stood close to its opening mark at 7043.66, a fall of 8.96 points.

In contrast to Victorian Plumbing, shares in online car retailer Motorpoint slumped 13% after it revealed a 9% fall in volumes for September.

The company said “adverse economic news flow and political uncertainty” was partly to blame for the decline, having recorded a 30% rise in revenues to £785 million across the six months to the end of last month. Shares dropped 24.15p to 154.35p.

AIM slump is bad news for the City

10:25 , Simon English

THE alarming slump in activity on London’s moribund capital markets is laid bare today with figures showing AIM raised a paltry £3 million for fresh flotations in the last quarter.

That is a 13-year low, figures compiled for the Evening Standard show, and a sign of a wider slowdown in the City which clearly puts banker bonuses – and jobs – at risk.

In a good year, AIM helps growth companies raise hundreds of millions. Since foundation in 1995 it has become home to 1000 companies with a combined value of £90 billion – a clear City of London success story.

AIM listed companies include Fevertree, BooHoo and YouGov.

But today’s figures from UHY Hacker Young show that only one company – Lifesafe Holdings - floated on the junior stock market in the last three months, raising just £3 million in new equity.

City people say now is the time for new PM Liz Truss to bolster her “growth, growth, growth” message by cutting tax on investment in start-up firms.

Some would like to see capital gains tax slashed or abolished for investors in growth firms.

Colin Wright, Chairman of the UHY Hacker Young Group, says that many companies have had to shelve plans to list on AIM until volatility in the stock and bond markets reduces.

read more here

Facebook pay jumps past £260k in London

10:09 , Simon Hunt

Average employee wages at Facebook’s UK arm have leapt past £260,000 as one of the world’s biggest tech firms ramps up its presence in London.

Facebook’s UK employee headcount swelled 37% to 5,148 in 2021, filings with Companies House show, while its wage bill jumped to £1.4 billion, an average of £262,317 per employee and a 6% rise on the previous year. The overwhelming majority of Facebook’s employees work in London, with the lion’s share based at the firm’s gleaming new offices in King’s Cross.

It comes as Facebook’s UK arm posted bumper results, with sales up 39% on the previous year. Pre-tax profits jumped 21% to £230 million, despite a 19% drop in taxes paid to £30 million.

Facebook said the discrepancy was a result of a number of factors including a change in the rate of corporation tax and an increase in deferred tax credit due to its share-based employee pay package. The firm said its actual tax bill was higher, as those tax credits would crystallise in future years.

The jump in hew hires in London last year comes amid reports Facebook is planning to cut its global headcount for the first time as advertising revenue dwindles.

Tory peer Lord Cruddas: no comment on Liz Truss

10:01 , Simon English

BORIS Johnson fan and Tory party donor Peter Cruddas was tight-lipped today on new PM Liz Truss.

He declined to discuss the matter as his CMC Markets said it expects half year profits to be up 21% to £153 million.

Trading improved in August and September CMC also today launched a new investment platform – CMC Invest – which aims to compete with AJ Bell and Hargreaves Lansdown.

Cruddas made his fortune by offering riskier leveraged bets and was once perhaps the richest man in the City.

Baron Cruddas donated £500,000 to the Conservative Party last summer just days after he joined the House of Lords.

He was open about wanting Boris to stay as PM and is said to remain concerned at the power of the 1922 Committee of back bench MPs that led to his defeat.

CMC shares today rose 12p to 234p.

Cruddas said: "We closed the first six months with a pickup in market volatility and client trading volumes driving an improvement in operating income versus last year. As part of our diversification strategy, we are pleased to have launched our new UK non-leveraged business, CMC Invest. This move into self-directed investing marks a significant milestone for us, representing a major opportunity for growth and diversification into the non-leveraged market.”

FTSE 100 higher, Volution surges 13% in FTSE 250

08:42 , Graeme Evans

The FTSE 100 index is 15.35 points higher at 7067.97, despite a 3% slide for Shell after it warned of weaker third quarter refining margins.

Imperial Brands shares rose 4% following its £1 billion buyback announcement and electrical components supplier RS Group lifted 3% as it said full-year revenues and adjusted profits will be slightly ahead of expectations.

Ventilation products business Volution surged 13% in the FTSE 250 index after it reported an encouraging start to its new financial year.

The FTSE 250 index rose 108 points to 17,671, with defence technology firm Chemring 3% higher after its latest trading update.

Bathroom supplies business Victorian Plumbing also rose 6% on AIM after it reported trading ahead of expectations, but a sharp fall in September volumes meant car retailer Motorpoint dropped 12% in the FTSE All-Share.

Crude price steady at $93, FTSE 100 seen higher

07:50 , Graeme Evans

Crude prices stood at a three-week high today as commodity markets reacted to the two million barrels a day cut in oil production announced by OPEC ministers yesterday.

The cartel’s largest reduction in output since Covid lockdowns in 2020 comes into force next month and has been made in response to the weaker demand outlook and with many member countries struggling to deliver on existing quotas.

The controversial move, which has been criticised in Washington, has left Brent futures at $93 a barrel this morning compared with near to $80 seen a fortnight ago. City banks including Goldman Sachs now believe the price will finish the year at around $100.

OPEC’s production output cut adds to worries that inflation will stay higher for longer and prolong the need for aggressive interest rate rises by global central banks.

The FTSE 100 index fell 0.5% yesterday, despite gains of more than 1% for heavyweight oil stocks BP and Shell. IG Index expects a recovery of 48.8 points when trading resumes today, leaving the top flight at just above 7100.

US markets finished broadly unchanged last night but are poised to open in positive territory later today.