FTSE 100 Live: Record pay squeeze revealed, unemployment rate steady at 3.8%

 (Evening Standard)
(Evening Standard)

Earnings in real terms have fallen by a record 3% as workers continue to be squeezed by soaring prices, official figures showed today.

Regular pay excluding bonus payments went up by 4.7% in the three months to June, a better-than-expected figure but representing a record fall when adjusted for inflation.

The Office for National Statistics also revealed an unchanged unemployment rate of 3.8% but the number of job vacancies dropped for the first time since the middle of 2020.

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FTSE 100 Live Tuesday

  • Ted Baker backs £211m takeover

  • Darktrace shares surge on bid interest

  • Mining shares rally after BHP results

FTSE 100 keeps its gains as miners provide energy in afternoon trade

Tuesday 16 August 2022 15:17 , Michael Hunter

The main London stock index’s heavily-weighted mining sector underpinned overall gains in afternoon trade, as strong earnings news from one of the industry’s biggest names lit up the sector.

The FTSE 100 was up 32 points at 7540.65, with miners dominating the leaderboard after BHP announced plans for a record dividend payout after soaring coal prices lifted its earnings. Its shares, which are no longer part of the index, rose by over 5% to 2357p. Resource stocks crowded to the top of the index after the news, with Rio Tintoup 4% to 189p and in the top spot. Glencore, the commodities trader, was up 3.6% at 481p. Anglo American gained 3.2% to 2995p.

The FTSE 250 slipped 31 points to 20353.90. with transport and real estate stocks under pressure.

Wall Street stocks steady as retail earnings season starts to offer insight into the US economy

Tuesday 16 August 2022 14:41 , Michael Hunter

New York’s S&P 500 is holding steady after well-received earnings news from Walmart opened earnings season for US retailers and helped soothe nerves about what it may reveal about the state of the world’s biggest economy.

The main Wall Street stock index was little changed, down by around three points to 4293.28. Walmart rose by almost 4% after its numbers came in above its recently revised expectations, assuaging concerns at the extent to which soaring inflation will erode sales in the country’s biggest retail chain.

Home Depot’s stock rose 1.2% after it too reported reassuring earnings.

Home Depot keeps full-year guidance on hold after Q2 earnings beat forecasts

Tuesday 16 August 2022 14:10 , Michael Hunter

Home Depot, the US’s largest do-it-yourself retailer, has left is guidance for the full-year on hold after its second-quarter earnings exceeded forecasts.

Revenue came in at almost $44 billion dollars , ahead of forecasts of around $43 billion. Earnings per share, the measure favoured by Wall Street analysts, hit $5.05, better than predictions of $4.94. Sales and earnings were both the highest in the company’s history, but were not enough for it to lift profit guidance.

The company has over 2,300 outlets in all 50 mainland US states and directly employs 500,000 people. Its shares were marked lower in pre-market US trade before the Wall Street opening bell at 2.30pm London time.

Walmart shares get a boost as profits surpass expecations

Tuesday 16 August 2022 13:26 , Simon Hunt

Shares in Walmart rose 4% in Wall Street pre-market trading after the US retailer posted second-quarter results that beat analysts expectations.

Last month, the firm announced a significant cut to its profit forecasts, but it today revised those up a little, reflecting a less gloomy economic picture than originally feared.

Sales at its US stores grew 6.5% in the second quarter, ahead of the 6% expected growth, largely as a result of price rises.

Walmart shares have dropped 8.3% since the start of the year.

Swedish rival buys Fat Llama rental platform for £34m

Tuesday 16 August 2022 12:57 , Simon Hunt

London-based peer-to-peer rental platform Fat Llama has been snapped up by Swedish competitor Hygglo in a £34 million deal as Britons turn to tech solutions for extra income.

Launched in 2016, Fat Llama allows users to rent out their personal belongings such as DSLR cameras and musical instruments.

Nearly one in 12 people in the UK have started a “side hustle” this summer, according to Barclaycard.

Hygglo CEO Ola Degerfors said the deal would “create the world’s biggest and most sophisticated rental platform and enable people across Europe and the US to have more sustainable lifestyles through buying less and renting more.”

New home for Rolex Boutique as sales defy cost of living crisis Watches of Switzerland

Tuesday 16 August 2022 12:17 , Simon Hunt

Watches of Switzerland, the operator of the Rolex Boutique chain, is moving its flagship West End store into bigger premises as demand for its luxury timepieces defies the cost-of-living crisis.

Its leading London outlet is not moving far — from Bond Street to New Bond Street — but it will be eight times larger, at 7,200 sq ft. “This new flagship will reflect the importance of the London market and the special relevance of London to the history of Rolex,” said Brian Duffy, chief executive.

Watch sales in the first quarter of its current financial year were up a third at £342 million, and jewellery sales also rose, by 36% to £27 million. It was the first market update from the FTSE 250 company, which filed record annual profits in July for its last financial year.

Its guidance for the full year “anticipates a potentially more challenging trading environment in the second half”, though it expects revenue of about £1.5 billion, and relatively steady earnings, with growth of up to 0.5%.

The company, which also operates the Mayors outlets and the Betteridge chains in the US, said its revenue there rose 76%. It is exposed to the weaker pound via sales in dollars that are translated into revenue in sterling.

BHP makes record divi as coal recovery lights up earnings

Tuesday 16 August 2022 11:26 , Michael Hunter

BHP, the world’s biggest mining company, is making a record dividend payment to shareholders, after coal prices surged in the wake of Russia’s invasion of Ukraine.

Annual profit from operations at the Anglo-Australian company rose 34% to over $34 billion, from revenue of $65 billion, up 14%. Its coal division returned to profit before tax of almost $9 billion, from a loss of $577 million a year ago.

That offset a drop in profit at BHP’s iron ore operations of $4.6 billion to $21.7 billion, as wider commodity markets slipped in line with the outlook for the global economy as central banks raise rates to fight inflation. Shares in BHP rose 4.4% to 2342p in London today.

Darktrace shares up 17%, miners lift FTSE 100

Tuesday 16 August 2022 10:24 , Graeme Evans

Darktrace shares are up 17% as US takeover interest creates another twist in the cyber security firm’s eventful stock market journey.

Cambridge-based Darktrace, whose high-profile flotation in April 2021 valued the business at £1.7 billion, revealed last night it is in the sights of private equity firm Thoma Bravo.

Discussions about a possible offer are at an early stage but shares still rose 72.7p to 487.5p for their highest level since March. Thoma Bravo has until 12 September to make a firm offer or walk away.

Darktrace made its debut at 250p and topped 1000p in September as interest in its machine learning technology helped the company to reach the FTSE 100 index. However, a subsequent sell-off left shares at less than 300p last month.

AJ Bell financial analyst Danni Hewson said: “If it goes through, the acquisition of Darktrace would, yet again, thin the ranks of an already under-represented technology sector in London.”

The Darktrace takeover developments helped the wider FTSE 250 index to climb 29.43 points to 20,412.19, with other stocks on the risers board including Pets at Home and Domino’s Pizza after gains of more than 2%.

The FTSE 100 rose 30.30 points to 7,539.45, even though energy-focused stocks faced more pressure after this week’s weakening of the Brent crude price to $94 a barrel.

GSK topped the risers board as shares recovered some of their recent losses, lifting 39.6p to 1445.6p after the drugs giant revealed it had completed the acquisition of Massachusetts-based Affinivax. GSK’s shares were 1,776p last month.

Mining stocks were also higher as the industry welcomed today’s BHP results, which included a dividend payout ratio equivalent to 77% of underlying earnings. Glencore and Anglo American rose 12.85p and 65p to 477.35p and 2966p respectively, while former FTSE 100 stock BHP jumped 90.5p to 2328p.

FTSE 100 higher, BHP shares up 4%

Tuesday 16 August 2022 08:58 , Graeme Evans

Rio Tinto, BAE Systems and BT Group are among stocks more than 1% higher as the recent momentum behind the FTSE 100 index continued today.

GSK topped the risers board as shares recovered some of their recent losses, lifting 26.4p to 1432p following the completion of its acquisition of Massachusetts-based Affinivax.

The FTSE 100 climbed 23.95 points to 7533.1, despite heavyweight stocks London Stock Exchange and Experian falling by just under 1%.

BHP shares, which are no longer listed in the FTSE 100, rose 4% or 88.5p to 2326p after the Australian mining giant’s total dividend of $3.25 a share represented a payout ratio equivalent to 77% of underlying earnings.

The FTSE 250 index was flat at 20,385 but cyber security firm Darktrace jumped 20% as it revealed a takeover approach from a US-based private equity firm.

Ted Baker backs £211m takeover

Tuesday 16 August 2022 08:50 , Graeme Evans

Ted Baker is set for new ownership after its board backed a £211 million takeover by Reebok firm Authentic Brands Group (ABG).

The 110p-a-share agreement is at a 18% premium to last night’s closing price and comes after the fashion and lifestyle retailer launched a formal sale process in response to a number of unsolicited bid approaches.

Interim chair Helena Feltham said the price balanced growth prospects with the risks of the uncertain economic environment.

She added: “The Ted Baker board believes that ABG will be a strong and supportive owner of the business. We are confident that with ABG's experience, reach and investment, the Ted Baker brand will be capable of achieving its long-term global potential."

Ted Baker, which was founded by Ray Kelvin in 1987, has 370 stores and concessions worldwide including 92 in the UK. ABG has majority ownership interests in over 50 consumer, lifestyle, media and entertainment brands, including Reebok, David Beckham and Eddie Bauer.

Brent crude at $94, FTSE 100 holds firm

Tuesday 16 August 2022 07:51 , Graeme Evans

Oil prices remain near $94 a barrel after Monday’s softer than expected industrial production and retail sales figures raised concerns about demand in China.

Brent crude futures yesterday fell 3.7% to a six-month low in a weak session for commodity markets that also saw iron ore and aluminium weaken by around 3%.

Despite pressure on shares in the resources and energy sector, the FTSE 100 index was broadly unchanged and is expected to open 22 points higher at 7,531 today.

In the US, the Dow Jones Industrial Average rose 0.4% and the Nasdaq Composite added 0.6% last night.

Wall Street’s attention now turns to today’s earnings reports from retailers Home Depot and Walmart and Wednesday’s minutes from the recent Federal Reserve meeting.