The latest snapshot of the UK economy offered some reassurance today in a session when London-listed shares traded higher.
Big risers included JD Sports Fashion after Nike’s strong results, while shares in Future and Aston Martin Lagonda also jumped.
Others in focus included Severn Trent after the water company announced a £1 billion fundraising in order to support its investment needs.
FTSE 100 Live Friday
Severn Trent in £1bn fundraising
JD Sports boosted by Nike results
Future surges on resilient trading
FTSE 100 ends September at 7,608.08
Friday 29 September 2023 16:38 , Daniel O’Boyle
The FTSE 100 closed at 7,608.08 today, roughly where it started this morning, despite rising as high as 7673. The index fell int he afternoon to close up only six points.
London’s top flight ends the week down 1%, never recovering from a big fall on Monday. But for the month, it is up 1.8%, thanks mostly to good news on inflation and an end to the Bank of England’s cycle of interest rate hikes.
JD Sports was today’s top riser, following a strong update from Nike in the US last night. Severn Trent and Ocado were also up more than 4%. Hargreaves Lansdown and Shell were the top fallers.
Three quarters of the way through the year, the FTSE is up 0.7% on where it started on 1 January.
Tesco to reveal sales performance as cost of living still in focus
Friday 29 September 2023 16:29 , Daniel O'Boyle
Tesco’s pricing and efforts to stop customers switching to discount rivals will be in the spotlight again as the supermarket giant updates shareholders next week.
The UK’s largest grocery chain has appeared resilient and seen volumes continue to grow over the past year despite pressure from the cost-of-living crisis.
However, intense competition in the industry means the group is coming under continued pressure to preserve profitability as some higher costs persist.
Big drop in number of nightclubs, study suggests
Friday 29 September 2023 16:09 , Daniel O'Boyle
The number of nightclubs has almost halved in the past decade – including a 30% fall since the start of the pandemic, a new study suggests.
The impact of Covid, coupled with changing consumer habits have led to a sharp drop in the popularity of Britain’s nightclubs, according to a report.
Research company CGA NIQ said its study found that 10 years ago, Britain had around 1,700 nightclubs, but in June this year the total stood at 873.
US Fed’s favourite inflation indicator eases down
Friday 29 September 2023 15:52 , Daniel O'Boyle
The US Federal Reserve’s favourite measure of inflation, the core PCE price index, edged further down today, to 3.9%, in news that should help to ease ‘higher for logner’ global interest rate fears.
The decline was in line with expectations, but represents further progress towards the 2% target.
It follows a sharp drop in Eurozone inflation that fuelled hopes that ECB interest rates have peaked.
City Comment: The doom mongers have spoken. Now the City bounces back
Friday 29 September 2023 15:33 , Daniel O'Boyle
For a long while the complaint was all about these swaggering foreigners coming over here, stealing all our big companies.
Morrisons – our Morrisons – fell to US private equity. Sky fell to Comcast. There were loads of others, Americans, Qataris and Scandinavians, grabbing our corporate heroes on the cheap.
Lately, the complaint is that there isn’t enough of this action, even though London shares are, bankers in the capital say, plainly undervalued.
That might soon change, as our reporting today on top buyout targets shows. Deal-making has been moribund lately, for sure, but not just here.
Nasdaq up more than 1%: US markets open
Friday 29 September 2023 14:54 , Simon Hunt
A few minutes into the day’s trading session on Wall Street, the Nasdaq is up more than 1%.
Here’s a look at your key markets data.
Vultures circle over UK firms where bargains are to be found
Friday 29 September 2023 14:46 , Daniel O'Boyle
Fifteen UK stock market listed companies with a combined market value of nearly £170 billion could be vulnerable to takeover analysis for the Evening Standard shows, deals that would kick start the City and the moribund stock market.
City bankers says big money rivals, often in the US, are taking a close look at some of Britain’s best known businesses, driven by the strength of the dollar against the pound, fresh certainty about interest rates that influence borrowing costs and low share values.
For months City experts have been complaining that London listed shares are unloved compared to similar firms in the US. With both economies now likely to avoid recession, bankers say clients are casting their eye over what could be some huge deals.
Competition watchdog clears £1.2bn health tie-up
Friday 29 September 2023 14:00 , Daniel O'Boyle
The competition watchdog has cleared a proposed £1.2 billion tie-up between two data management and software companies.
The Competition and Markets Authority (CMA) said that it would allow UnitedHealth to take over Emis after finding no competition concerns.
The deal was announced in June 2022 and would combine UnitedHealth’s subsidiary Optum with Emis in the UK.
Eurozone inflation falls to 4.5%
Friday 29 September 2023 13:48 , Daniel O'Boyle
Inflation in the Eurozone fell much more quickly than expected, to a two-year low of just 4.3%.
The figures show that the European Central Bank’s rate rises are having an effect, and will add to hopes that interest rates within the currency union have peaked.
Core inflation fell to 4.5%.
Clemence Dachicourt, Senior Portfolio Manager, Morningstar Investment Management Europe Limited, said: “Today’s drop in headline inflation back to levels last seen in October 2021, is very good news for the European Central Bank, which currently faces a difficult conundrum. While the ECB has shown a strong determination in bringing down inflation closer to its 2% target after it raised interest rates for a tenth consecutive time in September, its efforts are precipitating the Eurozone into a potentially deep and long-lasting recession. The latest economic numbers published in the Eurozone clearly indicate that the region currently sits in contractionary territory, however, the labour market remains strong.”
“While we feel the ECB is very close to the end of its tightening cycle, it will need to be convinced that the ‘inflationary psychology’ has been extinguished before it can declare victory against inflation. Markets will therefore be carefully watching the possible spill-over effects that higher energy prices may have on prices of consumer goods or services. In a world of a tight labour market, higher than expected inflation will likely lead to workers pushing for higher wages, which could reignite the inflation spiral.”
Soaring wage bill hits profits at Groucho Club as new owners take charge
Friday 29 September 2023 13:25 , Daniel O'Boyle
Soaring labour costs and inflation have resulted in a big drop in underlying profits at the Groucho Club, latest accounts reveal today.
Earnings at the Soho haunt fell 41% from £1.7 million to £1 million last year, despite the venue being able to return to near normal trading after the pandemic.
Accounts for Groucho Club Ltd filed at Companies House show that turnover jumped 47% from £5.4 million to £7.9 million in 2022.
But it blamed wages and other costs for a decline in profits from operations.
Asda issues £2.1 billion dividend after Issa brothers takeover as profits plunge 80%
Friday 29 September 2023 12:43 , Daniel O'Boyle
Asda declared a £2.1 billion dividend to its owners after being bought by the billionaire Issa brothers, accounts published today show, as the pair sought to juggle debts around their sprawling retail and petrol forecourt empire.
The supermarket declared the dividend to its parent company in September last year, despite a more-than 80% drop in pre-tax profits to £197.8 million in 2022.
In its accounts Asda said of the dividend: “The intercompany payable was settled by transferring intercompany receivables.
“There were no cash payments made.”
Minister raises hopes of pre-election tax cuts next year
Friday 29 September 2023 12:23 , Daniel O'Boyle
A minister raised hopes on Friday of tax cuts possibly as early as next year after inflation is brought more under control.
Andrew Griffith, Economic Secretary to the Treasury, stressed the Government’s priority “right now” was halving inflation, to around five per cent by the end of the year.
Given the Covid pandemic and Ukraine war sending inflation skyrocketing, ministers had had to make tough choices to stabilise the economy, he added, including “not being able in the very short term to make tax cuts”.
FCA changes rules for insurers of leasehold buildings after Grenfell
Friday 29 September 2023 11:14 , Daniel O'Boyle
Insurers will be forced to act in the best interests of people who own flats in apartment blocks and other leaseholders under new rules from the City watchdog.
The Financial Conduct Authority (FCA) said that from the start of the new year, insurance firms will have to treat leaseholders as customers when designing products.
They will also be banned from recommending insurance policies based on the level of commission or remuneration they can get.
HS2 boss exits amid speculation of cuts
Friday 29 September 2023 10:42 , Daniel O'Boyle
HS2 Ltd boss Mark Thurston leaves his role on Friday amid speculation the high-speed rail project will be cut further.
The 56-year-old, whose pay package was worth £677,000 in the last financial year, announced his resignation in July.
There has been widespread speculation in recent days that Prime Minister Risi Sunak is preparing to either scrap or delay HS2’s Birmingham to Manchester leg after being warned the price tag for the whole project may have soared past £100 billion.
FTSE 100 higher, big gains for JD Sports, Future and Aston Martin
Friday 29 September 2023 10:31 , Graeme Evans
JD Sports Fashion set the pace in the FTSE 100 index today as investors reacted to better-than-expected results by US giant Nike.
Nike’s shares jumped 8% after last night’s Wall Street closing bell as the world’s largest sportswear business demonstrated its pricing power in first quarter results.
Despite cost pressures and waning consumer demand, earnings comfortably beat forecasts while the Oregon-based company also stuck by full-year guidance.
The read across for JD Sports, which is a Nike global partner, helped the chain’s shares reach their highest level since August with a gain of 6% or 8.3p to 151.1p.
Lancashire-based JD’s robust showing came in a strong session for the wider retail sector as Next lifted 92p to 7374p and Marks & Spencer improved 1.6p to 236.9p, aided by today’s robust second quarter GDP figures.
Housebuilders Barratt Developments and Taylor Wimpey were among other stocks in demand as the FTSE 100 index surged 56.13 points to 7657.98, continuing London’s recent outperformance.
In contrast, Wall Street has experienced its worst month of the year as US shares struggle on fears that the Federal Reserve will keep interest rates high throughout 2024.
Casualties of the rates uncertainty have included London-listed magazine publisher Future, given that a growing proportion of its revenues are in the US.
Shares have slumped by more than a third this year, although investors returned in significant numbers today when the Marie Claire and GoCompare firm delivered a brief but reassuring trading update.
Future surged 17% or 123p to 837.5p in a session when the FTSE 250 index put on 1.4% or 248.43 points at 18,347.11.
Aston Martin Lagonda also powered 12% higher, up 30.2p to 291.2p as it emerged that the Yew Tree consortium led by the car maker’s executive chair Lawrence Stroll had increased its stake by 3% to over 26%.
Stroll said the stakebuilding demonstrated the consortium’s “continuing confidence and belief” in the future of Aston Martin, having overseen a major turnaround in fortunes since coming on board three years ago.
He added: “We have rebuilt this iconic company, transforming it into an ultra-luxury brand, with a portfolio of highly desirable, performance-driven cars.”
Elsewhere in the FTSE 250, airport caterer SSP put on 4.2p to 207.8p as it emerged that deputy chief executive Jonathan Davies had spent £75,000 backing the shares. He made his investment after the Upper Crust owner’s recent downgrade to earnings guidance.
Mortgage approvals plunge in August as interest rates finally starting to bite
Friday 29 September 2023 10:11 , Daniel O'Boyle
The effect of higher interest rates on home purchases became clearer in August, as the amount of mortgage approvals in the month fell further, while the average rate paid on new deals rose sharply.
According to figures released today by the Bank of England, the number of approvals for home purchases fell to just 45,400, the lowest figure since February, when approvals plummeted in the wake of the mini-Budget. Though still higher than the low-point reached last year, monthly approvals are far below the average of the last decade, when around 70,000 approvals was a typical figure.
Losses widen at cybersecurity firm Snyk
Friday 29 September 2023 09:46 , Simon Hunt
Losses widened to $267 million (£218 million) at Snyk, its 2022 accounts show today, as the cybersecurity business counted the cost of its aggressive expansion plans.
The London-based tech firm saw its costs go up by half after it ramped out its marketing spend and recruited hundreds of new staff in 2022, leading to a near-doubling in its wage bill.
Those costs ultimately proved too difficult for Snyk to swallow, and in April it laid off over 120 staff, around 12% of its workforce, in a bid to “increase operational efficiencies and streamline expenses.”
Its turnover rose from $58 million in 2021 to $147 million in 2022.
The cybersecurity market has boomed over the past year as a number of high-profile cyberattacks on blue-chip businesses prompted firms to strengthen the protections around their IT systems.
But the industry has also seen fierce competition between major players, with vast sums spent on advertising and marketing to secure new customers. Snyk’s British rival Darktrace spent as much as $228 million on sales and marketing in the year to end June, more than four times its spend on research and development.
Is a recession still on the cards?
Friday 29 September 2023 09:20 , Daniel O'Boyle
Investec analyst Sandra Horsfield says the UK is still likely to enter a recession at the end of this year despite the revised GDP figures.
She said: “We see little in today’s numbers to derail our expectation of a more challenging growth picture ahead: we continue to forecast that the UK economy will enter a recession over the winter months, a view that fits with the clear weakening in the most recent survey data. But the revisions to the GDP numbers since early September do mean this comes from a stronger starting point.”
But Richard Carter, head of fixed interest research at Quilter Cheviot, said the data “gives some hope that a recession can still be avoided by the UK”.
FTSE 100 higher on retail optimism, Aston Martin up 9%
Friday 29 September 2023 08:42 , Graeme Evans
Retail stocks powered the FTSE 100 higher today, led by JD Sports Fashion in the wake of last night’s robust first quarter results by sportswear giant Nike.
Transatlantic operator JD Sports rose 5% or 7.85p to 150.7p in a session when food retail partners Marks & Spencer and Ocado lifted 6.9p to 242.2p and 21.4p to 602.4p respectively.
The FTSE 100 index surged 56.58 points to 7658.43, with Severn Trent 4% or 88p higher at 2353p on the back of its £1 billion fundraising plan.
The FTSE 250 index put on 1% or 189.68 points at 18,288.36. Consumer publishing group Future surged 9% or 67p to 781.5p after the GoCompare owner reassured on recent trading.
Aston Martin Lagonda also rallied 9%, up 23.4p to 284.4p as it emerged that the Yew Tree consortium led by the car maker’s executive chair Lawrence Stroll had increased its stake to over 26%.
FTSE 100 up 0.7% on GDP data
Friday 29 September 2023 08:35 , Simon Hunt
Half an hour into the day’s trading session in London, the FTSE 100 is up 0.7% as investors cheered upward GDP revisions.
Here’s a look at your key markets data:
Future says magazine performance ‘resilient’
Friday 29 September 2023 08:32 , Daniel O'Boyle
Country Life and TechRadar publisher Future said its magazine titles had been “resilient” over the last three months, leaving it still on track to hit its profit targets for the year.
The business said audience numbers had stabilised after a slowdown in the first half of the year, with magazine revenue having “remained resilient”. Advertising and affiliate marketing revenue for its online publishing brands struggled, despite a good performance on Amazon Prime Day. However, price comparison giant GoCompare performed well with revenue rising.
The group expects operating profit to land close to the consensus figure of £254.1 million.
Jon Steinberg recently took over as Future CEO after the exit of Zillah Byng-Thorne.
Energy price cap to fall - but households may still have to pay more than last winter
Friday 29 September 2023 08:24 , Daniel O'Boyle
A fall in Ofgem’s energy price cap takes effect this weekend amid concerns households could still end up paying around 13% more than last winter.
The regulator announced in August that the cap on a unit of gas and electricity would reduce the average bill from £2,074 to £1,923 for the three months from October 1 in England, Wales and Scotland.
However, this is still more than 50% higher than pre-crisis levels, and the Government is yet to announce any financial support along the lines of last year, when the Energy Price Guarantee limited average bills to £2,500 per year and each household received a further £400 over six months to offset the soaring costs.
New GDP figures ‘don’t change big picture'
Friday 29 September 2023 07:59 , Daniel O'Boyle
Capital Economics deputy chief UK eonomist Ruth Gregory was not optimistic about the UK’s economic outlook despite the revised GDP figures.
She said: “Overall, today’s release changes very little. The data leaves the economy still only 0.6% above its level a year ago. It does not change the big picture that the economy has lagged behind all other G7 countries aside from Germany and France since the pandemic. And that’s before the full drag from higher interest rates has been felt.”
Water giant Severn Trent in £1 billion sale of new shares to fund business plan overhaul
Friday 29 September 2023 07:53 , Michael Hunter
Severn Trent, the FTSE 100 water utility, is raising £1 billion via a placing of new shares to fund an overhauled business plan, which includes an increased level of investment in infrastructure.
Half the new stock – worth £500 million in total – is going to Qatar Investment Authority, an existing investor.
The company, which supplies almost five million homes from the Bristol Channel to the Humber, also launched its five-year business plan running from April 2025 to the end of April 2030. It includes £12.9 billion of total expenditure.
The water industry has been hit by a wave of public anger over overflows of raw sewage into rivers during storms and high levels of leaks of supply from mains pipes. Severn Trent said its plan aimed to cut storm overspills by 30% and leakage by 16%.
Brent Crude above $90 after big quarterly rise
Friday 29 September 2023 07:52 , Graeme Evans
Brent Crude futures today remained close to their highest level in a year, having rallied by some 22% in the quarter about to close.
The increase follows Saudi Arabia’s decision to extend a voluntary supply cut through to the end of the year, as well as recent signs of falling US stockpiles.
The oil benchmark today traded at just above $93 a barrel, fuelling worries that inflation will take longer to fall back to target levels and force central banks to keep interest rates high for longer.
Wall Street’s worst month of year, FTSE 100 seen higher
Friday 29 September 2023 07:21 , Graeme Evans
A choppy quarter for global markets is poised to end on a subdued note, with the FTSE 100 index forecast by CMC Markets to open 13 points higher at 7614.
US markets finished in positive territory last night, although the gains are unlikely to prevent Wall Street recording its worst monthly performance so far this year.
The S&P 500 index, which hit a three-month low earlier this week, is down 4.5% in September and the tech-focused Nasdaq about 6% lower.
Michael Hewson, chief market analyst, said: “There’s been a significant shift in sentiment over the summer as economic data has deteriorated and expectations around how long interest rates are likely to stay high have shifted well into 2024.”
There’s potential for more rate rise jitters this afternoon through the release of the price index for personal consumption expenditure, which is the Federal Reserve’s preferred measure for tracking inflation.
Hewson added: “The Federal Reserve has continued to suggest that they may look to hike rates again in November if inflation doesn’t show further signs of coming down.
“Today’s numbers need to show that further downside is possible when it comes to core inflation for the prospect of a further rate hike by year end to recede.”
Pound rises as UK economy grew 0.2% in second quarter
Friday 29 September 2023 07:10 , Daniel O'Boyle
The UK economy grew 0.2% in the second quarter compared to the prior one, according to revised ONS data released this morning. First quarter GDP growth, though, was revised upwards from 0.1% to 0.3%.
That meant the economy grew 0.6% compared to the prior year, in signs the UK economy is performing better than previously thought.
The pound has extended its gains against the dollar on the back of the data, with FTSE futures now looking higher.
Recap: Yesterday’s top stories
Thursday 28 September 2023 23:23 , Simon Hunt
Good morning. Here’s a summary of our top stories from yesterday:
888 profit warning after run of “customer friendly” sports results particularly Premier League results
Mitchells & Butlers sales up 9% and “cost headwinds abating”
Zoo Digital profit warning as Hollywood strikes have “significant impact”
Iphone designer Jonny Ive in talks with Softbank to raise $1 billion for AI powered smartphone
Jack Ma-owned London fintech WorldFirst has shifted its Asia business away from UK oversight in a major restructuring, the firm’s accounts published today show.