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FTSE 100 Live: Food price inflation hits record 14.7%, Binance acquires crypto exchange FTX

FTSE 100 Live: Food price inflation hits record 14.7%, Binance acquires crypto exchange FTX

Housebuilder Persimmon and Primark owner Associated British Foods today revealed the impact of increased economic uncertainty.

Persimmon reported rising cancellation rates, with higher interest rates creating pressure on weekly sales rates and its forward sales.

The owner of Primark also revealed today it had decided not to implement further price increases on this year's autumn/winter and spring/summer ranges beyond those already actioned and planned.

Food price inflation has hit a record high as soaring energy prices and labour costs push prices up at supermarket shelves. Grocery price inflation now stands at 14.7%, according to data insights business Kantar, a record high since the firm began tracking prices in this way in 2008.

FTSE 100 Live Tuesday

  • Food price inflation hits a record high

  • Primark shelves price rises

  • Persimmon cancellation rate rises, shares fall

That’s all folks: look ahead to tomorrow

Tuesday 8 November 2022 17:41 , Simon Hunt

That concludes our coverage for today as the FTSE 100 trod water and the pound enjoyed an uplift as midterm elections commenced across the pond in the United States.

London’s blue-chip index lost about 50 points during its lows of the day, dragged down by debt-burdened Irish firm DCC and downbeat housebuilder Persimmon. But it managed to claw back its losses and had edged up by just 0.08%, or 6.15 points, at the end of the day, to 7,306.14.

Tomorrow we’ll have a clearer picture of the outcome of the midterm results, plus interim results from Marks & Spencer which will shed light on how high street retailers have fared over the winter.

Binance acquires crypto exchange FTX to tackle ‘liquidity crunch'

Tuesday 8 November 2022 17:12 , Simon Hunt

Binance is to acquire crypto exchange FTX in a bid to tackle its ‘liquidity crisis’, the firm has announced.

Binance founder Changpeng Zhao said in a tweet: “This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire and help cover the liquidity crunch.”

It comes after billionaire Zhao said he would liquidate Binance’s holdings in FTT, a crypto coin operated by FTX, because of “recent revelations.”

The precise terms of the deal were not disclosed.

FTSE 100 closes up 6 points: Evening wrap

Tuesday 8 November 2022 16:44 , Simon Hunt

The FTSE 100 closed up 6 points to 7,306 after gains in tech and raw materials stocks were offset by a drop in energy stocks.

B&M Retail made the most gains today. The stock was up 4.4% on the day it was revealed inflation at supermarkets had hit a whopping 14.7% and value retailers like Aldi and Lidl were increasing their market share as cash-strapped customers looked for places to make their budgets go further.

Shares in Harbour Energy fell 4.5%, while shares in Shell dropped 2.5% after news emerged that the UK was set to strike a new gas supply deal with the US.

Stocks stand still as investors await election results: Wall Street open

Tuesday 8 November 2022 14:51 , Simon Hunt

Stocks remained relatively unchanged in the opening minutes of trading in New York, as Wall Street investors held their breath while Americans went out to vote in the midterm elections.

Polls are suggesting that the Republicans will make gains -- making it difficult for more controversial Democrat legislation to pass, and therefore, some hope, paving the way for share price rises.

Shares in NVidia were a notable exception -- they rose 3.4% on news the company had begun work on making a processor for China.

Pound drops 0.7% against the dollar after Pill warns on inflation

Tuesday 8 November 2022 13:06 , Simon Hunt

The pound lost around 0.7% against the dollar on Tuesday after the Bank of England chief economist Huw Pill gave a speech in which he warned the Bank did not consider the threat of inflation to be under control.

He said: “I think we cannot delcare victory against second-round effects, but we are entering a recession.”

The dollar may have also gained some strength against the pound as Wall Street investors weighted the prospects of the outcome of US midterm elections being held today.

Pound vs dollar, 8 November (Bloomberg)
Pound vs dollar, 8 November (Bloomberg)

Motor claims crank up pressure on Direct Line as Hilton Food also falls: Morning wrap

Tuesday 8 November 2022 11:40 , Simon Hunt

Pressure on Direct Line shares continued today after the Churchill and Green Flag business revealed the impact of motor claims taking longer to settle.The insurer said the delays, which have been caused by court backlogs among other factors, slowed the pace it releases prior year reserves.

This means it now expects a full-year operating ratio of 98% or moderately above, whereas an update in July pointed to a better trend on profitability at below 98%.Shares fell 4% or 8.4p to 191p, leaving the stock more than 30% lower this year as the company grapples with motor claims inflation running at about 10% in 2022. The company said supply chain pressures continue to stretch motor repair times, adding that pricing actions to restore margins have led to a reduction in third quarter new business sales.

Despite the pressures, chief executive Penny James remains upbeat: “In these challenging economic conditions, the business is strong and actions we have taken continue to underpin the group’s future earnings power.”

Direct Line was joined on the FTSE 250 fallers board by Hilton Food, which tumbled 15% or 94p to 5540p after it warned that full-year operating profits will miss expectations.

The multi-protein food supplier blamed the shortfall on the time it has taken to mitigate or pass through “unprecedented” inflationary costs faced by its UK seafood business.Support from shopping centre landlord Hammerson after its shares rose 8% on the back of a reassuring trading update meant the wider FTSE 250 index held firm with a gain of 10.51 points to 18,570.18.

The FTSE 100 index was 16.04 points lower at 7283.95.

Persimmon shares tank while ABF shares get a boost: FTSE 100 biggest movers

Tuesday 8 November 2022 11:04 , Simon Hunt

Three hours into the day’s trading session in London, here’s a look at the biggest movers on the FTSE 100.

Shares in Primark owner ABF are up almost 5% after the firm said shoppers are back in stores at near pre-pandemic levels – and stocking up on cold weather clothes so they can keep heating bills down.

At the other end of the table, Persimmon shares are down 6.3% after the York-based house builder said “rising interest rates and broader economic uncertainty are clearly impacting mortgage lending and customer behaviour” as it described market conditions as “more challenging”.

New CFO at WPP

Tuesday 8 November 2022 09:57 , Simon English

THERE was a shake-up at the top of advertising giant WPP today, when it appointed Joanne Wilson to become the new chief financial officer.

She arrives from Britvic to support CEO Mark Read, replacing John Rogers, whom the statement said “has decided to step down from the company”.

Rogers was himself poached from Sainsbury three years ago and became one of the best paid number twos in the corporate world with pay of around £4 million a year.

Wilson becomes one of only a few female CFOs at FTSE 100 companies. NatWest has Katie Murray in the same role.

Rogers said: "It has been a privilege to work alongside Mark, the Board and the executive team to deliver our transformation plan and growth strategy, and I am very proud of what we have achieved together over the last three years.

"With WPP well positioned for ongoing success, and as the company enters the next phase of its transformation, I feel now is the right time to move on to new challenges and to begin a smooth transition to a new CFO. I look forward to working with Joanne on the handover next year."

WPP shares are down 25% this year. They rose 4p today to 810p, which leaves the business valued at £8.8 billion.

Direct line shares drop as it warns claims are taking longer to settle

Tuesday 8 November 2022 09:17 , Simon Hunt

Shares in home and motor insurance business Direct Line fell 3% this morning after the firm warned delays to settling claims were hurting its balance sheet reserves.

In a statement Direct Line said: “Claims are taking longer to settle, for example due to court backlogs, and this is slowing down the recognition of prior-year reserve releases, particularly from Motor large bodily injury claims.

“There remains pressure in the supply chain elongating repair times, especially for third party repairs.”

Builders hit as FTSE 100 falls, Hammerson up 9%

Tuesday 8 November 2022 09:00 , Graeme Evans

Valuations in the housebuilding sector have taken another hammering following today’s cautious guidance by Persimmon.

The FTSE 100-listed shares fell 8% or 108p to 1215p, leaving the company around 57% lower in 2022 as investors position for a sharp fall in house prices. Taylor Wimpey and Barratt Developments also dropped more than 3%.

Weaker oil stocks BP and Shell added to pressure on the FTSE 100 index, which fell 32.06 points to 7267.93. Other blue-chip casualties included the conglomerate DCC with a 7% drop, but Associated British Foods improved 63p to 1491.5p following annual results.

The FTSE 250 index was flat at 18,552.21, with Brent Cross shopping centre owner Hammerson up 9% or 2p to 23.5p after a reassuring third quarter update on footfall and rent collection rates. Hilton Food dropped 14% or 88p to 546p after warning it is taking longer to pass on higher costs in its UK seafood division.

Hats and hoodies fly off shelves at Primark

Tuesday 8 November 2022 08:04 , Simon English

PRIMARK shoppers are back in stores at near pre-pandemic levels – and stocking up on cold weather clothes so they can keep heating bills down.

For the year to September sales jumped 22% to nearly £17 billion at parent group ABF, which includes the Silver Spoon sugar arm.

Chief executive George Weston says customers are cautious.

“We are seeing a change in shopping behaviour,” he told the Standard. “Our footfall is up but the basket size is down, people are buying less, but coming into stores in greater numbers.”

“We have been selling a very large amount of cold weather colds -- hats, scarves, hoodies. That is about people wanting to leave the central heating off for longer.”

He added: “We are selling more Xmas items earlier in the season than we could expect too, people are spreading Christmas buying over more than one pay day.”

Profits jumped 43% to £1.35 billion, with dividends up 8% to 43.7p. The shares, down 23% to 1436p, are likely to recover somewhat today.

Weston, a business old timer, compares the present economic conditions to the 1970s rather than the 2007 banking shock.

There will be another year of inflationary pressures before things return to something approaching normal, he warns.

The group has taken a £1 billion hit from extra costs this year.

The statement to the stock market said: “We estimate that inflation increased costs across the Group by some £1bn in this year alone. The fact that the Group prospered is testimony once again to the agility and expertise of our people and to the strength of our business model.”

Footfall on Oxford Street is back to pre-pandemic levels, a sign that not all shopping will go online.

Food price inflation hits record 14.7%

Tuesday 8 November 2022 08:02 , Simon Hunt

Food price inflation has hit a record high as supermarkets pass on soaring energy and labour costs to customers at the checkout.

Four-week grocery price inflation now stands at 14.7%, according to data insights business Kantar, a record high since the firm began tracking prices in this way in 2008.

Own label sales jumped 10.3% over the past four weeks, while branded goods market grew far slower at 0.4% as  shoppers on squeezed incomes scrapped buying household brand names in a bid to get more bang for their buck. Sales of the very cheapest value own label ranges grew by 42%.

Aldi was the fastest growing retailer in the latest period, increasing its sales by 22.7% year on year to now hold a 9.2% market share. Lidl boosted sales by 21.5% to take its market share to a new record high of 7.2%, while Waitrose’s market share fell 1.9% to 4.7%.

read more here

US elections in focus, FTSE 100 seen lower

Tuesday 8 November 2022 07:51 , Graeme Evans

US midterm elections get underway later today, with pollsters pointing to the Republicans winning at least one of the US legislatures.

Such an outcome could result in gridlock for the next two years, delaying any potential laws that could impact negatively on business.

Deutsche Bank strategist Jim Reid points out that US stock markets have traditionally done well in the period after the polls.

He said: “It’s no exaggeration to say that midterm elections are one of the best historic buy signals for equities we have.

“In fact, in the 19 midterm elections since WWII, the S&P 500 has always been higher one year after the vote. Whether any of those cycles had to contend with the macro tsunami that's coming in the next 12 months is a moot point but it shows the underlying technicals.”

The dollar has weakened ahead of elections, putting pressure on the overseas-focused FTSE 100 index during trading yesterday. CMC Markets expects a further decline for London’s top flight today, with a fall of 29 points to 7271.

Persimmon reports rising cancellation rates as rising interest rates bite

Tuesday 8 November 2022 07:43 , Michael Hunter

FTSE 100 house builder Persimmon has pointed to “recent elevated cancellation rates” in a trading update in which it stood by its existing guidance to sell between 14,500 and 15,000 homes this year.

The York-based company said “rising interest rates and broader economic uncertainty are clearly impacting mortgage lending and customer behaviour” as it described market conditions as “more challenging”.

Its rate of cancelled sales rose to 28% from 21% in the last six weeks as rising interest rates made mortgages more expensive and introduced “uncertainty” in the market, while the government’s Help to Buy scheme, designed to help open access to the housing ladder, is now closed to new applicants.

Dean Finch, CEO, said: “Our highly experienced senior operational management team are drawing on their decades of detailed knowledge across many housing cycles to continue to rigorously assess every aspect of our business to ensure we are building quality homes for customers in the most cost-efficient manner.”

Primark shelves planned price rises, warns over margin impact

Tuesday 8 November 2022 07:28 , Graeme Evans

Primark owner Associated British Foods has reported a 49% rise in profits to £1.4 billion, with the retail chain’s surplus more than double the previous year at £756 million.

The chain’s operating margin improved to 9.8% for the year to September but is set to come under pressure as high street conditions deteriorate and it holds back on planned price rises.

It said: “Given a context of a likely reduction in consumer disposable income we have decided this year not to implement further price increases on the autumn/winter and spring/summer ranges beyond those already implemented and planned.

“We believe this decision is in the best interests of Primark, supporting our core proposition of everyday affordability and price leadership and supporting market share growth over the longer term.

“We expect Primark's adjusted operating profit margin for next year to be lower than 8% but looking further ahead, we remain focused on returning to an adjusted operating profit margin of some 10% as commodity prices moderate and consumer confidence improves.”