Yahoo Finance FTSE 100 Live 9 February: London index ends week down again, S&P closes above 5000, Barclays buys Tesco Bank
London’s long-awaited run of dealmaking action continued today when Tesco unveiled the sale of its banking operations to Barclays.
This week has already seen a proposed tie-up between Barratt Developments and Redrow and DS Smith disclose takeover interest from packaging rival Mondi.
In the latest sign of an upturn in confidence in the housebuilding industry, Bellway today reported an improvement in reservations so far this year.
FTSE 100 Live Friday
Tesco sells banking arm to Barclays
Bellway sees pick-up in reservations
Hermès results defy luxury slowdown
S&P closes above 5000
Friday 9 February 2024 22:51 , Daniel O'Boyle
The US’s S&P 500 has closed above 500 for the first time in its history, in contrast with the struggled for UK stocks.
The index closed at 5,026.61
FTSE 100 closes down 0.3%
Friday 9 February 2024 16:38 , Daniel O'Boyle
The FTSE 100 closed at 7,572.58 today, down 0.3%.
That means it ended the week lower again, down 0.6% from last Friday’s close.
Top risers included Entain, after strong figures from its US-facing joint venture BetMGM, and DS Smith, which built on yesterday’s takeover-fuelled gains.
Miners Fresnillo and Glencore were the top fallers.
FTSE 100 slides, now down 0.4%
Friday 9 February 2024 15:33 , Daniel O'Boyle
The FTSE 100 looks to be finishing the week on the wrong foot, tumbling to 7,562.20.
London’s top flight had held steady for most of the day, but has slid in the afternoon, as has been a frequent event this year.
Legal & General, Glencore and Burberry are among the biggest fallers.
S&P back above 5000
Friday 9 February 2024 14:34 , Daniel O'Boyle
The S&P 500 is back above the 5000 mark as it looks to close above that threshold for the first time.
The US’s main stock market index briefly topped 5000 yesterday, only to fall back below that line.
Led by the ‘magnificient seven’ tech firms, the S&P has surged to start this year, in contrast with the struggling FTSE 100.
The index opened up 0.2% to 5,005.28.
City Comment: City mergers are back — for now
Friday 9 February 2024 14:28 , Jonathan Prynn
Hold on to your hats. The tumbleweed has all blown away and the M&A gunslingers are back in town.
What a few days it has been for the dealmakers. On Wednesday we had the £2.5 billion tie-up between Barratt Developments and Redrow to create a £7 billion sector superheavyweight. Yesterday it emerged that FTSE 100 packaging giant Mondi is in talks with rival DS Smith about a potential £10 billion merger.
Now we have Tesco Bank being sold to Barclays for up to £700 million.
But is the flurry a sign of a sustained pick-up in M&A… or just a blip?
Pfizer/BioNTech Covid jab to be sold in UK high street pharmacies
Friday 9 February 2024 14:15 , Daniel O'Boyle
The Pfizer/BioNTech Covid jab will be sold in UK high street pharmacies from next month.
Pharmaceutical giant Pfizer is in talks with major pharmacy chains, such as Boots, to sell the vaccine to people who cannot get one on the NHS.
The price will be set by individual pharmacies – much in the way prices are currently set for annual flu jabs.
NatWest’s earnings in focus as bosses hope to put aside debanking row
Friday 9 February 2024 13:33 , Daniel O'Boyle
NatWest’s investors will be hoping for good news on the banking group’s finances next week, as it looks to shrug off the turmoil of the recent debanking saga and prepares to sell its shares to the public.
The group, which also owns Royal Bank of Scotland, Ulster Bank and Coutts, will unveil its fourth quarter earnings and full-year financial results on Friday.
It is expected to report a pre-tax profit of £6 billion for the year, with an income totalling £14.6 billion, according to a consensus compiled by analysts in November.
Inflation expected to rise for second straight month, making interest rate cuts less likely
Friday 9 February 2024 13:12 , Daniel O'Boyle
The UK’s inflation rate is set to rise for the second consecutive month, in a blow to hopes that the Bank of England will cut interest rates next month.
According to Refinitiv data, economists predict that the UK’s headline rate of inflation is set to rise again to 4.2% in January when the ONS reveals the official figures next week. However, there is a wide range of opinion among the economists surveyed, with the highest predicted rate being 4.5% and the lowest 3.7%.
Energy prices are a major reason for the rise, as a new, higher, energy price cap came in on 1 January.
Virgin Media faces Ofcom probe over compliance with digital switchover rules
Friday 9 February 2024 12:34 , Daniel O'Boyle
Ofcom has opened an investigation into Virgin Media over concerns about the telecoms firm’s compliance with rules to protect vulnerable customers during the switch from analogue to digital telephone landlines.
The regulator said it wanted to look into Virgin Media’s compliance in two areas: rules around taking necessary measures to ensure uninterrupted access for customers to emergency organisations, and rules on the fair treatment of vulnerable customers.
The telecoms industry is currently upgrading landline services to new digital technology using an internet connection, such as Voice over Internet Protocol (VoIP), Digital Voice or All-IP telephony.
City Voices: UK recession is a real risk — but ‘soft landing’ is more likely
Friday 9 February 2024 11:53
George Lagarias outlines the different options ahead of the UK economy
Economists often predict recessions.
Pessimism is inherent, I suppose, when dealing with the ‘dismal science’. The past few years have been no exception. This time last year, forecasters predicted an 90% probability that the UK would be in recession by now. Yet, the British economy stayed above water. 2024 will probably go the same way of low but positive growth. Why is that?
Recessions, are ultimately a choice. A government can decide either to take the economic pain at a particular juncture, or defer it by running higher deficits. In the case of the UK, the latest deficit-to-GDP number was 5.5%, according to Bloomberg. Excluding the Global Financial Crisis and the pandemic, this is nearly double the average deficit of approximately 3%.
‘Tourist tax’ set to hit total spend during Chinese New Year celebrations in London
Friday 9 February 2024 11:00 , Daniel O'Boyle
The controversial 'tourist tax' means London won't see the Chinese New Year "dramatic spend uplift" it experienced pre-pandemic, it has been predicted.
The warnings that spending may not be as high as seen in prior years comes despite a fresh forecast that anticipates footfall will rise by as much as 10% in central London this weekend compared with the prior weekend.
Scores of overseas tourists and Brits will hit shops and fill up restaurants as they enjoy Lunar New Year celebrations, with Year of the Dragon related goods on sale in certain stores. There are events over the weekend, with a parade beginning on Charing Cross Road on Sunday.
AstraZeneca steadies after results slump, Air Astana dealings underway
Friday 9 February 2024 10:17 , Graeme Evans
Air Astana was today valued at $847 million (£671.5 million) as conditional dealings got underway through a triple listing in London and the Astana and Kazakhstan stock exchanges.
BAE Systems, whose local subsidiary’s 49% shareholding dates back to the Central Asia airline’s maiden flight in 2002, is reducing its stake to about 15% through the listing.
Air Astana’s offer of global depositary receipts was several times oversubscribed, an encouraging sign for the London market after a barren run of new listings.
The airline’s chief executive Peter Foster said: "The strength of investor support reflects our profile as a profitable, high-growth airline group underpinned by compelling market dynamics.“
Early dealings left Air Astana 2% lower ahead of the start of official trading on Wednesday, while BAE Systems stood 12p higher at 1207p.
London’s top flight added 1.51 points to 7596.99, with AstraZeneca among the risers despite chief executive Sir Pascal Soriot coming under more pressure in the City today.
Deutsche Bank responded to yesterday’s results with a “sell” recommendation and lower target price of 9500p, calling the end to 2023 “thoroughly underwhelming”.
Having lost its place to Shell as London’s most valuable company, Astra shares followed up yesterday’s fall of 6% with a rise of 129p to 9952p.
Legal & General fell 2% or 5.2p to 236.1p at the top of the fallers board, ahead of 1% declines for Aviva, NatWest and British American Tobacco.
The FTSE 250 dipped 8.43 points to 19,094.29, with Victrex down 2% or 26p to 1318p.
The high performance polymers business forecast first half revenues and profits lower than a year earlier, although it did report signs of improvement in January.
UBS, which has a “sell” recommendation, said a significant recovery in volumes is needed “but not yet visible” for Victrex to meet the City’s full-year expectations.
AstraZeneca downgraded but shares rise, Victrex down 5% In FTSE 250
Friday 9 February 2024 08:45 , Graeme Evans
Deutsche Bank’s “sell” recommendation has heaped pressure on AstraZeneca after yesterday’s 6% slide for shares in response to fourth quarter results.
The City firm cut its target price to 9500p after Astra’s “thoroughly underwhelming” end to 2023.
Having lost its place to Shell as London’s most valuable company, Astra shares steadied in today’s session with a rise of 1% or 108p to 9931p.
The FTSE 100 index continued its lacklustre run by adding 2.14 points to 7597.62, with Tesco up 3.9p to 284.3p after Barclays bought the supermarket’s banking operations.
Legal & General fell 3% or 6.7p to 234.6p at the top of the fallers board, followed by 1% declines for Aviva, NatWest and the mining group Glencore.
The FTSE 250 dipped 2.24 points to 19,100.48, with Victrex down 5% or 68p to 1276p. The high performance polymers business reported challenging trading conditions and forecast first half revenue and profits lower than a year earlier.
Hermès avoids luxury slowdown
Friday 9 February 2024 08:39 , Daniel O'Boyle
French fashion house Hermès defied the luxury slowdown as its profits grew 28% in 2023.
Revenue came to €13.4 billion, up 21% from last year, with accessories and watches among the best-performing products. That helped profits rise to €4.3 billion.
The Birkin and Kelly bag maker expects sales to grow further in 2024.
Hermès’ performance contrasts with Gucci owner Kering, which yesterday reported a fall in sales for 2023. Commentators had feared that the boom in luxury spending after the pandemic had been followed by a dramatic slowdown in the second half of 2023.
Axel Dumas, executive chairman of Hermès, said: “In 2023, Hermès has once again cultivated its singularity and achieved an outstanding performance.”
The business will pay a €4,000 bonus to all of its 22,400 staff.
The shares rose by 4.3% this morning in Paris to €2,164.50. They’re up 27.3% over the last year.
Bellway points to signs of spring in the housing market as mortgage rates fall
Friday 9 February 2024 07:35 , Michael Hunter
There are signs of a rebound in the housing market as the mortgage rates on offer from lenders start to come down, according to an update today from Bellway.
The developer said there were “encouraging levels of customer enquiries in the traditionally quieter winter trading period”, lifting private reservation rates.
Overall in the six months to the end of January, housing revenue fell to £1.25 billion, down from £1.8 billion year-on-year. The number of completions fell, to 4,092 homes from 5,695.
And the average selling price also dropped, to £309,300 from £316,929.
The FTSE 250 company said it had opened 34 new outlets in the period “building on the recent recovery in customer demand” and has plans to open over 40 more in the second half of the year.
Jason Honeyman, group CEO, said: “While the economic backdrop remains uncertain, the gradual reduction in mortgage interest rates through the first half has eased affordability constraints and we are encouraged by the seasonal pick-up in customer leads and an improvement in reservations since the start of the new calendar year.
Tesco sells banking arm to Barclays for £600m
Friday 9 February 2024 07:23 , Simon English
Tesco today agreed what it called a “long-term strategic partnership” with Barclays to provide banking services to its millions of customers.
The supermarket first moved into banking in July 1997, a move aped by other grocers. It was then a 50:50 joint venture with Royal Bank of Scotland.
Supermarkets thought their close relationship with their customers would enable them to sell insurance and other banking products alongside food.
In most cases, the plans did not take off as expected.
A few weeks ago Sainsbury said its banking arm was up for sale as it instead goes for a “food first” strategy. It first launched into banking nearly 30 years ago. It had already sold its mortgage book to Co-op Bank last August.
Barclays will take on 2800 staff from Tesco Bank, paying around £600 million for its customers deposit and loan arm. Barclays said the deal is a “further demonstration of the investment we continue to make in our UK consumer business”.
Chief executive C.S. Venkatakrishnan added: “We are looking forward to working closely with the team at Tesco over the coming months to enable a smooth transition and, subject to completion of the transaction, we look forward to welcoming Tesco Bank colleagues and customers to Barclays.”
And Tesco boss Ken Murphy said the tie up will offer “greater value for customers and for our business”.
The value of the deal could rise over time.
Arm shares surge and S&P 500 breaks 5000, FTSE 100 seen higher
Friday 9 February 2024 07:22 , Graeme Evans
Shares in Arm Holdings closed 48% higher last night, valuing the Cambridge-based chip designer at $116.76 billion (£92.5 billion) after results the previous evening smashed Wall Street expectations.
Arm’s shares have more than doubled since they began trading on Nasdaq in September, fuelled by demand from customers needing chips to power AI technology.
The strong performance, which means Arm is now worth more than FTSE 100-listed BP, GSK and Rio Tinto, came during an otherwise lacklustre session on Wall Street.
The S&P 500 index closed 2.85 points higher at 4997.91, having briefly gone above the 5000 threshold for the first time. The Dow Jones Industrial Average and Nasdaq Composite both registered modest gains.
A negative reaction to AstraZeneca results contributed to London’s underperformance in yesterday’s session, with the drugs giant down 6% and the FTSE 100 off 33.27 points to 7595.48. IG index expects the top flight to open today’s session 0.2% higher.
Tesco sells banking arm to Barclays
Friday 9 February 2024 07:11 , Daniel O'Boyle
Tesco has agreed to sell its banking arm to Barclays for about £1 billion, weeks after rival Sainsbury’s announced its exit from banking.
Tesco said the deal removed £7.7 billion worth of “capital-intensive assets” and £6.7bn of financial liabilities from its balance sheet.
It will get an initial £600 million, plus £100m after the settlement of certain regulatory capital amounts and after transaction costs, and a special dividend of £250 million.
Ken Murphy, Tesco chief executive, said: “Tesco Bank is a strong business that has helped millions of loyal customers to manage their money for more than 25 years.
“As we look to the future, our aim is to be the best provider of financial services in the UK, with this strategic transaction and partnership with Barclays unlocking greater value for customers and for our business. By working with one of the UK's leading banks, we can bring customers new and innovative propositions, which will continue to benefit from Tesco Clubcard's unique insight and digital capabilities.”
C.S. Venkatakrishnan, Barclays chief executive, said: “Barclays is a leading consumer bank in the UK. This strategic relationship with the UK's largest retailer will help create new distribution channels for our unsecured lending and deposit businesses.”
Recap: Yesterday's top stories
Friday 9 February 2024 06:48 , Simon Hunt
Good morning from the Standard City desk.
Along with unemployment, home repossession is probably the most distressing symptom of recession.
We still do not know if the country was officially in recession at the back end of last year — for that we have to wait for the puff of white smoke from the ONS next week.
But the scourge of repossession is almost certain to rise, with London worst affected, whatever the GDP number crunchers come up with. According to government figures published today, banks and building societies initiated 4,384 mortgage possession claims in the last quarter of 2023.
That is up 39% on the same period in 2022.
It takes about a year for the process to play out, from a claim being lodged with the county court, to owners having to hand the keys over the bailiffs. So legal proceedings started last autumn will not result in people being turfed out for many months yet.
We are not yet back at the levels of claims seen before the pandemic, let alone after the financial crisis, or God forbid, during the Nineties property crash. But they are steadily rising — and London is on the front-line.
There has been so much talk of rate cuts that you have to remind yourself sometimes that the Bank of England continues to stay its hand at 5.25%.
Today’s figures show that for increasing numbers of people that is too much of a burden to bear.
Here’s a summary of our other top stories from yesterday:
Unilever says performance is “disappointing” as hard pressed shoppers switch from the likes of Magnum and Ben & Jerry’s to cheaper own brand alternatives
Rolex seller Watches of Switzerland says UK sales slumped due to “challenging macroeconomic conditions” and lack of tourist spending
Superbowl and Winmbledon caterer Compass reports “better than expected” revenue growth of nearly 12%
Astra Zeneca revenues up 6% despite $3.7 billion drop in COVID revenues. But legal dispute hangs over its best-selling drug Farxiga
Arm shares surge 50% making it the sixth most valuable British company
