Yahoo Finance FTSE 100 Live 23 January: December borrowing sets 2019 low, Primark boosted by Rita Ora, shares higher
The number of companies in ‘critical’ financial distress today showed a big jump as higher interest rates take their toll on the UK economy.
The Begbies Traynor Red Flag Alert report said the 26% increase on the previous quarter showed a “perfect storm impacting every corner of the economy”.
In today’s City trading updates, Sir Martin Sorrell’s S4 Capital said it expects client caution on marketing spend will likely persist during 2024.
FTSE 100 Live Monday
“Perfect storm” leaves more firms in danger
Ad industry boss braced for tough year
Compass buys Kew Gardens caterer
NatWest stake sold by Government
FTSE 100 closes at 7,487.71
Monday 22 January 2024 16:39 , Daniel O'Boyle
The FTSE 100 has closed up 0.35% at 7,487.71 today, shrugging off questions about China.
London's top flight briefly crossed the 7500 mark in early trading before slipping into the red, but rose again in an afternoon rally.
Entain and JD Sports were the top risers, while Glencore and Endeavour Mining were the big fallers.
How to build a better bank, with ex-Barclays boss Anthony Jenkins - Podcast
Monday 22 January 2024 16:28 , Daniel O'Boyle
This week on our How to be a CEO podcast we're joined by former group CEO of Barclays, Anthony Jenkins.
Anthony is the founder and CEO of 10x Banking. It's a tech company created in 2016 with an ambition to “build better banks”.
US stocks continue bull run, Nasdaq highest since 2021
Monday 22 January 2024 15:52 , Daniel O'Boyle
US stocks have continued their strong start to the year today, with the Nasdaq hitting its highest point in three years.
Take a look at our US market snapshot
Barclays cuts mortgage rates again in sign inflation rise hasn't stopped price war
Monday 22 January 2024 15:13 , Daniel O'Boyle
Barclays has cut its mortgage rates again, as last week’s shock rise in inflation does not appear to have deterred lenders from reducing prices.
The high street bank will cut mortgage rates by as much as 0.6 percentage points from Tuesday (23 January), as the “mortgage price war” shows no sign in slowing down.
A message to brokers said: “We are pleased to confirm we are reducing rates on a selection of products by as much as 0.50% across our residential purchase and remortgage range and 0.60% across our existing customer range, effective from tomorrow, Tuesday 23rd January 2024.”
Here's why 99% mortgages would be a disaster for the housing market
Monday 22 January 2024 14:30 , Daniel O'Boyle
Ben Ramanauskas says that instead of introducing economically illiterate schemes, the government needs to tackle the root cause of the housing crisis
In an incredibly crowded field, the proposal to introduce 99% mortgages has to be one of the very worst policies of any government ever. The plan is to allow people to be granted a mortgage by paying a deposit of 1%. The logic (and I use that word loosely) behind the proposal is that this will make it easier for young people to own a home and get on the housing ladder.
While it is true that many young people do struggle to save enough money for a deposit due to the cost of living crisis, 99% mortgages would be an absolute disaster for the economy.
The young people who find themselves able to take advantage of the new scheme might find themselves happy at first. However, there is a real risk that they would fall into negative equity if a future government decided to do the responsible thing of actually tackling the root causes of expensive housing.
Thames Water in short term bond buy-back offer as new CEO moves to clean up debt burden
Monday 22 January 2024 13:33 , Michael Hunter
Thames Water has offered to buy some of its near-term bonds back from investors, as its new chief executive seeks to get a grip of its debt burden.
The move comes as the firm simultaneously seeks investors for longer-term debt.
London's 16-million customer utility owes around £15 billion in total, and rising interest rates have made it more expensive to service the debt.
The sheer scale of the financial obligation involved stoked speculation about the company's ability to continue as a going concern. Today's announcement comes after Chris Weston, took up the helm at the Reading-based firm this month.
Thames said today that it would buy back its outstanding bonds due in June 2025. They feature a 4% rate. It also said it would issue new longer-term debt, which is likely to cost it more, but could appeal to investors cashing in on the nearer-term bonds,
Reports carried by the Bloomberg financial news agency suggested that these bonds were designed to raise around $750 million and run for two longer durations, of 7 years and 20 years.
Lunchtime market snapshot: FTSE 100 down less than a point
Monday 22 January 2024 13:09 , Daniel O'Boyle
The FTSE 100 is down by less than a point as of lunchtime today, as it continues its struggling start to the year.
Elsewhere, it's been a better day for London's mid-cap stocks, while the price of Bitcoin is falling back towards $40,000.
Hunt will be Chancellor at time of election, Sunak says
Monday 22 January 2024 12:45 , Daniel O'Boyle
Jeremy Hunt will still be Chancellor at the time of the general election expected later this year, Rishi Sunak has said.
The Prime Minister said his finance minister was doing a “fantastic job” at managing the economy after mounting speculation ahead of the spring Budget about how long he will last in the post.
Asked on a visit to Buckinghamshire whether Mr Hunt would remain in his position at the time of the election, Mr Sunak told broadcasters: “Yes, and I’ve said that multiple times, it’s not new information.”
Retail stocks get tax cut boost
Monday 22 January 2024 12:18 , Daniel O'Boyle
Susannah Streeter, head of money and markets at Hargreaves Lansdown, says:‘ ’It’s a warmer to start to the week for the FTSE 100 and European indices, with stocks largely gaining ground. Even the sprinkle of cold scepticism about the prospects for interest rate cuts isn’t acting as much of a dampener to the red-hot enthusiasm, which helped Wall Street gain fresh new highs on Friday. The Nikkei also scaled fresh heights, as the positive vibes spilled over into the tech sector, with the Japanese index appearing to suck in investor appetite for Asian shares, amid a continued aversion towards China.
"The FTSE 100 is largely sitting on the sidelines of the tech rally, given the lack of star names in the index. However, retail stocks have started on the front foot, as speculation has swirled about the potential for tax cuts in the UK Budget in March. It seems to have inspired a bit of confidence that respite is on the way for the retail sector. It’ll be a difficult trade off however, given that more money in consumers’ pockets is aimed at boosting demand for goods and services, just at the time when the Bank of England is trying to trample down inflation, which is still double the target. Nevertheless, there seems to be a little uplift in appetite for a raft of high street and luxury names, which have suffered due to concerns about aspirational shoppers tightening their belts."
UK economic prospects picking up but 'good chance' it slipped into recession at the end of 2023, say experts
Monday 22 January 2024 11:43 , Daniel O'Boyle
Britain's economic prospects are picking up but there is a “good chance” it slipped into recession at the end of last year, a leading economist said on Monday.
The EY ITEM Club, which uses similar methodology to the Treasury, predicted that the UK economy will grow 0.9 per cent in 2024, up from its 0.7 per cent forecast in the autumn.
But asked on BBC radio if the UK economy went into recession at the end of last year, Martin Beck, chief economic adviser to the group, said: “There is a good chance that it did.”
City Comment: A new 'Lawson boom'? No thanks, I remember the first one
Monday 22 January 2024 11:03 , Daniel O'Boyle
Jeremy Hunt is hoping to recreate the Eighties “Lawson boom” with tax cuts in the March Budget, according to one particularly lurid splash headline in the Sunday papers.
Be careful what you wish for.
The Chancellor is old enough and — I assume — well versed enough in recent British economic history to know that it did not end well, either for the UK, or for the reputation of his Tory predecessor.
Market snapshot as FTSE gains fade
Monday 22 January 2024 10:39 , Daniel O'Boyle
Much of the FTSE 100's early gains have disappeared as we move to the late morning.
Take a look at the latest market snapshot.
FTSE 100 gains despite China uncertainty, transport stocks higher
Monday 22 January 2024 10:20 , Graeme Evans
Some of 2024’s biggest fallers rallied today as London investors focused on Wall Street optimism rather than jitters over China’s economy.
Barclays gained 3.6p to 144.6p and Ocado put back 8.4p to 560.4p.
BetMGM firm Entain also jumped 41.4p to 958.2p amid the read-across to the Swedish owner of Unibet and 32Red being a £2.1 billion takeover target for a company behind the French and Irish lotteries.
The blue-chip recoveries helped London’s top flight up by 11.90 points to 7473.83, with Friday’s record close for the S&P 500 index a factor in the improved risk appetite.
Wall Street’s tech-led bounce has been in contrast to frustration for Asia investors after China’s central bank today passed up another opportunity to deliver fresh stimulus.
The latest declines of more than 2% left the Hang Seng index 11% lower this year and the Shanghai Composite off by around 7%.
London-listed mining stocks reflected the China uncertainty, while accounting software firm Sage fell 8.55p to 1143.45p after a broker downgrade.
Among other risers, NatWest improved 3.9p to 211.9p after it emerged the Government had sold a further 1% stake to reduce its ownership to 35.94%.
The FTSE 250 index outperformed with a gain of 133.53 points to 19,004.94, led by heat treatment specialist Bodycote as its plans for a £60 million buyback of shares triggered a rise of 4% or 24p to 620p.
Other mid-caps up by 2% or more included transport operators FirstGroup and Mobico.
Compass serves up £475m deal to buy Kew Gardens caterer
Monday 22 January 2024 09:49 , Daniel O'Boyle
Catering giant Compass Group has struck a £475 million deal to buy CH&Co, the hospitality provider for venues such as Kew Gardens.
On Monday, the world’s largest food services firm said it has “signed an agreement” to take control of its private equity-backed rival.
CH&Co, which generates annual revenues of around £450 million, operates catering services across a raft of sectors including business, sport and leisure, education and culture, with the Royal Opera House also among clients.
Government sells another 1% of NatWest
Monday 22 January 2024 09:29 , Daniel O'Boyle
The Government has sold another 1% of its stake in NatWest, bringing its ownership of the bank to 35.94%.
The banking giant was bailed out following the global financial crisis, but the Treasury has been gradually cutting down its stake. The fact the bank was partially taxpayer-owned led to increased scrutiny of the bank’s handling of the closure of Nigel Farage’s account with NatWest-owned Coutts.
During last year’s Autumn Statement, the Chancellor revealed plans to sell more shares of NatWest in a retail sale, allowing members of the general public to take part for the first time.
NatWest shares are up 1.9% to 212p today.
$2.7bn deal for rival sends Entain to top of FTSE 100
Monday 22 January 2024 09:23 , Daniel O'Boyle
Shares of betting giant Entain jumped today on the news that Swedish-listed rival Kindred is set to be bought out in a $2.7bn deal.
La Française des Jeux, the owner of the French and Irish lotteries, is set to buy Unibet and 32Red owner Kindred for $2.7 billion. The read-across for Entain's value sent the Ladbrokes owner to the top of the FTSE 100, up 4.3%. Entain's Bwin brand and Kindred's Unibet are rivals as two of the biggest gambling sites in mainland Europe.
Paddy Power owner Flutter’s shares also briefly jumped before returning to roughly where they started the day. Gambling software firm Playtech’s shares got a boost too, up 2.1%.
Brickability buys cladding firm Topek Southern
Monday 22 January 2024 09:17 , Daniel O'Boyle
Building materials firm Brickability has bought cladding firm Topek Southern Limited for £27 million.
The deal continues its diversification away from bricks.
Analysts at Peel Hunt said: “This is another good deal, highlighting the group’s continued ambition to grow into niche areas and diversify away from its traditional brick/housing-exposed businesses.”
Brickability shares are up 2.7% to 57.5p.
London AI firm with 29-year-old founder achieves billion-dollar valuation after fresh funding round
Monday 22 January 2024 09:06 , Simon Hunt
An AI business founded by a 29-year old London tech entrepreneur is now worth more than $1 billion dollars after a fresh funding round in signs the capital is cementing its status as Europe’s foremost artificial intelligence hub.
ElevenLabs, which uses AI to generate voices use for video dubbing, has hit the unicorn milestone less than two years after its launch following a $80 million Series B funding round led by US venture capital firm Andreessen Horowitz.
The firm plans to use the funding to hire dozens more staff and bring more products to market. The firm’s value has shot up from its series A funding round just a few months ago, when it was worth 100 million.
Mental health firm Kooth hit by NHS backlogs and cutbacks
Monday 22 January 2024 09:02 , Daniel O'Boyle
Shares in mental health platform Kooth slid as it said NHS cutbacks and backlogs will continue to hit its sales this year.
Paddington-based Kooth, which offers anonymous mental health support tools for young people, said that headwinds from “a focus on NHS cost saving and the ongoing acute care backlog” will remain in the near term.
It saw strong growth in the US, though, having launched in 2021.
Shars dipped by 2.4% to 286p.
CEO Tim Barker said: “The need for digital mental health services is as great as ever and we look forward to ensuring that Kooth remains a trusted and growing provider for children and young people both in the US and UK.”
Barclays and Entain boost FTSE 100, Bodycote leads FTSE 250
Monday 22 January 2024 08:41 , Graeme Evans
The FTSE 100 index today rose 33.93 points to 7495.86, led by a recovery for some of this year’s heavily-sold stocks.
Risers included Ocado with a rebound of 18p to 570p, while JD Sports Fashion improved 1.25p to 112.5p and Barclays by 3.8p to 144.8p.
Ladbrokes owner Entain led the blue-chip risers board following a jump of 4% or 37.4p to 954.2p, while the worst performing company was software firm Sage as shares fell back 15.3p to 1136.7p.
The FTSE 250 index jumped 0.7% or 130.61 points to 19,002.02, with Bodycote the leading stock. The heat treatment specialist rose 4% or 24.5p to 620.5p after it announced plans for a £60 million buyback of shares.
Other mid-cap stocks up by 2% or more included National Express owner Mobico, Aston Martin Lagonda and Virgin Money.
Market snapshot as stocks climb
Monday 22 January 2024 08:24 , Daniel O'Boyle
The FTSE 100 climbed back towards the 7500 mark in early trading
AIM-listed software firm approached over £26 million takeover
Monday 22 January 2024 07:58 , Daniel O'Boyle
AIM-listed SmartSpace Software has received a proposal over a £26 million offer from US-based firm Sign In Solutions.
SmartSpace, which offers software for building management, has received an approach over a 90p per share offer.
Its board said: “Discussions between the parties are advancing but there can be no certainty that an offer will be made, even if the pre-conditions are satisfied or waived.
“Further announcements will be made as and when appropriate.”
London has the most businesses on Begbies Traynor's 'critical' list
Monday 22 January 2024 07:55 , Michael Hunter
More on the news this morning of another big rise in the number of UK businesses in financial distress.
Begbies Traynor found that London has thew biggest number of firms on the brink of collapse, with over 14,000 falling into its definition of "critical distress". The South East was second, with just under 8,000.
The Midlands and the North West were after than, with around 5,000 each.
The pattern was the same for companies in "significant distress", on notch down from critical. London had over 154,000 companies in this category, and the South East almost 93,000.
'Perfect storm' leaves almost 50,000 business in danger says Begbies Traynor
Monday 22 January 2024 07:43 , Michael Hunter
One of the most closely watched barometers tracking the number of UK businesses in difficultly has found a sharp rise in the number of firms currently at risk.
Begbies Traynor's Red Flag tracker found that 47,000 firms are starting the year in critical difficulty, leaving them on the brink of collapse.
The the insolvency and accountancy services firm said today that the number was up by a quarter, for the second consecutive period.
There were also almost 540,000 businesses in significant difficulty. The increase was driven by the Construction sector, where the number rose over 15%, and Real Estate & Property Services, where it rose by over 21%.
Begbies said it was a "worrying picture for UK businesses".
Julie Palmer, Partner at Begbies Traynor, said: "After a difficult year for British businesses that was characterised by high interest rates, rampant inflation, weak consumer confidence and rising and unpredictable input costs, we are now seeing this perfect storm impacting every corner of the economy."
She added:
"Now that the era of cheap money is firmly a thing of the past, hundreds of thousands of businesses in the UK, who loaded up on affordable debt during those halcyon days, are now coming to terms with the added burden this will have on their finances."
Virgin Wines shows signs of recovery
Monday 22 January 2024 07:41 , Daniel O'Boyle
Virgin Wines says it saw a “significant improvement in profitability” in the second half of 2023, after a disastrous period in which it struggled with warehouse issues and a post-pandemic slump in demand.
Revenue ticked slightly up to £34.3 million, but the bottom line looked better as underlying profits grew to £1.75 million.Virgin Wines said this was due to “stringent cost management” as operating costs declined by 14.5%.
After multiple profit warnings last year, the online wine retailer says profits for 2023-24 are in line with expectations.
CEO Jay Wright said: “We are pleased with our performance through the first half of our financial year, particularly our strong profitability despite the challenging trading environment, with EBITDA representing over 5% of revenue. Following operational challenges last year, we made significant improvements in our warehouse operations, achieving a planned reduction in fulfillment costs, while maintaining an excellent next day delivery service throughout the busy peak trading period.”
S4 Capital braces for tough year
Monday 22 January 2024 07:39 , Simon English
SIR Martin Sorrell’s S4 Capital was cautious today, warning it was is unlikely to be an economic improvement this year,
The digital ad business thinks revenue will be down about 4%, a blow to Tory hopes of a pre-election boom.
Sir Marin, the former WPP executive sometimes dubbed the “Sage of Soho” for his reading of markets, was glum today.
He said this morning: “After four years of very strong growth, 2023 was a difficult year impacted by volatile macro conditions and, consequently, cautious spending from clients, particularly those in the technology sector and from smaller project-based assignments. Our client relationships remain strong and we have also managed costs tightly."
"While it is early in the year, we are not expecting 2024 to show macro-economic improvement, and client caution on marketing spend will likely persist, although not at last year's level given interest rates are likely to fall over time. Initial indications are for an improvement in performance in the Content practice, reflecting cost reductions, broadly similar performance in Data&Digital Media to last year and a more challenging outlook for Technology Services. In these unpredictable times, we are focused on positioning the Company for medium term growth, improving profitability and returning funds to shareowners."
S4 shares open today at 41p bur are likely to come under pressure. They are down 80% in the last year.
Hang Seng weakness continues as Nikkei 225 rallies, FTSE 100 seen higher
Monday 22 January 2024 07:16 , Graeme Evans
Japan’s latest stock market rally today contrasted sharply with declines of more than 2% for Hong Kong’s Hang Seng index and the Shanghai Composite.
The Nikkei 225 rose 1.6% ahead of tomorrow’s meeting of the Bank of Japan, with the country’s ultra-loose approach on monetary policy set to continue.
While Tokyo’s leading benchmark is near a 34-year high, the Hang Seng is at 15-month low after today’s fall of 2.8% took this year's losses above 11%.
Mainland China stocks also struggled, with the Shanghai Composite down 2.7% after the country’s central bank left its key lending unchanged.
The FTSE 100 index is expected to open 25 points higher at 7487, although London’s performance contrasts sharply with Wall Street's after technology stocks drove the S&P 500 index to a record close on Friday.
Recap: Friday's top stories
Monday 22 January 2024 06:45 , Simon Hunt
Good morning from the Standard City desk.
You have to go a long way back to find monthly retail figures as grisly as Friday's 3.2% fall for December.
If you exclude January 2021, when we were still confined to quarters courtesy of the Covid virus, the last time sales plummeted more was in June 2008, just before the credit crunch morphed into full scale financial bedlam.
But December is a much bigger month for retail than June — for the obvious presents and tinsel related reasons — so arguably this remarkable slump in volumes is of far greater significance for the High Street. Indeed it appears to be the worst number for a December since the ONS began collecting monthly data in 1996.
The scale of the fall comes as a surprise, as several bellwether retailers, notably Next, Marks & Spencer and Sainsbury’s, appear to have enjoyed bumper Christmases. But many of the seasonal trading statements, don’t forget, cover a longer 13-week period, not just the final frenzied run-in to the Big Day.
November was strong, so for some retailers volumes in the longer “peak season” may have held up respectably. But November is all about discounting, December, full price sales — in theory. So a major shift from December to November spending — a trend that has been growing in recent years — is a disaster for margins.
Here's a summary of our other top stories from Friday:
Logistics firm Wincanton become latest stock market stalwart to be snapped up as its agrees to £765 million bid from French shipping group
Bremont, Tiffany and Aspinall all sign new leases at the Royal Exchange in vote of confidence for London luxury sector
