FTSE 100 Live 22 July: Wall St up after Biden bows out of White House race, Ryanair warning hits airlines
Airline stocks have fallen after Ryanair warned that average fares are materially lower this summer. The moves came on the same day the government backed a third runway for Heathrow.
In the telecoms sector, BT has been fined £17.5 million by Ofcom for emergency call failings.
Wall Street stocks
FTSE 100 Live Monday
Ryanair warns over fares pressure
BT fined for 999 call-handling failures
Vodafone in £1.1bn towers stake sale
FTSE 100 closes higher as bid talk breathes new life into Rentokil
16:46 , Michael Hunter
Speculation of potential bid interest in Rentokil Initial sent shares in the pest controller to the top of a rising FTSE 100 today.
Weekend press reports linked the firm with a private equity bid backed by former BT chief Philip Jansen.
Rentokil has expanded with a multi-billion deal to buy Termninix in the US. But it issued a profit warning in November and has been seen as vulnerable to a bid.
After the Sunday Times report, Rentokil’s stock was up almost 9% at over 486p at the top of the leader board.
Overall, London’s main index added over 57 points, to 8212.94, a rise of 0.7%.
Airlines dragged after Irish budget carrier Ryanair warned of falling fares, in a sign the post-pandemic travel boom was losing altitude.
EasyJet fell furthest on the the FTSE 100, down over 7% at 426p. BA’s parent IAG was down almost 4% at 164p.
Why the CrowdStrike Microsoft tech crash reveals the need for clearer City scheduling
15:17 , Michael Hunter
Friday’s widespread systems outage as a result of the CrowdStrike /Microsoft software update laid bare a problem in the City, says John Blowers, managing director of the investment database Investegate:
The current fallibility of the regulatory news reporting service for London-listed companies.
While the majority of the primary information providers were unaffected by the move, the London Stock Exchange’s own Regulatory News Service – commonly known as RNS – failed to disseminate the usual flood of corporate updates from 7am.
Read more here on his ideas for a potential solution.
Wall Street stocks bounce higher after Biden bows out of White House race
14:53 , Michael Hunter
US stocks started the week on the front foot after President Joe Biden called time on his re-election bid.
As full Wall Street trading got its first chance to react to the weekend’s news, the S&P 500 added 56 points to 5560.77.
Tech stocks are likely to stay in the spotlight after investors cut their exposure to sector last week.
That move. lower came ahead of a big week for tech earnings this week. Google’s patent Alphabet and Elon Musk’s electric car firm Tesla are due to report tomorrow.
Hammerson sells £1.5bn stake in Bicester Village owner
13:58 , Simon Hunt
Shopping centre giant Hammerson has sold off its stake in the owner of Bicester Village in a deal worth £1.5 billion.
Shares in Hammerson lifted on Monday morning after it announced the sale of its Value Retail business to private equity firm L Catterton, backed by French luxury good giant LVMH (Louis Vuitton Moet Hennessy).
Hammerson, which also owns Birmingham’s Bullring, said the sale will generate around £600 million in cash proceeds.Read more here
Bloomberg: Billionaire Gerko loses tax fight over quant trader payouts
13:23 , Bloomberg
One of the UK’s largest taxpayers, billionaire quant trader Alex Gerko lost a legal dispute with British authorities over the tax treatment of a deferred payment plan. Appeal judges ruled that Gerko and other traders, while they were still running high-frequency trading strategies at GSA Capital Partners between 2010 and 2015, should pay income tax on their share of the trading profits from the fund. The total size of the tax bill is some £22.5 million ($29.1 million).
Gerko said he’d chosen to challenge HM Revenue & Customs because the case results in what he called “massive double taxation.” He said he was looking at ways to continue the litigation.
“The amounts involved are small compared to the billions of pounds in tax I have paid, and been happy to pay, over the years,” Gerko said in a statement. His net worth has almost doubled to $11.7 billion since the start of last year, according to the Bloomberg Billionaires Index.
Lunchtime update: airline stocks continue decline after Ryanair warning
12:32
Midway through the day’s trading session in London, airline stocks have continued their turbulent retreat after a warning from Ryanair that it may have to cut fares in order to shore up demand in the forthcoming quarter.
That made Ryanair’s shares plunge as much as 16%, the single-biggest one-day drop for the airline since the start of the pandemic in March 2020.
British Airways owner IAG saw its stock drop 4%, while easyjet is now down 8% and Wizz Air fell nearly 9%.
“The airlines again demonstrated the volatility that comes with investing in the sector due to factors beyond its control,” said Richard Hunter, Head of Markets at interactive investor.
Government not opposed to third runway at Heathrow: spokesperson
12:21 , Simon Hunt
The new UK government has offered the strongest sign yet it is in favour of Heathrow expansion after a Downing Street spokesperson said it was not opposed to a longer or extra runway at the airport.
Any new runway would have to pass clear tests, the spokesperson added.
Read more here from our political correspondent, Rachael Burford.
Buy-to-let mortgage market has shrunk ‘amid challenges for landlords’
11:40 , Simon Hunt
The volume of lending for buy-to-let (BTL) house purchases more than halved over the course of 2023, according to a banking and finance industry body.
The number of new mortgage deals being granted for this purpose fell from 25,280 in the fourth quarter of 2022 to 12,422 in the first quarter of this year.
Rapidly rising interest rates played a major role in this trend, making it harder for those looking to buy a BTL property to pass lenders’ affordability tests, UK Finance said.
It added that the stamp duty surcharge on second and subsequent properties, which came into force in 2016, and the progressive removal of higher-rate income tax relief on mortgage payments for rental properties have also made being a landlord more challenging and less attractive.
“Trump trade” stocks in focus after Biden's exit
10:33 , Graeme Evans
Wall Street futures are slightly higher and the dollar broadly unchanged after Joe Biden’s exit from the US presidential race.
The potential of a Trump administration has raised expectations of tax cuts and lighter business regulation, potentially boosting firms in sectors including financial services.
Joshua Mahony, chief market analyst at Scope Markets, said: “For markets, the ‘Trump trade’ gains served to highlight the perception that a victory for the Republican leader would be good for US businesses, crypto, and stocks.
“However, we now enter a period of uncertainty, with traders weighing up whether it will be Kamala Harris to take on Trump and what changes the Democrats would seek to bring in the event of a victory.
“Ultimately, markets have been served up a fresh bout of uncertainty, and the coming period will likely see some jitters as we seek to gauge whether the Trump-led gains should be reversed.”
European stocks markets are also in positive territory, with the FTSE 100 index up 43.62 points to 8199.34 after last week’s generally downbeat performance.
Airline stocks under pressure, Rentokil Initial surges in stronger FTSE 100
08:25 , Graeme Evans
Rentokil Initial shares have jumped 12% or 52p to 500p after the Sunday Times reported that ex-BT boss Philip Jansen is working on a private equity-backed takeover bid.
On the fallers board, easyJet shares are down 6% or 28.5p to 430.5p on the read across to this morning’s fares warning by Ryanair. British Airways owner IAG is off 3% or 4.1p to 165.5p.
The FTSE 100 index is 0.6% or 46.60 points higher at 8202.32, with gambling stock Entain up 3% or 17.8p to 662p following the appointment of Gavin Isaacs as chief executive.
The UK-focused FTSE 250 is up 0.3% 66.59 points to 21,134.27, including a rise for Ocado of 6% or 22.8p to 400.9p after the retail and technology business extended its partnership with US chain Kroger.
MONY Group fell 13p to 214.6p after the Moneysupermarket price comparison business posted interim results.
Ryanair warns of "softer" pricing into summer getaway
07:55 , Michael Hunter
Ryanair has warned of “softer” pricing into the peak summer getaway season in a sign that the carefree spending of post-pandemic holiday makers is easing off as the schools break up.
Michael O’Leary, the CEO of the leading budget airline said:
“We now expect Q2 fares to be materially lower than last summer (previously expected to be flat to modestly up).
“The final H1 outcome is, however, totally dependent on close-in bookings and yields in Aug. and Sept. As is normal at this time of year, we have almost zero Q3 and Q4 visibility, although Q4 will not benefit from last year's early Easter. “
For the first quarter, profit fell 46% to €360 million, (£303 million)
It flew 10% more passengers in the period to the end of June, with 55.5 million people taking to skies with the Irish firm. But revenue per passenger was down 10%, with average fares down 15% and “ancillary revenue” flat.
Mony first-half earnings top £73 million as Moneysupermarket.com users shop around for cashback offers
07:26 , Michael Hunter
Moneysupermarket.com users shopping around for cashback offers and deals on insurance have helped earnings at Mony Group rise 8% to £73.3 million in the first half.
The price comparison firm also said it had helped people save £1.7 billion in the first half of 2024.
Revenue came in at £224 million, up 5%. That was a record for the first half, as was the revenue figure.
BT fined £17.5 million for 999 call-handling failures
07:21 , Simon Hunt
BT has been fined £17.5 million by Ofcom over its emergency call handling failures as a result of network disruption in June 2023.
On 25 June 2023, BT experienced a network fault that affected its ability to connect calls to emergency services, during which time nearly 14,000 call attempts – from 12,392 different callers – were unsuccessful.
Suzanne Cater, Ofcom’s Director of Enforcement, said: “Being able to contact the emergency services can mean the difference between life and death, so in the event of any disruption to their networks, providers must be ready to respond quickly and effectively.
“In this case, BT fell woefully short of its responsibilities and was ill-prepared to deal with such a large-scale outage, putting its customers at unacceptable risk.
“Today’s fine sends a broader warning to all firms -– if you’re not properly prepared to deal with disruption to your networks, we’ll hold you to strict account on behalf of consumers.”
Vodafone offloads Vantage Towers stake for £1.1 billion
07:16 , Simon Hunt
Vodafone has sold a 10% stake in Oak Holdings, the company that controls mobile tower business Vantage Towers, for £1.1 billion.
Vodafone said the sale “achieves the 50:50 joint ownership structure with the consortium of long-term infrastructure investors led by Global Infrastructure Partners and KKR that was envisaged when the co-control partnership was first announced.”
The stake is being sold at 32 euros per share, the same price as the initial transaction which was announced in November 2022.
The telecoms firm said it would use the proceeds from the sale to help bring down its debts.
China rate cuts get mixed response, FTSE 100 seen higher
07:13 , Graeme Evans
Interest rate cuts as China’s central bank looks to support the country’s faltering economy today drew a mixed response from Asia markets.
The Shanghai Composite fell by 1.1% while Hong Kong’s Hang Seng index recovered from a weak start to stand 0.8% higher near the close of the session.
The support included a 10 basis point cut in China’s key short-term lending rate to 3.35%.
The FTSE 100 index is forecast to open 24 points higher at 8180, having risen by 6% so far this year despite a faltering recent performance ahead of a flurry of blue-chip results.
Futures trading is pointing to a steadier US session after Friday’s fall of 0.9% for the Dow Jones Industrial Average and 0.7% for the S&P 500 index.
The pound starts the week near $1.29 with Brent Crude at $83.11 a barrel.
Recap: Yesterday's top stories
07:11 , Simon English
Good morning from the Standard City desk.
Tomorrow is a big day for fans of Tesla shares, the price of which is either indicative of a genius at work, or some sort of collective madness.
At $252 each, stocks in the cars that can drive themselves (sometimes) are worth nearly $800 billion.
Elon Musk is plainly brilliant, plainly, perhaps literally, shooting for the stars.
He was right about electric vehicles and has turbo charged that industry in what is an extraordinary example of one-man bending events to his will.
It still seems most likely that in the future, if we drive at all, if will be Ford’s, VW’s and Toyota’s, same as now.
If you haven’t driven a Tesla, try it. It’s exhilarating and slightly scary.
But the business case is under pressure due to tumbling cash flow and a drop in production levels.
Second quarter results on Tuesday will do well if Wall Street and City folk can see that the business aside from the cars -- energy storage, energy generation and other business lines – is on the up.
If they aren’t, investors are buying a dream – actual financial results be damned.
Which is fine, so long as they know.
I might buy a car, if I suddenly had some money coming my way. The shares? Not on this planet.
~
Here’s a summary of our top headlines from Friday:
Wash out: Retail sales figures for June significantly worse than anticipated. Sales excluding fuel were down 1.5% compared to the previous month. Economists had predicted a much shallower fall of 0.5%
Cash out: UK public sector borrowing higher than expected in June, according to official statistics that give less wiggle room to new chancellor Rachel Reeves ahead of the Budget. Borrowing — the difference between public sector spending and income — was £14.5bn in June. That was £3.2bn less than in June 2023, but higher than the £11.6bn forecast by the Office for Budget Responsibility.
Netflix adds more than eight million subscribers in the three months to June, reeling in audiences for the new season of Bridgerton and new drama Baby Reindeer.
Dial it down -- Ofcom to ban phone, broadband and pay TV companies from including inflation-linked mid-contract price rises in their contracts.
And in City Spy: