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FTSE 100 Live: US inflation at 4.9%; John Lewis staff back boss; pound strongest in year; FTSE closes at 7732

 (Evening Standard)
(Evening Standard)

ASOS shares are down sharply after the fast fashion chain reported a deeper half-year loss and said it faced a challenging trading backdrop.

In a busy session for corporate updates, investors have also heard from contract caterer Compass, the pubs chain JD Wetherspoon and the holidays giant TUI.

The prospect of this afternoon’s US inflation reading means the FTSE 100 index is close to its opening mark, with traders also looking ahead to tomorrow’s Bank of England interest rates decision.

FTSE 100 Live Wednesday

  • US inflation reading fuels market jitters

  • ASOS reports deeper half-year loss

  • Capita expects £15m-£20m hit from cyber attack

FTSE closes at 7732

17:25 , Daniel O'Boyle

The FTSE 100 closed at 7732 today, down 0.4%.

The index spent most of the day slightly below where it opened, but rose into positive territory on the back of the latest US inflation data.

However, that was short-lived, as a sharp drop in the mid-afternoon meant another day in the red.

Binance bosses mount charm offensive to restore relations with FCA

15:47 , Daniel O'Boyle

Binance has mounted a fresh charm offensive in a bid to restore the crypto firm’s fraught relationship with the UK’s finance watchdog.

The company’s bosses hailed the Financial Conduct Authority’s “reasonable” and “responsible” approach to crypto regulation after they renewed discussions to secure licenses in the wake of its “concerns” over attempts to gain access to UK customers.

Read more here

US stocks up on inflation decline

15:24 , Daniel O'Boyle

US stocks are off to a mixed start after today’s better-than-expected inflation reading.

The S&P 500 is up 0.2% to 4129.2, but the Dow Jones is down 0.2% to 33,487, while the Nasdaq is down 0.6% to 12,180.

Minister announces Post Office probe over unapproved bonuses linked to Horizon

15:19 , Daniel O'Boyle

The Post Office is facing a second investigation after its chief executive and other senior officers were paid unapproved bonuses relating to the Horizon IT scandal inquiry.

Business minister Kevin Hollinrake described the payments as “extremely concerning and deeply regrettable” as he announced an independent review of the governance around Post Office decisions on remuneration.

Read more here

John Lewis staff back Dame Sharon White to take retailer forward

14:37 , Daniel O'Boyle

John Lewis staff today voted to back Dame Sharon White in a confidence vote in her leadership during a turbulent period on the high street.

But a representative for employees of the beloved retailer, which also owns Waitrose, said they “did not support last year’s performance”, which led to the axing of bonuses.

The partnership’s council, a 61-member group of team members across John Lewis and Waitrose elected by the workforce, meet twice a year to look at trading performances and pass a vote of confidence in leadership.

Read more here

City Voices: London remains a beacon of innovation for stock listings

14:19 , Michael Hunter

The decline of London as a financial hub has been a theme in recent commentary, but a run of companies pulling their stock listings points to the City evolving, not dying, according to our City Voices writer, Veronika Oswald.

The tsunami of moves off-market — including private equity market buyouts — is a sign of how innovation will always unite investors chasing returns with companies that need capital.

London’s recent delistings show the tide is turning on how companies want to raise capital. It does not show that confidence is flowing out of the market.

Veronika is Commercial Director of JP Jenkins, the trading platform for dealing in unlisted securities.

Read more here

Pound rises further as rate pause appears more likely

14:12 , Daniel O'Boyle

The pound has risen further today to the highest point in a year, as US inflation data appears to set the Federal Reserve up to pause its cycle of rate hikes.

A pound now buys $1.2659, higher than any point in the past year, as the dollar slipped against all major currencies.

Fed’s strategy ‘appears to be working’ as US inflation dips to 4.9%

13:48 , Daniel O'Boyle

Inflation in the US came in slightly below expectations at 4.9% in April, offering a boost to investors’ views that the Federal Reserve is close to its goal of bringing prices under control, and may safely pause its cycle of rate hikes.

But the slow decline from last month suggests the remaining phase of the battle with inflation may prove to be the toughest.

The Consumer Price Index had been expected to land in line with last month, when inflation was an unexpectedly low 5.0%.

Read more here

US inflation at 4.9%

13:33 , Daniel O'Boyle

Inflation in the US came to 4.9%, slightly below expectations.

US stocks set to dip slightly ahead of inflation reading

13:21 , Daniel O'Boyle

US stock futures are down slightly, ahead of the latest CPI release.

Dow Jones futures are down 0.1% to 33590, while S&P 500 futures are also down by 0.1%, to 4130. Nasdaq futures, which include the most rate-sensitive stocks, are down by 0.1% to 13259.

Airbnb is among the big premarket losers, with shares down 15% in premarket trading.

Treasury appoints Sam Beckett as chief economic adviser

13:10 , Daniel O'Boyle

The Treasury has hired long-standing civil servant Sam Beckett as its new chief economist.

Ms Beckett takes on the role of chief economic adviser to the Treasury, replacing Clare Lombardelli, who was recently appointed as the chief economist at the Organisation for Economic Co-operation and Development (OECD).

Read more here

New blueprint for Shepherd’s Bush Market

12:18 , Daniel O'Boyle

The latest blueprint for a revival of Shepherd’s Bush market will see co-working spaces, a life science incubator run by Imperial College and 40 affordable homes created alongside a modernised and expanded retail space.

Property investment firm Yoo Capital submitted a planning application with Hammersmith & Fulham council this week after a two-year consultation with traders.

 (Yoo Capital)
(Yoo Capital)

The 109 year old market has seen dwindling footfall as various plans to modernise it have fallen by the wayside since it was sold by TfL in 2011.

Yoo Capital, which has owned the market since 2020, says traders will get £5.4 million of support including the cancellation of rent and service charge during construction

John Lewis boss to face confidence vote over leadership

12:02 , Daniel O'Boyle

The boss of the John Lewis Partnership is set to face a confidence vote on her future after criticism of the leadership of the retail giant.

It comes after Dame Sharon White, chairwoman of the business which runs the department store chain and supermarket arm Waitrose, said the group is considering options for its future after reports that it could bring in outside investment.

Read more here

Billionaire Wise CEO Kristo Kaarman takes three-month holiday to spend time with baby boy

11:48 , Simon Hunt

The billionaire boss of payments firm Wise is to take a three-month sabbatical to spend more time with his family, he announced today.

Kristo Kaarman, who co-founded the London-based fintech in 2011, said he would be stepping away from the firm between September and December 2023 after welcoming his baby son into the family.

Kaarman is worth £1.01 billion, according to the Evening Standard Tech Rich List, while co-founder Taavet Hinrikus is worth £607 million.

Read more here

HMRC workers ‘up for the fight’ as they strike over pay

11:12 , Daniel O'Boyle

Civil servants at HMRC are “definitely up for the fight”, a union said as they walked out in a dispute over pay and conditions.

PCS members at HMRC in East Kilbride, South Lanarkshire, and in Newcastle began targeted strike action on Wednesday which will see them down tools for 18 days between now and June 2.

Read more here

London Mayor Sadiq Khan unveils fresh support package for start-up sector

10:44 , Daniel O'Boyle

The capital’s tech start-ups were given a boost today after the Mayor of London unveiled a fresh package of measures to support the development of high-growth businesses.

The plans, which include an export programme for scale-ups looking to grow overseas and an ‘Innovation Fellowship’ programme for entrepreneurs, will be delivered by the mayor’s agency London & Partners in a bid to maintain the capital’s status as a hub for innovation and business on the global stage.

Read more here

Rolls-Royce shares higher, Wetherspoons up 6%

10:29 , Graeme Evans

Bumper sales figures today ensured shares in JD Wetherspoon continued their recent resurgence in the FTSE 250 index.

Highlights in its latest trading update included the busiest-ever Saturday over the May Day weekend and a new high for Easter week sales.

Like-for-like revenues for the third quarter to 30 April rose 12.2% on a year earlier, meaning the company is on track for record annual sales and profits at the top end of market forecasts.

Shares in the company, which trades from 834 pubs, jumped 6% or 48p to 792.5p in the FTSE 250 and are up more than 70% in 2023 to levels last seen over a year ago.

The chain’s strong performance came in an otherwise subdued session for the London market as the UK-focused FTSE 250 drifted 33.20 points to 19,243.84 and the FTSE 100 index lost 9.29 points to 7754.80.

Melrose Industries was the top flight’s best performing stock after the GKN aerospace manufacturing company announced that trading is materially ahead of expectations, with significant growth in revenue, profit and margin.

Shares jumped 3% or 13.5p to 437.9p as Melrose also said it would pause its 'Buy, Improve, Sell' strategy in order to focus on maximising the quality and value of its aerospace operations.

Rolls-Royce, which is due to post an update tomorrow, benefited from Melrose’s guidance as shares lifted 2.6p to 154.25p. On the fallers board, the pressure on the property sector continued as British Land and Land Securities both fell by another 1%.

Asos losses swell and firm sees UK sales fall 10%

10:18 , Daniel O'Boyle

Moves to slash costs at Asos, the online fashion giant that has seen sales take a battering as consumer finances are squeezed, have contributed to statutory losses swelling to £290.9 million it has emerged.

The London-founded business popular with fashion fans aged 16-35, said revenue in the first half to February 28 dropped 8% to £1.8 billion, and in the UK sales were down 10%.

In an update that laid bare how a flurry of headwinds are biting, the company which owns brands including Topshop and Miss Selfridge, also posted a statutory £290.9 million pre-tax loss, wider than the £15.8 million loss from a year earlier.

Read more here

Elizabeth Line drives Londoners’ return to offices

10:03 , Daniel O'Boyle

The Elizabeth Line is helping to drive a return to London offices, as new data shows attendance at sites along the line soared in the first year since its launch.

Flexible workspace operator IWG said the number of visits to its sites along the Elizabeth Line are up 23% in April compared to a year earlier. The Elizabeth Line opened to the public in May of last year.

Read more here

Melrose leads FTSE 100 index, ASOS shares down 8%

08:31 , Graeme Evans

Melrose Industries is the best performing stock in the FTSE 100 index after the aerospace manufacturing company announced that trading is materially ahead of expectations.

Shares jumped 6% or 24.8p to 449.2p as the company also said it would pause its 'Buy, Improve, Sell' strategy in order to maximise the quality and value of GKN Aerospace.

Other strongly performing stocks included the catering giant Compass, which lifted 31p to 2096p following its interim results.

The FTSE 100 index is 5.07 points higher at 7769.16, with the FTSE 250 index up 11.64 points to 19,288.68.

ASOS shares fell 8% or 48.4p to 587.5p after the fast fashion group’s results, while TUI shares gave up some of yesterday’s improvement by falling 15.6p to 546.8p in the wake of its latest trading update.

Online fashion retailer Asos posts deeper loss as sales decline

07:52 , Joanna Bourke

Moves to slash costs at Asos as consumer finances are squeezed have hit profits in the short term, with the online fashion giant plunging further into the red and recording a 8% sales drop.

The retailer which owns brands including Topshop and Miss Selfridge, said revenue in the first half to February 28 fell to £1.8 billion.

The FTSE 250 company also posted a statutory £290.9 million pre-tax loss, wider than the £15.8 million loss from a year earlier.

A plan by its new boss that saw less discounting and more full-price items was among factors that hit sales, alongside “a challenging trading backdrop”.

Earlier this year Asos, which has been led by José Antonio Ramos Calamonte since June 2022, also launched a £300 million cost saving plan for the 12 months to August 2023. Measures include removing 35 unprofitable brands from the website, reducing office space and closing three warehouses, including one in the UK. That has led to a number of one-off costs.

The firm, which was founded in London in 2000, said it will retain its focus on profitable sales in the second half and exit the year “with a cleaner inventory position”.

More to follow...

Sterling above $1.26 as oil price steadies

07:51 , Graeme Evans

Brent crude is 1% lower at $76.71 ahead of today’s US inflation reading, continuing a more subdued trend for the benchmark since last week’s heavy falls in price.

Gold is broadly unchanged at $2031 an ounce, while the pound has consolidated its position above the $1.26 threshold ahead of tomorrow’s decision by the Bank of England monetary policy committee.

With the annual rate of inflation still in double digits, UK interest rates are widely forecast to see another quarter point increase to 4.5%.

All change at National Express as transport firm rebrands as Mobico

07:40 , Simon Hunt

National Express, the coach operator and transport group, is changing its name.

The company, which has grown from its origins in Birmingham to run public transport services from Bahrain to Spain, Canada and Morocco, said today that it would become known as Mobico from next month.

It added that “well-known customer-facing brands” would remain, including the National Express name in the UK, which first appeared on coaches in the UK in 1970s.

The exact timing of the change will be announced later, and when it is made, the company’s NEX stock ticker symbol will be retired and replaced by MCG.

Ignacio Garat, National Express Group CEO, said: “Whilst National Express is a highly valued consumer brand, Mobico better represents our multi-modal operations, global reach and future ambitions. We remain focused on providing best-in-class services and delivering our Evolve strategy, with the intent of establishing Mobico Group as the world’s premier shared mobility operator.”

Compass to report profits in dollars as US business dominates but has no plans to move shares to New York

07:27 , Michael Hunter

Compass Group, the world’s biggest contract caterer, said today it will start reporting its profits in dollars, but that it does not plan to shift its share listing to New York.

The global canteen and sporting event food business said it would swap the currency it reports in from October “due to foreign exchange translation”. Companies earning the bulk of their revenue in dollars can get a lift from a weaker pound, when the earnings they report are flattered by buying more sterling. But when the pound is high or strengthening, the trend reverses. Sterling is up 2.4% in a year.

Compass said today that its North America business contributed 67% of group revenue of nearly $16 billion, up almost a quarter in the first half of its financial year. Operating profit rose by over 41% to cross above £1 billion.

Capita expects £15m-£20m hit from cyber attack

07:24 , Daniel O'Boyle

Outsourcing giant Capita expects the cybersecurity breach that left staff working at organisations including the NHS and Ministry of Defence locked out of their computers to cost it between £15 million and £20 million.

The firm, which provides 61,000 employees for various roles including many in the civil service, was hit by a ransomware attack in late March, locking staff out of their computers. It later revealed that some data was likely to have been taken in the attack.

It has now counted the cost of the breach, including recovery and remediation costs and investment to make sure it doesn’t happen again.

Last year, Capita made £235.7 million in profits.

US inflation set to offer clues on rates outlook

07:19 , Graeme Evans

Today’s US inflation reading for April comes with Wall Street looking for signs the Federal Reserve’s interest rate tightening cycle is over.

The headline annual rate is expected to be unchanged at 5%, having fallen from 6% the previous month and a peak of 9.1% in June last year.

The biggest focus will be on whether core prices fall back to 5.4% or 5.5%, having edged up to 5.6% in last month’s release. This put core inflation above the headline rate for the first time since January 2021.

Michael Hewson, chief market analyst at CMC Markets, said: “It is this stickiness in core prices as well as the resilience in the US jobs market that is making the Fed’s job so difficult, even allowing for the fact we’ve seen the US central bank hike rates at every meeting over the last 12 months.”

He added that one area of encouragement has been in the direction of core producer price inflation, which fell to 3.4% in March having been as high as 9.6% a year ago.

The S&P 500 index last night closed 0.5% lower ahead of this afternoon’s inflation reading, with CMC expecting the FTSE 100 index to open two points lower.

Spoons hails record trading as sales surge past pre-pandemic levels

07:15 , Simon Hunt

J D Wetherspoon said it saw its highest ever trading day over the bank holiday weekend as it predicted sales would surge past pre-pandemic levels.

The pub chain said sales increased 12.2% in the 13 weeks to the end of April, and said it expected its full-year sales to hit a new record, with profits to be towards the top of market expectations.

But in a warning shot to MPs, boss Tim Martin said: “Inflation, especially in labour, energy and food costs, remains a more intractable issue.

“In order to bear down on inflation, political parties should encourage free enterprise, rather than a reliance on additional regulations. A lack of understanding, among some senior politicians, about the need to encourage a successful free market economy, presents a real threat to the future prosperity of the country.”

read more here

JD Wetherspoon chairman Tim Martin said the company is ‘cautiously optimistic about future prospects’ (PA) (PA Archive)
JD Wetherspoon chairman Tim Martin said the company is ‘cautiously optimistic about future prospects’ (PA) (PA Archive)

Airbnb shares slide on bookings forecast

06:51 , Simon Hunt

Shares in Airbnb fell as much as 11.5% in aftermarket trading overnight, as the online holiday booking firm warned it expected fewer bookings and lower rental rates in the second quarter compared with last year.

The company forecast second-quarter revenue between $2.35 billion and $2.45 billion, broadly in line with analysts’ expectations, and said that revenue growth was being stifled by customers becoming more price sensitive.

CEO Brian Chesky said: “In the United States, the lowest price listings have the highest occupancy.”

“Some of the pressures that we’re seeing there on overall revenue growth has frankly just been some of the elevated rates,” CFO David Stephenson added.

 (AFP via Getty Images)
(AFP via Getty Images)

Recap: yesterday’s top stories

06:43 , Simon Hunt

Good morning. Here’s a summary of our top stories from yesterday.

  1. Shares in PurpleBricks plunged to a new low after its cash warning.

  2. Bosses of Thames Water said they won’t be taking a bonus after a public backlash over sewage discharges.

  3. Education giant Pearson unveiled its plans for the use of AI and said it will take legal action over use of its content to train language models.

  4. Speculation among City experts and analysts is rife that the May BoE Monetary Policy vote will end the run of consecutive rate rises at a straight dozen.

Today we’re expecting results from:

  • Airtel Africa

  • Compass Group

  • Vertu Motors

  • ASOS