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FTSE 100 Live: Markets steady after US sell-off, British Gas owner Centrica surges

·9-min read
 (Evening Standard)
(Evening Standard)

London shares are experiencing a steadier session after US mega-cap stocks were the target of more heavy selling last night.

Tesla and Amazon slid 9% and 5% respectively as the S&P 500 closed below 4000 for its lowest level in more than a year. The price of Brent crude also declined sharply, while the safe haven of the US dollar rallied.

In today’s session, shares in British Gas owner Centrica jumped 5% as it said full-year earnings are towards the top end of City forecasts due to a surge in trading acitivty and higher production volumes in gas and nuclear.

FTSE 100 Live Tuesday

  • FTSE 100 steadies after heavy US selling

  • Centrica shares higher on gas trading guidance

US indices open higher as tech stocks look to recover losses

14:42 , Rhiannon Curry

Trading has begun on Wall Street, and the Dow Jones was 258 points higher at 32,504.09 on the opening bell.

Both the S&P 500 and the Nasdaq also opened higher, as the market begins to reverse three days of selling.

Shares in Peloton, which were trailing as much as 27% in premarket trading, opened at $12.07, around 14.5% lower than yesterday’s close price, but have since lost another 50 cents in value.

Elsewhere Novavax dropped around 23% on the back of recent quarterly earnings.

Tech stocks were badly hit on Monday as fears of rising inflation hit market sentiment. However, shares for Meta, Alphabet and Tesla were all up in early trading, reversing some of the heavy losses felt yesterday.

Peloton’s woes continue as losses mount

13:38 , Rhiannon Curry

Upmarket exercise company Peloton has reported deep losses, cut its revenue guidance and agreed a $750 million debt package in an attempt to reverse its loss of fortunes.

The company, which boomed during the pandemic when consumers snapped up at-home workout equipment, reported a net loss of $757.1 million in the last three months, compared with the $132.1 million expected by Wall Street analysts.

In February, co-founder John Foley was ousted as chief executive officer after sales slowed and Peloton struggled to manage its production. He was replaced by former Spotify and Netflix CFO Barry McCarthy, who vowed to cut costs and generate more of Peloton’s revenue from subscriptions.

The company expects to report between $675 million and $700 million in revenue in the fourth quarter, well below analysts’ average estimate of $820.9 million. It blamed the forecast on “softer demand” and recent price reductions for its products.

Its shares have fallen to $11.25 in premarket trading, having closed at $14.13 yesterday.

12:32 , Rhiannon Curry

The price of oil has dropped as much as 2% in this morning’s trading as coronavirus lockdowns in China, a strong dollar and the risk of recession weighed on the price.

Even with impending European Union sanctions on Russian oil, the price of Brent crude has slumped in recent days and fell below $101 a barrel this morning.

“The combination of Covid-related lockdowns in China and worldwide interest rate increases to battle inflation put equity investors on the back foot, strengthened the dollar and significantly raised concerns of economic slowdown,” said Tamas Varga of oil broker PVM.

Elsewhere, the FTSE 100 was up 43 points at 7,260.30, driven by Melrose, which gained 4.83% during the morning after it said its trading had been in line with its expectations during the first quarter of the year.

Information technology consulting company Aveva also rose 4.24% as it continued its price recovery after a profit warning last month.

In Europe, the Dax was up 175 points at 13,556.17 and the CAC rose almost 50 points to 6,135,65.

The pound was trading at €1.17, and $1.23.

Here are some of the morning’s top stories:

El Salvador has spent $15.4 million buying bitcoin as the price of the world’s biggest cryptocurrency drops.

Richard Wilson, CEO of Interactive Investor, Britain’s second biggest investment platform, has accused rivals of taking customers “hostage” by charging high exit fees that trap them.

Sony has been forced to slash its sales target for Playstation 5 consoles this year due to part shortages and supply chain woes.

John Allan, chairman of Tesco and Barratt Developments, has said the case for a one-off tax on energy company profits was now “overwhelming”.

First quarter GDP figures will show growth, analyst suggests

11:55 , Rhiannon Curry

UK GDP could grow by just under 1% in the first quarter of the year before contracting by 0.2% in the second quarter, raising the risk of a recession, an analyst has suggested.

Increased household consumption and private investment are expected to boost the figures for January to March, which the Office for National Statistics will publish tomorrow, Sanjay Raja from Deutsche Bank said.

GDP rose by 0.1% in February, down from 0.8% in January and lower than the 0.3% expected by analysts.

“We expect monthly GDP to have flatlined, with risks tilted to a negative print,” Raja said in a note on Tuesday.

Growth in 2022 as a whole would be around 3.8%, he estimated, although he flagged increased recession risks in the second quarter of the year.

11:31 , Rhiannon Curry

More retailers could collapse in the coming months as higher inflation and falling incomes force consumers to curb their spending, a report has warned this morning.

Total retail sales across the UK fell by 0.3% in April, according to the latest retail sales monitor from the British Retail Consortium and KPMG, compared to a three-month average growth of 3.2% and a 12-month average growth of 6.4%.

Paul Martin, UK head of retail at KPMG, warned that the squeeze on disposable incomes risked sending some shops to the wall.

Read the full story here.

Tesco chairman backs windfall tax for energy companies

11:21 , Oscar Williams-Grut

John Allan, chairman of Tesco and Barratt Developments has backed a windfall tax on energy giants, becoming one of the most high-profile business leaders to do so.

He told the BBC’s Today Programme: “I think there’s an overwhelming case for a windfall tax on profits from those energy producers, fed back to those most in need of help. That’s the single biggest thing I think could be done.”

You can read the full story here.

FTSE 100 higher after US sell-off, dividend stocks popular

10:30 , Graeme Evans

A brutal session for US mega-cap stocks was today followed by calmer trading in London as investors were told not to overreact to global recession fears.

The S&P 500 closed below 4000 for the first time in over a year last night, with Tesla and Amazon among heavy fallers after the Vix fear index set its second highest closing price in the past 12 months.

JP Morgan yesterday blamed technical flows, fear and poor market liquidity for the recent wave of selling, rather than fundamental developments. It highlighted strong labour markets, healthy consumer and corporate balance sheets and potential policy easing in China as positive factors.

The US bank added: “While we expect growth to soften, we continue to push back on a base case assumption that the global economy is headed for recession, an outcome that is increasingly being priced by markets.”

UBS analyst Paul Donovan agreed today: “The economic outlook has not significantly changed from last week or last month. Markets seem caught in a narrative, not objectively reacting to economic news.”

Markets are pricing in some rapid US interest rate hikes but Donovan said falling inflation over the coming months has the potential to moderate concerns.

European markets posted a steadier session today as the FTSE 100 index climbed 52.37 points to 7268.95 and the UK-focused FTSE 250 index lifted 168.95 points to 19,475.67.

AJ Bell investment director Russ Mould said it appeared that fearful investors were increasingly seeking stocks with generous dividends, with mid-to-high yielding stocks such as Imperial Brands and Barratt Developments among those doing well today.

The top flight’s fightback also included gains of 4% for GKN owner Melrose Industries and industrial software firm Aveva.

Outside the top flight, shares in publisher Future rose 18p to 1960p after chief executive Zillah Byng-Thorne returned to the acquisition trail with the purchase of digital-only WhoWhatWear from US-based Clique Brands.

FTSE 100 rallies, Wizz Air 3% higher

08:40 , Graeme Evans

The FTSE 100 index is 0.9% higher as investors get some much-needed respite from pressures caused by growth and interest rate fears.

Shares in Standard Chartered and Imperial Brands led with gains of more than 3%, while retailers Kingfisher and Next improved 2%.

The FTSE 100 stood 65.58 points higher at 7282.16, having lost 171 points in response to more big losses on Wall Street on Monday.

The UK-focused FTSE 250 climbed 0.9%, with Marks & Spencer among those putting back recent losses with a gain of more than 2%. Wizz Air also lifted 3% after signing a deal to explore expansion opportunities in Saudi Arabia.

Trading surge boosts Centrica earnings

08:20 , Graeme Evans

British Gas owner Centrica says a strong start to the year means earnings are currently towards the top of City forecasts for this year.

As well as strong volumes from nuclear and gas production assets, Centrica has benefited from surging levels of trading activity as it looks to secure gas and renewable energy to improve the UK and Europe's security of supply.

In British Gas Services, however, the company’s costs and level of customer demand are being impacted by factors including supply chain disruption and higher inflation.

In the face of accusations of profiteering in the energy industry, Centrica said it is investing £50 million in supporting customers through the current crisis, including grants of up to £750 and hiring 500 new customer support workers.

Centrica shares were 4% higher today.

S&P 500 slides below 4000, FTSE 100 seen flat

07:49 , Graeme Evans

More heavy selling has left the tech-laden Nasdaq more than 25% lower this year as investors are spooked by a mix of rising interest rates and stagflation fears.

Big fallers in another turbulent Wall Street session included Tesla and Amazon, down 9% and 5% respectively, as the Nasdaq fell 4% to its lowest level since late 2020 last night.

The S&P 500 also dropped 3% to below 4000 for the first time since April last year and the Dow Jones Industrial Average fell 2% during a third consecutive slump for US markets.

Yesterday’s weakness wasn’t helped by trade data from China’s economy amid more signs the country’s zero-Covid policy is disrupting factory production.

The darker outlook was reflected in the price of Brent crude, which reversed all last week’s gains in a single day to finish down by almost 6% at $105 a barrel.

The safe haven of the US dollar continued to gain strength, leaving the pound as low as $1.225 at one point yesterday.

A calmer start is expected for US shares later, despite nervousness ahead of tomorrow’s release of another 8%-plus inflation figure.

On the back of the recent heavy selling, CMC Markets sees a steadier session in Europe today after forecasting that the FTSE 100 index will open unchanged at 7216.

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