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FTSE 100 Live: Energy crunch hits London market, AO World slowed by driver shortage, Wetherspoon’s £155m loss

·11-min read

A global energy crunch has continued to put pressure on gas prices after China ordered its state-owned companies to do whatever it takes to secure supplies for this winter.

The latest unsettling developments have added to the inflationary fears of European markets, with Lloyds Banking Group down 3% and the FTSE 100 index set to finish a challenging week more than 1% lower.

Online electricals retailer AO World highlighted the tough environment today when it said UK growth had been impacted by the shortage of delivery drivers and disruption in the global supply chain. Its shares skidded 15% in the FTSE 250 index.

FTSE 100 Live Friday

  • FTSE 100 index falls 1%

  • Fears over winter gas crunch

  • AO World shares slide 15%

  • JD Wetherspoon reports £155m loss

Pizza Express plans more restaurant openings

15:45 , Joanna Bourke

News from a non-listed company here: Pizza Express is planning to expand.

The firm’s boss has said the restaurant chain is “well underway” with a three-year programme to open 50 more sites.

Plans to increase the size of the estate contrast to the pandemic, with the firm last year completing a Company Voluntary Arrangement, resulting in the closure of 73 restaurants with the loss of 1,100 jobs.

Read more HERE.

Major new £1bn office development planned in central London

13:53 , Joanna Bourke

A new cycle ramp planned at the 105 Victoria Street development (pr for welput and bgo)
A new cycle ramp planned at the 105 Victoria Street development (pr for welput and bgo)

A landlord has revealed plans to start construction in July 2022, on what it said will be the largest speculative London office project to come forward since the onset of the pandemic.

Welput, a central London office fund managed by property firm BentallGreenOak (BGO), intends to create a green-focused £1 billion 470,000 square feet commercial building in Victoria.

Read the full story HERE.

FTSE 100 lunchtime update: Blue chip index slips, and latest on driver shortages

13:21 , Joanna Bourke

London’s blue chip index was 44,24 points lower at 7042.18 shortly after 1pm.

The Evening Standard’s market report says Europe’s inflationary worries are among factors driving a soggy start to the new quarter for the FTSE 100 index.

Here are some of the headlines and stories to read on your lunch break:

-JD Wetherspoon has crashed to a £155 million loss after a year of turmoil for pubs

-Sainsbury’s has launched a large Christmas hiring spree

-AO World has warned supply chain disruption is hitting UK growth

-Revolut’s CEO Nik Storonsky discusses inheritance, growth plans, and IPO

-Warehouse lettings are booming in the UK

Britain’s biggest sandwich maker lifts raises expectations

11:49 , Naomi Ackerman

Britain’s biggest sandwich maker today lifted expectations for its full year as food-to-go demand recovers.

The listed Greencore supplies supermarkets including M&S as well as smaller retailers such as convenience stores on high streets and in travel hubs.

The company, which raised £90 million in equity from shareholders in November to help see it through, said fourth-quarter revenues rose 27% year-on-year.

It now anticipates full-year operating profit to be towards the upper end of previous guidance of between £36 million and £40 million.

Bosses said they expect full year revenues to reach £1.32 billion.

UK warehouse lettings continue to boom

10:33 , Joanna Bourke

Firms signed up for UK warehouse space equivalent to the size of around 31 Wembley stadiums over the last three months, as many sought to prepare for expansion and better cope with the supply chain crisis.

There was 13.2 million square feet of lettings done nationwide, according to preliminary data compiled by property agent Savills for the Evening Standard. It tracked space at properties of 100,000 square feet or higher.

That was the second highest-ever third quarter recorded for take-up.

Read more HERE.

Gas powered slump for FTSE

10:06 , Graeme Evans

The inflationary fears stalking European markets showed no signs of easing today after China raised the stakes in the global scramble for gas supplies ahead of winter.

Beijing's demand that state-owned companies do whatever it takes to secure enough fuel for the coming months follows widespread power cuts that have impacted the country's factory production and slowed global supply chains.

The prospect of a winter gas crunch exacerbated by a shortage of storage capacity meant gas futures in Europe rose to a record 100 euros a megawatt hour at one point today. Households are already feeling the pinch, with Ofgem's new price cap coming into effect today pushing up the average bill by £139 a year for 15 million homes.

There's also been a knock-on effect for oil prices, although Brent crude eased today from its recent three-year peak above $80 a barrel on hopes that OPEC+ ministers will step up production at a meeting on Monday.

Oanda's Jeffrey Halley noted: “Asia spot natural gas prices are now trading at near the equivalent of $180 a barrel of Brent crude, meaning that oil’s appeal as a gas substitute for power generation is almost irresistible.”

Europe's inflationary worries meant the FTSE 100 index started the new quarter on the back foot, not helped by a poor session overnight on Wall Street.

London's premier index fell 64.13 points to 7,022.29, with the uncertain outlook depressing banking stocks in particular. Lloyds Banking Group slid 1.5p to 45.1p, a drop of 3% at the top of the fallers board, while Barclays was also 3.2p cheaper at 186.4p.

Demand for defensive stocks pushed education publisher Pearson 3% higher or 23.4p to 735.2p and Sainsbury's improved 1.1p to 286.5p. National Grid rose 9.4p to 894p on the day it announcd the timely start of commercial operations for the world’s longest subsea electricity interconnector linking the UK and Norway.

The 450-mile cable, which will enable the countries to share renewable energy for the first time, will start with a maximum capacity of 700 megawatts and gradually increase to the link’s full capacity of 1400 megawatts over a three-month period.

The FTSE 250 index fell 175.30 points to 22,855.99, with Darktrace 53p lower at 767p after Jefferies placed shares at 750p in order to raise $225 million for shareholders selling in the wake of the cyber security firm's recent IPO.

The warning from white goods firm AO World about slower trading sent its shares down 18% and also put pressure on rival Currys, which declined 10.5p to 123p.

AO World UK growth hit by delivery driver shortage

08:38 , Joanna Bourke

Online electricals retailer AO World has warned that first-half UK growth has been impacted by the nationwide shortage of shortage of delivery drivers, as well as global supply chain problems.

FTSE 250 firm AO World, which is led by John Roberts, said: “The challenging market dynamics in both the UK and Germany resulted in lower volumes than expected which affected operational leverage, particularly in the second quarter.”

Total sales improved by around 5% in the six months to September 30, with UK sales some 6% higher.

Read the full story HERE.

Gloomy start to quarter

08:22 , Graeme Evans

September was a much weaker month for financial markets, with October starting in similar fashion after the FTSE 100 index opened more than 1% lower at near the 7,000 barrier.

Shares in JD Sports Fashion fell 4%, alongside declines of 3% for Rolls-Royce, British Airways owner IAG and Premier Inn hotels chain Whitbread.

Deutsche Bank reports that just seven of the 38 non-currency assets in its coverage were in positive territory last month, the smallest number so far this year amidst broad declines for both equities and bonds.

Headwinds have included mounting inflationary pressures and concerns about China's debt-laden property firm Evergrande.

Deutsche Bank said the overall picture across the third quarter was a more solid one, with 24 of the 38 assets posting gains.

Jim Reid, the bank's global head of thematic research, said: “In part, markets have been supported by the Covid situation proving more contained than some had feared at the start of the quarter, with no major variants emerging since delta.

“Furthermore, central banks have continued to exhibit a fairly dovish stance overall, even if we’ve seen a few hawkish pivots in recent weeks that’s contributed to some of the losses in September.”

Sainsbury’s starts biggest ever Christmas recruitment drive

08:06 , Joanna Bourke

Sainsbury’s is seeking thousands of delivery drivers to work over Christmas, with some £500 bonuses on offer, the company has said.

Sainsbury’s is led by Simon Roberts (Sainsbury’s)
Sainsbury’s is led by Simon Roberts (Sainsbury’s)

Supermarket chain Sainsbury’s is looking for around 22,000 workers, in its biggest ever Christmas recruitment drive.

The grocer, which also owns Argos, said there will be some 14,500 in-store roles, 4500 openings in logistics (in house or for third parties Sainsbury’s uses), and 3000 delivery driver roles. The jobs are temporary for the festive period. Bonuses of £500 will be on offer in some cases.

The search for drivers comes at a time when retailers are competing for employees, with a well documented shortage of HGV drivers in the UK.

Read the full story HERE.

Will OPEC raise output?

07:46 , Graeme Evans

With natural gas prices soaring due to a global shortage, energy suppliers have turned to oil in a move that has contributed to the recent spike in Brent crude above $80 a barrel.

The existing plan of OPEC and allies led by Russia is to boost production by 400,000 barrels a day in November and December. But with oil prices at a three-year high and consumers in need of more supplies, there will be pressure at their meeting on Monday to go further.

Howie Lee, an economist at Singapore's OCBC bank, told Reuters: “Last time we saw $80, supply was considerably more than where we are right now and I think the world could do with some extra barrels now given the global energy crunch.”

Brent crude was slightly lower at just over $78 today amid hopes that the OPEC+ alliance will step up the planned increase in output.

Wetherspoons crashes to massive loss

07:35 , Simon English

JD Wetherspoons crashed to a £155 million loss after a year of turmoil that highlights the pressure facing the pub trade.

Founder and chairman Tim Martin partly blames the government, which he thinks has singled out pubs for unfair treatment.

He said: “In the last year, the country moved, in succession, from lockdown, to ‘Eat Out to Help Out’, to curfews, to firebreaks, to pints with a substantial meal only, to different tier systems and to further lockdowns. Pub management teams, and indeed the entire hospitality industry, had an almost impossible burden in trying to communicate often conflicting and arbitrary rules to customers.”

You can read more here

Red October

07:28 , Graeme Evans

European markets are set for a negative start on the back of yesterday’s poor session on Wall Street, when the S&P 500 completed its worst monthly performance since the pandemic started.

A deal to fund the US government until December 3 in order to avert a shutdown failed to boost the mood as the Dow Jones Industrial Average and the other major indices closed more than 1% lower last night.

The FTSE 100 index is expected to open the final quarter of the year 56 points lower at 7,030, according to CMC Markets. The premier index is still up 10% so far in 2021.

CMC's chief markets analyst Michael Hewson said: “As we head into the final quarter of 2021 the gains in the year to date are still pretty decent, which raises the question, how much more is left in the tank, and whether this October will live up to the reputation of Octobers past, and deliver a huge curveball, as well as giving investors an anxiety attack.

“There’s certainly plenty to be concerned about from surging energy prices, supply chain disruptions, and concerns about more persistent inflation.“

Reports that China’s state-owned energy companies have been instructed to “do whatever it takes” to secure winter energy supplies will add to ongoing about energy costs.

Oanda's Jeffrey Halley noted: “Asia spot natural gas prices are now trading at near the equivalent of $180 a barrel of Brent crude, meaning that oil’s appeal as a gas substitute for power generation is almost irresistible.”

Brent crude was trading at $78.23 this morning ahead of an OPEC meeting next week, when ministers will be under pressure to increase production quotas.

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