The outlook for UK interest rates remains in focus after traders signalled yesterday they expect the Bank of England to begin tightening monetary policy in November.
The stronger pound put pressure on dollar earnings stocks in the FTSE 100 index, which was broadly unchanged after earnings optimism had earlier helped global markets to survive the blow of Monday's below par China GDP figures.
In corporate news, price comparison site Moneysupermarket hit the acquisition trail with the purchase of cashback business Quidco for up to £101 million.
FTSE 100 Live Tuesday
Downbeat session for FTSE 100
Moneysupermarket buys Quidco
Netflix reports Q3 earnings later
Investment in Britain ‘national priority’ says Aviva boss
14:52 , Oscar Williams-Grut
The government is hosting its first Global Investment Summit today.
Around 2,000 investors controlling $24 trillion — including Blackrock boss Larry Fink and Blackstone founder Stephen Schwarzman — attended the high security summit in West London today. Boris Johnson delivered a keynote address, comparing attendees to “the cornflakes that got to the packet — they are the winners.”
Speaking to the Standard ahead of the event, Amanda Blanc, CEO of Aviva, said the event was “crucial” for attracting more investment into the UK.
“Attracting more investment into the UK is a national priority and I am very keen Aviva plays its part,” she told the Standard. “The UK is starting from a strong base and today is all about making the UK an even more attractive investment destination.”
Bill Gates invests £200 million in UK
13:51 , Oscar Williams-Grut
Bill Gates joined forces with Boris Johnson today to announce a £400 million partnership to invest in new green technologies. Speaking at the UK’s Global Investment Summit at London’s Science Museum, the Microsoft co-founder said the money would boost the development of green hydrogen, long-term energy storage, sustainable aviation and carbon capture.
Half of the investment will come from the Government with the other half from Gates’s Breakthrough Energy Network, made up of a group of businesses and philanthropists.
Gates said these technologies are vital if the UK and other developed nations are to hit ambitious targets to reduce carbon emissions. He said: “To achieve net-zero emissions, we need to reduce the costs of clean technologies so they can compete with and replace the high-emitting products we use today. Our partnership will help make them more affordable and accessible.”
Ahead of the Cop26 climate summit in Glasgow later this month, Mr Gates said the UK had made “immense progress”, but added that the summit would be vital in showing where further investment was needed.
Fresnillo rallies on silver price
13:47 , Oscar Williams-Grut
Shares in Fresnillo, the Mexican precious metals miner, are rallying strongly today - the stock is the second biggest riser on the FTSE, with a gain of 2.5%.
The rally comes as silver prices rally strongly. Silver is up 2.9% today to $24 an ounce. Fresnillo is the world’s largest producer of silver from ore.
Other precious metal miners are rallying on the back of the silver price: Polymetal International is up 1.9% on the day and Hochschild Mining is 3.9% higher.
Oxford Biomedica signs £31m tie-up for cystic fibrosis drug
13:00 , Simon Freeman
Oxford Biomedica has signed a deal worth up to £31 million to scale-up manufacture of a cystic fibrosis therapy for one of Europe’s biggest pharma firms.
The UK gene and cell therapy group, which is producing millions of AstraZeneca’s Covid-19 shots, will use its vector technology to produce Boehringer Ingelheim’s drug, which has the potential to revolutionise treatment.
The inhaled formulation selectively introduce a CFTR gene into the target cell and has potential to address all of the more than 2,000 different known gene mutations across CF patients.
Boehringer, based in Germany, will pay an option exercise fee of £3.5 million with further regulatory milestone payments of up to £27.5 million, in addition to a tiered low single digit royalty on net sales.
Its head of discovery research, Clive Wood said the drug could be a breakthrough for patients “desperately waiting for better options.”
Biomedica’s shares, up 45% since January, rose 6p to 1496.0p today.
Housebuilder Bellway sets out profit goals
11:21 , Joanna Bourke
Bellway expects solid growth to outlast the pandemic housing boom, with the builder outlining a target for £1.25 billion of profits over two years.
The FTSE 250 housebuilder is aiming to generate that underlying pre-tax profit figure over the next two financial years, amid continual buyer demand and after having invested £1 billion into the land bank during the pandemic.
In the year to July 2023 it expects to sell 12,200 homes, around 20% above the year just ended.
Sites purchased for development in the capital include in Barking and Enfield.
Read more HERE.
Airlines under pressure
10:48 , Graeme Evans
Lucrative transatlantic routes are still to resume, yet that's not stopped jittery investors dumping airline and travel stocks just as the sector's recovery gets underway.
Fears over rising Covid-19 case numbers appear to have triggered this week's selling as shares in British Airways owner IAG today dived for a second session in a row. Rising household costs, particularly with interest rates set to go higher before Christmas, may also have deterred some from making getaway plans this winter.
Analysts at Berenberg added to the pressure when they removed their “buy” recommendation and lowered their target price by 30p to 200p. IAG shares were today 2.5% cheaper, off 4.5p at 171.3p at the top of the FTSE 100 fallers board.
Shares were as low as 131p in September before getting major boost when the US said it would re-open its borders to double-vaccinated travellers from November.
IAG is not alone in coming under pressure as FTSE 250-listed holidays giant TUI fell 3% just days after announcing a major fundraising on the back of improved booking trends. Wizz Air and fellow low-cost airline easyJet also declined 0.5%.
The travel weakness put pressure on the recent recovery of engine maker Rolls-Royce, with shares down 1.2p to 141.44p.
The FTSE 100 index struggled for momentum despite the improved mood of Wall Street and Asian markets overnight, with the impact of the stronger pound on dollar earning stocks one reason for the top flight only rising 4.77 points to 7208.65.
Further momentum for commodity prices, with zinc back at a 14-year high, ensured there was fresh buying of mining stocks as Rio Tinto lifted 82p to 5,084p and BHP rose 24.9p to 2012.5p as the latter also benefited from an in-line trading update.
Polymetal International was among the other beneficiaries after the gold price rose by 1% and silver improved 2%. Mexico's Fresnillo featured on the risers board for a second session in a row following yesterday's upgrade to guidance by analysts at UBS.
Investors also returned to education publisher Pearson, whose shares rebounded 21.2p to 636.4p following the disappointing trading update on Friday.
The UK-focused FTSE 250 index improved 55.23 points to 23,023.74, led by Moneysupermarket after it offset a difficult third quarter by announcing the acquisition of cashback business Quidco. Shares were 15.2p higher at 218.2p.
McBride shares lower as cleaning products firm warns of price hikes for customers
09:45 , Joanna Bourke
Cleaning products firm McBride, which makes everything from dishwasher tablets to Oven Pride, has warned the UK’s supply chain crisis has resulted in it presenting customers with “substantial” price rises.
The manufacturer of own-label goods sells to major supermarket chains in the UK and in Europe, and it today issued a profit warning. The shares lost 4.05p to 65.35p.
Read more HERE.
Moneysupermarket adds cashback
09:39 , Graeme Evans
Moneysupermarket's acquisition of Quidco involves the UK's second largest cashback business, with around one million transacting users. It offers cashback at around 4,500 merchants including retail, travel and switching services.
The initial price tag is £87 million with a further £14 million deferred.
Chief executive Peter Duffy said: “Moneysupermarket exists to help households save money. Today we’ve added a broad and compelling cashback offer. We welcome Quidco: a profitable, successful business, with strong consumer engagement and high growth potential.”
The move was announced alongside a trading update showing a 10% fall in revenues for the third quarter. Home services fell 46% after the surge in wholesale prices led to energy providers removing tariffs from the market.
FTSE 100 struggles
09:06 , Graeme Evans
London's premier index failed to tap into the improved mood of Wall Street and Asian markets as the FTSE 100 stayed close to its opening mark.
The impact of the stronger pound on dollar earning stocks was one of the factors for an unchanged top flight underperforming the FTSE 250 index, which rose 75 points or 0.3%.
Mining stocks including Rio Tinto and Polymetal International did their best to support the FTSE 100 amid further gains in commodity prices, with zinc back at a 14-year high.
British Airways owner International Airlines Group came under the most selling pressure as shares fell sharply for the second day in a row, 5.2p lower at 170.5p.
Asda launches major pre-Christmas recruitment drive
08:56 , Joanna Bourke
Asda plans to hire around 15,000 temporary employees, with some 1500 of the jobs being delivery driver roles.
The search for staff is slightly higher than the company would typically look for at this time of year.
A number of retailers are anticipating strong Christmas trading as customers look to make up for the period last year when lockdown restrictions were in place. Firms are also competing for staff amid driver shortages.
Read more HERE.
Meggitt responds to CMA referral
08:49 , Graeme Evans
Defence contractor Meggitt today sought to reassure shareholders after its £6.3 billion takeover by US rival Parker-Hannifin was referred to the Competition and Markets Authority (CMA) on national security grounds.
Business secretary Kwasi Kwarteng has given the CMA until 18 March to complete its review, with Meggitt continuing to expect the acquisition will complete in the third quarter of next year.
The Coventry-based company said today that it “looks forward to engaging constructively” with the competition regulator. Its shareholders have already backed the 800p a share deal, following a series of commitments made by Parker-Hannifin in relation to UK operations.
Meggitt shares were 1.8p lower at 748p in the FTSE 100 index today.
The UK company employs 9,000 people across 37 sites, with operations focused on braking systems, sensors and advanced polymer seals for commercial and defence aircraft. As well as the MoD, other major customers include Airbus, Boeing and BAE Systems.
Tesco launches till-free store in central London
08:43 , Joanna Bourke
Tesco, the UK’s largest supermarket chain, has launched its first checkout-free store to the public in London’s High Holborn.
The FTSE 100 company, led by Ken Murphy, said visitors to the 2000 square feet shop with the Tesco app will be able to check in to the branch, pick up groceries, and leave without using a physical in-store till.
Instead once shoppers leave, they will be charged to the card linked with their Tesco grocery app. They will receive a receipt within minutes of exiting the store.
Read more HERE.
Netflix shares surge
08:13 , Graeme Evans
Investors appear confident that the Wall Street trend of stronger-than-expected earnings will continue this week, with streaming giant Netflix due to announce its numbers after the close of US markets tonight.
Its shares are close to a record high, with Bloomberg reporting yesterday that $19 billion has been added to the company's value since the launch of hit show Squid Game in the middle of last month. That's about 20 times the size of its estimated $900 million impact value, which is used to assess the performance of individual shows.
UBS published a note yesterday in which it maintained its “buy” recommendation and raised its estimates for fourth quarter and 2022 subscription numbers.
The bank added: “We believe Netflix is a long-term secular winner with substantial scale, penetration upside and pricing power - supporting higher margins and free cash flow.”
Modest rebound for FTSE 100
07:39 , Graeme Evans
The fall-out from China's disappointing Q3 GDP performance appears to have been short lived after Asian markets rose and traders forecast a positive opening for the FTSE 100 index.
The top flight finished 0.4% lower yesterday, but CMC Markets expects a modest rebound to just above 7,200 amid hopes that the London market can resume the form that drove its best week since April.
Most of the attention yesterday was on the outlook for interest rates after Bank of England governor Andrew Bailey said inflation was proving to be more persistent than expected.
His comments on Sunday sent bond yields higher as investors increasingly think that interest rates will rise to 0.25% in November and possibly to 0.75% by February. The pound today strengthened against the dollar at 1.378, a rise of 0.3%, as attention now turns to Wednesday's publication of UK inflation figures for September.
Inflation pressures eased a little yesterday when oil prices slipped on expectations that the US will have warmer-than-normal weather for the rest of October. It was only a temporary respite, however, with Brent crude futures up 0.3% to $84.57 today.
The tech-laden Nasdaq finished 0.8% higher last night, while Apple shares rose more than 1% after the iPhone company unveiled its own-design computer chips alongside two new MacBook Pro laptops.
The day ahead on Wall Street sees results from Procter & Gamble, Johnson & Johnson and streaming giant Netflix.