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FTSE 100 Live: House prices in biggest fall since 2008, oil near $80

 (Evening Standard)
(Evening Standard)

The average house price slid 2.3% in November, the largest monthly drop recorded by lender Halifax since October 2008.

The decline, which follows the mortgage market volatility seen in the wake of the mini budget, reduces the annual rate of house price growth to 4.7% from 8.2% the previous month.

Oil prices, meanwhile, are at their lowest level in nearly a year as the demand outlook is hit by recession warnings in the US economy.

S&P 500 slips in line with stubborn fears about global growth, Apple also falls

Wednesday 7 December 2022 14:54 , Michael Hunter

New York’s S&P 500 slipped in early trade, as worries about the impact of China’s stuttering economy on global economic growth rates kept investors across global markets on cautious mood.

The S&P 500 eased back by 11 points to 3,930.11, a decline of 0.3%.

Shares in Apple also fell, by 1.5%, after reports that the company has delayed the launch date for its much-heralded electric car ro 2026.

New York stocks head for opening fall on gloomy outlook for global growth

Wednesday 7 December 2022 13:18 , Michael Hunter

Wall Street’s S&P 500 was on course to fall in opening trade, with concerns about the impact on global growth from China’s struggles with Covid-19.

According to futures trade, the broad New York index will open down 23 points at 3921.75 with after weak-looking export data from China caught the attention of global markets.

The Brent crude oil price was trading under $80 a barrel around some of its lowest levels of the calendar year.

GSK shares up 10% after court ruling, FTSE 100 oil stocks fall

Wednesday 7 December 2022 10:15 , Graeme Evans

A courtroom victory sent GSK shares surging today as the drugs giant shook off some of the uncertainty caused by lawsuits relating to heartburn product Zantac.

The US federal court ruling in favour of GSK and two other companies determined that there was no scientific evidence to support claims the treatment was carcinogenic.

Other lawsuits are pending in state courts and there’s the chance of an appeal, but GSK shares jumped by 10% or 137.2p to 1525p today. They had been at 1664p prior to August’s disclosure over the filing of thousands of personal injury claims.

AJ Bell’s investment director Russ Mould said the outcome was the best GSK could have hoped for “given how comprehensively the judge dismissed the plaintiffs’ arguments”.

He added: “It will allow the market to focus on the recent improvements in GSK’s underlying performance and the fact it is now a leaner and more efficient operation.”

Haleon, GSK’s former consumer healthcare division, rallied 4% or 12.5p to 307p. The Sensodyne-to-Panadol firm also benefited from Barclays raising its price target to 360p, well above July’s launch price of 330p.

The health stocks were joined at the top of the FTSE 100 by Ocado, which continued its run of outsized price movements by adding 4% or 29p to 691.2p.

The FTSE 100 index rose 21.26 points to 7542.65, despite Shell and BP shares losing 1% as Brent crude fell to $78 a barrel on US recession fears.

Figures showing the biggest monthly fall in house prices since 2008 heaped more pressure on Persimmon and Taylor Wimpey, which dropped 22p to 1248p and 1.2p to 102.8p respectively.

Commodities giant Glencore also weakened 2% or 10.6p to 545.5p after its production guidance for 2023 disappointed yesterday.

The FTSE 250 index dropped 38.79 points to 19,061.29, with recruitment firm Page down 4% or 20p to 444.8p after a downgrade by analysts at Jefferies.

Glimmers of hope for Naked Wines as it talks up balance sheet strength

Wednesday 7 December 2022 09:38 , Simon Hunt

There were glimmers of hope for beleaguered subscription service Naked Wines today, as it said it had revised its borrowing terms to supply it with enough resources to continue to operate comfortably for at least the next 12 months. The firm’s future had been in serious doubt, and in September it warned it was considering its options for the next 18 months, sending shares plunging.

The firm posted earnings of £4.6m for the six months to September, nearly four times the prior year, while sales climbed 4% to £166 million.

Boss Nick Devlin said: “We’re being pretty honest in saying the outlook for acquiring new customers has become less certain [but] we’ve got a balance sheet in good health.”

Naked Wines shares climbed 0.7% to 98p.

City Comment

Wednesday 7 December 2022 09:13 , Simon English

Inflation may have peaked. There are few signs yet of sweeping job cuts. And the tone from big companies reporting results lately has been surprisingly optimistic. Not exactly jolly, but not despairing either.

Today’s results from Mitchells & Butlers suggests even pubs have a shot. Maybe the last boozer in Britain won’t close in 2038 after all.

And maybe next year won’t be nearly as bad as we feared.

Sadly, in the City of London the opposite sentiment seems to apply.

Last night Morgan Stanley said it would cut 1600 jobs, about 2% of its global workforce.

Other banks have already done the same – a whopping 9,000 at Credit Suisse, but it has its own problems – or are sure to follow.

Last week Peel Hunt, a scrappy, small size broker that typifies the City, reported a 99.7% drop in profits. If you work there, the question you’d be asking yourself is: how much longer have I got?

Peel Hunt has suffered from the lack of flotations and from clients being too nervous to trade. It is far from alone.

The risk is that just as the real economy shows signs of a turnaround, the financial bit panics.

Many, many thousands of well-paid folk (who pay a lot of tax) find themselves out on their ear, a blow to London and the wider economy.

Banks are supposed to be good at reading economic cycles. And post Covid, there was a general idea that they wouldn’t do what they normally do: bring out the axe when times are tough; then rehire like crazy when things turn.

How about the banks sit this one out and keep their staff. Have another look come Easter to see how the land lies…

GSK and Haleon surge on court ruling, FTSE 100 flat

Wednesday 7 December 2022 08:51 , Graeme Evans

GSK shares have jumped 12% after the drugs giant last night won a crucial court battle relating to claims that heartburn drug Zantac caused cancer.

The federal court ruling removed some of the uncertainty hanging over the FTSE 100-listed shares, although GSK and other companies still face lawsuits in state courts.

GSK shares were 159.2p higher at 1547p, while former consumer healthcare division Haleon rallied 5% or 13.8p to 309p.

The FTSE 100 surrendered initial gains to stand close to its opening mark at 7522, with housebuilder Persimmon down 2% in the wake of today’s big drop in the monthly Halifax house price index.

The FTSE 250 index fell 12.83 points to 19,087.25, with pubs chain Mitchell & Butlers up 9% or 13.3p to 155.3p and Moonpig down 16% or 24.7p to 126.5p in the wake of their respective results.

Major investor launches move to oust Topps Tiles chairman

Wednesday 7 December 2022 07:59 , Michael Hunter

A significant shareholder in Topps Tiles is seeking to remove the chairman of the FTSE 250 building products group.

MS Galleon wants to replace Darren Shapland as non-executive chairman at the Leicester-based company, in which it has built a stake of about 20%. MSG owns Cersanit, another title producer and a major player in the European home improvement market, with a major chain in Poland. It also wants to appoint two representatives of its own to Topps’ board.

Topps says MSG approached it during 2021 suggesting the board appointments and that Topps “should purchase a greater proportion of its tiles from Cersanit,” adding:

“MSG has consistently set out its belief that the proportion of Topps’ tile supply purchased from Cersanit and its representation on the Topps Board should directly reflect its shareholding in Topps.”

Topps said today: “The Board unanimously rejects these proposals, which it believes present a clear conflict of interest between MSG’s objective for Cersanit to be a major supplier of Topps and the interests of all Topps shareholders.  In particular, the Board believes it is incompatible for the proposed non-executive directors to have the target of increasing tile purchases from Cersanit to 29.9 per cent., whilst at the same time acting in the best interests of all shareholders of Topps.”

Mitchells and Butlers back in black but CEO warns “the trading environment remains highly challenging”

Wednesday 7 December 2022 07:54 , Simon Hunt

Pub chain Mitchells and Butlers has returned to profitability as pub-goers came back in their droves after the lifting of Covid restrictions but the firm warned “the trading environment remains highly challenging.”

Pre-tax profits hit £8 million for the year to September, compared to last year’s loss of £2 million, while sales more than doubled to £2.2 billion.

Mitchells and Butlers boss Phil Urban told the Standard: “We’ve seen the city centre recover and wet-led businesses recover [and] we’re cautiously optimistic that people cut back on other things before they cut back ongoing to the pub.”

However, he warned utility and food costs were “still far higher than they were pre-covid” and “whereas historically we could swap out expensive items on the menu, pretty much every category is expensive now.”

Urban said the firm had put pint prices up by 5%, around double a typical price rise.

House prices down 2.3%, third fall in a row

Wednesday 7 December 2022 07:45 , Graeme Evans

The average house price fell by 2.3% in November, the largest decline recorded by lender Halifax since October 2008 and the third consecutive fall.

The rate of annual growth slowed further to 4.7% from 8.2%, with the typical UK property price now sitting at £285,579.

Halifax Mortgages director Kim Kinnaird said: “While a market slowdown was expected given the known economic headwinds – and following such extensive house price inflation over the last few years – this month’s fall reflects the worst of the market volatility over recent months.

“Some potential home moves have been paused as homebuyers feel increased pressure on affordability and industry data continues to suggest that many buyers and sellers are taking stock while the market continues to stabilise.”

Halifax pointed out that property prices are up more than £12,000 compared to this time last year, and £46,403 above their pre-pandemic levels in March 2020.

Kinnaird added: “The market may now be going through a process of normalisation.

“While some important factors like the limited supply of properties for sale will remain, the trajectory of mortgage rates, the robustness of household finances in the face of the rising cost of living, and how the economy – and more specifically the labour market – performs will be key in determining house prices changes in 2023.”

FTSE 100 seen higher despite Wall Street sell-off, crude at $80

Wednesday 7 December 2022 07:38 , Graeme Evans

Wall Street weakened and the oil price fell back towards $80 a barrel last night after recession warnings grew louder in the US.

JP Morgan Chase chief executive Jamie Dimon said persistently high inflation is likely to mean the world’s largest economy will be in recession next year.

The selling pressure also reflected fears that interest rates will have to continue rising well into the new year.

The S&P 500 fell 1.4% yesterday and has now unwound the rally seen after last week’s speech by Federal Reserve chair Jerome Powell signalled a slackening in the pace of tightening after four successive 0.75% hikes.

The weaker demand outlook yesterday caused the Brent crude price to fall 4% to below $80 a barrel, the lowest level since January and up just over 2% in the year to date.

The FTSE 100 index fell 0.6% yesterday but is forecast by CMC Markets to open 43 points higher at 7564 this morning, despite more evidence of weakness in China’s economy after today’s publication of disappointing trade figures.