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FTSE 100 Live: M&S and Tesco hail strong trading, Centrica upgrade; US inflation drops in December

 (Evening Standard)
(Evening Standard)

Marks & Spencer today said it had delivered a strong Christmas trading performance after seeing like-for-like sales growth of 7.2% in the 13 weeks to 13 December.

In a busy session for retail updates, Tesco boss Ken Murphy said the UK’s biggest supermarket chain had delivered a strong market share performance over the festive period. Both companies left their annual profit guidance unchanged.

Other updates today include from ASOS, Halfords. housebuilder Persimmon and Centrica, with the British Gas owner forecasting annual earnings ahead of market expectations at more than 30p a share.

US inflation fell by 0.1% month-on-month, adding to hopes that price rises may have peaked and that the Federal Reserve’s fight against price rises is working.

FTSE 100 Live Thursday

  • M&S and Tesco report strong trading

  • Centrica shares give fresh boost to FTSE 100

  • Halfords profits hit by skills shortage

That’s all folks. Tomorrow: GDP

Thursday 12 January 2023 16:45 , Simon Hunt

That concludes the Standard City Desk liveblog coverage for today, after bumper Christmas trading updates from supermarket stalwarts Tesco and M&S.

We’ll be back at 7am tomorrow where crucial GDP data will shed light on where the UK economy stands on its potential journey into recession.

US inflation helps lower investor expectations for peak BoE interestrates

Thursday 12 January 2023 15:55 , Simon Hunt

Investor expectations for peak Bank of England interest rates fell to their lowest level since September today as analysts were bouyed by positive inflation data from the US.

Traders expect the peak BoE raate to hit around 4.5% by the second half of this year, according to Bloomberg data, after US CPI inflation fell 0.1%.

Seema Shah, Chief Global Strategist at Principal Asset Management said: “Taking a step back, evidence is building that inflation is cooling and will continue to do so over the coming months. But perhaps the real question will come in late Q2 as inflation tries to move below the 4-4.5% handle.

“If it falls steadily through that threshold due to growing economic weakness, permitting Fed loosening, markets will still be challenged due to earnings concerns. Not a great outcome, either way.”

Illegal crypto activity hit all-time high of $20 billion in 2022

Thursday 12 January 2023 15:29 , Simon Hunt

Illegal crypto activity hit an all-time high of $20.1 billion in 2022, new research has found, as criminals intensified their efforts to scam unwitting investors.

The share of cryptocurrency activity associated with crime has risen for the first time since 2019, according to an investigation by Chainalysis, a doubling of 2021 levels.

Chainalysis director of research Kim Grauer said consumers have become more alert to dodgy crypto investments in the wake of the FTX scandal.

read more here

Wall Street stocks make steady start after inflation data drops, pointing to smaller Fed rate hikes

Thursday 12 January 2023 14:47 , Michael Hunter

New York’s S&P 500 made a steady start to trade, with the mood helped by softer-than-expected inflation data for December, which pointed to smaller rate hikes from the Federal Reserve.

While the annual rate of inflation stayed some way above the central bank’s 2% target a 6.5%, it was down from 7.1%, and eased by 0.1% month-on-month.

The broad Wall Street stock index opened down 0.1% at 3965.90, with some talk among analysts noting that the market was now looking for signs of a deeper moderation in the inflation rate. Expectations deepened that the Federal Reserve would now adopt smaller, 0.25% rate hikes in its fight against inflation, hitting the dollar. The index tracking the US currency fell 0.6%.

James Knighley, chief international economist at ING, said: “US inflation shows price pressures are easing, yet in an environment of a strong jobs market, the Federal Reserve will be wary of calling the top in interest rates.“

He added: “A 0.25% hike in February is likely with a further 0.25% in March. Inflation will slow even more meaningfully in 2Q though, with the prospects for 2H rate cuts looking strong as recession bites hard.”

FTSE 100 heads to the brink of 7800 points as drop in US inflation energises global stocks

Thursday 12 January 2023 14:12 , Michael Hunter

London’s FTSE edged near 7800 points in afternoon trade as global stock markets took heart from a fall in US inflation.

The broad rally took the main UK stock index to levels last seen in 2018.

It was the second successive month US inflation fell, by 0.1% in December from November, taking the annual rate to 6.5% from 7.1%.

The decline raised hopes that peak inflation could be behind the world’s biggest economy and it opened the way for the Federal Reserve to adopt smaller rate hikes as it fights to get the rate of price rises back to its 2% target.

Srijan Katyal, global head of strategy & trading services at brokerage ADSS, said: “This further stokes speculation that the Fed will ease its pace of interest rate increases. Calibration will be key, meaning a 25-basis point raise is a likely outcome from the Fed’s January meeting.”

US inflation falls in December, Wall Street stock futures turn round to head for opening gains

Thursday 12 January 2023 13:34 , Michael Hunter

US inflation fell by 0.1% month-on-month, adding to hopes that price rises may have peaked and that the Federal Reserve’s fight against price rises is working and putting stock markets on course for opening gains

The drop was better than an expected flat reading to the consumer price index, which rose 0.1% last time month-on-month.

It took the year-on-year rate to 6.5%, in line with forecasts and down from 7.1% and to its slowest in over a year.

Jobs data was also out and was better than forcast, showing fewer initial claims for unemployment benefits, at 205,000 last week, rather than the 215,000 expected.

After the numbers came out, futures trading cheered up to point opening gains for the S&P 500, of 0.4% to 4008.0, having been forecasting a drop earlier.

FTSE midday movers: Investors don’t rate Experian

Thursday 12 January 2023 12:30 , Michael Hunter

Experian was among the biggest fallers on the FTSE 100 in midday trade after a broker downgrade hit the credit checking agency. RBS cut its rating on the stock to “underperform” from “sector perform” and cut its price target on the stock by 400p to 2500p. It was at 2836p in the early afternoon, down by around 2%.

Persimmon topped the leaderboard — up almost 7% at 1258p as traders focused on the strong points in a mixed trading update. While it said sales slowed dramatically in the second half of the year, its completion rate of new homes came in at the top of forecasts.

Blockchain.com lets go of 28% of workforce

Thursday 12 January 2023 11:35 , Simon Hunt

UK-founded crypto brokerage Blockchain.com is set to cut 28% of its workforce as the so-called ‘crypto winter’ intensifies.

The firm, which was founded by British entrepreneur Ben Reeves in York in 2011, plans to let go around 110 employees, according to reports by news site Coindesk. It adds to the roughly 150 staff cut from the firm in July last year.

The announcement makes Blockchain.com the latest crypto firm to cut its headcount in 2023 after US-based exchanged Coinbase began a round of 950 layoffs earlier this week.

A Coinbase spokesperson said: “In the face of increasingly challenging economic conditions, we made the difficult decision to start redundancy processes with a group of provisionally selected employees in Europe to reduce the size of our teams to strengthen our business and ensure we can weather anything else that comes our way.”

Further falls take gas prices down 55% in a month

Thursday 12 January 2023 11:33 , Michael Hunter

Wholesale gas prices are falling further, helping raise hopes that the wave of inflation set off by high energy costs may have peaked.

The sustained fall -- helped by mild winter weather, improved storage capacity and high winds that boost the UK’s production of electricity from offshore turbines -- has taken the price down 55% in a month.

The latest market moves come as Centrica, the owner of British Gas, raised its profit forecasts after a turbulent year in the energy market, which was up-ended by Russia’s invasion of Ukraine.

Meanwhile, Citizens Advice, the consumer advocacy charity, called for energy companies to be banned from forcing customers to use prepayment meters after over 3 million people ran out of credit on them last year

M&S and Tesco report bumper sales figures

Thursday 12 January 2023 10:29 , Graeme Evans

Fresh hope that the UK could narrowly avoid a recession arrived today in the form of bumper Christmas trading figures from both Tesco and Marks & Spencer.

While that could indicate a last splash-out before austerity bites, the numbers are strong enough to suggest consumers are more resilient than feared.

Tesco said like-for-like sales rose by 5.3% over Christmas, while M&S grew by 7.2%.

Both argue they are now in a strong position to compete with the discount retailers Aldi and Lidl, offering budget ranges and more luxury goods for when people are celebrating.

The “trading down” that is occurring sees customers eschew restaurants in favour of a nice night in, Tesco chief Ken Murphy suggests.

Read more on the Tesco and M&S updates

Centrica leads FTSE 100, Virgin Wines shares slump

Thursday 12 January 2023 10:26 , Graeme Evans

Shares in British Gas owner Centrica rose another 6% today ater it upgraded guidance on 2022 earnings for the second time in three months.

The latest rise of 5.2p took the FTSE 100-listed stock back to levels seen in 2019 at 97p, meaning a boost for the company’s army of long-suffering retail shareholders.

As well as its British Gas energy supply operation, Centrica owns gas and oil exploration and production assets and a 20% interest in the UK’s nuclear power generation fleet. In October, it announced the reopening of the Rough gas storage facility.

High energy prices and stronger demand during December’s cold snap are likely to have driven the latest upgrade, with Centrica now expecting earnings per share above 30p compared with guidance in November for up to 26p.

There was little detail in today’s update as Centrica limited its commentary to references about a strong operational performance and good asset availability.

Centrica shares led the FTSE 100 index, which moved to within 100 points of its record close level by adding 0.6% or 47.49 points to 7772.47.

Other big risers included Vodafone, which rebounded 3.2p to 91.1p after interim boss Margherita Della Valle announced a shake up of the phone giant’s executive committee.

Today’s strong retail updates and hopes that inflation pressures are under control meant the FTSE 250 index surged by 1% or 178.40 points to 19,700.10.

In the FTSE All-Share, consumer reviews business Trustpilot jumped 10.55p to 103.9p as it reported a 23% rise in revenue for last year and said annual earnings should be ahead of expectations.

Shares in Virgin Wines lost a third of their value after the online retailer said one-off operational challenges in the run-up to Christmas led to revenues falling by around £7 million to £33.7 million in the final six months of the year.

Chief executive Jay Wright said the company was disappointed with its profit performance but that the underlying business model remained resilient “as the consumer proposition continues to resonate strongly”. Shares fell 21.5p to 51p.

Halfords shares crash after profit warning

Thursday 12 January 2023 10:03 , Jonathan Prynn

Shares in Halfords crashed by almost a quarter today after it issued a profit warning over shortages of skilled mechanics and a slump in sales of car tyres and adult bikes.

The motoring and cycling retailer and car servicing giant slashed its guidance for pre-tax profits in the current financial year to a range of £50 million to £60 million. The shares fell 50.8p, or 23%, to 165p.

In a third quarter trading update covering the last three months of the year Halfords said the labour market had remained “very challenging.” That had prevented it from hiring the technicians it needs in its Autocentres business for the peak MOT market over the winter and Spring.

Asos shares soar 18% in vote of confidence for CEO turnaround plan

Thursday 12 January 2023 09:58 , Simon Hunt

Asos shares rose 18% in a vote of confidence for turnaround plans by new CEO José Antonio Ramos Calamonte.

Asos plans to cut office space and close down storage warehouses after reporting a drop in UK sales.

The beleaguered online retailer said it had embarked on a £300 million package of “cost mitigation measures” as it battles raging inflation and dwindling consumer demand, including rationalising office space and closing three storage facilities.

M&S and Tesco shares lower, Halfords down 21%

Thursday 12 January 2023 08:57 , Graeme Evans

Centrica shares jumped 6% in the FTSE 100 index after the British Gas owner upgraded its guidance on 2022 earnings for the second time in three months.

The stock rose 5.3p to 97p, placing Centrica ahead of Whitbread on the risers board after the Premier Inn chain lifted 4% or 101p to 2956p on the back of a trading update.

Marks & Spencer and Tesco impressed with their festive sales figures, but their shares fell back after recent strong runs to stand 2.3p and 3p lower respectively at 141.1p and 240.7p.

The FTSE 100 index rose 41.46 points to 7766.44 and the FTSE 250 lifted 122.24 points to 19,643.94, with the release of US inflation figures due at 1.30pm likely to determine whether markets close the session in positive territory.

In a busy session for updates, ASOS and Trustpilot shares jumped 15% and 11% respectively in the FTSE 250 index but Halfords tumbled 21% after its profit warning.

Halfords impacted by skills shortage

Thursday 12 January 2023 08:00 , Graeme Evans

Halfords today issued a profit warning after its Autocentres car repair business was impacted by the challenging labour market.

It said: “We have been unable to recruit enough skilled technicians in our Autocentres business which we now expect will limit growth of higher margin sales during the important upcoming Q4 MOT peak.

“In addition, we have also seen weakness in the consumer tyre market continue for longer than initially anticipated and expect a deeper decline in demand for more discretionary high-ticket items in retail than previously forecast.”

In today’s Christmas trading update, Halfords said strong sales in motoring and needs-based categories had been offset by the softer than expected cycling and tyre markets.

It has reduced its guidance for underlying profits in the year to March to between £50 million and £60 million.

Mitchells and Butlers hails return of office Christmas party after sales jump 19%

Thursday 12 January 2023 07:57 , Simon Hunt

Pub company Mitchells and Butlers reported a strong end to 2022, with sales up 19% in the five weeks to 7 January 2023 after the office Christmas party made a roaring comeback.

Drink sales outperformed food, up 23.4% over the period, while revenues in the 10 weeks before December also climbed 6.5%.

Christmas 2021 had been a particularly bad year for pub companies, as a surge in coronavirus cases led to a wave of cancellations of festive parties.

Phil Urban, Chief Executive, said: “We are encouraged by a strong performance through the first quarter and delighted to have been able to welcome our guests back over the festive trading season after three years of disruption due to Covid 19, setting sales records as we did so.”

House sales slump at Persimmon as home buyers delay purchasing decisions

Thursday 12 January 2023 07:56 , Michael Hunter

Home buyers delaying major purchasing decisions amid rising interests rates and mortgage costs hit forward sales at Persimmmon, the FTSE 100 house builder.

It also warned that a weakening economy was hitting its outlook for 2023.

Private forward sales slumped by over a half, falling 56% to £500 million, with total forward sales down 36% to £1 billion.

Persimmon said: “We saw notably weaker customer demand in the second half of the year as concerns over the economy, mortgage rates and the cost of living weighed heavily on consumer confidence.” It also said it was “too early” to predict when there would be a recovery in demand.

The weaker trading performance hit the south hardest, especially where the government’s Help to Buy scheme was being heavily used before it was closed to new applicants at the end of October.

For 2022, the York-based company completed almost 15,000 houses, up 2% and in line with the top end of forecasts.

FTSE 100 higher ahead of US inflation reading

Thursday 12 January 2023 07:46 , Graeme Evans

The FTSE 100 index is within 2% of an all-time high and set to make further progress ahead of today’s inflation figures in the United States.

Investors are hopeful that the latest CPI figure will give Federal Reserve policymakers further scope to slacken interest rate rises.

China’s reopening after a long period of Covid disruption has also boosted sentiment in London, with CMC Markets expecting the FTSE 100 to open 20 points higher at 7745.

Wall Street is looking for year-on-year growth in CPI to ease to 6.5% from 7.1% the month before, with growth in core prices predicted to ease slightly to 5.7%.

Deutsche Bank strategist Jim Reid said this morning: “After a long run of inflation surprising on the upside, the latest releases have seen two downside surprises on CPI in a row for the first time since the pandemic, which has led to growing hopes that the Fed might achieve a soft landing after all.

“If we did get a third downside surprise today, clearly that would add further fuel on market speculation about a Fed pivot later in the year.”

Popularity of London Premier Inns boosts Whitbread sales

Thursday 12 January 2023 07:42 , Michael Hunter

Rising demand from business and leisure travellers to London helped boost sales at Whitbread, the owner of the Premier Inn budget hotel chain.

The FTSE 100 company reported a rise of almost a quarter in UK accommodation sales for the third quarter, with strong growth from its move into Germany helping total room sales up by almost 30%. Food and beverage sales were up over 9%.

Increased occupancy, higher average room rates and growth in Premier Inn’s estates followed what it called “a strong performance across both London and the Regions”.

The company now has 45 hotels in Germany and plans to open 36 more.

Centrica lifts 2022 earnings guidance

Thursday 12 January 2023 07:32 , Graeme Evans

British Gas owner Centrica today issued a brief trading update in which it lifted its 2022 earnings guidance to more than 30p a share.

When it last briefed investors in mid-November, the FTSE 100-listed company anticipated a figure towards the top end of the City’s forecast range of between 15.1p and 26p.

As well as its British Gas energy supply operation, the company owns gas and oil exploration and production assets and a 20% interest in the UK’s nuclear power generation fleet. In October, it announced the reopening of the Rough gas storage facility.

The company continues to benefit from higher commodity prices, while it said today that “infrastructure asset availability and volumes have remained good.”

Asos to close offices and storage warehouses after reporting drop in UK sales

Thursday 12 January 2023 07:19 , Simon Hunt

Asos plans to cut office space and close down storage warehouses after reporting a drop in UK sales.

The beleaguered online retailer said it had embarked on a £300 million package of “cost mitigation measures” as it battles raging inflation and dwindling consumer demand, including rationalising office space and closing three storage facilities.

Asos boss José Antonio Ramos Calamonte said: "We are undertaking necessary strategic and operational changes, with our focus shifting from prioritising top-line growth to building a more relevant and competitive fashion business with a disciplined approach to capital allocation.”

The firm reported sales of £1,337 million in the four months to end December, down 6% at constant currencies, while turnover in the UK fell 8% and revenues outside Europe and the US sunk 31% to £130 million. Asos blamed the downturn in sales in weaker consumer sentiment and disruption in the delivery market which resulted in earlier cut-off dates for Christmas orders.