Stock market confidence continues to build after the FTSE 100 index today held its position at a two-month high.
US markets are also on the front foot ahead of Federal Reserve meeting minutes, which may offer clues on the peak for interest rates.
Britvic, Halfords, Pets at Home and bank note printer De La Rue are among a large number of companies reporting results in London today.
FTSE 100 Live Wednesday
Recession warning after weaker November business activity
Pets at Home shares fall after results
Britvic boosts capacity as demand surges
Wall Street stocks tick higher as investors prepare for Fed minutes
Wednesday 23 November 2022 14:50 , Michael Hunter
New York’s S&P 500 rose 8 points to 4010.90 at the start of a session that is likely to be defined by reaction to minutes from the Federal Reserve’s last monetary policy meeting at which it hiked rates by 0.75%.
Investors will be looking for signs that the central bank was considering increases of a smaller margin amid signs that its agressive fight against inflation has started to tame the pace at which prices are rising.
Jobs claims data out before the start of trade showed a larger than expected number of people signing on for benefits for the first time last week. With policy makers on watch for signs that rate hikes could start to hurt hiring, there is much attention on the twists and turns of the employment market.
The Fed minutes are out at 7p.m. London time, 2p.m. in New York, about two-and-a-half hours before the end of full US trading hours.
US jobless claims rise to higher level than expected
Wednesday 23 November 2022 13:39 , Michael Hunter
More US economic data looked to open the way for the Federal Reserve to adopt smaller rate rises in its fight against inflation.
The number of people claiming unemployment support for the first time in the US last week reached 240,000, more than the 225,000 expected, in what could be seen as another sign that the central bank’s fight against inflation is being felt in the jobs maket as well as showing signs of working to cool rising prices.
There will be fresh insight into the central bank’s thinking in the New York afternoon, when minutes of its last rate-setting meeting are released.
In the meantime, the dollar was lower after the numbers, with the index tracking it against a series of rivals down 0.2% to 107 points, taking its advance for the year to just under 11%.
Futures trade pointed to a muted open for the S&P 500 stock index, expecting it to hold steady ay 4010.50. It had been marginally higher beforehand.
New York markets set sights on employment data ahead of release of Fed minutes
Wednesday 23 November 2022 12:35 , Michael Hunter
Wall Street’s S&P 500 was expected to tick higher in opening trade, although the fate of the session is likely to depend on jobless data due out before the start of trade and Federal Reserve minutes published during the US afternoon.
The weekly number of people claiming for benefits for the first time was forecast to reach 225,000, up marginally from 222,000 last time.
Then investors will be looking through the details of the US central bank’s last rate-setting meeting for clues on wether to expect smaller rate rises, and if they could kick in at its next meeting in December. The Fed has been using 0.75% increases to fight inflation, although there have been hopes among investors that tighter monetary policy is starting to cool price rises.
In the run up to the last trading session before the Thanksgiving holiday on Thursday, New York’s broad stock gauge was expected to gain just over 4 points to 4015.
FTSE 250 held back by property and industrial stocks
Wednesday 23 November 2022 12:12 , Michael Hunter
London’s FTSE 250 was not making gains in afternoon trade, pinned to the flatline by falls for property and industrial stocks after more economic data pointed to a looming recession in the UK.
Attention in Purchasing Managers’ Index (PMI) data focused on the biggest drop in new orders for over two years as companies held back on spending.
Balanced Commercial Property Trust was among the biggest fallers, down almost 4p to 89p, a drop of over 4%. Sector peer Hammerson was down almost 2% to 24p. Coats, the industrial thread maker, fell 3% to 67p. Petrofac, which energy designs infrastructure for industry, fell 1.7% to 104p.
The mid-cap index that has deeper roots in the domestic UK economy was flat overall at 19415.19, finding support from some well-received corporate news. Britvic, the mixer maker, was up 27p at 796p, a rise of almost 4% after its profits surged.
De La Rue shares fall 20%, Glencore leads FTSE 100
Wednesday 23 November 2022 10:17 , Graeme Evans
Another profit warning has increased the pressure on banknote printer De La Rue ahead of next month’s vote on the future of chairman Kevin Loosemore.
Activist investor Crystal Amber wants Loosemore to step down after claiming that a turnaround plan instigated in 2019 has failed. A special meeting has been called by the company for 2 December so shareholders can vote on the matter.
The US fund’s case appeared to strengthen today after De La Rue’s third profit warning of 2022 left shares 20% or 20.1p lower at near their low for the year at 79.8p.
A post-Covid fall in demand for banknotes meant currency first-half revenues slid 12.3% to £116.4 million and caused a 46.6% decline in overall operating profits to £9.3 million.
De La Rue, whose authentication division makes ID security products, lowered full year guidance but insisted it is now better placed to deal with the current economic conditions.
It pointed out that the turnaround plan had saved De La Rue by dealing with legacy issues and restoring profitability in the currency business.
Crystal Amber, which became a shareholder in 2018 and backed a 110p-a-share rights issue in July 2020, believes bosses lack a strategy for growth.
In the FTSE 100, which De La Rue used to be part of, commodity-focused stocks continued their momentum to leave the top flight 0.5% or 39.36 points higher at 7492.20.
The performance was led by mining giant Glencore after favourable broker comment sent shares up 3% or 17.1p to 532p. Analysts at Bernstein lifted their target price to 770p, while Deutsche Bank named the company its top pick in the mining sector.
BP offered support for the second session in a row, lifting 6.7p to 494.7p, and Premier Inn owner Whitbread improved 2% or 52p to 2591p.
The FTSE 250 crept into positive territory, up 39.29 points at 19,461.66, after updates by flow control engineer Rotork and electronics manufacturer discoverIE left their shares 11p and 43p higher at 296.6p and 914p respectively.
Further sign of UK recession comes from fall in business activity in November
Wednesday 23 November 2022 09:58 , Michael Hunter
There was another signpost on the UK’s road to recession from data showing a fall in business activity in November, although like numbers from mainland Europe, it was not a steep as predicted.
The S&P Global/CIPS Purchasing Managers Index for the month came in at 48.3, above the 47.2 forecast. The reading for the services sector, which makes up the bulk of the UK economy, held steady at 48, while manufcuring rose to 45.4 from 45.
But under the bonnet of the numbers were some more worrying signs, with the rate of new orders falling at its fastest pace in over two years as squeezed budgets constrained spending.
Dr John Glen, chief economist at the Chartered Institute of Procurement & Supply, which compiles the data, said: “The survey pointed to some deeply concerning developments such as the quickest fall in new orders since January 2021 and the fastest decline in manufacturing export orders since 2009 outside the pandemic years.
“The covid veil, now almost completely lifted, has revealed the challenges still faced by exporters struggling with customs and paperwork challenges and other Brexit constraints putting off overseas customers.”
Pets At Home still on the up
Wednesday 23 November 2022 09:49 , Simon English
THE pandemic pet boom that saw locked-up Brits embrace cats and dogs as family members like never before is still aiding the leading animal business in the UK.
But Pets at Home warned today that wider economic issues could hit its profits later, even in such a pet-friendly country as this one.
The company saw profits for the half year down 9% to £59 million, a challenge to new CEO Lyssa McGowan, who recently replaced the highly regarded Peter Pritchard.
Pritchard moved on after 11 highly successful years that saw the business become a household name.
Today McGowan said the pet care market was “resilient” despite a looming recession, something regarded as inevitable by many economists.
Pets At Home is seen as a key economic indicator since all studies show Brits are so passionate about their pets that they maintain spending on the animals even after they have cut meals for themselves.
Revenue in the half year to October rose 7% to £727 million, a sign that so-far pet spending is robust in the face of a cost-of-living crisis.
Sarah Riding, retail partner at law firm Gowling WLG, said:
"The increase in the number of ‘pandemic pets’ during COVID-19 gave a boost to the retailer
, and despite the current cost of living pressures, it has maintained strong growth. As consumers start to feel the economic pinch ever more so over the next few months, the company’s revenue may take a hit and investors will be wary of this eating into profits.”
McGowan said she has been learning how the company operates and thinks pet care will be a boom sector whatever the economic weather.
She said: “I am more convinced that Pets at Home is well-positioned to capitalise on an attractive growth opportunity in our structurally-growing pet care market, supported by our unique blend of products and services, deeply-embedded culture and expert, passionate colleagues and partners.
“Our first-half performance shows progress and resilience across the business.”
Pets At Home shares fell 12p, 4%, to 290p today on concern that the coming recession could even see people cut back on treats and food for their animals.
The stock is down 40% in the past year on exactly that concern.
Pets At Home said full year profit should be £131 million, in line with previous guidance to the City.
Some economic hope arrives for Europe as PMI surveys are better than feared
Wednesday 23 November 2022 09:47 , Michael Hunter
The latest economic data from Europe shows that its manufacturing and service sectors are continuing to shrink, but the readings on the S&P Global Purchasing Managers’ Indexes are not as bad as forecast.
While the extent of the decline is the second biggest in almost a decade, not counting the drops during Covid, City experts were expecting it to be worse.
The drop in business activity means a recession remains likely, but there were also signs that problems in the supply chain were easing,
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:“The November PMI data also bring some tentative good news. In particular, the overall rate of decline has eased compared to October. Most encouragingly, supply constraints are showing signs of easing, with supplier performance even improving in the region’s manufacturing heartland of Germany.”
The eurozone-wide PMI came in under the 50-mark that separates expansion from contraction at 47.3, better than the forecast reading of 46.
FTSE 100 extends run, Pets at Home 4% lower
Wednesday 23 November 2022 08:40 , Graeme Evans
The recent improvement for the FTSE 100 index has continued after London’s top flight rose another 0.6% or 42.91 points to 7496.75.
The performance was led by mining giant Glencore after upgrades to price targets by analysts at Deutsche Bank and Bernstein sent shares 3% or 17.1p higher to 532p.
BP also offered support for the second session in a row, lifting 6.7p to 494.7p, but United Utilities dropped 1.5% after its interim results.
The FTSE 250 index fell 41.97 points to 19,380.40 in a busy session for mid-cap results.
Updates from Britvic, engineering firm Rotork and electronics business discoverIE sent their shares 3% higher but Johnson Matthey and Pets at Home weakened 5% and 4% respectively.
Johnson Matthey shares lower after inflation and supply chain woes hit profits
Wednesday 23 November 2022 08:19 , Michael Hunter
Shares in Johnson Matthey fell in early trade after the chemicals company’s profits slipped, hit by inflation and supply chain constraints.
The FTSE 250 chemicals company reported interim profit of £222 million, down from £297 million a year ago. Revenue fell 14% to £7.3 billion.
Supply chain problems took a toll on its business making catalytic converters, which clean up emissons from cars, due to Covid restrictions in China . There was also disruption from shortages of semiconductor chips, while it also cited the war in Ukraine as a source of “disruption”.
The stock was down 61p to 1985p, a drop of around 3%,
Applied Graphene Materials seeks funding to stay in business beyond January
Wednesday 23 November 2022 07:53 , Michael Hunter
AIM-listed Applied Graphene Materials has put itself up for sale and warned that a “strategic review” of its business could end in job losses as it seeks to raise cash in order to keep going beyond the end of January.
The company confirmed it would not be raising capital by issuing fresh equity, but said it was considering options including funding “from a debt specialist provider or strategic investor” and the sale of its “trade and assets”.
Graphene is a potentially revolutionary material consisting of a single layer of carbon atoms which has long been thought to have a range of potential applications. But companies investing in the discovery, made at the University of Manchester, have struggled to find profitable ways to exploit it.
Britvic profits surge as it ramps up capacity to meet demand
Wednesday 23 November 2022 07:41 , Simon Hunt
Drinks maker Britvic is ramping up production capacity in the UK, Brazil and France to meet growing demand after it posted a surge in profits.
In Great Britain, the business added an additional can line in Rugby, in addition to the three lines installed as part of our Business Capability Programme completed in
2019. It is also upgrading the National Distribution Centre to ensure it is well placed for future growth and to deliver improved efficiency.
The firm posted revenue of £1.6 billion for the year to September, up 15%, while profit after tax gew 45% to £140 million.
United Utilities backs call for national social tariff as revenue and profits fall
Wednesday 23 November 2022 07:35 , Michael Hunter
United Utilities has added its voice to industry calls for a national social tariff to help hard-pressed consumers with their bills and avoid a “postcode lottery” when it comes to support.
The FTSE 250 water company also reported a drop in revenue and profit in the six months to the end of September. Underlying operating profit fell to just under £260 million from over £332 millon a year earlier, from revenue of just over £919 million, down from £932 million.
Steve Mogford, Chief Executive Officer, said: “We believe that affordability support should not be a postcode lottery, which is why we are a strong supporter of the Consumer Council for Water’s proposal for a national social tariff to help households with their water bills.”
US economy in focus, FTSE 100 set to open higher
Wednesday 23 November 2022 07:31 , Graeme Evans
With US markets closed tomorrow for the Thanksgiving holiday and due to shut early on Friday, there are more economic updates than usual today.
These include weekly jobless claims and figures on new home sales, as well as the minutes of the Federal Reserve’s most recent policy meeting.
Much has happened since the Fed hiked rates as expected by 0.75%, with a lower-than-expected inflation print offsetting chair Jerome Powell’s earlier insistence that it was still too early to be talking about a policy pivot.
The Dow Jones Industrial Average is up 8% in the past month, including a rise of more than 1% last night. The FTSE 100 index is also at its highest level since mid-September, despite concerns about a fresh round of Covid restrictions affecting China’s economy.
The FTSE 100 is expected to open 14 points higher at 7,466, according to CMC Markets.
Halfords creates 1,000 new roles after revenue soars
Wednesday 23 November 2022 07:28 , Simon Hunt
Halfords is to recruit 1,000 new mechanics to meet surging demand after it reported booming revenue.
The company said its new recruitment programme will be aimed at over-50s and retirees in a bid to bring older skilled workers back into the labour market.
The firm reported sales growth of 31% in the 6 months to September to £766 million, while pre-tax profits gew 2% to £29 million.
Graham Stapleton, Halfords CEO, says he wants to use the opportunity created by a boom in demand to rewire the company’s workforce.
“We have a big focus on people who left the workforce in recent years but are now starting to return in these tough economic times,” he said. “We want to give people the best possible route to return to work. Becoming a qualified automotive technician can be an incredibly satisfying second career.”