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FTSE 100 Live: Mike Ashley to step down, central banks in focus

·11-min read
 (Evening Standard)
(Evening Standard)

Sports Direct owner Frasers Group today announced that founder Mike Ashley is to step down from the board after next month’s AGM.

Ashley set up the business in 1982 when he opened his first sports and ski shop in Maidenhead before overseeing its transformation into a FTSE 100-listed company with brands including House of Fraser and Jack Wills.

Central banks, meanwhile, are poised to announce more big interest rate hikes this week, with the US Federal Reserve expected to hike rates by 0.75% on Wednesday and the Bank of England to increase by 0.5% to 2.25% on Thursday.

Read more on Mike Ashley

FTSE 100 Live Tuesday

  • B&Q owner Kingfisher reports 30% profits fall

  • Choppy trading ahead of UK/US rates decisions

  • CEO exit speculation hits Future shares

Not so certain Future as shares dip on CEO departure confirmation

15:25 , Mark Banham

Shares in publisher Future whose magazine brands include Marie Claire, Total Film and Metal Hammer, dropped by nearly 20% today on the confirmation that boss Zillah Byng-Thorne will depart the business by the end of next year.

Future said it had “made it clear in last year’s annual report that CEO succession planning was an ongoing focus of the board and nomination committee”.

“Zillah Byng-Thorne, CEO, joined the business in November 2013 and is approaching nine years at the group,” it added.

The company said that she remains “committed to the business, and has not resigned”, but that Byng-Thorne had “informally indicated” that she would like to step down by the end of 2023.”

Last week, Manchester-based online shopping platform THG announced that Byng-Thorne would be standing down as a senior independent director.

FTSE 100 falls in afternoon trade as consumer stocks and housebuilders hit by rate expectations

15:09 , Michael Hunter

London’s FTSE 100 was down in afternoon trade with investors across global markets in cautious mood ahead of a run of rate calls from major central banks, at which more aggressive action against inflation was expected.

The main UK stock index lost over 50 points to 7185.20, a drop of 0.7%, amid growing talk that the Bank of England and the Federal Reserve could be about to vote through further super-sized rate hikes this week.

Consumer stocks made notable drops after the owner of the B&Q home improvement chain, Kingfisher, reported a 30% fall in profit. Its shares were down almost 3% at 241p. Housebuilders, sensitive to the outlook for rising interest rates which can constrain the availability of the mortgages on which the sector depends, were lower. Persimmon fell 7% to 1325p Berkeley Group lost 2.7% to 3497p.

Wall Street falls in opening trade as speculation on super-sized Fed rate call deepens

14:47 , Michael Hunter

New York stocks were down at the start of a two-day Federal Reserve policy meeting at which US interest rates could be increased by 1% according to a growing number of City experts who expect US policy makers to intensify their fight against inflation.

The S&P 500 fell 37 points to 3862.98, a decline of 1%, with Ford making the biggest single fall, of over 8%. The carmaker highlighted the problems posed by inflation, warning that costs in the the third quarter would br $1 billion higher than previously thought as rising prices echo through its supply chain.

Michael Hewson, chief market analyst at CMC Markets UK, said: “The main factor spooking markets right now is how much higher will rates have to go.

“The last few days has seen the market narrative start to shift quite markedly from optimism over some form of Fed pivot, to increasing concern over a hard landing for the global, as well as the US economy. More rate rises are coming over the next few days, that much is not in doubt, it’s more a case of by how much.”

tui holidays fly back to 2019 levels

12:44 , Simon Hunt

Travel group Tui said UK bookings for summer holidays this year rose above pre-pandemic levels amid a frenzy to get away, while sales of winter breaks are on course to follow.

The world’s biggest tour operator reported a total of almost 13 million bookings for the whole summer, 1.4 million more than at its last trading update. UK cumulative bookings are 4% ahead of summer 2019 despite the chaos at some airports caused by staffing shortages.

Tui said that departures in the key months of July and August reached 94% of 2019 levels across the group. Winter bookings are already at 78% of 2018/19 and Tui expects business to be at “normalised pre-pandemic levels”.

Shares in Tui were up 3.4% at 141p early today.

Nightmare for eve Sleep as losses double to £4.6m

11:34 , Simon Hunt

Mattress company eve Sleep saw UK revenues plunge 18% this year in what it called “truly unprecedentedly appalling market conditions”.

The business said it had been hit by the economic consequences of the war in Ukraine and the domestic financial squeeze which had led to reduced spending on furniture.

It came days after sofa giant DFS and John Lewis reported results ravaged by the downturn.

Eve said its overall revenue fell 16% to £11.6 million in the six months to end of June, while losses doubled to £4.6 million. In response, Eve cut its annual overheads by £2.5 million, reduced salaries and restructured its staff.

In June it began exploring a potential sale, and other financing options.

CEO Cheryl Calverley said “everything possible” was being done to keep the business afloat.

Rate hike of 1% from Sweden’s central bank highlights expectations of big move from BoE and Fed

10:46 , Michael Hunter

Market expectations of further, super-sized interest rate hikes this week from the Bank of England and the Federal Reserve were highlighted by a big move from Sweden’s Riksbank today.

It made the biggest rate rise the Scandinavian country has seen in 10 years, with a hike of 1% to 1.75%, in the latest sign of the determination among global monetary policymakers to tame inflation.

The Bank of England is due to make its September rate call this Thursday at midday, an announcement put back by a week after the death of the Queen. There has been speculation that it could increase base rates from the current 1.75% by a further 0.75%. It would be the seventh increase since last December, after a 0.50% increase last time, and it would match the size of increases already adopted by the Fed.

Later in the week, the new UK government will also reveal more detail of its tax and spending plans in what it has referred to as a “fiscal event”, which City experts have described as an “emergency budget”.

Russ Mould, investment director at AJ Bell, said: “All the focus this week will be on interest rate decisions in the US and UK and a so-called  ‘mini budget’ from new chancellor Kwasi Kwarteng on Friday.”

The Federal Reserve starts a two-day rate-setting meeting today, with an announcement due tomorrow.

There are also rate announcements this week from the Swiss National Bank and the Norges Bank of Norway.

Michael Hewson, chief market analyst at CMC Markets UK, said: “More rate rises are coming over the next few days, that much is not in doubt, it’s more a case of by how much. The last few days has seen the market narrative start to shift quite markedly from optimism over some form of Fed pivot, to increasing concern over a hard landing for the global, as well as the US economy.”

In the meantime, the pound was steady just above $1.14, a level it lost for the first time since the mid-1980s last week.

Asia-focused stocks lift FTSE 100, Future shares down 14%

10:12 , Graeme Evans

The FTSE 100 index is 4.32 points higher at 7241, having lost an initial 1% improvement. Asia-focused stocks offered some support after Hong Kong announced plans to review its Covid quarantine policy and more major China cities exited lockdowns.

Insurer Prudential, whose recent pivot towards Asia markets has been hampered by the region’s pandemic restrictions, topped the FTSE 100 risers board with a gain of 2% or 19.4p to 977p and Burberry improved 15p to 1739p.

Higher oil prices on expectations of a China demand boost meant BP and Shell shares were 2% higher.

In the FTSE 250 index, shares in magazine publisher Future tumbled 14% in their first session since Sky News reported that chief executive Zillah Byng-Thorne intends to step down next year.

She took over the running of Future in April 2014 when it was worth £30 million, before a series of acquisitions that have recently included rival publisher Dennis and the parent company of comparison website Go Compare.

Rapid expansion in the United States also contributed to shares hitting a high of 3940p at the end of 2021, with Byng-Thorne being named CEO of the year in March’s PLC Awards. The FourFourTwo and Country Life publisher has fallen back to 1,430p for a £2 billion valuation since then, including today’s decline of 227p following the unconfirmed departure speculation.

Future was joined at the top of the FTSE 250 fallers board by greeting card business Moonpig, even though its AGM update reiterated guidance for full year revenues approximately double the level achieved three years ago.

Shares slid 11% or 22.5p to 117.5p as London’s second tier experienced another session of underperformance, falling 1% or 205.43 points to 18,591.71.

Kingfisher shares take a hit on consumer uncertainty

09:40 , Simon English

THE DIY boom that began during lockdown may have slowed, but it certainly isn’t over, Kingfisher insisted today.

The Anglo-France business behind B&Q and Screwfix has seen a shift to DIFM – Do it For Me – now the pandemic has mostly past.

But chief executive Thierry Garnier says sales were 16.6% ahead of pre-pandemic levels in the first half of the year.

He said: “This was driven by the extension of share gains in all our key markets, reflecting successful execution of our strategy, and resilient sales from both DIY and trade customers. We are now back to pre-pandemic levels for in-store product availability and maintaining competitive pricing across our banners.”

Profits fell 30% to £474 million.

Richard Hunter, Head of Markets at interactive investor, said: “Kingfisher is swimming against a strong tide of tough comparatives and a deteriorating economic outlook, although over a longer-term view progress is still being made.

The dividend is unchanged at 3.8p, but there is a share buyback programme in place which should boost shareholder value.

There wasn’t much sign of that today – the stock fell 5% to 235p. It is down 36% in a year.

The company says it remains “vigilant against the most uncertain economic outlook for the second half”

FTSE 100 up 1% but Kingfisher 3% lower

08:41 , Graeme Evans

A stronger-than-expected session for London’s top flight included gains of 3% for British Airways owner IAG as the FTSE 100 index lifted 1% or 75.26 points to 7311.94.

Shares in another widely-held stock, the Asia-focused insurer Prudential, rose 2% after Hong Kong announced moves to change its Covid quarantine policy.

Other stocks on the risers board included consumer healthcare business Haleon after its maiden interim results showed double-digit revenues growth and no change to full-year guidance.

The shares have fallen from 330p since the company’s July demerger from GSK, but were 5.8p higher at 265.2p today.

B&Q owner Kingfisher stood 3% or 7.5p lower at 239.8p after it announced first-half pre-tax profits had fallen by 30% in a performance in line with expectations.

The FTSE 250 index rose 0.2% or 37.29 points to 18,834.43.

FTSE 100 higher after Wall Street rally

08:04 , Graeme Evans

Last night’s late rebound on Wall Street has meant a positive start for European markets ahead of a busy few days of central bank decision making.

US benchmarks recovered from an uncertain start to close up by around 0.7%, meaning the FTSE 100 index has opened 54.22points higher at 7290.

On Friday, London’s top flight fell by 0.6% and the FTSE 250 index by 0.5% as a difficult week ended with figures showing a larger-than-expected slide in retail sales in August.

Sterling dropped to its lowest against the dollar since 1985 at $1.14, a move that also reflected expectations for another hike in interest rates of at least 0.75% by the US Federal Reserve when its monetary policy meeting concludes tomorrow.

The Bank of England follows with its decision on Thursday, when policymakers are likely to increase the base rate by another 0.5% to 2.25%. Decisions from central banks in Japan and Switzerland are also due this week.

Minutes from the Reserve Bank of Australia’s most recent meeting were published this morning and included a line that members “saw the case for a slower pace of increase in interest rates as becoming stronger”.