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FTSE 100 Live: EG Group property sale, CBI boss steps aside

 (Evening Standard)
(Evening Standard)

Oil prices and mining stocks have weakened after China announced a lower-than-expected GDP target for this year of 5%.

The forecast, which was disclosed by Premier Li Keqiang at the annual National People’s Congress on Sunday, follows last year’s second slowest growth rate since 1976.

The China demand outlook put pressure on mining stocks and the price of Brent crude.

FTSE 100 Live Monday

  • China GDP target disappoints markets

  • Data firm considers US listing

  • London property merger completes

US shares rise in first hour of trading

15:27 , Daniel O'Boyle

US shares continued a rebound that began last week, with all major indices up in the first hour of trading today.

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The S&P 500 was up 0.6% to 4068.8, while the Dow Jones was up 0.4% to 33537.64 and the Nasdaq up 0.8% to 11786.13.

Among the biggest risers was Snapchat parent company Snap, with shares up 11.9% after the US House Foreign Affairs Committee voted to approve legislation that would grant the president the authority to ban TikTok.

More trouble at Home REIT as two tenants enter liquidation

14:24 , Rhiannon Curry

Two tenants providing accommodation for homeless and vulnerable people through beleaguered housing provider Home REIT have gone into liquidation.

Home REIT told investors on Monday that Midlands-based Lotus Sanctuary, which provides 939 beds for residents, predominantly women, and Gen Liv UK, which has 517 in the North West of England, were close to collapse.

The pair make up a cumulative 18% of Home REIT’s annual rent roll.

The company said it has appointed FRP Advisory Trading Limited as liquidators, and that it was in talks with prospective tenants to take on new leases for the two portfolios.

Read more here

City comment: Hunt’s tinkering won’t steer the economy straight

13:40 , Simon Hunt

Chancellors often seem to imagine themselves as captains of a mighty ship.

They stand at the bow, nudging the UK economy here and there, skilfully avoiding icebergs and prodding the ship faster forwards when the opportunity arises.

In reality, the course was set by predecessors and old events and they have very little wiggle room. The best they can hope is to create as much space as possible for themselves to do big things well.

That might make them look like they are mostly doing nothing, so they tinker.

The Sunday Times reports that Jeremy Hunt is to push ahead with plans to cut research and development tax relief for small firms in the Budget. Maybe this is a good idea, though it is hard to immediately see why.

How much does the Chancellor expect to save from this move? About £215 million. From a Government spending pot of perhaps £900 billion.In other words, almost nothing.

It’s a footling measure, the best of which can be said for it is that it might not do too much damage. It hardly makes a difference to Government finances.

Perhaps it frees up £200 million that Hunt can chuck at pet projects — new cricket pitches at schools in south London. A bridge in Doncaster.These things are fine in themselves but they don’t lead to actual changes in the economy or in most people’s lives.

Perhaps the rule should be this: if the Chancellor’s exciting new plan costs or saves less than £25 billion, it is waste of time. It’s a man on a ship mucking about because he knows the true direction of travel is out of his control.

US futures stable ahead of Powell testimony this week

13:19 , Daniel O'Boyle

US shares are set to open this morning around where they closed on Friday, with futures for each of the major indices roughly stable.

Dow Jones futures are down by 24 points to 33390. S&P 500 futures are up by a single point to 4050.75. Nasdaq futures, meanwhile, are up by 18 points to 12331.25.

Telecoms business Lumen Technologies is among the biggest pre-mmarket movers, with its futures up by 1.3%.

US investors will be paying close attention to Federal Reserve chair Jerome Powell’s testimony before congress later this week, which may provide insight into how hawkish the Fed will be in continuing to raise interest rates.

Billionaire Issa brothers’ EG Group sells $1.5 billion in property

12:28 , Simon Hunt

The billionaire Issa brothers’ business EG Group has sold $1.5 billion worth of property in the US as the pair scramble to bring down the firm’s debt burden amid soaring interest rates.

EG Group, which runs hundreds of petrol stations in the UK as well as the Leon fast food brand, said it had sold 415 store assets in the US to property company Realty Income, in a deal which will see it lease the assets back for a $103 million annual rental fee.

EG Group said the move, which represents a sale of around 15% of its property empire, was part of its “commitment to reduce total net leverage through debt reduction and free cash flow generation.”

Read more here

CBI boss Tony Danker steps aside amid workplace misconduct probe

12:24 , Daniel O'Boyle

Confederation of British Industry (CBI) director-general Tony Danker has stepped aside as the trade body investigates claims of workplace misconduct.

The CBI - which speaks for more than 190,000 UK businesses - said it was made aware of an allegation regarding Danker’s conduct in January.

This, it said, “was investigated thoroughly and was dealt with comprehensively”, with the CBI ultimately determining that disciplinary action was not required.

Read more here

Currys alters remuneration policy after shareholder revolt

11:41 , Daniel O'Boyle

Currys has changed how it will award stock to directors, after a significant number of shareholders rejected its remuneration policy.

The retailer will now require top executives to hold shares for two years after leaving the business. Under the previous policy, they needed to hold shares for one year.

The change comes after Currys’ remuneration plan received approval from shareholders representing 65.9% of voting rights last year. While this was enough for the plan to be approved, Currys said at the time that it would engage with shareholders who voted against.

Building contractors struggle to fill 2023 order books

10:55 , Joanna Hodgson

London’s biggest building contractors will be hoping measures to boost housing and address inflation concerns are announced in the March Budget, as research today laid bare how construction order books have been hammered by political and economic headwinds.

Two surveys published on Monday showed a tough outlook for construction in 2023, piling pressure on firms that are already grappling with difficulties such as labour shortages and high materials costs.

The closely-watched S&P Global/CIPS UK Construction Purchasing Managers’ Index brought good news about commercial construction - which grew at the fastest rate in nine months in February - but residential building declined for the third straight month.

Meanwhile a poll among London’s biggest building contractors found that 25% of their new work for 2023 is still to be secured. A year earlier, companies only had 15% left to fill in their order books to meet targets.

Read more here

Aston Martin shares jump 20%, markets flat on global worries

10:17 , Graeme Evans

Aston Martin Lagonda’s flying start to the year is continuing after the FTSE 250-listed shares jumped another 20%.

The stock is at its highest level since May after annual results last week provided a major boost to City confidence, with the promise of significant growth in profitability this year.

Despite today’s rise of 46.8p to 286.8p, the shares are still a far cry from the 1,900p seen during Aston Martin Lagonda’s £4.3 billion stock market debut in October 2018.

The car maker’s shares provided the standout performance during a session dominated by uncertainty over the outlook for China’s economy in 2023.

Aston Martin Lagonda’s flying start to the year is continuing (AP)
Aston Martin Lagonda’s flying start to the year is continuing (AP)

Beijing’s uninspiring annual GDP target of 5% compared with expectations for 5.5%, putting pressure on oil prices and mining stocks as it suggested that officials are less likely to push stimulus into the economy.

Anglo American and Rio Tinto shares fell 3%, off 91.5p to 2951p and 181p to 5963p respectively, as the FTSE 100 index weakened 21.56 points to 7925.55.

The poor session also reflected a risk averse approach ahead of Federal Reserve chair Jerome Powell’s testimony to Congress on Tuesday and Wednesday and the publication of the monthly non-farm payrolls report on Friday.

The events should help Wall Street build a picture about the potential for further interest rate rises and the type of landing facing the US economy following the spike in inflation.

Other fallers in London included Ocado as the grocery technology business came under further selling pressure with a decline of 23.8p to 526.4p.

However, retail stocks were stronger as B&Q owner Kingfisher lifted 3p to 288.1p and Next cheered 52p to 6950p. B&M European Value Retail improved 2.5p to 491.4p after analysts at RBC raised their price target to 550p.

The FTSE 250 index was 7.66 points lower at 19,918.11, despite today’s bounce for Aston Martin shares and the latest boost for easyJet as shares added another 7.6p to 512.6p.

Snapchat removed very few underage accounts from its platform, report finds

10:06 , Simon Hunt

Snapchat has barely removed any underage children from its platform in the UK, a report shared with media regulator Ofcom has found, raising concerns about its safeguarding efforts for younger users.

Just 700 suspected underage accounts were removed from Snapchat in the UK between April 2021 and April 2022, according to data filed with Ofcom seen by the Reuters news agency. That represents just 0.4% of the some 180,000 accounts removed by TikTok over the same period.

According to Ofcom, nearly two-thirds of children under the age of 13 have at least one social media account, suggesting that many use a fake date of birth to bypass age restrictions.

A Snap spokesperson said the figures were from a leaked document and misrepresented the scale of work the company did to keep under-13s off its platform.

read more here

Survey finds 630,000 small businesses at risk of going bust this year

09:54 , Daniel O'Boyle

A new survey has found that 630,000 small businesses fear they could go bust this year.

The annual Venture Forward survey from GoDaddy found that 12% of ‘micro-businesses’ - companies with 10 employees or fewer - fear that they could be out of business by the end of the year.

In addition, only 19% of entrepreneurs said they believe that Rishi Sunak is acting in the best interests of small and microbusinesses.

“With more than 600,000 microbusinesses saying that they feel at risk of going under this year, it is crucial that they are given adequate support to help negate the rising cost of doing business,” Andrew Gradon, Head of GoDaddy UK & Ireland, said.

Capita continues asset sell-off with HR businesses disposal

09:18 , Daniel O'Boyle

Outsourcing business Capita will sell three human resources firms for a combined £21 million.

Capita Resourcing, HR Solutions and ThirtyThree will all be acquired by Inspirit Capital.

Capita announced last year that it aimed to sell off most of its non-core assets, and has also sold off its payments, real estate and infrastructure consultancy businesses in recent months.

“We are pleased to have agreed the sale of our resourcing services businesses to Inspirit Capital, following a competitive sale process,” Capita CEO Jon Lewis said. “The transactions offer significant growth opportunities for the businesses, their clients and colleagues.

“It also marks another significant step towards reducing Capita’s debt, as we continue to simplify and strengthen the organisation, and become a more successful business for the long term.

“We remain focused on selling the majority of the remaining non-core Portfolio businesses throughout the first half of 2023 depending on general market conditions.”

Costa Coffee boosts wages for UK staff

08:47 , Rhiannon Curry

Costa Coffee has announced plans to increase wages for staff across its 1,520 company-owned UK stores.

From 1 April, base pay rates for baristas will increase from £10 per hour to at least £10.70 per hour, regardless of age, while more experienced ‘barista maestros’ will get at least £11.23 per hour, up from £10.53, depending on location and role.

Nick Orrin, Costa’s interim UK and Ireland managing director, said: “We continue to live in uncertain times, but we are passionate about putting our teams and communities first.”

Costa Coffee has announced plans to increase wages for staff across its 1,520 company-owned UK stores. (AFP/Getty Images)
Costa Coffee has announced plans to increase wages for staff across its 1,520 company-owned UK stores. (AFP/Getty Images)

Costa said staff will also be offered the chance to boost the basic rate to £10.90 by undertaking training, meaning three-quarters of its team members will be on at least £10.90 per hour from April.

This is the third time Costa Coffee has increased its pay rates in the last 12 months. In this time, the company’s base rate of pay has risen from £9.36 to £10.70 per hour – an increase of more than 14%. 

Retail rally offsets mining weakness, Clarkson up 2%

08:35 , Graeme Evans

Mining stocks have weakened on China’s 5% GDP target, with Anglo American, Rio Tinto and Antofagasta all down by around 2%.

The selling left the FTSE 100 index broadly unchanged at 7946.62, with Ocado and Reckitt Benckiser among other stocks under pressure.

Retailers are enjoying a strong session after B&Q owner Kingfisher lifted 4.7p to 289.8p and B&M European Value Retail improved 5.5p to 494.4p.

The strong run for Aston Martin Lagonda shares continued in the FTSE 250 index as the luxury car maker jumped another 10% or 23.4p to 263.4p.

A bigger-than-expected dividend also helped shares in shipping broker Clarkson to improve 2% or 65p to 3370p as the FTSE 250 edged 5.32 points higher to 19,931.09.

Capco-Shaftesbury mega-merger closes

08:26 , Daniel O'Boyle

Central London landlords Shaftesbury and Capital & Counties (Capco) have officially merged, uniting much of Soho and Covent Garden under a single ownership.

The combined business, which will be named Shaftesbury Capital, will have a portfolio of properties worth £4.9 billion, made up of over 2.9 million square feet of lettable space.

Shaftesbury shareholders will receive 3.356 new shares in the business for each Shaftesbury share held, with 1.1 billion new shares to be issued.

Capital & Counties owns scores of buildings in Covent Garden (Capco)
Capital & Counties owns scores of buildings in Covent Garden (Capco)

Shares in the new business are up 1.3% to 126.1p.

Record-breaking profits at London ship broker Clarkson fuelled by LNG boom

07:57 , Michael Hunter

London shipbroker Clarkson has reported record underlying profits of over £100 million , up over 45%, helped by demand for highly specialised vessels carring liquified natural gas.

The boom came as European companies scrambled to find alternative sources of energy after Russia’s invasion of Ukraine, with the Lower Thames Street company helping move over 400 million tonnes of LNG, a record high. Rates for hiring an LNG tanker reached an average of $131,500 (£109,238) a day, up almost 50% year-on-year.

FTSE 100 seen higher, focus on Powell testimony

07:43 , Graeme Evans

The FTSE 100 index is expected to open five points higher at 7952, reflecting a positive finish to the Wall Street session on Friday and a more mixed performance for Asia markets due to China’s lacklustre GDP target.

Looking ahead to later this week, traders will be focused on Federal Reserve chair Jerome Powell’s testimony to Congress on Tuesday and Wednesday and the publication of the monthly non-farm payrolls report on Friday.

The events should help Wall Street build a picture about the potential for further interest rate rises in the spring and the type of landing faced by the US economy.

Deutsche Bank strategist Jim Reid said: “it's hard to see how Powell can be too confident about where the Fed is going to land.

“He may provide clues as to what employment and inflation numbers need to do to make the Fed act in a particular way, especially how it pertains to whether 0.5% hikes are back on the table.”

Foxtons buys Atkinson McLeod in £7.4 million deal

07:28 , Simon Hunt

Foxtons has acquired Atkinson McLeod in a £7.4 million deal as it jostles with rivals Dexters to cement its position as London’s biggest estate agent.

East London-based Atkinson McLeod has four branches and generates 90% of its revenues from around 1,100 tenancies, Foxtons said.

It’s the latest sign of consolidation in the London lettings market after Dexters snapped up rival Marsh & Parsons in January for £29 million, claiming it had become London’s biggest estate agent in the process. Last year, Foxtons acquired South London-based Gordon & Co and North London-based Stones Residential in a combined £10.6 million deal.

In a statement Foxtons said: “The acquisition of Atkinson McLeod represents further progress against our strategy of acquiring lettings businesses that deliver an attractive return on invested capital, enhance earnings and improve the resilience of the Group’s earnings, whilst also reinforcing Foxtons as London’s largest lettings brand.”

Oil price weakens on China GDP forecast

07:21 , Graeme Evans

China’s uninspiring annual GDP target of 5% put pressure on oil prices today as traders revised their expectations for the country’s pandemic recovery.

Most economists had forecast a figure of 5.5% after Covid lockdowns resulted in growth of 3% in 2022, the second weakest performance since 1976. Last year’s target was 5.5%.

Brent crude fell 1% to $85 a barrel this morning as China’s restraint weakened the prospects for global GDP.

Michael Hewson, chief market analyst at CMC Markets, said: “The lower-than-expected target might suggest that Chinese officials are less likely to push stimulus into the economy as it strives for stability over anything else.

“It could also be an acknowledgment that recent protectionist measures have damaged confidence in China as an investment opportunity, and consequently, investors could well be more cautious over the next 12 months.”

WANdisco becomes latest UK tech firm to weigh US listing

07:11 , Simon Hunt

WANdisco has become the latest London-listed tech firm to explore a public listing in the US.

The Sheffield-based software business said it was weighing up a secondary listing in the US but was committed to continuing to have a presence in the London market.

In a statement WANdisco said: “As a dual UK and US headquartered technology company, WANdisco has long-stated its intention to consider an additional listing of its ordinary shares in the United States. The company can confirm that it is in the early stages of proactively exploring this option.

“The Company also confirms that it remains committed to London’s Alternative Investment Market (“AIM”) and to maintaining its current UK AIM listing.”