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FTSE 100 Live: Pound under pressure as Brent crude falls below $100 a barrel

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

US stock markets made a positive start after positive jobs data and as oil prices eased back, while pressure mounts on the European Central Bank to take tough action on interest rates after a record for eurozone’s consumer price index.

The currency area’s main inflation measure hit 9.1%, with the ECB’s governing council due to meet next week.

Brent crude yesterday fell back from $105 a barrel to below $100, while the pound has weakened to below $1.17 as confidence in the UK economy also deteriorates.

FTSE 100 stays negative but off session lows as European stocks struggle

15:12 , Michael Hunter

London’s FTSE 100 could not match the overall gains seen on US stock in opening Wall Street trade, but it was able to hold above its low point for the session.

While data pointed to signs of easing inflationary pressure in the US, helping snaps a three-day run lower there, a record high for eurozone inflation at 9.1% constrained the mood closer to home.

And while lower oil prices offered wider solace to investors worried about soaring prices, it hit London’s major oil stocks, taking points off the FTSE 100, which fell 0.8% overall to 7304.87 in afternoon trade. Shell was down 3% at 2267p and BP lost 2.9% to 436p.

Retailers were among the gainers, with JD Sports up 2.1% at 115p and Ocado gaining 1.9% to 733p.

New York stocks rise after jobs data sounds a supportive note and tech stocks bounce higher

14:53 , Michael Hunter

Signs of a cooling jobs market in the US and easing oil prices helped New York stocks make gains after a gloomy trading session across much of Europe, where pressure increased on policy makers to adopted tougher rate hikes after record inflation data.

Wall Street’s S&P 500 helped brighten the mood on global markets with an early gain of over 20 points, taking it to 4007.68, up 0.6%.

Tech stocks were higher after the sector’s troubled run. Brent crude oil’s decline helped soothe market fears on inflation, and signs of a more conservative pace of hiring in the private sector ahead of the full non-farm payrolls report on Friday also helped. Private payrolls were up by 132,000 this month, missing consensus expectations of 300,000.

European stocks came up off their lowest readings of the day, but stayed weaker overall as the US day began. The international Stoxx 600 was down 0.2% at 419.22. London’s FTSE 100 was 0.7% weaker at 7315.56.

Wall Street futures positive after private sector jobs data

13:55 , Michael Hunter

After a gloomy trading session across much of Europe, US stock futures are pointing to a brighter open after private-sector jobs data lifted the mood in the run up to the main employment figures for the month due on Friday.

The S&P 500 was on course to open up 0.3% according to futures trade after ADP’s report into hiring at private businesses pointed to a more “conservative pace of hiring” according to the data company’s chief economist.

A stellar employment market, in which job creation has run significantly ahead of forecasts, has looked to give the Federal Reserve more room for aggressive rate hikes as it fights inflation. Signs that the red-hot job market may be cooling could help ease fears in the market about runaway prices and the potential for the rate hikes used to fight it to constrain economic growth.

The most closely-watched jobs data of the month -- the non-farms payroll report -- is due out this Friday and will be scrutinised for its implications on the outlook at the Fed, which surprised markets last week with its hawkishness on rates in remarks from its chairman, Jerome Powell.

Stocks fall as record eurozone inflation adds to prospect of aggressive ECB rate hikes

13:26 , Michael Hunter

Continental European stocks fell to multi-week lows as record inflation data from the eurozone added to the chances of bigger interest rate hikes for the currency area next week.

The European Central Bank meets on September 8 and will discuss today’s reading for 9.1% on the bloc’s consumer price index, the highest it has reached in the history of the euro. Commentators were expecting policy makers to take more aggressive action in their fight against inflation.

“We are now leaning towards a 0.75% hike in all three of the ECB’s benchmark rates next week, and we would expect the overall messaging from the central bank to be quite hawkish,” said Stephen Gallo, European head of FX strategy at the Bank of Montreal.

In the meantime, the international Stoxx 600 index fell 0.5% to 417.92, its lowest since mid-July.

The inflation numbers came out on the same day Russia shut the Nord Stream gas pipeline to Germany, for several days of maintenance, a move that stoked fears that Moscow could use constrained gas supply as a political weapon against Europe into the winter, when energy demand peaks. Rising gas and energy prices since Vladimir Putin’s invasion of Ukraine are the main drivers of inflation, and have been influencing increased food costs while also contributing to a rise in finished goods prices in the latest data.

Billionaire brothers add Co-op forecourts to Asda for £600m

12:41 , Simon Hunt

The billionaire Issa brothers have added another major asset to their sprawling retail empire after their majority-owned supermarket Asda snapped up 129 petrol forecourt sites from the Co-op in a £600 million deal.

The deal, which includes £438 million cash and £162 million in lease liabilities, represents 5% of Co-op’s retail estate and is set to be completed by the end of the year.

It’s the latest in a string of frantic big-ticket acquisitions after Blackburn-based Mohsin and Zuber Issa took a stake in Asda from Walmart in October 2020. The duo bought fast-food vendor Leon in April 2021 in a £100 million deal and made an offer for beleaguered firm Caffè Nero, which was seen off by the coffee chain in favour of agreeing a refinancing deal in January 2022.

The pair are worth £4.7 billion according to the Sunday Times rich list.

read more here

Back-to-school shopping boosts Shoe Zone forecasts

12:22 , Simon Hunt

Back-to-school shoppers are still spending, helping Shoe Zone lift profit forecasts and offer some relief from the gloom over much of the UK High Street as the cost-of-living crisis deepens.

The company, which has almost 370 shops and 2700 employees, said that it now expects profit for its current financial year of at least £10.5 million, up from previous guidance of £9.5 million issued in July. That was also an upgrade, by about £1 million.

Shoe Zone is a discounter and sells almost 17 million pairs of footwear annually at an average price of £10.

The retailer has outlets across London, on High Streets from Streatham to Edgware.

Having been hit hard by Covid lockdowns, it secured rent reductions and also tightened its supply chain management.

Like all retailers, it faces an uncertain autumn and winter, when soaring inflation driven by rocketing energy costs will constrain consumers’ spending power as the cold weather arrives in time for the peak trading period into Christmas.

Shoe Zone’s shares rose almost 12% to 162p this morning.

Snap loses chiefs to Netflix as cuts loom and ad revenue falls

12:02 , Simon Hunt

Two top executives at Snap have quit to join Netflix in another setback for the social media firm as it struggles with dwindling advertising revenue.

Chief business officer Jeremi Gorman and vice president of ad sales for the Americas Peter Naylor announced they were leaving amid reports the company was set to cut 20% of its workforce.

Last month, Snap said customers were cutting back on advertising spending as it posted results that failed to live up to expectations.

“We are not satisfied with the results we are delivering,” Snap said ahead of an analyst call.

Shares in the firm have fallen 80% since January.

Carr’s sells farming supplies division to partner for £44.5m

11:14 , Simon Hunt

Carr’s Group is to raise £44.5 million after agreeing the sale of its animal feeds-to-country stores division to current partner Billington Group.

The agriculture supplies division, which was set up by the two companies in 1999 and trades as Carr’s Billington Agriculture, makes animal feed, distributes farm machinery and fuels and runs more than 30 one-stop shops for the farming community.

Carr’s said the proceeds will support its speciality agriculture and engineering divisions, both of which provide a greater opportunity for growth and have tended to achieve higher profit margins. Its shares rose 2% or 2.5p to 130p.

FTSE 100 lower as Brent crude weakens

10:29 , Graeme Evans

The FTSE 100 index has fallen 41.95 points, adding to the loss of 0.9% seen yesterday for the lowest level in a month at 7318.47.

The worse-than-expected performance came after US markets fell for a third straight session, driven lower by the prospect of the Federal Reserve continuing with its aggressive stance on tackling inflation.

With Brent crude back at $96 a barrel due to the weakening demand outlook, oil giant Shell lost 41.5p to 2298p and BP retreated 5.85p to 443p. There were also falls of 2% for heavyweight stock AstraZeneca and a further decline of 1.5% for British Gas owner Centrica.

The selling came despite encouragement from robust manufacturing activity figures in China, albeit with August’s reading of 49.4 showing a second consecutive contraction.

The FTSE 250 index dropped 93.08 points to 19,056.57, with Tullow Oil and power station operator Drax the biggest fallers after declines of 4%. WH Smith shares moved in the opposite direction, rising 36.5p to 1436.5p.

Turkey booms on panic buying

10:21 , Simon English

TURKEY’s economy is booming figures showed today – because consumers are so worried about inflation they are buying up whatever they can right now.

GDP rose 7.6% in the three months to June, among the fastest in the G20.

Exports were strong thanks to the weakness of the lira, but the main driver seemed to be near-panic buying of goods and services.

Inflation in Turkey is running at 80%.

President Recep Tayyip Erdoğan has taken a controversial view of this problem, claiming that putting up interest rates won’t help.

The rest of the Western world is moving interest rates sharply upwards in a bid to control price increases.

The president ordered Turkey’s central bank to cut interest rates to 13% earlier this month.

He says he intends to tackle inflation by boosting exports, investment and employment.

He faces a tricky re-election bid before next June. Rivals says he has destroyed Turkey’s standard of living.

His supporters argue that Turkey rebounded from Covid-19 pandemic better than many countries, and note that today’s growth figures are much better than expected.

Turkey’s economy was one of few to narrowly expand in 2020. It bounced back in 2021, expanding 11%.

Pause in volatility, ITV shares rally 2%

08:36 , Graeme Evans

The FTSE 100 index is close to its opening mark at 7358 after this morning’s robust manufacturing activity figures in China. August’s reading of 49.4 represented a second consecutive contraction, but was better than July’s 49 and the 49.2 forecast.

One of the best performing stocks was Anglo American, which rose 30p to 2816.5p after the mining giant’s De Beers division reported rough diamond sales at a steady level in its most recent sales period.

Imperial Brands led the risers board with a gain of 2%, while housebuilders Barratt Developments and Persimmon were more than 1% higher. Pressure on GSK’s former consumer healthcare arm Haleon continued as shares fell another 3.95p to 255.25p.

The FTSE 250 index is 6.2 points lower at 19,145, with ITV shares 2% higher and outsourcer Serco ahead by 1%.

Brent crude back at $100, FTSE 100 steady

07:59 , Graeme Evans

US indices closed lower and oil prices weakened significantly as markets yesterday took a dim view of the global economy.

The S&P 500 and Nasdaq were down by more than 1%, meaning a third session in the red since Federal Reserve chairman Jerome Powell’s Jackson Hole speech revealed no change in the central bank’s aggressive stance on tackling inflation.

Monday’s rally for oil prices on fears over potential OPEC output cuts completely unwound yesterday to leave Brent crude futures below $100 a barrel last night The weaker demand outlook as central banks continue to hike interest rates wasn’t helped by new Covid restrictions in some Chinese cities earlier this week.

The FTSE 100 index fell 0.9% yesterday after an initial improvement but is expected to open 15 points higher at 7,376 this morning, according to CMC Markets. US futures markets are currently trading in positive territory.