The fall-out from President Biden's move to keep Jerome Powell at the helm of the US Federal Reserve continues to be felt after sharp moves for tech stocks, gold and bitcoin.
Wall Street responded to the White House’s plans for Powell's re-appointment by betting that interest rates will rise as soon as next summer in order to bring inflation under control.
Tech stocks fell overnight as a result, while gold and bitcoin came under pressure after rising previously as a hedge againt inflation.
Oil prices will be closely watched today on speculation that Biden may announce the release of strategic reserves, possibly in conjunction with other nations in an effort to curb spiralling energy costs.
In corporate news, online electricals retailer AO World has issued a second profits warning in as many months after supply chain woes and higher costs dented its performance in the run-up to Christmas.
FTSE 100 Live Tuesday
AO World shares slide after second warning
Powell’s Fed nomination fuels rates speculation
Pets at Home posts more strong sales
Caterer Compass climbs
Johnson Matthey faces relegation
FTSE 100 finishes the day in positive territory
17:14 , Joanna Bourke
London’s blue chip index edged up 11.23 points to close at 7266.69, with catering giant Compass the top riser.
The company, which provides meals in schools, offices and football stadiums, looks to be bouncing back from Covid now that sports events and company conferences are back on. The shares gained more than 5%, or 83p, to 1555.5p.
Elsewhere today President Joe Biden announced that the Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve to lower prices for Americans.
The President is “using every tool available to him to work to lower prices and address the lack of supply”, a statement said.
Danni Hewson, AJ Bell financial analyst, said: “There was a late surge from oil giants BP and Shell as markets digested President Biden’s moves and concluded they were perhaps more modest than had been anticipated; the price of a barrel of the black stuff rose slightly in reaction.”
Oliver Males at Spreadex said UK markets were also given a boost as IHS Markit PMIs, released this morning, were better than expected.
IHS Markit PMIs for November, a closely-watched score of economic health, shows the UK lately doing notably better than Europe.
The UK score of 57.7 topped the 55.8 across the eurozone – any number above 50 shows growth. The UK’s all-important services sector outpaced manufacturing, which also saw its strongest expansion in three months.
That is all from the Evening Standard City team today. Back tomorrow.
FTSE 100 edges up, and President Joe Biden updates on plan to release oil reserves
14:11 , Joanna Bourke
The FTSE 100 was 7.2 points higher at 7262.64 at 2pm.
London’s blue chip index had slipped earlier driven by weakness for BP and Royal Dutch Shell after Brent crude fell to $78.88 a barrel on expectations that President Biden would release oil from the country’s strategic petroleum reserves.
But the index has now risen slightly, and Biden has since announced that the Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve to lower prices for Americans.
The President is “using every tool available to him to work to lower prices and address the lack of supply”, a statement said.
Among the top risers on the FTSE 100 is Compass, with shares in the catering giant up 59.5p at 1531.5p.
The firm is bouncing back from Covid now that sports events and company conferences are back on.
Other news to catch up on over lunch:
-Pets at Home sales leap, as animal owners pick up plenty of Christmas gifts
-AO World shares plunge on warnings over profits and the supply chain
-Fintech Payhawk raises £83 million as it eyes expansion to the US
Offices landlord Helical returns to profit
13:29 , Joanna Bourke
Helical has seen use of its buildings steadily improve as more workers head back to headquarters, the London office landlord said today.
The firm gave the update alongside reporting it swung back into the black in the six months to September 30. Pre-tax profits were £31 million compared with a £12.7 million loss a year earlier.
Helical, which also said the value of its property portfolio increased 3.9% on a like for like basis to £888.9 million, joins a list of property developers, including Landsec and British Land, this month reporting improved sentiment around offices.
That comes amid a number of employers seeking new and environmentally-friendly space for staff, even if it is only used for part of the week as hybrid working is embraced.
Helical boss Gerald Kaye said: “Our buildings are currently around 60% occupied and we have seen this number increase steadily over the summer months and into the autumn.”
He added that demand for space is coming from a range of sectors including tech, professional services and banks.
Shares in Helical rose 7.5p to 443p.
UK widens gap with eurozone
13:23 , Simon Freeman
The IHS Markit PMIs for November, a closely-watched score of economic health, shows the UK lately doing notably better than Europe.
The roll back of pandemic restrictions is restoring consumer confidence with robust rises in business and consumer spending, the report said.
Pigs-in-blankets crisis ‘off'
11:48 , Simon Freeman
The boss upmarket meat producer Cranswick today sought to calm nerves following excitable reports of shortages of turkey, poultry and pigs-in-blankets at the Christmas dinner table.
The firm has upped its dividend 7% to 20p after like-for-like revenue growth of 6.4% lifted its half-year profit before tax to £63.2 million.
CEO Adam Couch is around 400 down on his preferred headcount of 13000 workers but said increased automation and a decade of investment in infrastructure will keep supplies safe.
He said: “We’re not immune to those pressures, particularly the shortages of butchers and slaughtermen, but we’re geared for doing 60 million pigs in blankets, and could well end up doing more.
“Demand has come in very early, with consumers stocking up in advance in anticipation of there being a problem, but we won’t be short of turkey products and we won’t be short of pigs in blankets.”
AO World shares plunge on flurry of headwinds hitting retailer
10:47 , Joanna Bourke
Online electricals retailer AO World is experiencing a flurry of headwinds hitting trade, from shortages of goods such as certain gaming consoles, to pressures on household spending.
The firm, which sells products such as TVs, laptops and washing machines, said: “We continue to see meaningful supply chain challenges with poor availability in certain categories, particularly in our newer products where we have less scale, experience and leverage.”
It added: “In addition, shipping costs, material input prices and consumer price inflation remain challenging uncertainties.”
Those factors have all contributed to the peak season, which covers October to the run up to Christmas, being “significantly softer” than the firm anticipated just eight weeks ago.
Shares in AO World dropped 29.56p, or 23.84%, to 94.44p.
Read the full story HERE.
Johnson Matthey heads for FTSE 100 exit
10:38 , Graeme Evans
Johnson Matthey's place in the exclusive club of founding members still in the FTSE 100 index looks increasingly in danger after its shares fell another 3% today.
The next quarterly reshuffle takes place in December, with the signs not looking good for the speciality chemicals firm after this month's profits warning and decision to pull out of electric vehicle battery development left its valuation close to £4 billion.
AJ Bell sees Johnson Matthey and recently-promoted cyber security firm Darktrace as the most likely to drop out of the top flight, with Electrocomponents and veterinary business Dechra Pharmaceuticals waiting in the wings to replace them.
The investment platform said Johnson Matthey's departure would leave just 25 of the FTSE 100 founder members from 1984. The group dropped out once before in December 1984 but has been an ever-present since winning back its place in June 2002.
Its shares today fell 51p to 2184p, compared with more than 3,000p in April.
Among the FTSE 100 ever-presents, consumer goods giant Unilever was the best performing today as shares rallied 1% during a weak session for blue-chip sentiment.
The FTSE 100 index fell 14.15 points to 7242.24, driven by weakness for BP and Royal Dutch Shell after Brent crude fell to $78.88 a barrel on expectations that President Biden is planning to release oil from the country's strategic petroleum reserves.
Mining giants including BHP and Rio Tinto offered some support after their shares rose more than 2% on the back of a rebound for the iron ore price.
The UK-focused FTSE 250 fell more sharply, down 167.88 points to 23,263.73 after being impacted by the fall-out from the AO World profits warning. Other fallers included newspaper group Reach, despite reporting digital revenues growth of 17.2% in the second half of the year.
Shares have more than doubled this year, but fell back 4% or 12.5p to 289.5p today.
Severfield shares edged up 0.4p to 71.40p after the structural steel group reported growth in revenues, profits and dividends for the half year. Progress has been underpinned by recent major projects including Google's King's Cross HQ and Sky's new studio in Elstree.
Fish & Chips a COP26 hit for Compass
10:30 , Simon English
CATERING giant Compass said today it is bouncing back from Covid now that sports events and company conferences are back on.
It has reinstated a dividend of 14p, welcome news for investors, though that is still far shy of the pre-pandemic 40p.
Chief executive Dominic Blakemore reckons companies large and small will be keen to outsource staff food. “It is increasingly complex to manage the health and safety issues,” he said. “We know how to do it.”
In the year to September revenue was down 6% to £18 billion, while profits rose 55% to £811 million.
AO World shares 27% lower
08:31 , Graeme Evans
AO World shares are trading 27% lower in the FTSE 250 index after the company's latest profits warning.
They had been above 400p at the start of this year after lockdown restrictions fuelled demand, only to reverse to below 100p in today’s session due to the ongoing supply chain difficulties.
The warning depressed the UK-focused FTSE 250 index, which fell 150.95 points to 23,278.75.
Rival chain Currys dropped 2% but there was better news from Pets at Home as shares climbed 6% in the wake of its forecast for annual results at the top end of expectations.
The FTSE 100 index fell by 24.36 points to 7231.10, with mining giants including BHP and Rio Tinto offering some support after a rebound for iron ore prices.
Pets at Home like for like sales leap 22.5%
08:29 , Joanna Bourke
Pets at Home has recorded a first half comparable sales surge of 22.2%, helped by a wave of new animal owners treating pooches to Christmas presents, from spa days to advent calendars.
As well as toasting revenue reaching £677.6 million, the FTSE 250 business said it sees a “pathway” to annual sales reaching £2.3 billion over the medium term. Last year it recorded £1.4 billion.
The chain has seen a step up in pet ownership during the pandemic, as people made the most of spending more time at home during lockdowns.
Read more HERE.
Tech stocks, gold and bitcoin lower
07:40 , Graeme Evans
Tech shares saw increased volatility last night as Wall Street reacted to President Biden's nomination of Jerome Powell for a second term as chairman of the US Federal Reserve.
Markets immediately priced in a first interest rate hike under Powell by June 2022, sending US bond yields higher and putting pressure on rate-sensitive technology stocks.
The tech-heavy Nasdaq closed 1.2% lower, but as the steeper yield curve benefited Wall Street banks the decline for the S&P 500 was limited to 0.3%.
Trading in gold weakened on expectations that Powell will now be more inclined to take a firmer hand on inflation, while there was a similar reaction for bitcoin after the crypto retreated to around $56,200 overnight.
Michael Hewson of CMC Markets said: “The reappointment of Powell signals a steady as she goes approach, sending US yields sharply higher, along with the US dollar, while gold prices plunged.”
He expects the FTSE 100 index to open 20 points lower at 7235, reflecting last night's late reversal for US markets.
Energy prices are also being closely watched amid speculation that the US could today announce a release of oil from the Strategic Petroleum Reserve, potentially as part of a coordinated move with other nations.
Brent crude fell 0.9% to $79 a barrel, although the downside was limited by a warning from the Opec cartel and its allies that such a move could prompt them to reconsider their production plans when they meet next week.