FTSE 100 Live Wednesday
16:37 , Simon English
US traders were fretting about interest rates, not exactly for the first time, in New York trading.
Shares fell and short-dated government debt followed. Yields rose.
The concern is that Jay Powell being nominated for a second term as Fed Reserve chief might lead to stimulus for the economy being reined in sooner than markets are ready for.
Figures showed US consumer spending up 1.3% in October, a decent result which suggests that, like their UK counterparts, Americans are spending in the face of rising inflation.
The Dow Jones is down 73 points to 35,740. In London, the FTSE 100 is up 24 points to 7290.
Spreadex.com noted: “The FTSE 100 is currently +0.24% despite rising COVID-19 cases continuing to weigh heavily on airline stocks, as IAG, and Rolls Royce both down over 2%.
Rising oil prices can also be to blame for these losses as Crude is now above $82 a barrel, even with Bidens attempt to push the price lower, through his plan to release 50 million barrels in reserve.”
Less food at Christmas, MPs warned
15:05 , Simon English
Are we going to face less choice for food at Xmas? Shane Brennan, head of the Cold Chain Federation, has just told MPs he fears so.
He represents firms who distribute chilled and frozen products, including food.
He was giving evidence to the Transport Select Committee inquiry into supply chains.
“We are very good at piling high and selling it cheap at Christmas time,” he said.
“What we’re having to do is strategically scale that back, in order to basically meet the promise that there will be the stuff you expect to see on the shelves, but not necessarily all the extras.”
Snapchat owner secures new London HQ
15:04 , Joanna Bourke
It is understood New York-listed Snap Inc, led by Evan Spiegel, has agreed to take close to 115,000 square feet in a pre-let at a soon to be completed building called Bloom.
Read more HERE.
Dimon “regrets” China crack
14:36 , Simon Freeman
JP Morgan’s veteran boss Jamie Dimon has apologised for joking that his bank is likely to outlast China’s Communist Party.
“I regret and should not have made that comment,” Dimon said in a statement issued via the Wall Street giant this afternoon.
“I was trying to emphasize the strength and longevity of our company.”
The change of heart came 24 hours after making the quip at a Boston busines forum: “The Communist Party is celebrating its 100th year. So is JPMorgan. And I’ll make you a bet we last longer.”
He went on: “I can’t say that in China. They are probably listening anyway.”
JPMorgan has some $20 billion of exposure to the world’s second-largest economy and heady ambitions to expand.
Hu Xijin, editor of the Communist Party’s Global Times newspaper, posted on Weibo: “I bet the Chinese Communist Party will outlast the United States of America.”
Mayday for airlines as EU infections spiral
13:27 , Simon Freeman
Surging Covid-19 cases raging across mainland Europe sent airline investors scrambling for the parachutes.
The WHO has warned of another 700,000 deaths in the bloc, taking the total to 2.2million by March.
The potential of the looming uncertainty to weigh on Christmas bookings as holidaymakers recall the red-tape, delays and mayhem that accompanied previous upsurges.
The rising oil price isn’t helping. Crude is up above $82 a barrel, in defiance of US president Joe Biden’s plan to release 50 million barrels in reserve, in an effort to push down prices.
• IAG down 2.9%
• Ryanair down 2.7%
• Easyjet down 3%
• Wizz Air down 2%
• Rolls Royce down 2.1%
Susannah Streeter at Hargreaves Lansdown said: “There were high hopes that brighter skies would emerge by the Spring but now storm clouds appear to be gathering over the sector once again.’’
Drinks groups warn of Christmas booze shortage
13:00 , Simon Freeman
Drinks trade body the Wine and Spirits Trade Association has warned transport secretary Grant Shapps of a Christmas booze shortage unless the HGV driver crisis is fixed.
In the letter signed by major brands including Moet Hennessy, Pernod Ricard and Campari, the WSTA said: “This is an urgent issue for our businesses, and it is imperative that Government takes immediate steps.”
Bosses warned that the cost of freight had jumped by around 7% to retain drivers, and delays at ports were hampering efforts for shipments to arrive quickly.
The group is calling on the Government to urgently extend the temporary visa scheme for HGV drivers beyond the end of February next year for a minimum one-year period to “ease the burden on industry and allow for a sufficient increase in domestic drivers”.
They also want better routing for freights at ports and more regular updates from the DVLA on HGV driving tests and licences, after a huge backlog built up over lockdown periods during the pandemic.
Mulberry bags sales and profit growth, sending shares 22% higher
12:22 , Simon Freeman
Shares in Mulberry soared more than 22% earlier after the handbag maker returned to profit, said it was well prepared for Christmas and pointed to a revival in central London.
The luxury accessories group, which counts Mike Ashley’s Frasers Group among its shareholders, is one of many brands that saw sales in the capital, and elsewhere, hurt by lockdowns and a plunge in tourist and office worker numbers due to travel restrictions.
But it today said revenues in the six months to September 25 jumped 34% to £65.7 million, returning to pre-Covid levels.
Read more HERE.
Revs steps up US invasion
12:16 , Simon Freeman
TIKTOK favourite Revolution Beauty is stepping up its US presence as it launches into an as yet unnamed mass market retail chain’s 2800 stores.
The make-up seller’s sales were up 39% to £79 million in the six months to September. Losses after tax widened to £15 million from £6 million a year earlier, put down to the costs of its July float on the AIM.
Sales were boosted by an uplift in its make-up products as customers returned to socialising again following lockdown restrictions.
CEO and founder Adam Minto hailed a "momentous year", adding: "We have now really benefited from the return of make-up, with people going back to school, college and the office."
The company is confident of meeting market expectations for the full year, having last monght bought up Medichem - one of its major suppliers - to mitigate the impact from global supply chain snags.
Duffy in the money at Virgin
11:43 , Simon English
VIRGIN Money chief executive David Duffy saw his pay this year nearly double to £2.8 million, thanks to bonuses and share deals, the annual report reveals.
That might cause anger in some quarters since it comes as the bank plans to close 31 of its 162 branches across the country at a cost of more than 100 jobs.
VM, formerly CYBG, wants to save £175 million of costs a year as it shifts to digital banking.
Duffy got fixed pay of £1.23 million and “variable” pay of £1.5 million.
Oil price defies White House intervention
10:36 , Graeme Evans
Oil markets defied Joe Biden and other world leaders today as it became clear that tapping stockpiles for a few million extra barrels won't make a difference to prices.
Brent crude futures remained above $82 a barrel today, having surged 3% last night on disappointment at the scale of the White House's efforts to ease inflationary pressures.
As well as the 50 million barrels from US strategic reserves, Japan contributed 4.2 million but the overall figure barely meets one day of consumption. There are also fears the Opec cartel could respond next week by curtailing its own plans to increase production.
AJ Bell's investment director Russ Mould said markets were unimpressed: “Strategic reserves are meant to be untouched unless there is a real shortage of oil, and there is certainly no emergency at present.
“Governments shouldn’t be dipping into them to try and control the market price. Also, the amount released is very small in the bigger scheme of things.”
The oil market resilience propped up shares in Royal Dutch Shell and BP, in turn lifting the FTSE 100 index by as much as 0.5% before it settled 6.62 points higher at 7273.50.
Blue-chip housebuilders contributed to the positive session, but the best performing stock of all was quality assurance firm Intertek after surging 6% on the back of a strong update.
Ladbrokes owner Entain and rival Flutter Entertainment were down on their luck after falling 2% and investors continued to dump Johnson Matthey shares following this month's surprise exit from battery materials development.
The move cost the company £314 million in today's half-year results, leaving the speciality chemicals firm £9 million in the red. Despite promising a £200 million buyback, shares still fell another 25p to 2157p.
The FTSE 250 index dipped 97.22 points to 23,123.61, with leisure-focused stocks easyJet, TUI and Cineworld among those under selling pressure.
Animal genetics group Genus slid 15%, down 790p to 4460p, after revealing that challenging market conditions in China will mean 2022 profits moderately lower than previous expectations.
Commodity rally drives FTSE 100
09:00 , Graeme Evans
The FTSE 100 index has rallied 0.5%, up 37.99 points to 7304.68, after benefiting from a strong session for commodity-based stocks.
BP rose 1.5% after the latest lift for Brent crude futures, while fellow market heavyweights Anglo American and BHP also gained.
Quality assurance business Intertek posted the biggest improvement in the top flight, rising 4% after revealing it is on track to deliver revenues growth in the current financial year.
Gambling stocks were down on their luck, however, after shares in Ladbrokes owner Entain and rival Flutter Entertainment declined more than 1% at the top of the fallers board.
The FTSE 250 index rose 32.99 points to 23,254.60, led by a recovery of 4% for Hochschild Mining following the battering for shares earlier this week
Bain Capital might be best bet for LV=
08:51 , Simon English
On the sale of what I still think of as Liverpool Victoria, but which some marketing folk decided to call LV= back in 2007, there is not much to enjoy.
Either a human facing business, around since 1843, is being sold off against the best interests of the policyholders who are also the owners (for now). Or an old-fashioned insurer has reached the end of the road and needs the embrace of a richer partner.
Neither truth is heart-warming.
Bain Capital is playing the part of the evil private equity kings, against haloed Royal London, the rival bidder which is still a mutual itself.
Tide boosts open banking
08:49 , Simon English
TIDE, the finance app for business, is poised to attempt a major shake-up of the market by opening its services to non-account holders.
The fintech firm, founded in 2015, is ready to let all small and medium sized firms connect their existing bank accounts to its platform. That means Barclays or Natwest customers, for instance, can try the Tide offer without switching banks.
Some analysts say this could be a game-changer for open banking. Rivals note that Tide does not have its own banking licence, relying on partner Clearbank for that.
Governments and regulators have been trying to increase competition in the business banking market for years, with limited success.
Johnson Matthey takes £314m e-battery hit
08:17 , Graeme Evans
Speciality chemicals firm Johnson Matthey has revealed a £314 million hit from this month's shock move to quit the e-battery race.
The FTSE 100 firm’s write down on previous investment contributed to a £9 million loss in today's half-year results.
Johnson wrong-footed investors this month by revealing plans to exit battery materials, despite it being seen as one of its target markets.
The company blamed competition from alternative technologies and from more established larger scale, low cost producers.
Robert MacLeod, whose departure as chief executive was announced alongside this month’s battery u-turn, believes a focus on clean air technologies and efficient natural resources will offer greater opportunities.
Lidl eyes UK expansion with hopes for 1100 stores by 2025
08:08 , Joanna Bourke
Lidl Great Britain returned to profit in the year to February, the grocer said as it unveiled plans to further expand its store empire and create 4000 new jobs.
The German discounter’s GB arm employs some 26,000 people here and has around 860 branches, of which more than 100 are in London.
It today said it is on track to reach 1000 shops by the end of 2023 and wants to reach 1100 branches by December 2025.
Read more HERE.
Oil prices firm, NZ raises rates
07:39 , Graeme Evans
President Biden's move to release strategic oil reserves is having little impact on prices after Brent crude traded above $82 a barrel this morning.
Brent's latest move higher reflected disappointment at the scale of the release and fears that Opec and its allies might respond by lowering their production targets next week.
As well as the 50 million barrels coming from US stockpiles, Japan today committed 4.2 million barrels and the UK has contributed 1.5 million.
But the estimated 70 to 80 million barrels of additional supply from major oil consuming nations is below the 100 million-plus expected by some Wall Street banks and equivalent to little more than a day's worth of Opec output.
Deutsche Bank analyst Jim Reid said: “There’s no sign that inflationary pressures will be going away just yet, since much of what happens next will depend on the reaction of the OPEC+ group.
“If they move to cancel plans to increase production, then that could put upward pressure on prices again and help counter the impact of the move from the various energy consumers.”
The inflationary pressures continue to send bond yields higher as markets price in US policymakers raising interest rates as soon as next summer. The Reserve Bank of New Zealand is leading the way after increasing the cost of borrowing for the second time in as many months, taking its policy rate up by 0.25% to 0.75%.
High growth stocks are under the most pressure from rising bond yields, leading to the tech-laden Nasdaq finishing 0.5% lower last night despite modest gains for the Dow Jones Industrial Average and S&P 500.
A significant amount of US data is being released ahead of Thursday's Thanksgiving holiday, including weekly initial jobless claims, the second estimate of Q3 GDP and the minutes of the most recent meeting of the US Federal Reserve.
CMC Markets expects the FTSE 100 index to open 15 points higher at 7281.