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FTSE 100 Live: Recession warning, Balfour Beatty gets £1.2bn contract

 (Evening Standard)
(Evening Standard)

The UK’s economic outlook is in focus today after EY Item Club warned the recession will be deeper than it thought three months ago.

The consultancy sees a 0.7% contraction for this year, compared with 0.3% predicted in October. This will be followed by growth of 1.9% in 2024, down from the 2.4% improvement seen previously.

In today’s corporate news, Balfour Beatty said it has secured the National Highways’ £1.2 billion Lower Thames Crossing contract.

Read more on the EY Item Club forecast

FTSE 100 Live Monday

  • Fuller’s says strikes cost £4 million

  • Figures reveal cooling in City jobs boom

  • Balfour Beatty gets £1.2bn roads contract

That’s all folks. Tomorrow: Primark

Monday 23 January 2023 17:52 , Simon Hunt

That concludes our liveblog coverage today, after London-based pub chain Fuller’s said it took a £4 million knock from industrial acction in the weeks leading up to Christmas.

The Evening Standard City Desk will be back at 7am tomorrow, where we’ll find out if Primark owner ABF has been able to cash in on the cost-of-living crisis with a boost in sales over the festive period.

National Grid asks Drax coal unit to restart tomorrow morning

Monday 23 January 2023 16:56 , Simon Hunt

The National Grid has asked the drax coal unit to restart operations as it seeks to ensure homes have an adeaquate power supply amid a surge in demand for energy during the cold temperatures.

National Grid warned yesterday it had put a number of coal-fired power units on standby as a precautionary measure.

Coal typically accounts for about 2% of the UK’s electricity generation, according to data from iamkate.com.

FTSE 100 closes up 22 points: Evening wrap

Monday 23 January 2023 16:45 , Simon Hunt

The FTSE 100 closed up 22 points to 7,793 at the end of the day’s trading session in London, starting the week on a positive note and bringing hopes that the index will reach a record high before the end of the month back into contention.

Online grocery retailer Ocado rose the most today, up around 4% to 736p. It’s early days but Ocado has been one of the best performing stocks so far this year -- up over 13% over the past three weeks.

It was a less upbeat story for Sterling, which was looking tired after its strong start to 2023, falling back against the dollar and staying shy of the $1.24 level with investors already looking ahead to next week’s monetary policy decision at the Bank of England for a sense of direction.

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, said: ‘’Investor confidence has surged into the Lunar New Year after China lifted its drastic Covid restrictions and hopes have risen that the end to interest rate hikes may finally be in sight while there have been signs economies may prove more resilient in the downturn.

“Relief that inflation is finally past its peak is palpable, and there has been rash of data showing central bank policies aimed at dampening down demand appear to be working.”

Big decisions needed on green growth as UK lags behind rivals – CBI chief

Monday 23 January 2023 16:12 , Simon Hunt

The UK is lagging behind international rivals on green growth, the chief of the Confederation of British Industry has warned, as he urged the Government to take “big decisions” to boost the economy.

Tony Danker called on Chancellor Jeremy Hunt not to “shy away from the hard decisions that can reverse the UK’s trajectory” of falling investment in his spring budget.

In a speech at University College London, the CBI director general said: “Growth still matters.

It’s time for us to take those hard decisions, generating the forward momentum not only to limit recession this year but also get us really growing next

“The PM set out less than a year ago what is needed to transform our economy. The ideas are there.

“Let’s stop second guessing ourselves and get on because there is money on the table to capture right now.”

He argued that “our international competitors in Europe, Asia and the US are going hell for leather on green growth and getting firms investing.

“We are behind them now and seem to be hoping for the best.

Ofcom to investigate BT’s customer contract information compliance

Monday 23 January 2023 15:32 , Simon Hunt

Ofcom has opened an investigation into BT’s compliance with its obligation to provide customers with clear and simple contract information before they sign up to a new deal, the regulator has announced.

Telecoms providers have been required to give customers contract information and a short – usually one-page – summary of the main contract terms before signing up since June last year.

However, in October Ofcom opened an investigation into EE – which is part of the BT group – after it suspected it may have failed to comply with the requirements.

Ofcom said on Monday: “We have since received information giving us reason to suspect that Plusnet – another BT subsidiary – may also have failed to comply with these requirements.

Wall Street starts brisk week with modest gains

Monday 23 January 2023 14:53 , Michael Hunter

New York’s S&P 500 ticked higher at the start of a week in which a brisk run of earnings news will compete with Washington politics to set the tone to trade into fourth-quarter growth data that will be closely watched on Thursday.

As Monday trading began, the S&P 500 was steady, up 9 points at 3892.1, a rise of 0.2%.

While hopes that a deal will be reached to lift limits on the amount the US government can borrow held, the series of corporate reports started with a muted reaction to earnings from oilfield services group Baker Hughes. Its shares were up almost 2%.

New York on course for steady start to trade

Monday 23 January 2023 14:01 , Michael Hunter

Wall Street’s main stock index was heading for a muted open, with investors keeping watch on Washington, for signs of progress over the need to raise the limit on US government debt.

With the level of borrowing passing over the £31.4 trillion debt ceiling last week, Democrats and Republicans need to agree measures to take it higher to ensure government spending stays smooth. Republicans are demanding reduced budgets for the Biden administration in order to agree overall higher limits.

The political wrangle, which has been a regular feature of brinkmanship politics on Capitol Hill, comes ahead of national US economic growth data for the fourth quarter, due on Thursday. Meanwhile, traders are also keeping watch on the outlook for softer rate rises from the Federal Reserve.

It all left the S&P 500 eyeing an initial rise of 4 points, or 0.1%, to 3992.0.

Pound eases back against the dollar with BoE February rate call already already getting attention

Monday 23 January 2023 13:39 , Michael Hunter

Sterling was looking tired after its strong start to 2023, falling back against the dollar and staying shy of the $1.24 level with investors already looking ahead to next week’s monetary policy decision at the Bank of England for a sense of direction.

The pound slipped 0.3 per cent on the session to $1.2355. Over January, there has been a wider trend for a weaker dollar, in line with the outlook for smaller rate rises in the US, which has in particular lifted the euro against the US currency, amid a feeling that bigger hikes are needed in the euro area. Monetary policy is set to tighten further in the UK next week.

Chris Turner at Dutch bank ING said: “The market now prices a 0.45% Bank of England hike at next week’s meeting. The firming up of BoE tightening expectations has allowed sterling to match this year’s strength of the euro.”

FTSE 100 midday movers: St James’s Place is at the bottom of the market while Ocado goes tops

Monday 23 January 2023 12:25 , Michael Hunter

St James’s Place hit the bottom of the FTSE 100 today, as the lacklustre start to the year for shares in actively run City funds continued.

The fall for one of the UK’s largest wealth managers came after analysts at HSBC dropped their “buy” rating on the stock. cutting it to “hold”. Meanwhile. Barclays took its price target on St James’s Place down to 1507p from 1509p.

Ocado was back at the top of the market, with the bullish investment case for the online grocer and e-commerce tech provider winng out over doubts about the outlook for revenue growth at its retail operation.

Spotify slashes 6% of workforce after revenue growth slows

Monday 23 January 2023 12:15 , Simon Hunt

Spotify has slashed 6% of its global workforce after the firm said its operational costs outpaced its revenue growth.

The music streaming service said it would begin holding one-to-one conversations with affected employees, who will receive 5 months of severance pay on average.

Spotify boss Daniel Ek said: Like many other leaders, I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us.

“In hindsight, I was too ambitious in investing ahead of our revenue growth.

“And for this reason, today, we are reducing our employee base by about 6% across the company. I take full accountability for the moves that got us here today.”

The Stockholm-based company has 6,600 employees, according to its most recent annual report, implying as many as 400 workers were set to be laid off as part of the move.

Sparkling sales fizz lifts Chapel Down

Monday 23 January 2023 11:32 , Simon Hunt

Sales at Chapel Down, England’s largest winemaker, jumped 10% last year as shoppers flocked to buy its Kent fizz.

According to its latest trading update, revenue for 2022 was £15.6 million, up from £14.3 million a year before. Export sales, previously a small part of the business, increased by 164%.

Its traditional method sparkling wine sales grew 53% last year after Chapel Down invested more heavily in that part of the business, selling a record 790,000 bottles.

CEO Andrew Carter said: “This performance, and the excellent harvest we enjoyed in 2022, means we carry momentum into 2023 and are on track to meet our target of doubling the size of our business by 2026.”

Billionaire US hedge fund boss buys into Bremont watches

Monday 23 January 2023 11:01 , Simon Hunt

US hedge fund billionaire Bill Ackman liked his Bremont watch so much, he has snapped up a stake in the UK’s biggest maker of luxury timepieces.

Ackman, who bought his watches at Bremont’s flagship showroom on South Audley Street in Mayfair, said he has taken “a substantial minority interest” in the Henley-based company, which has global ambitions, especially for its US business.

Forbes puts the personal fortune of the founder of Pershing Square Capital Management at £3.5 billion.

Known for making bespoke watches for élite military units as well as civilians, Bremont’s latest funding round was worth £48.4 million.

Ackman said: “I am thrilled to have the opportunity to become a shareholder of Bremont at a fulcrum point in the company’s evolution, and to see it take its rightful position as a global leader in watchmaking.”

Everyman shares boosted by resilient update, FTSE 100 higher

Monday 23 January 2023 10:21 , Graeme Evans

Cinema chain Everyman Media lifted its shares 4p to 90p as it forecast better-than-expected earnings of £14.5 million for 2022.

It expects both the volume and quality of new releases to significantly increase this year, boosting confidence in further progress in 2023.

Chief executive Alex Scrimgeour added: “The UK's appetite for film and the Everyman brand remains reassuringly strong.”

Newly-opened venues in Edinburgh and Egham are due to be followed by sites in Durham, Salisbury, Northallerton, Plymouth and Marlow, although current conditions mean Everyman is now taking a more measured approach to expansion.

Everyman’s strong performance came during an otherwise lacklustre showing for the wider London market, with the FTSE 100 index 16.79 points higher at 7787.38. Ocado led the way with a rise of 4% or 29.8p to 737.6p, while Primark owner Associated British Foods cheered 23p to 1849.5p ahead of tomorrow’s trading update.

The FTSE 250 index rose 72.33 points to 19,744.96, topped by a 6% surge for National Express after it secured a one billion euro contract to run the RE1 and RE11 Rhein-Ruhr-Express lines in Germany until 2033. Shares raced ahead 8.3p to 145.8p.

A landmark contract also helped shares in Balfour Beatty to make progress after it unveiled a £1.2 billion project with National Highways.

Balfour will be responsible for the design and delivery of over 10 miles of new highways, connecting the M25 at Junction 29 and the A13 with the Lower Thames Crossing tunnel at Tilbury, Essex. Shares continued their recent momentum by climbing 1.8p to 361.8p.

Elsewhere, shares in over-50s travel group Saga rose 5.2p to 155.7p after confirming it is looking at a potential sale of its insurance underwriting business in a drive to reduce debt.

City jobs boom cools

Monday 23 January 2023 09:59 , Simon English

Last year was a boom time for jobs in London’s financial services sector, but a slowdown has begun and the next 12 months could see a squeeze on pay.

The latest statistics from the Morgan McKinley employment monitor shows there were 16% more City jobs in 2022 than 2021.

But the final quarter of last year saw an 8% decrease on the previous three months.

The stats come as major tech companies announce global lay offs and City banks cut headcount in response to lower levels of stock market activity – clients have been cautious, and few new businesses have come to market.

That has hit revenues across town, including notably at Goldman Sachs, which has already axed thousands of roles.

Hakan Enver, Managing Director, Morgan McKinley UK said: “It comes as little surprise that economic optimism and business confidence has fallen, however, the number of jobs in financial services in London throughout 2022 continued to rise post-Covid, reaching 2019 levels of hiring.”

Unlike in other sectors, notably leisure, there are plenty of finance workers available.

The Morgan McKinley figures suggest there are more workers in the City’s Financial Services sector available for work than has been seen since 2017.

Enver added: “Financial services and banks have had a strong 2022 and continued to hire throughout the year. Jobs available in the City increased by 16% in 2022 compared to 2021 but is noticeably less than the peak year of 2016. The number of financial services jobs in London has been shrinking over recent years with a shift in jobs due to Brexit and onshoring of business to other British cities as well as further afield to mainland Europe.”

City jobs paid 22% more in 2022 than in 2021 as banks, lawyers, insurers and others fought to keep the staff they value most.

With a likely recession looming, there are fears even the Square Mile will be hit.

Morgan McKinley thinks this downturn will be short lived however.

The survey said: “Although London firms could face a decline in investment over the coming months, the capital will come roaring back.  London is a strong market with lots of innovative businesses looking for finance, and lots of people looking to finance them.  Financial and related professional services contributed £261bn to UK gross value added (GVA) in 2021.”

National Express leads FTSE 250, Dr Martens up 3%

Monday 23 January 2023 08:56 , Graeme Evans

The FTSE 100 index is up 8.74 points to 7779.43, with housebuilders Barratt Developments and Persimmon among the stocks more than 1% higher.

In the FTSE 250 index, National Express is the best performing stock after its disclosure of a one billion euro German rail contract helped shares to jump 5% or 7.5p to 145p.

Balfour Beatty rose 2.2p to 362.2p after it revealed a £1.2 billion contract from National Highways, while Dr Martens recovered 3% or 4.1p to 143.7p as sentiment steadied following last week’s profits warning.

The FTSE 250 index stood 90.24 points higher at 19,792.87, with other risers including Royal Mail owner International Distribution Service following a gain of 2%.

Nat Express shares get a boost

Monday 23 January 2023 08:13 , Simon Hunt

Shares in National Express have jumped 5.5% to 145p after the firm announced a one billion euro German rail contract award.

Under the agreement, National Express will run the RE1 and RE11 Rhein-Ruhr-Express lines in Germany until 2033, making it the second largest rail transport company in the region.

“This allows us to unlock operational synergies, and cements our position as the trusted operator in the region, the firm said.

EY downgrades UK outlook, FTSE 100 seen higher

Monday 23 January 2023 07:50 , Graeme Evans

The S&P 500 index rose 1.9% on Friday, led by a recovery for tech stocks after a strong earnings update by Netflix was accompanied by fresh hope that the Federal Reserve might yet opt for a 0.25% rates increase at its meeting next month.

The FTSE 100 index finished 0.3% higher on Friday but dropped 1% over the week as investors increasingly worried about the outlook for the global economy.

Those recession fears were highlighted today when EY Item Club forecast a 0.7% contraction for the UK this year, compared with the 0.3% it predicted in October. This will be followed by growth of 1.9% in 2024, down from the 2.4% increase seen previously.

Key events for investors to look out for this week include Thursday’s release of the fourth quarter GDP figure from the US economy, as well as the Federal Reserve’s preferred measure of inflation on Friday.

CMC Markets expects the FTSE 100 to open 12 points higher at 7,782 this morning, with little direction coming from Asia as many markets are closed for the Lunar New Year holidays.

Fuller’s says strikes cost £4 million

Monday 23 January 2023 07:40 , Simon Hunt

Pub chain Fuller’s said it took a £4 million pound hit from strikes as it warned profits would come in lower than expectations.

Like-for-like sales in the 43 weeks to 21 January climbed 20% to hit 97% of pre-pandemic levels.

In a trading update the firm said: “Due to the impact of the train strikes, our sales compared to the same four weeks in 2019 have declined by 5%.

“Since the start of October, we estimate that industrial action has reduced our sales by some £4 million and the consequent impact on profitability means that we now expect to report earnings below market expectations for the full year.”

Balfour Beatty secures major roads contract

Monday 23 January 2023 07:31 , Graeme Evans

Balfour Beatty has been awarded a £1.2 billion contract by National Highways to deliver the 'Roads North of the Thames' package of works for the proposed Lower Thames Crossing.

The Lower Thames Crossing will create a new connection under the River Thames to increase capacity and ease congestion in the South of England.

Balfour Beatty will be responsible for the design and delivery of over 10 miles of new highways, connecting the M25 at Junction 29 and the A13 with the Lower Thames Crossing tunnel at Tilbury, Essex.

Completion is due between 2029 and 2030, with Balfour Beatty expected to directly employ a workforce of about 2,000 at the construction peak.

Chief executive Leo Quinn said: “The Lower Thames Crossing is a significant scheme - one that will stimulate local, regional and national economic growth, create employment opportunities and new, sustainable methods of construction for the future of our industry.”