Yahoo Finance FTSE 100 Live: Index ends worst week since August down 2.6% as bond sell-off continues, Shell cutbacks
The FTSE 100 appears set to close down more than 1% for the third consecutive day, as gilt yields continue to push ever-higher.
After sharp falls on Wednesday and Thursday, London's top flight has lost more than 250 points in the space of just three days. That puts the index at its lowest mark since August.
Global political uncertainty and fears of "higher-for-longer" interest rates have pushed the price of gilts down, sending yields up to the highest levels in decades.
Meanwhile, UK retail sales fell by much more than expected, while public borrowing declined year-on-year for the first time since September 2022.
Oil supermajor Shell, meanwhile, has cut a number of contractors as it continues its "ruthless" focus on profits.
FTSE ends week at 7,402.14
16:38 , Daniel O'Boyle
The FTSE 100 closed the week at 7,402.14, down 2.6% from where it started on Monday, after three successive days of losing more than 1%.
That marks the worst week for London's tp flight since August.
Today, the index is down 97 points, or 1.3%.
The index has lost 280 points since Wednesday morning amid fears of political instablity and "higher-for-longer" interest rates.
IHG, Anglo-American and Rentokil were among the biggest fallers today. Rentokil's decline leaves the ratcatcher down almost 25% for the week.
City Voices: The key to £98bn of economic growth could be right in front of us
16:33 , Daniel O'Boyle
Thierry Garnier, CEO of Kingfisher, explains why tradespeople are the key to growth
It’s the subject of endless debate by politicians of every stripe: how to fire up Britain’s economic growth.
Amid the heated arguments about tax rates or complex infrastructure projects, it’s easy to forget that growth can also be about something simpler – the economic activity all around us in our daily lives. And there’s a huge opportunity being missed, right in front of us.
The country’s shortage of skilled tradespeople means the UK could lose out on £98 billion in economic growth by 2030, according to research we have published today, in partnership with economics consultancy Cebr.
FTSE 100 below 7400, lowest since August
15:35 , Daniel O'Boyle
The FTSE 100 is now below 7400, down more than 100 points for the day, and at its lowest since August.
The index of London blue-chips is down 102.5 points today to 7,397.01. It was last this low when fears of a Chinese economic slowdown hit many Asia-exposed stocks two months ago.
The FTSE has now lost close to 300 points in just three days.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: ‘’It’s turning out to be a dismal session with a rising pressure cooker of concern about the impact of high interest rates and geo-political turmoil.
"As painful borrowing costs weigh down on households, UK consumer confidence has taken a big knock and sharply slowing sales in September signal a deep downturn for retail. The pound has been sideswiped by the bleaker prospects for the UK, falling to five-month lows against the euro."
US stocks fall after steady start
15:28 , Daniel O'Boyle
Wall Street stocks opened fairly steady this morning after yesterday's steep fall, but have now tumbled further.
The S&P 500 is down 0.7% to 4,248, leaving it down 2.2% for the week. The Dow Jones is down 0.5% at 33,244.31 and the Nasdaq is down 0.8% to 13,080.36.
American Express is down 4.4% after reporting its results before markets opened, while a number of regional banks are also among the big fallers.
The great London rent rip-off — How prices have soared in a decade
15:04 , Daniel O'Boyle
Rents in some London boroughs have jumped by 50% in the last decade and could do so again in the next ten years, exclusive analysis for The Standard reveals.
The research will increase fears that the capital is becoming impossible to afford for all but the most privileged and that there will be a “brain drain” of talent away from London, especially among the young
Analysis by Zero Deposit, the tenancy deposit business, shows that average monthly rents are up 44% in Barking and Dagenham, 53% in Bexley and 45% in Lewisham.
UK banks in the spotlight next week
14:38 , Daniel O'Boyle
The profits of Britain’s biggest high street banks and how their customers are holding up against the cost-of-living squeeze will be in the spotlight again when the lenders unveil their latest financial results.
Barclays, Lloyds Banking Group and NatWest Group are due to update shareholders on their third-quarter earnings and outlook for the year.
Investors will be watching the high street lenders closely for signs that customers are being squeezed by higher interest rates, which have pushed up borrowing costs throughout the year.
September inflation figures ‘encouraging’ despite CPI failing to fall, Bailey says
14:07 , Daniel O'Boyle
The Bank of England was not surprised that inflation didn’t come down in September, and found the latest ONS figures on price rises “encouraging”, its Governor Andrew Bailey revealed today.
In an interview with the Belfast Telegraph, Bailey said that the latest CPI reading, showing prices rose by 6.7%, the same as in August, was “not far off” what the Bank had expected.
“It was not far off what we were expecting. Core inflation fell slightly from what we were expecting and that’s quite encouraging,” Bailey said.
But he said that inflation should start to fall again soon.
FTSE down 1% for third straight day
13:33 , Daniel O'Boyle
The FTSE 100 is currently set to close down more than 1% for the third straight day, and is approaching its lowest level since August.
The index of London blue-chips is down 82 points today to 7,417.66, and is down 270 points since Wednesday morning.
Big fallers include Anglo American, Ocado and WPP.
Sale process to secure new owners for Telegraph and Spectator is launched
12:58 , Daniel O'Boyle
The Telegraph Media Group and The Spectator magazine have launched the sale process to secure new owners for the business.
The long-awaited sale to gain control of one of the UK’s largest newspaper groups has already seen a wealth of interest from potential buyers.
The board of the parent companies behind the Telegraph and Spectator confirmed their advisers launched the separate sale processes for each business on Friday.
Retail sales and public borrowing show double-edged rate hike impact
12:28 , Daniel O'Boyle
A drop in retail sales and an unexpected fall in government borrowing highlighted the double-edged impact of the Bank of England’s fight against inflation today.
For the high street, it meant alarm bells were ringing more loudly than the tills as hard-pressed consumers kept hold of their cash, sending a crucial part of the economy back toward recession.
For the government, a fall in inflation cut the interest payments due on some of the bonds used to raise cash in the capital markets. That offered some relief for the Chancellor Jeremy Hunt into his Autumn Statement in November, even with a national debt burden almost at the same size as the economy.
City Comment
12:08 , Simon English
BANK joke of the week (they always do at least one) comes from David Postings, the CEO of UK Finance, a trade body.
The Government is offering an unfair rate of return on savings products, he complains. The best one-year fixed-rate bond from NS&I pays a tasty 6.11%.
Such deals create “distortive competitive pressures for intermediate and specialist deposit-takers, who are less able to absorb the costs to compete”, posts Postings.
The banks would have to put up the price of loans to compete with such deals, which would be a “difficult decision in the current economic environment”.
So, when it comes to such banks, they cannot compete on either loans or savings.
So, (clears throat), what is the point of the banks?
Mr Postings, who is just doing his job, can’t be asking that the Government withdraw from banking. They would go bust without us. In fact, in 2008, they did, and we had to bail them out.
When nominally free-market businesses — the super-efficient, lean ones — complain that they can’t compete with the clunky, over-staffed state bureaucracy you have to laugh.
Especially when it is an industry that entirely relies on government subsidy — the knowledge that it cannot be allowed to go broke in the first place.
As for the notion that loans would have to be more expensive to cope with government savings deals, well, that’s an interesting confession.
When watchdogs complain about bank profiteering — the gap between what they charge on loans and pay on savings — the banks say, it doesn’t work like that.
They are right about that, it doesn’t. They are not using your savings to make me a loan. The big banks borrow in the markets, where the cost is based on future interest rates, not on present savings rates.
If some banks can’t compete with the Government, let them merge with those who can, or be repossessed. Like banks do
Shell cuts contractors in shake-up
11:27 , Simon Hunt
Shell is cutting hundreds of contractors from its workforce amid a major efficiency drive by the oil giant's new CEO as he targets bigger shareholder returns.
Scores of contracts have either been cut short or are not being renewed. The bulk of the contractors who face the axe sit in the firm's IT wing, of which permanent staff represent a minority of the workforce in a number of teams.
Company insiders also say work social events have been cut back, and contractors have been barred from several events, to which only permanent staff are now invited.
"The morale inside the IT teams feels low right now," one IT worker told the Standard.
Shell CEO Wael Sawan has vowed to aggressively target profitability and bigger dividends for shareholders since stepping into the role at the start of the year.
Addressing investors at a capital markets day in New York in June, Sawan outlined his plans for a $40 billion package of investment into oil and gas production as well as a reduction in operating costs of up to $3 billion by 2025 as part of a “ruthless focus on performance, discipline and simplification.”
read more here
FTSE 100 posts fresh fall, BP and Shell rally
10:21 , Graeme Evans
Oil and gold prices pushed higher and European shares took a fresh hit today as the risk-averse mood of markets continued into the weekend.
The FTSE 100 index has dropped another 0.4% or 26.74 points to 7472.79, leaving London’s top flight 2% lower in a week dominated by fears the Israel-Hamas conflict may spread in the Middle East.
The potential for supply disruption in the region today caused Brent Crude to add another dollar at $93.44 a barrel, while safe haven gold edged nearer to $2000 an ounce.
The jittery mood wasn’t helped by Federal Reserve chair Jerome Powell suggesting there is room for monetary policy to be tightened further, a comment that caused the US 10 year bond yield to touch 5% for the first time since 2007.
The outlook for higher borrowing costs did little for the mood as the US earnings season is now in full swing, with results due next week from “Magnificent Seven” stocks including Microsoft and Amazon.
Electric car maker Tesla has already reported its figures, with below par earnings and sales causing shares to slump 9% in yesterday’s Wall Street session.
The S&P 500 index closed 0.9% lower last night and the Vix index of volatility reached its highest level since the March banking crisis.
The nervous mood continued in today’s London session, with higher oil prices putting aerospace stocks under fresh pressure. British Airways owner IAG lost 1.9p to 139.9p and Rolls-Royce fell 3.7p to 201.9p, in contrast to gains for BP, which lifted 5.9p to 558.8p, and for Shell after a rise of 24p to 2782p.
The squeeze on Rentokil Initial continued after yesterday’s 19% slide triggered by the pest control firm’s warning of tougher conditions in North America. Shares shed another 4.2p to their lowest level in over a year at 480.2p.
The FTSE 250 index, meanwhile, dropped 0.5% or 79.70 points to 17,133.44, leaving the UK-focused benchmark down more than 9% so far this year.
Trading in small cap stocks resumed this morning after yesterday’s system outage halted the final hour of dealings for companies outside the FTSE 350 index.
AIM-listed kitchenware brand ProCook was among the big fallers as it said trading in September and early October has been “markedly softer”, with lower footfall and customers increasingly seeking out greater value and promotional offers.
The weaker trends soured progress seen in July and August, causing shares to reverse 14% or 2.95p to 18.5p.
Harland & Wolff lands £61m contract
09:46 , Michael hunter
London-listed maritime engineer Harland & Wolff landed a major contract today from an offshore oil company, burnishing its credentials outside the defence sector.
The £61 million deal with Cenovus Energy will bring the SeaRose oilfield production vessel from the North Atlantic to H&W’s Belfast shipyard for around three months.
It will arrive in the first quarter of next year and preparation work is already under way in the dry dock.
The deal will generate revenue of about £10 million this year.
H&W, which is best known for building the Titanic, said that the work would involve 1,000 personnel at its peak. It last worked on the vessel, which usually plies its trade off Newfoundland, in 2012.
John Wood, H&W’s CEO, said: “I am pleased that we are gaining a reputation as a go-to yard for large and complex programmes.”
Its shares rose 1p to 12p early today.
30-year gilt yields get even higher
09:18 , Daniel O'Boyle
30-year gilt yields have risen slightly further since markets opened this morning, remaining at the highest level in decades after US treasury yields surged further overnight.
The 30-year gilt is now yielding 5.10%.
Shorter gilt yields mostly declined slightly as the retail sales slowdown led to a little more cautious optimism that interest rates may have peaked.
IHG warns of interest rate impact on new openings
08:24 , Daniel O'Boyle
Average hotel rates at IHG are now almost 15% ahead of pre-pandemic levels, as revenue per available room grew another 10% year-on-year in the third quarter of the year.
The company behind Holiday Inn, Kimpton and InterContinental brands continued its rebound, boosted by a rebound in its hotels in China.
But CEO Elie Maalouf also wanted that higher interest rates might slow down its plans to open new hotels.
Philip Baker, head of hotels group at Gowling WLG, said: “The travel sector continues to demonstrate its resilience and benefit from the increased consumer demand despite the cost of living crisis.”
Shares are down 2.9% to 5,988p in early trading.
FTSE 100 posts fresh fall, IAG and easyJet under pressure
08:21 , Graeme Evans
Blue-chip investors sustained more losses today as the FTSE 100 index followed two successive falls of 1% with a decline of 0.6%, down 42.05 points to 7457.48.
Fallers included Vodafone after a drop of 1.1p to 75.6p, while house builders took a fresh hit as Taylor Wimpey retreated another 0.9p to 104.05p and Barratt Developments dipped 2.6p to 390p.
Higher oil prices put airline stocks under fresh pressure as British Airways owner IAG eased 1.8p to 140p and easyJet lost 4.6p to 359.8p in the FTSE 250. Rolls-Royce slipped 2.3p to 203.3p.
The shortened risers board in the FTSE 100 included BP and Shell, up 0.9p to 553.8p and 10.5p to 2768p respectively.
The FTSE 250 index fell 0.75% or 128.90 points to 17,084.24, with Aston Martin Lagonda and Dr Martens among the stocks down by more than 3%.
Consumer confidence slides
07:35 , Graeme Evans
Consumer confidence has fallen sharply to its lowest level since July last year, GfK reported today.
The headline reading of minus 30 is down nine points on a month earlier, reversing a recent improvement in UK sentiment.
Worryingly for the retail sector in the run-up to Christmas, the index's major purchase measure saw the biggest drop of 14 points. Confidence in personal finances over the next 12 months fell six points.
Joe Staton, client strategy director at GfK, said: "This sharp fall underlines that the cost-of-living crisis, and simply not having enough money to make ends meet, are still exerting acute pressure for many consumers.
"The fierce headwinds of meeting the accelerating costs of heating our homes, filling our petrol tanks, coping with surging mortgage and rental rates, a slowing jobs market, and now the uncertainties posed by conflict in the Middle East, are all contributing to this growing unease.
"The volatility we are seeing in consumer confidence is a sure sign of a depressed economic mood and there's no immediate prospect of any improvement."
Wall Street hit by more rate jitters, FTSE 100 seen lower
07:24 , Graeme Evans
Comments by Federal Reserve chair Jerome Powell that monetary policy wasn’t overly tight put US markets under fresh pressure last night.
The yield on 10 year Treasuries touched 5% for the first time since 2007, while the S&P 500 index closed a choppy session 0.85% lower.
Fears over higher-for-longer interest rates and developments in the Middle East meant the Vix volatility index hit its highest level since March at 21.4.
Among individual stocks, Netflix jumped 16% and Tesla fell by 9% after their respective quarterly updates on Wednesday evening.
Asia markets are in negative territory this morning, while CMC Markets expects the FTSE 100 index to fall by another 22 points to 7477.
London’s top flight lost 88.47 points yesterday for the second consecutive fall of more than 1%.
UK retail sales down 0.9%
07:11 , Daniel O'Boyle
UK retail sales fell by 0.9% in September, as the hot weather discouraged shoppers from buying retailers' Autumn/Winter lines.
The ONS said "unseasonably warm weather" caused non-food sales to fall by 1.9%.
Economists had expected a fall of just 0.3%.
Phil Monkhouse, Head of Sales at global financial services firm Ebury, commented: “A sizzling September scorched the high street to depress retail sales as shoppers put off refreshing their wardrobe.
“Lingering economic uncertainty is likely to have seen households shy away from big ticket, luxury items too providing another headwind to sales. Consumers are likely to reminded of the historically sky-high cost of energy as we head towards heating season which will further dent confidence.
“It creates a painfully uncertain environment for retailers as we hurtle towards Black Friday, the festive period and the January sales. Those who are able to retain quick access to capital, robust hedging arrangements to counter any fluctuations in currency and have built up decent levels of stock are likely to thrive in this shaky landscape.”
Recap: Yesterday's top stories
Thursday 19 October 2023 22:59 , Simon Hunt
Good morning. Here's a summary of our top stories from yesterday:
Future of Hipgnosis founder Merck Meroudas in doubt as board launches “strategic review” after disastrous share price slump and axed dividend
The Office Group says occupancy rose 6% to 91%, close to pre-pandemic levels in the first half of the year
French life science giant Biomerieux owned by billionaire Iain Merieux invests £70 million in Oxford Nanopore
Deliveroo sales and orders flatline as targeted promotions fail to deliver growth amid “tough consumer backdrop.”
Rentokil Initial sees slowdown in US
Hollywood Bowl boom continues
And...London tourism is booming! Raise a glass to... Kwasi Kwarteng?
