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FTSE 100 Live: Google staff layoffs, retail sales post surprise decline, consumer confidence dips

 (Evening Standard)
(Evening Standard)

Retail sales showed an unexpected decline in December as rising shop prices and higher living costs weakened demand.

The 1% fall in volumes reported by the Office for National Statistics compared with City expectations for a 0.5% increase.

The picture appears no better at the start of 2023 after GfK revealed a near record low in its consumer confidence barometer.

FTSE 100 Live Friday

  • Retail sales fall amid price squeeze

  • SSE ups guidance amid FTSE 100 recovery

  • Close Brothers takes hit on bad loans

That’s all folks. Monday: Fullers

Friday 20 January 2023 17:30 , Simon Hunt

That concludes today’s liveblog coverage, on the day Google became the latest major tech firm to let go of thousands of staff worldwide.

The Evening Standard City Desk will be back at 7am on Monday, where a trading update from London-based pub chain Fuller’s is set to shed light on the performance of the capital’s hospitality sector during the busy Christmas period -- did the office Christmas party make a full comeback?

FTSE 100 closes up 22 points: Evening wrap

Friday 20 January 2023 16:42 , Simon Hunt

The FTSE 100 closed up 22 points to 7,770 at the end of today’s trading session in London after some disappointing retail figures.

Technology stocks were the best performers today, up an average of 1.43%, while healthcare stocks fell 1.26%.

Danni Hewson, AJ Bell Financial Analyst, said: “For the retailers themselves these figures will be a blow but are unlikely to be a surprise. The food sector has been the most resilient, though we have been spending less and less at the supermarket since restrictions on bars and restaurants were lifted in summer 2021.

“Toy stores, cosmetic departments and jewellery counters have all suffered, a hard blow because Christmas is normally the golden period for these retailers to make money which helps see them through leaner times.

“There will be questions asked about how much strikes impacted online retailers.  There will be questions asked about why sales fell by such an unexpected amount.  The answer will be different in every home in the UK but the bottom line is Christmas 2022 might have been free of the Covid cloud but it still came with restrictions.”

Rally for tech giants helps Wall Street’s S&P 500 rise

Friday 20 January 2023 14:55 , Michael Hunter

Opening gains for two of the biggest names in the tech sector helped New York’s S&P 500 make a modest rebound from two sessions of steeper losses.

The broad Wall Street index added just under 7 points to 3905.60, a rise of 0.2%. Shares in Google’s parent Alphabet were up by around 5% after it announced plans for 12,000 job cuts, covering around 6% of its staff.

Netflix’s return to subscriber growth helped its shares gain over 7%.

New York stocks set to tick higher after run of declines with tech stocks centre stage

Friday 20 January 2023 13:04 , Michael Hunter

Wall Street’s S&P 500 was on course for modest opening gains into the start of Friday trade which would represent a rebound from two sessions of declines.

The improving mood came after news of a convincing return to growth in subscriber numbers after Thursday’s closing bell at Netflix, which were up by almost 8 million. The online TV powerhouse also said its founder and co-CEO Reed Hastings was stepping away to become its chairman. Its shares rose almost 7% in pre-market trade.

More job cuts in the tech sector also provided a major talking point, with Google’s parent Alphabet outlining plans to cut 6% of its workforce. Its shares were up by around 3% in pre-market trade.

Overall the broad New York stock index was expected to rise 13 points to 3928.0, a bounce of 0.3%.

FTSE 100 midday movers: Hargreaves lands down at the bottom of the market

Friday 20 January 2023 12:11 , Simon Hunt

Fund manager Hargreaves Lansdown made the biggest single loss on the FTSE 100 after a broker downgrade for the stock. Analysts at Jeffries cut their rating on the shares to “underperform” amid wider concern about a slowdown in the sector. Rising interest rates mean it is easier for investors to get returns from cheaper and less risky homes for their money.

Investment trust 3i bucked the trend, but only with its shares bouncing back from a drop over the previous session, although it was enough to take it to the top of the leaderboard.

Google axes 12,000 jobs

Friday 20 January 2023 10:50 , Simon Hunt

Google parent company Alphabet is eliminating 12,000 jobs, its chief executive said, according to a staff memo seen by the Reuters news agency.

The search engine giant has become the latest major US tech company to let go of staff after Microsoft said it was laying off 10,000 employees earlier this week and Amazon said it was cutting 18,000 jobs earlier in January.

There have been close to 40,000 tech layoffs since the start of the year, according to redundancy tracking site layoffs.fyi.

Google has 5,701 staff in the UK, according to its most recent filing with Companies House. Its parent company, Alphabet, had 186,779 staff worldwide according to its most recent filing with the US securities regulator.

SSE raises profit guidance, FTSE 100 higher

Friday 20 January 2023 10:30 , Graeme Evans

SSE lifted City profit expectations today after seeing its gas-fired generation plants deliver a big jump in output at a time of sky-high prices.

The energy giant, whose fleet of gas-fired plants includes the Medway power station on the Isle of Grain in Kent, said the 27% increase in production for the nine months to 31 December ensured security of supply for customers.

The performance more than offset a 10% decline in renewables output after unseasonably dry and calm weather affected its fleet of wind farms and hydro electric plants.

SSE shares rose 2% or 29p to 1731p in the FTSE 100 as it said earnings for the year to March will now top 150p a share, a big jump from the previous guidance of at least 120p.

It pointed out it would deliver record investment in 2022/23, with expenditure expected to be over £2.5 billion. Finance director Gregor Alexander added that SSE is performing well in a “shifting and volatile” energy landscape.

He said: "We are responding to the cost of living and energy crises by investing record amounts and remain committed to investing additional profit we make into critical low-carbon electricity infrastructure.”

SSE’s earnings update boosted interest across the sector, with British Gas owner Centrica near its highest level in over two years after shares rose another 0.3p at 97.9p.

The wider FTSE 100 index cheered 32.55 points to 7779.84 in a calmer session for investors after yesterday’s 1.1% slide.

The UK-led FTSE 250 index recovered 0.4% or 74.31 points to 19,648.42, with corporate merchandise firm 4imprint one of the biggest risers following a top-end profit forecast. Shares jumped 3% or 131.25p to 4606.25p

Spirent Communications slumped 16% or 43.6p to 233.8p after the provider of 5G testing services said its performance would be weighted towards the second half of 2023 as some customers have delayed investment divisions.

Meanwhile, maternity wear group Seraphine is poised to leave the stock market after just 18 months. It listed in July 2021 at a price of 295p a share, but after a challenging period of trading has recommended shareholders accept a 30p a share offer from its largest shareholder Mayfair Equity Partners. The 200% bid premium sent shares up 19.25p.

Netflix CEO Reed Hastings says it’s time to step away

Friday 20 January 2023 09:52 , Simon Hunt

The co-founder of Netflix has stepped down as CEO after the company posted an uptick in subscribers.

Reed Hastings, 62, who founded the business in 1997, will be stepping into an Executive Chair role, to be replaced by current co-CEO Ted Sarandos and COO Greg Peters, who were promoted to their roles in 2020.

He said in a statement: “The board and I believe it is the right time to complete my succession.

“It was a baptism of fire, given Covid and recent challenges within our business…but they’ve both managed incredibly well.”

The firm reported a 7.7 million uptick in subscribers in the fourth quarter, helping push shares up 6.1% to $335 in pre-market trading. Earnings per share of 12 cents came in well behind the 45 cents analysts had estimated, according to Refinitiv data.

Hastings controls a 2% stake in Netflix and has a net worth of $3.3 billion (£2.7 billion) according to an estimate by Forbes.

Jamie Dimon cashed in -- again

Friday 20 January 2023 09:37 , Simon English

Jamie Dimon is regarded as perhaps the most powerful banker in the world.

The JP Morgan boss is certainly one of the best paid. He recevied $34.5 million in 2022, the bank reveals.

That is the same as his pay a year earlier. There is also a possible $50 million earn out for him if he stays at JPM long enough.

That award has caused some anger among investors. A majority of them voted against the $50 million deal at the annual meeting in May 2022.

The bank said it won’t give Dimon, 66, any more special awards.

JPM’s profits were down 22% to $37.7 billion this year due to a slump in fees from investment banking.

Close Brothers takes hit on bad loans

Friday 20 January 2023 09:32 , Simon English

CLOSE Brothers, the City merchant bank founded 145 years ago, was hit with a double whammy today as it revealed a £90 million set aside for bad loans and sluggish share trading.

Novitas, the legal-finance specialist it acquired in 2017, was closed to new loans in 2021.

Today Close put £90 million into a pot to cover Novitas loans that are going bad. Profit from Novitas this year will fall from £36 million to just £8 million.

The shares fell 120p, 12%, to 928p.

Chief executive Adrian Sainsbury said: “. The financial strength of the group leaves us well placed to absorb the anticipated additional provisions and to continue to deliver on our long-term track record of disciplined growth and returns to shareholders".

Winterflood’s, the share trading and market making arm, has its own problems.

Performance has been “adversely impacted by the continued market-wide slowdown in trading activity in higher margin sectors”.

Other brokers have reported similar moves, indicating a wider City slowdown that is already leading to job losses.

Close Brothers employs 4,000 in the UK, many at offices near Liverpool Street.

Genesis collapse adds to crypto industry woes

Friday 20 January 2023 09:16 , Simon Hunt

The continued downfall of the crypto industry showed no signs of abating today after one of its largest lenders collapsed.

Genesis Global Capital, the lending arm of crypto business Genesis, has filed for Chapter 11 bankruptcy in New York after failing to raise enough capital to swerve a liquidity crisis.

It had assets and liabilities in the range of $1 billion and $10 billion, according to documents filed with the Southern District of New York, with at least $2.8 billion of active loans, according to the company’s website, sending shockwaves through the industry and raising concerns over the health of other industry players exposed to the company.

Interim CEO Derar Islim said in a statement: “While we have made significant progress refining our business plans to remedy liquidity issues caused by the recent extraordinary challenges in our industry…an in-court restructuring presents the most effective avenue through which to preserve assets and create the best possible outcome for all Genesis stakeholders.”

The firm forms part of the empire of billionaire Barry Silbert known as the Digital Currency Group, or DCG, which also operates asset manager Grayscale, that controls billions of dollars worth of crypto assets, as well as crypto news site CoinDesk.

Silbert is worth $3.2 billion (£2.6 billion) according to an estimate by Forbes.

FTSE 100 steadies, Spirent shares drop 12%

Friday 20 January 2023 09:03 , Graeme Evans

The London market has recouped some of yesterday’s losses, with the FTSE 100 index up 30.77 points to 7778.06 and the FTSE 250 index 33.45 points higher at 19,607.45.

Renewables giant SSE led the top flight after it upgraded earnings expectations to more than 150p a share, compared with previous guidance of at least 120p a share. The shares rose 33p to 1734p.

The fallers board was led by investment platform Hargreaves Lansdown after a decline of 3%, while consumer-focused stocks Diageo, Unilever and bottling company Coca-Cola HBC lost around 1%.

Today’s strong update by corporate merchandise firm 4imprint sent its shares 4% higher in the FTSE 250 index, but Spirent Communications dropped 12% as the provider of testing and analytics said some customers had delayed investment divisions.

Retail fears grow amid rising rates

Friday 20 January 2023 08:47 , Graeme Evans

The recent resilience in consumer spending towards the end of last year petered out in December, with sales volumes down by an unexpected 1% in the month.

Capital Economics expects this weakness to persist well into 2023, noting that the bulk of the drag from rising interest rates has yet to have been felt.

The consultancy points out that the retail sector has been in recession since the autumn of 2021, with today’s release the 12th fall in retail sales volumes in 14 months.

The pessimistic outlook is reinforced by today’s near record low consumer confidence reading and deteriorating credit card spending figures from earlier this month.

Economist Olivia Cross said: “We expect that weakness will continue as the drags on activity, particularly from higher interest rates, intensify in 2023 and the economy slips into recession.”

Netflix shares rally, FTSE 100 seen higher

Friday 20 January 2023 07:56 , Graeme Evans

Netflix shares jumped 7% in after-hours trading last night after the streaming service comfortably beat Wall Street expectations with the addition of 7.7 million customers in the fourth quarter.

Reported operating profit of $550 million (£445 million) was over $200 million (£162 million) better than expected, reflecting the better revenue and slower-than-expected hiring. Underlying operating margins were 20%, at the top end of the guidance range.

Hargreaves Lansdown analyst Sophie Lund-Yates said: “Netflix has had a showstopping end to the year, in a performance even its worst critics can’t argue with.

“While Wall Street sags with the weight of recession fear and Federal Reserve jitters, Netflix’s huge beat on subscriber numbers has injected some much-needed optimism into the mix. The subscriber growth has come from a combination of acquisition and retention, which is incredibly important.”

US markets fell on Thursday due to signs of weakening consumer demand and the threat of interest rates staying high for longer.

The Netflix boost should mean a more resilient session later, while CMC Markets expects the FTSE 100 index to recover 38 points to 7785 after yesterday’s 1% decline.

Christmas shoppers leave it late at The Works while postal strikes hit online sales

Friday 20 January 2023 07:51 , Michael Hunter

Discount books, toys and crafts retailer The Works said Christmas shoppers left it late last year, but turned up the week before the big day to help sales across its 500 stores rise by almost 10% in the 11 weeks to January 15.

But online sales dropped 14% in the period and it said they have continued to be “disappointing” . It said customers were “losing confidence in retailers’ delivery promises in light of the widely reported postal strikes, and the potential for knock-on effects on other carriers.

The mainstay of London high streets from Camden to Woolwich also said in-store sales stayed strong in January, with the level of marked down stock expected to rise after low levels last year.

But it reported a loss of almost £11 million for the first half of its financial year, up from a £1 million loss a year earlier. although it pointed out that its business is seasonal, with profit coming mainly from the second half and the festive period.

The Birmingham-based firm’s range of games, stationery and novelties make it a family favourite for stocking-fillers and present buying. It warned in August that inflation and the rising cost of living meant Christmas trading would mean sales growth in the period would be uncertain.

Today, its CEO Gavin Peck said: “Whilst the trading environment remains uncertain, we are encouraged by the strength of our performance during and after the key Christmas period.”

Retail sales fall, confidence near record low

Friday 20 January 2023 07:40 , Graeme Evans

Retail sales volumes fell by 1% in December, having been forecast to reverse November’s 0.5% decline.

Food sales were hit hard as shoppers cut back in the face of rising prices, while online retailers suffered due to the impact of Royal Mail industrial action.

The amount spent rose 3.8% in December from the year before, but an inflation rate above 10% meant shoppers got much less for their money as volumes declined by 5.8% on a year earlier.

With soaring energy bills and inflation continuing to swallow up pay rises, GfK said its measure of consumer confidence fell to minus 45 in January. That’s near a record low and defied expectations for a slight improvement.

4imprint smashes profits estimates as sales soar 45%

Friday 20 January 2023 07:27 , Simon Hunt

Promotional product maker 4imprint seems to be going from strength to strength with its profits smashing previous estimates.

The maker of branded mugs, wristbands and keyring hailed a “particularly strong finish to the year,” with revenue up 45% to $1.14 billion (£0.92 billion).

Pre-tax profits at the firm are set to come in above the top end of estimates, topping $100 million.

4imprint said: “The Board is delighted with the Group’s progress in 2022, which reflects clarity of strategy, the flexibility and resilience of the business model and the outstanding dedication of the team. The Group enters 2023 with optimism.”