Yahoo Finance FTSE 100 Live: Spotify sinks, Gazprom cuts gas to Poland and Bulgaria, Lloyds, WPP and Glaxo updates
Investors are reeling from a big slide in the value of US tech stocks as worries grow about the global economic outlook.
Apple and Amazon shares fell 4% last night as Wall Street reacted to mixed US earnings, an escalation in the Ukraine war and fears of a hard landing as central banks battle inflation.
In London, confidence is being further tested by first quarter trading updates from blue-chip companies including Lloyds Banking Group, GlaxoSmithKline, Persimmon and WPP.
FTSE 100 Live Wednesday
Growth outlook hits US tech stocks
Russia cuts off gas supplies to Poland and Bulgaria
FTSE 100 steady, Aveva falls 12%
Lloyds Q1 profits lifts shares
LME boss to stay on after nickel market chaos
WPP upgrades full-year forecasts
FTSE ends higher as miners rally
16:53 , Oscar Williams-Grut
The FTSE 100 has closed up 53 points, or 0.7%, at 7,439. The bluechip index was boosted by rallying mining and commodity stocks, with Anglo American and Antofagasta both rising more than 5% on the day. A postivie first quarter update from GlaxoSmithKline also helped things along.
The main headlines today were:
- Lloyds bank has painted a gloomy picture of the outlook for the UK economy in its first quarter update, despite posting better than expected numbers;
- The CEO of the London Metal Exchange has reversed an earlier decision to leave the market, vowing to stay on as CEO to help overhaul rules and regulations in the wake of last month’s chaotic nickel market closure;
- And the London Stock Exchange has revealled that its decision to pull out of Russia and block Russian companies from participating in its markets will cost it an estimated £60 million this year.
That’s all from us on the blog today. Join us again tomorrow.
Spotify sinks despite sales and revenue rise
15:54 , Oscar Williams-Grut
Spotify’s stock price has crashed 10% in New York in the wake of first quarter earnings, despite posting a rise in subscribers and revenues. That came despite controversy surrounding its star podcaster Joe Rogan earlier this year and the company’s decision to pull out of Russia, which cost it 1.5 million users.
The streaming giant’s share price is already down over 50% so far this year, tracking a broaders decline in tech stocks as rising rates make cash-hungry growth stocks less attractive. The Nasdaq slumped 4% on Wednesday in its worst one-day decline since 2020.
Wall Street has opened higher this morning after yesterday’s rout, though not by much. The S&P 500 and Nasdaq are both up 0.6%, while the Dow is 0.4% higher.
Kraft Heinz income jumps thanks to price rises
15:15 , Mark Banham
Kraft Heinz, manufacturers of Heinz tomato ketchup and Cadbury brands, has boosted sales predictions for the year afer a leap in prices for its food products led to bumper first-quarter sales.
The company said that organic sales, which strips out currency impacts, acquisitions and divestitures, rose 6.8% in the latest period, helped by a 9% increase in prices.
The company’s earnings were $776 million during the first quarter of the year, or $0.63 per share. That compares to $563 million, or $0.46 per share, this time last year.
Like other multi-national consumer goods companies, Kraft Heinz has been raising prices to offset rising costs in raw materials, energy and logistics.
Kraft Heinz indicated that it continues to face higher commodity costs, especially in dairy, packaging and meat, as well as wider costs to procure ingredients for its products.
“Our first quarter was a strong start to the year and yet another period where our team rose to mitigate new and different macro environment challenges,” said Kraft Heinz CEO Miguel Patricio.
“We continue to build critical capabilities, greater corporate agility, and additional financial flexibility to address short-term turmoil while building our long-term advantage.”
Boeing loses $1.2 billion in the first quarter
13:50 , Mark Banham
The world’s largest aircraft manufacturer Boeing has suffered a first quarter loss of $1.24 billion (£987 million) due to issues with its jetliner and military programs, along with Russian sanctions and supply chain issues.
Revenues of $14 billion were also down 8% from the first quarter of last year.
Boeing has been beset by delivery problems, pushing back the expected delivery of its 777X twin-aisle carrier until 2025 -- a delay of five years. However, the company said it had moved nearer to delivering its 787 Dreamliner after suspension of its development.
Dave Calhoun, Boeing president and chief executive officer, remained bullish about the future of the company.
“Despite the pressures on our defence and commercial development programs, we remain on track to generate positive cash flow for 2022, and we’re focused on our performance as we work through certification requirements and mature several key programs to production,” he said.
Will Russia cut off gas to other European countries?
13:40 , Oscar Williams-Grut
Russia’s gas embargo on Poland and Bulgaria has raised the prospect that other nations could soon be shut off.
Ole R. Hvalbye, a commodities analyst at SEB, said: “As most other European nations have already said they will not pay for gas in rubles, this supply halt could result in physical and psychological repercussions leading the continent to brace itself for further Russian curtailments.”
The EU imports 41% of its natural gas supplies from Russia. Germany received around a fifth of all Russian gas coming into the EU, with Italy, Turkey, France and Poland making up the rest of the top five destinations for Russian gas in Europe.
Smaller nations such as Malta, Luxembourg and Cyprus are the most dependant on oil and gas imports for their energy security.
The UK imports less than 5% of its gas from Russia but shortages elsewhere are likely to drive up wholesale price on the international market, inadvertedly driving up UK energy bills.
Walid Koudmani, chief market analyst at XTB, said: “So far, Russia has halted supplies to relatively small European countries, probably with the intention of sending a message to bigger countries, like Germany and France.”
Spotify shrugs off tech downturn to post uptick in subscribers
13:17 , Banham
Spotify has added more users in the most recent quarter and saw revenue grow, despite closing operations in Russia.
The music streaming service suspended its service in the country in response to its invasion of Ukraine, costing it 1.5 million users.
But during the quarter ending 31 March, Spotify said its premium subscribers jumped 15% year-on-year to 182 million, up from 180 million the previous quarter.
The platform posted first quarter revenue of €2.66 billion, up 24% year-on-year. Revenues from its premium service expanded by 23% year-on-year to €2.38 billion. Ad-supported revenue was boosted 31% to €282 million.
Monthly active users rose 19% from the same period the previous year to 422 million, up from 406 million at the end of last year.
European gas prices rise as Russia cuts of supplies to Poland and Bulgaria
12:58 , Oscar Williams-Grut
European natural gas prices have spiked after Russian gas giant Gazprom announced it was cutting off supplied to Poland and Bulgaria in a significant escalation of economic hostilities from Russia.
The Russian state-owned energy giant said today it had “fully halted” supplies due to the two country’s “failure to pay in roubles.” Russian President Putin declared last month that buyers of gas must pay in roubles or face being cut off.
European natural gas prices jumped by as much as a fifth on the news before settling back to a gain of around 8% on the day. UK gas prices were relatively unaffected.
European Commission President Ursula von der Leyen said the move by Gazprom was “another attempt by Russia to blackmail us with gas.”
“We are prepared for this scenario,” she wrote on Twitter. “We are mapping out our coordinated EU response.”
Kremlin spokesman Dmitry Peskov told reporters: “Russia was and remains a reliable supplier of energy resources to its consumers and remains committed to its contractual obligations.
“When the payment deadlines approach, if some consumers decline to pay under the new system, then the president’s decree of course will be applied,” Peskov said, per Reuters.
Walid Koudmani, chief market analyst at XTB, said: “So far, Russia has halted supplies to relatively small European countries, probably with the intention of sending a message to bigger countries, like Germany and France.”
Addison Lee on the road to recovery
12:39 , Rhiannon Curry
Addison Lee has trimmed its losses as demand for taxis in London picks up after a turbulent two years.
The cab company returned to an underlying profit of £7.9 million in the 12 months to August 2021, recovering from a £9.4 million underlying loss in 2020.
On a pre-tax basis, losses reduced from £39.8 million in 2020 to £23.1 million last year. Turnover rose from £52 million to £164 million.
The taxi firm was hit badly by the impact of lockdowns in London, which resulted in a dramatic drop in demand.
But Addison Lee said business was beginning to recover as London gets back to normal.
12:16 , Oscar Williams-Grut
The boss of London-based meal kit subscription business Gousto believes his business can keep growing rapidly despite the soaring inflation that is squeezing customer budgets and putting up his costs.
Timo Boldt, the founder and chief executive of Shepherd’s Bush-based Gousto, said he was confident of another year of strong growth after his business posted its ninth year of double digit growth.
Revenues at Gousto rose 67% to £315 million last year. The company made an underlying profit before exceptional costs, interest, depreciation and tax of £20 million, up 10% on 2020.
Russia exit to cost London Stock Exchange £60 million
11:57 , Oscar Williams-Grut
Turning its back on Russia will cost the London Stock Exchange Group an estimated £60 million this year, the company admitted today.
LSEG said pulling out of Russia and dumping Russian businesses from the market would knock revenues by an estimated £60 million in 2022.
The biggest impact comes from suspending its data and analytics services but the company has also suspended over 40 Russian businesses with listings in London since the invasion of Ukraine. Its FTSE Russell business has dumped Russian stocks from its indices and branded Russian government debt unclassifiable.
London Metal Exchange boss reverses decision to leave
11:46 , Oscar Williams-Grut
The boss of the London Metal Exchange has reversed an earlier decision to leave, pledging to help fix the market instead following the controversial suspension of nickel trading last month.
The LME said in January that CEO Matthew Chamberlain would be leaving at the end of April “to pursue career interests outside of the Group.” But LME-owner HKXE said today Chamberlain would now stay on as boss indefinitely.
Chamberlain said he wanted to “continue to work with the team on supporting the long-term health and efficiency of the market.”
The change of heart comes amid intense scrutiny of the historic trading venue following a controversial decision to suspend the nickel market last month.
WH Smith mulls more in-store pharmacies
11:21 , Oscar Williams-Grut
WH Smith is looking at a potential roll out of more in-store pharmacies across the UK as its business bounces back from a Covid induced downturn.
CEO Carl Cowling said he was considering opening more branches of Well Pharmacy inside WH Smith shops after a successful trial at London Euston station and Heathrow and Gatwick Airports. The tie-up allows customers to buy pharmacy-only medicines ahead of their travel.
“At the moment we have the [pharmacy] format in Heathrow Terminal 2, we’ve got it in Gatwick, we’ve got it in some regional airports and Euston, which is the really, really exciting one,” Cowling said. “We’ve been surprised by the results, the sales have been really good and customer feedback has been very positive. It’s definitely something to look out for.”
Cowling ruled out “rapid” expansion but said the partnership with Well Pharmacy would continue.
Read about interim results out today.
WPP upgrades growth forecasts after strong first quarter
10:30 , Oscar Williams-Grut
FTSE 100 advertising network WPP has reached a deal to exit Russia after signalling its intention to pull out at the beginning of last month.
Mark Read, CEO of the agency group, which owns high-profile advertising agencies including Ogilvy and Grey, said: “On 4 March, we announced that we would exit the Russian market, and we have now reached agreement to divest our businesses there.”
Read said the war in Ukraine had “created an appalling humanitarian crisis” and his network continued to support the people of Ukraine with “financial and practical assistance”. WPP employs 1400 people across its offices in Russia.
Confirmation of the divestment came as WPP reports a 6.7% jump in first quarter revenues to £3.1 billion. The company upgraded growth forecasts for the year after the strong start to 2022.
However, Read said: “We remain very mindful of the impact of the broader macroeconomic environment on our business and will respond quickly to any changes as the year progresses.”
He said WPP continues to invest in the “many opportunities for growth” driven by digital transition, including its recently launch of data platform Choreograph and the recent launch of e-commerce offering Everymile.
Shares initially jumped but are now trading down 4.8p at 985.2p.
Aveva down 12%, FTSE 100 holds firm
10:25 , Graeme Evans
The aftermath of a Wall Street tech rout ensured no hiding place for London-listed Aveva today as the industrial software group warned over rising cost pressures.
Shares in the FTSE 100-listed company skidded 12% as it revealed that 2023 earnings will be impacted by factors including a wage bill driven higher by the “very competitive” software labour market.
The group, whose technology improves operations for companies including EDF Energy and BP, is one of a small number of top flight stocks directly exposed to weaker sentiment caused by the recent dumping of US growth stocks.
The Nasdaq fell 4% last night to its lowest level since December 2020 as investors reacted to an outlook clouded by rising interest rates, higher prices and component shortages.
While Aveva tumbled 281p to its lowest level since 2019 at 2007p, grocery warehouse robotics business Ocado dropped another 14.6p to a fresh three-year low of 935.4p.
The wider FTSE 100 index weathered the storm as a rebound for commodity stocks helped the top flight to lift 13.92 points to 7400.11.
A largely encouraging batch of first quarter updates also helped the mood after Lloyds beat expectations to send shares 2% higher and boost rivals HSBC and NatWest.
GlaxoSmithKline improved 11.3p to 1765.9p after chief executive Emma Walmsley reported better-than-expected first quarter earnings and confirmed that July’s demerger of consumer health division Haleon remains on track.
The FTSE 250 index fell 26.60 points to 20,465.52 as selling pressure in the retail sector continued through further losses for Trustpilot and Marks & Spencer. WH Smith fell 5% after its interim results but biomass power station business Drax rose 3% after a trading update.
Ted Baker shares, meanwhile, lifted 3p to 150p as the fashion retailer said it has entered into due diligence on a potential sale of the business having received “a number of non-binding proposals”.
More execs out at Credit Suisse
09:58 , Simon English
Credit Suisse slumped to loss of 428 million Swiss francs (£350 million) in the first quarter and showed the exit to yet more top executives.
The embattled Swiss bank, which employs thousands at Canary Wharf in the City, said its chief financial officer, head of Asia Pacific and general counsel will be replaced. That completes a sweep of its board that leaves only CEO Thomas Gottstein in place. The bank has been caught up in the Greensill Capital and Archegos scandals.
Analysts at Barclays said the results were “disappointing versus low expectations”.
Gottstein said it was “a tough quarter”.
Shaftesbury boosted by rising value of its estate
09:07 , Oscar Williams-Grut
West End landlord Shaftesbury has seen the value of its 16-acre central London estate jump by £250 million as office workers, shoppers, diners and theatre goers return to the area.
The company, which owns much of Carnaby Street and Chinatown, said the value of its real estate had risen by 7.5% to £3.26 billion in the six months to March 31.
Chief executive Brian Bickell said: “I am pleased to report that confidence, footfall and sales across our villages continue to recover well.”
Bickell said there was “strong interest from potential occupiers across all uses and low vacancy”, which is “driving a recovery in rental levels.”
“We are now looking forward to an extended period of uninterrupted trading as we enter the important summer season,” he said.
Shaftesbury shares are up 9p to 605p.
Glaxo shares rise after update, Aveva slides 13%
08:50 , Graeme Evans
Stronger banking and mining stocks have limited the decline for London’s FTSE 100 index to 23.04 points at 7363.15.
GlaxoSmithKline shares also rose 1% after chief executive Dame Emma Walmsley reported better-than-expected first quarter earnings and confirmed plans to demerge the company’s consumer health division Haleon in July.
The biggest top flight faller was industrial software business Aveva, whose shares slumped 13% after it highlighted the potential impact on 2023 earnings of wage inflation and Russia sanctions.
Among the other blue-chip stocks reporting today, London Stock Exchange fell 2%, housebuilder Persimmon dropped 1% and advertising and marketing business WPP rose 1%.
The FTSE 250 index weakened 0.8%, or 158.94 points to 20,333.18. Consumer reviews website Trustpilot and retailer Marks & Spencer fell 3% amid fresh selling pressure, but biomass power station business Drax rose 3% after a trading update.
Lloyds beats expectations, shares rise
08:27 , Graeme Evans
Lloyds Banking Group shares are more than 2% higher today after its first quarter profit figure of £1.6 billion beat City forecasts.
The UK’s biggest mortgage lender also upgraded its guidance on two key measures of profitability, including its net interest margin.
But in a reflection of the increased economic uncertainty, Lloyds also made a credit loss provision of £177 million with today’s results.
Chief executive Charlie Nunn said the company has been proactively contacting customers it feels may need assistance at a time of rising cost of living pressures. He said: “We encourage customers, where affected, to get advice early and talk to us."
Energy bill fears grow after latest increase
08:08 , Graeme Evans
Natural gas markets are under more pressure after Russia cut supplies to Poland and Bulgaria following their refusal to pay in roubles.
Panmure Gordon economist Simon French said the average price of the forward UK curve traded at 214p a therm yesterday, whereas the price needed to avoid an increase in October’s energy price cap would be 85p a therm.
Two-thirds of the calculation period is still to run, but he warned In a Tweet this morning that it “is going to be very hard to avoid a further punishing increase”.
The uncertain supply outlook was reflected in the Brent crude price, which moved more than 1% higher to above $106 a barrel.
Tech stocks slide, oil price higher
07:45 , Graeme Evans
Growth and technology stocks led a Wall Street rout last night as the darkening economic outlook caused investors to take cover.
The Nasdaq fell almost 4% to a one-year low and the Dow Jones Industrial Average S&P 500 lost more than 2% during another session of volatility. Apple and Amazon shares fell 4% and Tesla slumped 12% on fears that Elon Musk may have to offload some of his stake in the electric car marker in order to finance the Twitter takeover.
The Nasdaq is now down by more than 20% this year and by 10% in April, which is usually a strong month for the tech-led index.
Analysts at Nordic bank SEB said: “Concerns about growth, interest rates, component shortages, and investment prices are some of the heavy clouds that are currently hanging over equity markets.”
Hopes of a rebound in today’s Wall Street session have been dashed by a mixed reception to results after the closing bell from Microsoft and Alphabet. The Google owner missed its earning estimates, leaving shares a further 3% lower in after-hours trading.
Michael Hewson, chief market analyst at CMC Markets, expects the FTSE 100 index to open 10 points lower at 7376, having surrendered most of the gains achieved in the early part of yesterday’s session.
He said the weakness partly reflected a lack of confidence in the ability of central banks to engineer a “soft landing” as they tackle inflation.
The Brent crude price, meanwhile, is higher at $105 a barrel after a spike caused by Russia saying that it would cut natural gas supplies to Poland and Bulgaria.
