Yahoo Finance FTSE 100 Live: UK economy grew in October, Microsoft builds LSE stake
GDP figures showing the UK economy expanded 0.5% in October today launched a packed week for economic announcements.
The rebound from the previous month’s fall of 0.6% is unlikely to allay the UK’s recession fears, with the Office for National Statistics pointing out the economy contracted over the last three months as a whole.
Meanwhile, it emerged today that Microsoft is to buy a 4% stake in London Stock Exchange as part of a 10-year strategic partnership for next-generation data and analytics and cloud infrastructure solutions.
That’s all folks. Tomorrow: unemployment and Ocado
Monday 12 December 2022 17:30 , Simon Hunt
That concludes our live markets coverage for the day, on the day the London Stock Exchange announced a long-term multi-billion pound partnership with software giant Microsoft.
The Evening Standard City desk will be back at 7am tomorrow where a trading update from Ocado will shed light on the health of the retail sector in the crucial Christmas trading season, while unemployment data will offer an insight into the health of the wider economy.
FTSE 100 closes down 28 points: Evening wrap
Monday 12 December 2022 16:39 , Simon Hunt
The FTSE 100 closed down 28 points to 7,449 at the end of today’s session in London as better-than-expected GDP data proved inadequate to allay investor recession fears.
The London Stock Exchange Group made the most gains of the day after itemerged today that Microsoft is to buy a 4% stake in it worth over £1 billion as part of a 10-year strategic partnership for next-generation data and analytics and cloud infrastructure solutions.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: ‘’Caution is in the air in financial markets ahead of a series of crunch central bank meetings around the world this week, with yet more interest rate hikes set to be unwrapped as inflation remains stubborn. The determined pursuit of sharply lower inflation in the UK is chasing away growth, with the economy set to run smack into recession.
“The Bank of England is still expected to raise rates though on Thursday by 0.5%, despite the fragility in the economy which is showing through so starkly as inflationary pressures stay so elevated.”
GSK to move back to central London with new HQ
Monday 12 December 2022 15:21 , Simon Hunt
Pharmaceuticals giant GSK is to move its global headquarters back to central London in 2024 in a major boost for the West End economy.
The company will relocate from its current base - the high profile glass facade campus on the Great West Road in Brentford where it has been since 2002 - to new offices on New Oxford Street close to Tottenham Court Road.
The six storey building, currently known as the Earnshaw, but likely to be renamed, is under construction and due to be completed next year.
Around 3000 people will work there on a hybrid basis including the GSK global leadership team headed by CEO Emma Walmsley.
New York stocks tick higher ahead of inflation data and Fed rate call
Monday 12 December 2022 14:47 , Michael Hunter
Wall Street’s S&P 500 inched higher in a cautious start to a week featuring fresh inflation data and the last Federal Reserve interest rate decision of the year.
The main action for the market is likely later in the week, around consumer prices data out on Tuesday and the Fed rate announcement on Wednesday.
Traders are expecting the central bank to move to a smaller rate rise, of 0.50%, from its previous hikes of 0.75%.
In the meantime, the broad New York stock index inched up 5% to 3939.50, a rise of 0.1%.
Next up is jobs and pay data in blockbuster week for the UK economy
Monday 12 December 2022 14:34 , Michael Hunter
Londoners have plunged headlong into a blockbuster week for the economy, one which will set the tone for homeowners, consumers and investors alike into 2023.
After better-than expected growth numbers today -- described by Chancellor Jeremy Hunt as a “false dawn” -- next up is jobs and earnings data on Tuesday. Then, we will find out if there is hope that inflation may have peaked in the run up to Christmas during a cost-of-living crisis.
But the Bank of England is top of the bill, with its December announcement on interest rates at high noon on Thursday. A hike is all but certain and will pile pressure on mortgage holders, with policymakers determined to tame double-digit inflation.
LSE Group tops the FTSE 100 after Microsoft deal
Monday 12 December 2022 12:39 , Michael Hunter
Shares in the London Stock Exchange Group topped the FTSE 100 leaderboard in mid-session trade on a warm reception in the market to news of its £1 billion strategic partnership deal with Microsoft.
The US software giant has taken a stake in the operator of Europe’s biggest stock market and will help the LSE beef up its data provision and use of cloud computing tools.
Ocado, the online grocer and e-commerce tech platform, was once again at the bottom of the market after a volatile year for the stock.
City comment: Fines are still not hitting big firms where it hurts
Monday 12 December 2022 11:54 , Simon Hunt
Another day, another hefty corporate fine. Today it was the turn of Metro Bank to be rapped over the knuckles by its regulator, landing a £10 million penalty from the FCA for giving investors incorrect information in a trading update.
It comes hot on the heels of Santander’s £100 million sanction for breaches of anti-money laundering regulations last week.And they are far from being the only transgressors. Fascinating data published today by Thomson Reuters Regulatory Intelligence shows fines imposed by regulators on FTSE-100 companies have jumped more than fourfold over the past year from £354 million in the 12 months to June 2021 to £1.6 billion in 2021/22.
Two-thirds of the fines went to mining or energy firms but the financial services sector — serial offenders — notched up the most with 11, totalling £354 million.
So are Britain’s leading blue-chip companies becoming worse behaved or are regulators growing a collective backbone?According to Thomson Reuters it is very much the latter with capitalism’s sheriffs aiming to make the point fines simply cannot be seen as an acceptable cost of doing business. Up to a point. The FTSE-100’s line-up landed profits of around £170 billion last year so even the current higher level of fines is arguably only a limited deterrent at only 1% of earnings.
It will probably take a real “shock and awe” penalty that genuinely hits a business where it hurts — and more importantly its shareholders — before CEOs get the message. In the meantime those fines will continue piling up like the corporate equivalent of parking tickets.
Retail stocks struggle, Centrica shares higher
Monday 12 December 2022 10:23 , Graeme Evans
Retail stocks are under pressure as fears grow over high street footfall in the key Christmas trading period.
Shares in Frasers Group and Next both fell 2%, while FTSE 250 duo Marks & Spencer and Currys lost 3% as the frozen conditions and prospect of another big interest rates rise by the Bank of England on Thursday weigh on sentiment.
Superdry bucked the retail gloom, however, as shares rose 1.8p to 107.2p on speculation that co-founder and chief executive Julian Dunkerton has held talks with private equity firms over a potential buyout.
According to the Sunday Times, major shareholder Dunkerton has become disillusioned with Superdry’s share price performance after a 60% slide in 2022.
The stock, which recently hit a record low of 96p, rallied to 113p in early trading even though talks about a take-private deal are not thought to be currently active.
Other risers today included British Gas owner Centrica and renewables giant SSE, reflecting a likely cold weather demand boost. Shares lifted 1.5p to 93.4p and 13.5p to 1709.5p respectively, while Drax rose 7p to 611p in the FTSE 250.
Traders were otherwise on the sidelines at the start of a pivotal week for the global economy, with inflation figures and rates decisions due on both sides of the Atlantic.
The FTSE 100 fell 16.44 points to 7460.19, while the FTSE 250 reflected the UK economic uncertainty by dropping 1% or 182.49 points to 18,733.51.
Big fallers included strike-hit Royal Mail business International Distributions Services, which weakened 5% or 9.8p to 202.8p after HSBC removed its “buy” recommendation.
There was also a hangover for pub stocks after England’s quarter-final exit. Marston’s, which has reported a 50% uplift in sales for previous games, fell 3% or 1.3p to 38.1p and rival Mitchells & Butlers lost 4.7p at 132.5p.
Monsoon comes back from the brink as shoppers return to the high street
Monday 12 December 2022 09:11 , Simon Hunt
Fashion retailer Monsoon has bounced back from near-collapse during the pandemic with higher sales and a revitalised store expansion plan as it approaches its 50th anniversary.
Monsoon, along with sister brands Accessorize and East, fell into administration in June 2020, blaming the impact of Covid-19 and associated lockdowns for making the business unviable.
But it was quickly bought by founder Peter Simon via a pre-pack administration deal, who made sweeping job cuts and store closures before implementing a transformation plan.
Now, annual accounts for holding company Adena Brands showed that group sales rose 43% to £258 million in the year to 31 August, boosted by a 24% growth in the company’s international business. EBITDA was £24.4 million, an increase of 132%.
Economic jitters hit FTSE 100, M&S falls 3%
Monday 12 December 2022 09:02 , Graeme Evans
The FTSE 100 index is down 22.26 points at 7454.37, reflecting a flight from risk ahead of this week’s interest rate decisions and inflation figures in the UK and US.
Anglo American fell 2% or 55p to 3135p and Ocado dropped 27.2p to 659p, while Next weakened 104p to 5742p during a poor session for UK retailers.
On the risers board, London Stock Exchange’s partnership with Microsoft sent its shares 4% or 310p higher to 7716p. Higher power prices also helped shares in British Gas owner Centrica and SSE to lift 1.2p to 93.5p and SSE by 13.5p to 1709.5p respectively.
The FTSE 250 index fell 0.4% or 79.55 points to 18,836.45, led by strike-hit Royal Mail business International Distributions Services after HSBC removed its “buy” recommendation. Shares fell 4% or 9p to 203.6p.
The UK economic jitters and poor weather conditions also meant Marks & Spencer fell 3% or 3.7p to 119.35p and Currys dipped 2p to 68p.
October GDP fuels BoE rate rise jitters
Monday 12 December 2022 08:24 , Graeme Evans
Today’s larger-than-expected 0.5% rise in GDP for October could tilt the Bank of England towards delivering another 0.75% interest rate hike on Thursday, depending on the labour market and inflation data on Tuesday and Wednesday.
Capital Economics notes that October GDP probably rose by 0.2% month-on-month when excluding the recovery from September’s extra bank holiday for the Queen’s funeral.
The rebound was strongest in services output, which rose by 0.6% after falling by 0.8% in September. Manufacturing output also rose by 0.7% after stagnating in September.
Ruth Gregory, senior UK economist at Capital Economics, said: “Overall, it now looks as though GDP in Q4 won’t be as weak as our forecast of minus 0.5% quarter-on-quarter or the Bank of England’s minus 0.3%.
“Rather than delivering a smaller 0.5%, today’s release might increase the chances of the Bank of England repeating November’s 0.75% hike.”
FCA fines Metro Bank PLC £10 million
Monday 12 December 2022 08:04 , Simon Hunt
The Financial Conduct Authority has fined Metro Bank £10,002,300 for breaching the Listing Rules by publishing incorrect information to investors.
The bank’s former Chief Executive Craig Donaldson and former Chief Financial Officer David Arden were also fined £223,100 and £134,600, respectively, for being knowingly concerned in Metro Bank’s breach.
The watchdog said Metro Bank published incorrect information concerning its RWA {Risk Weighted Assets) figure in a trading update in October 2018.
Metro Bank was aware at the time that this figure was wrong, the FCA said, and failed to qualify it or explain in the October announcement that it was subject to an ongoing review and would require a substantial correction.
Mark Steward, Executive Director of Enforcement and Market Oversight, FCA, said: “Listed firms must ensure that the information they are disclosing to the market is right. This is what investors are entitled to receive.
“The UK’s Listing Rules impose high standards on issuers and their officers which Metro Bank, Mr Donaldson and Mr Arden failed to meet in this case.”
Shares lower ahead of interest rate meetings
Monday 12 December 2022 07:59 , Graeme Evans
Wall Street’s poor end to Friday’s session has resulted in selling pressure for Asia markets, with the Hang Seng in Hong Kong down 2% this morning.
The FTSE 100 index dropped 1% across last week and is forecast by CMC Markets to open 19 points lower at 7457.
The downward move comes with investors opting to stay on the sidelines ahead of tomorrow’s inflation print in the United States and the Federal Reserve’s interest rate decision on Wednesday.
The Fed, the European Central Bank and the Bank of England are all expected to slow the pace of rate hikes to 0.5% this week from 0.75% at their previous meetings.
Traders will be looking for clues from the various meetings about the outlook for further rate rises in the early part of next year, given concerns about how recent outsized rate hikes are starting to impact the global economy.
Deutsche Bank strategist Jim Reid said: “Our economists think the Fed will want to keep 0.5% for the February meeting on the table but would at this stage prefer downshifting to 0.25%.”
Heathrow says ‘vast majority’ of travellers to be ‘unaffected’ by Border Force strikes
Monday 12 December 2022 07:59 , Michael Hunter
London’s busiest airport has told passengers to turn up as normal over the peak Christmas getaway period, with the “vast majority” of travellers expected to be unaffected by strikes among Border Force staff.
Heathrow said ““We are doing everything we can to protect a full flight schedule on strike days, so departing passengers should expect to travel as normal.”
The use of e-gates for many passengers will help minimise the impact. . “ Arriving passengers with UK, EU, US, Canadian and some other passports will be able to use e-gates as usual and their journeys should be largely unaffected on strike days. Border Force has contingency measures to ensure other arriving passengers are cleared safely and as quickly as possible,” the airport added.
It came as Heathrow reported a month-on-month drop in the number of people passing through west London hub in November, to 5.6 million from 5.9 million in October. That took the number of passengers over 2022 to 55 million, around 70% of pre-Covid levels.
Manufacturing output surprises, focus on BoE decision
Monday 12 December 2022 07:42 , Graeme Evans
Economic growth of 0.5% in October partly reflects activity levels rebounding from the impact of the Queen’s state funeral on September data.
Output fell 0.3% across the three months to October, although today’s figure was slightly better than City expectations for growth of 0.4%.
There was also encouragement from the manufacturing sector after an unexpected increase in production of 0.7% in October. This compared with forecasts for a flat reading and represented the first growth in manufacturing output since May.
The updates have launched a busy week of economic data, with unemployment and earnings figures due tomorrow and November’s inflation reading scheduled for Wednesday.
The figures will feed into the deliberations of Bank of England policymakers, who on Thursday are expected to hike interest rates by another 0.5% as part of several central bank decisions due this week.
Microsoft builds 4% stake in London Stock Exchange Group as part of strategic partnership
Monday 12 December 2022 07:30 , Simon Hunt
Software giant Microsoft has built a 4% stake in London Stock Exchange Group worth over £1 billion as part of a new strategic partnership with the exchange, it announced today.
Under the arrangements, LSEG's data platform and other parts of its technology infrastructure will migrate into Microsoft's Azure cloud service, with total cash costs over 2023-2025 expected to be in the range of £250-300 million.
LSEG has committed to a minimum cloud-related spend with Microsoft of $2.8 billion (£2.3 billion) over the term of the partnership.
David Schwimmer, CEO of LSEG, said: “This strategic partnership is a significant milestone on LSEG’s journey towards becoming the leading global financial markets infrastructure and data business, and will transform the experience for our customers.
“Bringing together our leading data sets, analytics, and global customer base with Microsoft’s comprehensive and trusted cloud services and global reach creates attractive revenue growth opportunities for both companies.”
