Yahoo Finance FTSE 100 Live: ‘We are going to be higher for longer’ on interest rates, UK GDP rises
Stocks open flat, treasuries fall after CPI results: US open
14:51 , Simon Hunt
Stocks opened flat and treasury yields fell in the opening minutes of trading on Wall Street on the back of fresh CPI numbers.
Giuseppe Sette, president of Toggle AI, said: “A mixed report leaves the Fed hanging. CPI rose a tad more than expected, core CPI did the opposite.
“We could get one more hike, or none at all, but the key point is different: even if CPI was to stabilize at this level and not fall more, Fed rates are already appropriate. The hiking cycle is done for good.”
Here’s a look at your key market data:
Standard Chartered CEO: ‘We are going to be higher for longer’ on interest rates
14:27 , Simon Hunt
The boss of Standard Chartered has warned we should expected interest rates to stay higher for longer amid persistent inflation and continued economic growth.
Bill Winters told Bloomberg: “Given the strength of the US economy, it does look like we are going to be higher for longer” adding that it would lead to a decline in discretionary spending.
Winters said that the outlook for China’s economy was “OK” but was “a bit disappointing relative to what we hoped after this very strong post-Covid reopening.”
Treasury yields rise but stocks unchanged after US inflation report
14:13 , Simon Hunt
2-year treasury yields rose 8 basis points to 5.1% and S&P futures were unchanged after today’s US consumer price index report.
The CPI report showed prices rose 4.1% in September compared to a year ago, the lowest rise since 2021.
Richard Flynn, managing director at Charles Schwab UK, said: “While the lack of a fall in the rate may be disappointing to the Fed, it is likely not surprising following last week’s jobs report which showed that the labor market remains hot – a factor that can put upward pressure on prices.
“As for how this will impact interest rates, at this point, “higher-for-longer” may be more important than “how high?”. Whether or not the Fed opts for hikes, it’s unlikely we’ll see rates drop below where they are for as long as the inflation dragon proves difficult to slay.”
Infosys ups dividend in boost to Sunak’s wife earnings
13:32 , Simon Hunt
Rishi Sunak’s wife Akshata Murty has now earned more than the combined parliamentary salaries of all Labour MPs in 2023 as she is poised to collect another £6.8 million dividend.
Murty, who has a stake in family-owned tech firm Infosys worth just over half a billion pounds, is set to receive the cash after the firm today announced a 18 rupee (17p) dividend to shareholders following a year of strong growth.
The fresh payout takes her total dividend income for the year to £13.5 million after she collected a seven-figure dividend in April. MPs are paid a parliamentary salary of £86,584, amounting to a combined wage bill of £12.8 million for Labour’s 197 MPs at this point in the calendar year.
Akshata’s father Narayana Murty founded Infosys, which provides IT outsourcing services, in 1981. It has since grown to have a market cap of £59 billion, giving him a wealth of $4.4 billion (£3.6 billion) according to Forbes.
Infosys today said it delivered £3.8 billion in revenues in the quarter to the end of September, up 6.7% on the previous year, while profits rose 3.2% to top £600 million. But the firm cut its sales forecast for the rest of the year in signs its customers were paring back spending on software and IT.
£1.8 million fine for ex-Barclays boss Jes Staley
10:45 , Simon Hunt
Former Barclays CEO Jes Staley has been fined £1.8 million by the financial watchdog on top of a ban from holding senior finance roles following concerns over disclosures around his relationship with sex offender and financier Jeffrey Epstein.
The Financial Conduct Authority said Staley approved the sending of misleading letter to it by Barclays about the nature of his relationship with Epstein and the point of their last contact.
Therese Chambers, joint Executive Director of Enforcement and Market Oversight at the FCA said: “A CEO needs to exercise sound judgement and set an example to staff at their firm. Mr Staley failed to do this. We consider that he misled both the FCA and the Barclays Board about the nature of his relationship with Mr Epstein.
“Mr Staley is an experienced industry professional and held a prominent position within financial services. It is right to prevent him from holding a senior position in the financial services industry if we cannot rely on him to act with integrity by disclosing uncomfortable truths about his close personal relationship with Mr Epstein.”
Mobico shares slide, BP continues to rally in FTSE 100
10:21 , Graeme Evans
National Express owner Mobico fell 30% today after suspending dividends and warning its profits recovery is taking longer than expected.
The FTSE 250-listed company dived 25p to 60p, below levels in the early days of the pandemic as bosses flagged the impact of ongoing cost pressures in the UK and for American school bus operations.
The squeeze deflected from a strong summer by the National Express arm, with quarterly revenues up 26% as strike-hit rail passengers used coaches instead.
Group-wide sales rose 10% but underlying earnings for the year will now be in the range of £175 million and £185 million. It said it will consider offers for its North American school bus operation and has put dividends on hold amid a focus on debt reduction.
Mobico, which also runs UK bus services and Alsa coaches in Spain, paid its first dividend since the pandemic in May when it handed £30.7 million through 5p a share.
Chief executive Ignacio Garat said today: "We recognise that the recovery of our profitability will take longer than we had previously expected.
“That is why we are announcing decisive actions to ensure we deliver sustainable profitability from our growing revenue base.”
Mobico shares were joined at the bottom of the FTSE 250 by cyber security firm Darktrace, whose strong run ended with a slide of 6% or 25p to 367.5p. The decline came despite reporting 28% quarterly revenues growth and unchanged full-year guidance.
The wider FTSE 250 added 0.4% or 74.05 points to 17,950.26, while the FTSE 100 index improved 0.7% or 50.59 points to 7670.62 after a strong handover from Asia that included a 1.8% jump for Hong Kong’s Hang Seng index.
BAE Systems added another 16p to 1070p, while BP led the blue-chip risers board with a gain of 12.2p to 532.5p after analysts at UBS reiterated a price target of 640p.
Among the small-caps, insulation specialist SIG fell 4.4p to 29.6p as it became the latest building industry supplier to lower profits guidance. Like-for-like revenues fell 2% in the last quarter after a notable softening in demand during September.
Senior Arm China staff quit to create government-backed startup
09:50 , Bloomberg
Arm Holdings Plc’s Chinese venture have started a chip design house with local government backing, adding to uncertainty in the British firm’s biggest market just weeks after it raised $5 billion in an initial public offering.
The departures from Arm China included the head of R&D, a regional head of sales and a government relations employee who is now chief executive officer of the new firm, Borui Jingxin, people familiar with the matter said.
The two-and-a-half-year- old firm is backed by Shenzhen’s government and aims to raise capital and recruit engineers — including from Arm. Borui is also a major new Arm licensee and aims to devise chips for servers, said the people, asking to remain anonymous discussing confidential deals.
Arm — whose chip designs power most of the world’s mobile devices including Apple Inc.’s iPhone — is grappling with a US- Chinese conflict over technology that has uncertain implications for foreign operators. Now, several investors have told Bloomberg News they are concerned Borui could eventually divert revenue from the China venture, in part because of the uncertainty that’s surrounded the operation in past years.
09:36 , Simon English
Easyjet today shrugged off global-political turmoil, targeted £1 billion in profits and said it would soon resume dividend payments to investors.
The low-cost airline had a torrid period during Covid when it was effectively grounded, losing billions in the process and leading many to question if budget air travel had a future.
Today it said it would make a record fourth quarter profit and that earnings for the full year could hit £460 million – an amount it believes it can more than double in time.
It has ordered 157 new Airbus planes with purchase rights on another 100. That is subject to shareholder approval.
Those investors include founder Stelios Haji-Ioannou who has lately preferred cash to investment, but could now get both.
Hotel Chocolat sales melt away but hopeful signs Japan expansion on firmer footing
09:22 , Simon Hunt
Hotel Chocolat today posted a second consecutive year of losses after sales melted away.
The luxury chocolate retailer posted a 10% dip in revenues to just over £200 million for the year to July, while pre-tax losses came in at £6.9 million, narrowly down from a loss of £8.7 million the previous year.
Online sales slipped further, down 26% in a reversal of gains made during the pandemic. But in-store sales rebounded and the firm confirmed plans to open another dozen in the UK.
Hopes were raised that Hotel Chocolat’s international business was on a firmer footing. A botched joint venture into Japan, which cost tens of millions to abandon, was replaced by a brand licensing deal in January that posted a small profit.
CEO Angus Thirlwell said the three years to the end of 2022 “ had left us out of shape on several fronts, compared to what we know Hotel Chocolat is capable of,” but that 2023 “will go down in Hotel Chocolat history as the year we set ourselves up for our next era of forward development.”
Peel Hunt analysts said: “Store numbers are strong but digital sales are under a cloud.
“The plans to reshape the business are in place and early signs are encouraging. There is value here and management has plans to extract it [but] it is a little early for us to get excited about the shares.”
Shares rose 5% to 136p.
FTSE 100 higher, National Express owner down 21%
08:35 , Graeme Evans
A strong handover from Wall Street and Asia markets has left the FTSE 100 index 0.5% higher, up 38.97 points at 7659.
Shares in BAE Systems have improved by another 12p to 1066p, while other strongly performing stocks include BP after a gain of 2% or 9.8p to 530.1p.
The FTSE 250 index added 23.21 points to 17,899.45, a rise of 0.1% during a busy session of mid-cap updates.
The biggest downward move came from National Express company Mobico, which reversed 21% or 18p to 67p on the suspension of dividend payments as its profit recovery has taken longer than expected.
Cyber security firm Darktrace also dropped 7% or 27.5p to 365p on the back of its end of financial year trading update, while a robust performance by easyJet failed to prevent its shares dropping 3% or 13.7p to 423.1p.
Stocks open higher
08:22 , Simon Hunt
Stocks have opened higher in the first minutes of trading in London.
TRG shares have soared 38% following its takeover offer from Apollo, and are now trading above the offer price of 65p.
But investors have been less welcoming of easyjets results, with shares down 3%.
Record fine for KPMG after failed audit of collapsed construction giant Carillion
08:21 , Michael Hunter
KPMG, the major accountancy firm, is paying a record fine over its failed audit of the fallen construction and facilities management giant Carillion .
The big-four accountancy firm approved Carillion’s accounts not long before it collapsed under a £1.3 billion debt burden, with the loss of thousands of jobs. The shockwaves ripples through the public sector, where Carillion had a range of contracts covering schools, prisons and hospitals.
Even after reductions for co-operating with the Financial Reporting Council’s investigation into the audit, KPMG will pay £21 million in total.
It has been fined £18.5 million over its audit of Carillion covering the financial years ending in 2014, 2015 and 2016, as well as some work in 2017. The fine was reduced from £26.5 million because the company cooperated. It will pay £2,450,000 relating to the 2013 financial year.
The former KPMG partner Peter Meehan is being fined £350,000, reduced from £500,000 after he cooperated. He is banned from the profession for 10 years. Another former partner, Darren Turner, will pay £70,000, reduced from £100,000 having co-operated. Both men were also issued with a severe reprimand.
The FRC found “significant and serious breaches” including a “ lack of integrity”. It said:
“KPMG failed to gather sufficient appropriate audit evidence to enable it to conclude that the financial statements were true and fair, and failed to consider (adequately or at all) the implications for the audit of evidence suggesting that Carillion’s accounting might have been incorrect or unreliable.
“KPMG failed to conduct its audit work with an adequate degree of professional scepticism. Instead of consistently challenging and scrutinising such audit evidence as it gathered, KPMG failed to subject Carillion’s management’s judgements and estimates to effective scrutiny.”
Jon Holt, chief executive and senior partner of KPMG in the UK, called the findings “damning”, adding:
“ I am very sorry that these failings happened in our firm. It is clear to me that our audit work on Carillion was very bad, over an extended period. In many areas, some of our former partners and employees simply didn’t do their job properly. Junior colleagues were badly let down by those who should have set them a clear example, and I am upset and angry that this happened at our firm.
“Since this audit work was undertaken, we have done an enormous amount to improve controls and oversight across our firm, to ensure that these failings could not take place today. But ultimately it still falls to each of us, individually, to hold ourselves and each other to the highest professional standards every day.”
Fall in US inflation rate expected
07:49 , Graeme Evans
Inflation figures due this afternoon are expected to offer more signs of easing price pressures in the US economy.
Wall Street is forecasting that the annual headline inflation rate will have edged down to 3.6% in September, from 3.7% the previous month.
Core inflation excluding food and energy prices is likely to have slowed from 4.3% to 4.1% year-on-year, the lowest level since September 2021.
The next Federal Reserve policy meeting concludes on 1 November, when policymakers are widely expected to keep interest rates unchanged.
Watchdog eyes big-name broadcasters and TV production houses over freelance pay
07:48 , Michael Hunter
Some of the biggest names in showbusiness are coming under scrutiny from the Competition and Markets Authority.
The watchdog is looking into potential collusion over the rates of pay offered to freelance production staff at a range of big-name TV programme makers, including the BBC and ITV.
Pay offered to the technical staff working on sports broadcasts came under scrutiny at the CMA in the summer of last year. Today’s announcement puts the wider industry in the spotlight. It said:
“The CMA believes it has reasonable grounds to suspect one or more breaches of competition law. The CMA has not reached a view as to whether there is sufficient evidence of an infringement.”
As well as the BBC and ITV, the companies under investigation are: Hartswood Films , Hat Trick Productions , Red Planet Pictures , Sister Pictures and Tiger Aspect Productions.
Easyjet flies high as pre-tax profits set to land at £460 million
07:43 , Simon Hunt
Easyjet is bringing back its dividend as it expects its FY23 Group headline profit before tax to be between £440 million and £460 million.
The low-cost airline saw 8% year-on-year growth in customer numbers with load factors increasing to 93%.
Easyjet said it now has 157 firm orders for the deliery of new aircraft with the option of a further 100 as it charts a course towards major expansion.
John Choong, senior equity analyst at investing comparison platform, InvestingReviews.co.uk, said: "easyJet may be clear for takeoff after its latest numbers continue to climb to new heights. Although the outlook remains mildly turbulent, investors may find some relief in the fact that the company has already secured 73% of its fuel for the first half of its new financial year at a lower rate than today's price.
"But perhaps more importantly, easyJet's packaged holidays business continues to impress from end to end as is expected to rake in an impressive £120m. With its Holidays being more profitable, this leaves room for higher earnings potential next year and should see its shares flying even higher soon, as the firm upgraded its medium-term targets with the ambition to deliver over £1bn in pre-tax profits."
Private equity swoop for Restaurant Group
07:24 , Simon Hunt
The Restaurant Group has agreed a takeover by private equity firm Apollo.
The offer of 65p per share is a 34 per cent premium on TRG's closing share price yesterday and values Wagamama’s owner at £700 million.
Apollo partner Alex van Hoek said: “TRG's business has proven resilient through macroeconomic cycles but the outlook is still one of high interest rates and inflationary pressures and the company now needs the support of patient private capital, to achieve its ambitions.”
Asia markets rally, FTSE 100 seen higher
07:15 , Graeme Evans
Asia markets have seen strong trading after Wall Street benchmarks rose in the wake of the Federal Reserve meeting minutes published last night.
The central bank met expectations by signalling that one more rate rise may be necessary, with policy likely to remain restrictive for some time.
The comments from the meeting a fortnight ago gave a lift to US markets as the S&P 500 index closed 0.4% higher and the Nasdaq Composite added 0.7%.
Asia tracked Wall Street’s performance, while the purchase of stakes in several banks by China's sovereign wealth fund also boosted sentiment to help the Hang Seng index up 2% in afternoon trading. Japan’s Nikkei 225 lifted 1.7%.
CMC Markets expects the FTSE 100 index to open 32 points higher at 7652, having consolidated Tuesday’s 1.8% jump with a flat performance in yesterday’s session.
On commodity markets, Brent Crude stood at $85.40 a barrel after figures showing a big jump in US inventories put pressure on the price last night.
GDP grew 0.2% in August
07:08 , Simon Hunt
Britain’s economy returned to growth in August but remains firmly stuck in the slow lane, new official figures reveal today.
GDP inched ahead a modest 0.2% in the month, a recovery from the 0.6% fall seen in July when output was hit by wet weather and strikes.
The data from the Office for National Statistics (ONS) shows that the all important services sector, which accounts for 80% of the economy, grew by 0.4%.
But the production sector, which includes manufacturing, was down 0.7% while construction fell 0.5%.
The economy has been struggling to gather pace under the weight of 14 consecutive interest rate rises, which have shackled consumer spending and made it more expensive for businesses to invest.
The bounce, which was in line with City forecasts, means that the economy may avoid contracting in the third quarter from July to September, reducing the chance of a technical recession.
However, City analysts said growth was likely to be sluggish for the rest of the year.
Recap: Yesterday’s top stories
Wednesday 11 October 2023 22:35 , Simon Hunt
Good morning. Here’s a summary of our top headlines from yesterday:
Heathrow traffic exceeds pre-pandemic levels for the first time in September as seven million passenger pass through airport
Transport giant FirstGroup says rail and bus use stronger than expected over the summer
Samsung profits down 78% amid slump in demand for gadgets and chips
WeWork sees big bounce in September with bookings up 17% year on year
Global IPO market shows signs of recovery in third quarter
Recruitment giant Page Group UK profits slump as labour market softens
Landlords switching from homes to “more reliable” commercial property says survey
And...London fintech WorldFirst founder quits days after telling the Standard he had faith in the firm’s risk management
