Yahoo Finance FTSE 100 Live: Blue-chip index rises as wage growth slows, Bellway cuts outlook
Inflation set to dip slightly as markets hope Bank of England interest rates have peaked
Tuesday 17 October 2023 17:48 , Daniel O'Boyle
The UK’s inflationrate is expected to dip slightly when official statistics are published by the ONS tomorrow, as markets look for signs that the Bank of England’s interest rates have already peaked.
City experts expect the headline inflation rate to dip to 6.6%, the lowest rate since February 2022, when Russia invaded Ukraine.
However, economists cautioned against celebrating another decline in the rate of price rises, as the latest developments in Israel and Palestine could send the price of oil soaring, which would have knock-on effects for inflation in the UK.
Professor of global economy at the Cranfield School of Management Joe Nellis said: “As energy and food prices continue to drop from their all-time highs, consumer price inflation is expected to fall again this week and we could see it head closer to 6% on Wednesday. This brings the Prime Minister’s end-of-year inflation aspiration of 5% in sight, but events in the Middle East and Ukraine could easily change the outlook."
FTSE 100 closes at 7,675.21
Tuesday 17 October 2023 16:50 , Daniel O'Boyle
The FTSE 100 closed at 7,675.21 today, up 0.6%.
Utilities companies were among the big risers, as was hotels giant IHG after a big-money merger in the US.
Fallers included Hargreaves Lansdown after fellow fund manager Jupiter reported major outflows.
Web Summit founder U-turns onIsrael comments
Tuesday 17 October 2023 16:10 , Daniel O'Boyle
The founder of the Web Summit tech conference has apologised after scores of investors threatened to withdraw from the conference over his comments on Israel, just hours after doubling down on the remarks and saying he ‘will not relent’.
Paddy Cosgrave, who founded Web Summit in 2009, last week expressed his “shock” over Western support for Israeli intervention in Gaza, which he suggested amounted to a war crime.
“War crimes are war crimes even when committed by allies and should be called out for what they are,” Cosgrave said. He also liked a number of social media posts comparing Israel action in Gaza to a genocide.
Goldman profits tumble as CEO steps back from the dancefloor
Tuesday 17 October 2023 13:14 , Simon Hunt
Goldman Sachs today unveiled a plunge in profits – and CEO David Solomon confirmed he will stop DJing to end the media “distraction” caused.
Solomon has been under pressure for a while. The once mightiest of the Wall Street investment banks has now recorded falling earnings for eight straight quarters.
Last week JP Morgan, its arch rival, reported a 35% jump in third quarter profits to $13.2 billion – way better than already optimistic expectations.
Today Goldman said net income fell from $3 billion a year ago to $1.88 billion, shy of investor hopes.
Media Watch: There are no winners in the Guardian cartoon row, only losers
Tuesday 17 October 2023 12:56 , Daniel O'Boyle
In this week’s Media Watch column, Chris Blackhurst says nobody comes out of the Guardian’s latest cartoon row looking better
At the Guardian, they’ve fired cartoonist Steve Bell.
His drawing of Benjamin Netanayahu was deemed anti-Semitic and Bell, 72, who has served the paper for more than 40 years, winning awards, is no more.
The image depicted the Israeli prime minister preparing to cut open his own stomach with a scalpel. On his stomach was outlined a map of Gaza.
The caption said: “Residents of Gaza, get out now.” The paper’s taste monitors said it was referring to a “pound of flesh”, the terrible demand from the Jewish Shylock in Shakespeare’s The Merchant of Venice. Bell insists it’s a reference to the famous Sixties cartoon by David Levine, characterising US president Lyndon B Johnson with a Vietnam-shaped scar on his torso during the Vietnam war.
Web Summit founder ‘not going to relent’ on Israel comments after investor backlash
Tuesday 17 October 2023 12:26 , Daniel O'Boyle
The founder of tech conference Web Summit has said he is “not going to relent” over comments he made about Israel after dozens of investors threatened to withdraw from next month’s conference in Lisbon.
Paddy Cosgrave, who founded Web Summit in 2009, last week expressed his “shock” over Western support for Israeli intervention in Gaza, which he suggested amounted to a war crime.
“War crimes are war crimes even when committed by allies and should be called out for what they are,” Cosgrave said. He also liked a number of social media posts comparing Israel action in Gaza to a genocide.
City Comment: Wages are still too hot for Bank of England to relax on interest rates
Tuesday 17 October 2023 11:44 , Daniel O'Boyle
The Monetary Policy Committee (MPC) will be picking over the bones of the wages and vacancies data today, although they will have to wait another week for the official jobs figures to drop as the ONS number crunchers have decided they need more time to garner robust figures.
The slew of labour market statistics are often a mixed bag, throwing out conflicting signals about the direction of travel.
Today’s are a crucial set of numbers, coming as they do little more than a fortnight before the next decision on rates from the Bank of England, and only a month before the Autumn Statement.
Electric HGV maker Volta Trucks files for bankruptcy
Tuesday 17 October 2023 11:03 , Daniel O'Boyle
One of the first electric HGV companies, Volta Trucks, has filed for bankruptcy following a struggle to secure batteries for its lorries.
While headquartered in Stockholm, Sweden, where the firm has filed for bankruptcy, Volta Trucks has most of its business and engineering operations in the UK, with bases in Warwick, Coventry and Reading. In June 2023, it also launched its first ‘service hub’ in Tottenham, north London, with London Mayor Sadiq Khan opening the site that was due to service the firm’s electric HGVs.
Miners struggle in the FTSE 100, THG shares jump 7%
Tuesday 17 October 2023 10:24 , Graeme Evans
Moneysupermarket.com soared up the FTSE 250 rankings today as it revealed a bigger-than-expected 38% rise in insurance channel revenues..
The comparison website’s shares jumped 4% or 9.6p to 254.6p after its quarterly trading update, with the high level of switching of car and home cover helping to offset the ongoing lack of activity in the energy sector.
Overall revenues rose 14% to £115.6 million, but the company is sticking to full-year expectations despite the strong insurance performance.
Alongside Moneysupermarket in the FTSE 250, countermeasures firm Chemring rose 12p to 258p as it said the US Department of Defense had cleared £25 million of deliveries that were pivotal to meeting full-year hopes.
The FTSE 250 index lifted 66.02 points at 17,585.41, broadly in line with the FTSE 100’s improvement of 0.4% or 32.26 points to 7662.89.
Heavyweight stocks AstraZeneca and Unilever offered support by gaining 1%, while Shell followed last night’s record close with the further addition of 12p to 2762.5p.
Rio Tinto shares have rallied recently but today fell 72p to 5145p, even though it said shipments from Pilbara iron ore operations in western Australia rose 1% to 83.9 million tonnes to leave it on track for the top half of full-year guidance.
The selling pressure came during a poor session for the mining sector as Glencore dropped 2% or 8.5p to 454.25p and Anglo American weakened 41.5p to 2240.5p.
Elsewhere, THG shares jumped 7% or 4.8p to 71.6p after the consumer brands business reported its best quarterly revenue performance in the last year.
Founder and chief executive Matt Moulding said September’s constant currency revenue growth of 3.2% was particularly pleasing, adding that each of THG’s divisions are “well positioned to grow market share in any market conditions."
Revolution Bars renegotiates loan terms amid slump in demand
Tuesday 17 October 2023 10:17 , Simon Hunt
Revolution Bars today said it had renegotiated the terms of its loans that it was in danger of breaching as it bemoaned a slump in demand.
The bar and pub operator said like-for-like sales had fallen 8.7% in the year to July amid a drop in footfall. The company has dropped the profit-related covenants attached to its debt as it warned it was in danger of breaching covenants if sales slipped back further.
CEO Rob Pitcher told the Standard: “It’s a pretty tough market for the Revolution brand which is aimed at younger guests that seem to be struggling in the cost-of-living crisis.”
Pitcher added that the firm’s pub estate, which caters to older customers, had fared better, with like-for-like sales up 14.1%, while today’s wage data showing pay growth outstripping inflation was “a very encouraging sign indeed” as he hoped for improved demand going into the start of the academic year at universities.
Revolution shares fell 4.1% to 3.5p. They are down 55% since the start of the year.
Pitcher said the firm had taken a serious sales knock from a spate of industrial action.
“We continue to lobby hard for the government and unions to reach a resolution on rail strikes,” he said. “The public deserve their first uninterrupted Christmas season for four years.”
Another £1bn out the door at Jupiter
Tuesday 17 October 2023 09:44 , Simon English
JUPITER saw another £1 billion pulled from its funds in the last three months as investors sought better returns from turbulent markets.
Chief executive Matthew Beesley blamed the “challenging market environment” and says client needs are changing as assets fell to £51.4 billion.
Jupiter has cut the number of funds it offers in a bid to appeal to a “broader range of clients”.
Its own shares fell another 10% to 79p, leaving it with a market value of £434 million. The stock was closer to 400p just three years ago when directors were among heavy sellers of the shares.
Beesley added: “During my first year as CEO, we have continued to make progress against our previously stated strategic objectives and I believe the continued investment in our clients, our technology and our people will deliver long-term value.”
City fund managers are fighting to prove they are better value than robots that just track stock markets. History suggests that in the longer run, few individual stock pickers can outperform the stock market.
UK economy in ‘horrible’ bind with no room for tax cuts as recession looms – IFS
Tuesday 17 October 2023 09:43 , Daniel O'Boyle
The UK economy is in a “horrible fiscal bind” as it heads for recession and with no room to cut taxes or increase public spending amid mounting political pressure on the Chancellor to do so, according to a report.
The Institute for Fiscal Studies (IFS) warned in its latest Green Budget that Britain will slump into a “moderate” recession in the first half of 2024 as borrowing costs stay elevated.
The report, funded by the Nuffield Foundation and using economic forecasting by Citi, analysed the challenges facing the Chancellor ahead of his autumn statement.
Frontier Developments to cut jobs
Tuesday 17 October 2023 08:58 , Simon Hunt
F1 Manager maker Frontier Developments is poised to cut jobs and freeze hiring as it grapples with a slump in demand.
The Cambridge-based video games developer said it was seeking to cut costs by as much as 20% after it warned last month the release of F1® Manager 2023 had “so far not delivered the expected sales contribution.”
The shift to axe jobs comes in contrast to Frontier’s more upbeat attitude last month, in which it said it had “been able to continue with current headcount growth plans” and “will look to increase the number of our development teams.”
Frontier today said it had “refined its strategy to refocus on its core strengths following a period of disappointing financial performance and more challenging industry conditions.”
The firm said it expected to post an EBITDA loss of £9 million for the year to the end of May 2024, around double the loss for the previous year. Revenues were set to pick up slightly to £108 million but remain behind the £114 million levels achieved in 2022.
Frontier did not say how many redundancies would be made as part of the cost-cutting drive. It reported a headcount of just over 900 staff earlier this year.
Shares rallied 7.6% to 208p.
Heavyweight stocks boost FTSE 100, house builders under pressure
Tuesday 17 October 2023 08:53 , Graeme Evans
The FTSE 100 index is 31.94 points higher at 7662.57, with AstraZeneca and BP among the heavyweight stocks offering support to London’s top flight. Shell, which closed at a record high last night, also put on another 19.5p at 2770p.
The restructuring plans of Rolls-Royce lifted its shares by 3.8p to 217.3p, while GKN Aerospace owner Melrose Industries improved 6.6p to 485.1p.
Other blue-chip risers included St James’s Place after the UK’s largest wealth manager unveiled details of a new charging structure alongside a third quarter update. Shares rose 17.2p to 689.4p, having initially been in negative territory.
Housebuilders came under pressure on the back of today’s annual results by Bellway, with Taylor Wimpey and Barratt Developments both down by more than 1%. FTSE 250-listed Bellway dropped 40p to 2122p.
London’s second-tier index improved 33.70 points to 17,553.09. Risers included Moneysupermarket.com, which added 10p to 255p after its performance benefited from continued high levels of switching activity in car and home insurance.
Slower wage growth boosts hope interest rates have peaked
Tuesday 17 October 2023 08:34 , Daniel O'Boyle
Economists believe that the cooling wage growth will further dissuade the Bank of England’s Monetary Policy Committee from any interest rate rises. Markets now price in a less than one-in-four chance of another hike when the MPC meets next on 2 November, and believe it is more likely than not that rates have already peaked.
Thomas Pugh, economist at leading audit, tax and consulting firm RSM UK, said: ‘The slowing in pay growth in August suggests that the MPC will keep interest rates unchanged again at its meeting next month.
‘However, there are obvious concerns about the reliability of the ONS’ measures of labour market tightness and pay growth. The response rate to the ONS labour force survey has fallen sharply since the pandemic when researchers stopped going door to door to gather responses. Indeed, the response rate currently stands at 14.6 per cent, down from about 40 per cent in 2019. What’s more, the ONS has found that the people most likely to answer a phone call from an unknown number during the day are those who aren’t working, heavily skewing the survey sample towards the unemployed and inactive.
‘That said, the ONS remains confident in its previous estimates of the labour market, suggesting that the recent large jump in the unemployment rate isn’t just a statistical mirage and the labour market really is cooling, but it will add to the uncertainty facing the Bank of England. An MPC which is less confident in the data may decide to err on the side of caution though, which might make further interest rate hikes more likely.
Ashley Webb, UK economist at Capital Economics, said: “Cooling labour market conditions appeared to start feeding through into an easing in wage growth in August. That supports our view that interest rates have peaked at 5.25%. But as we suspect wage growth will fall only slowly, interest rates will probably stay at their peak until late in 2024.”
Market snapshot as FTSE 100 opens higher
Tuesday 17 October 2023 08:29 , Daniel O'Boyle
The FTSE 100 is higher this morning as slightly slower-than-expected wage growth has increased hopes that interest rates have peaked.
Take a look at our full market snapshot
Housing market slowdown means Bellway to slash building by over 30% in 2024
Tuesday 17 October 2023 07:55 , Michael Hunter
Bellway, the FTSE 250 developer, gave fresh insight into the extent of the slowdown in the UK’s housing market today, with plans to cut the number of houses built next year by 31%.
The Newcastle-based firm said it will complete “around 7,500 homes in 2024, down from a “near-record” of 10,945 this year, which it called “a material reduction in volume” due to a “reduced order book and prevailing lower reservation rates.”
Higher mortgage costs after 14 consecutive interest rate hikes from the Bank of England took the base cost of borrowing up to 5.25% have been reverberating rounds the industry, hitting first time buyers particularly hard and slowing sales rates across the market.
Bellway also said today it expected the average selling price of its homes to drop in 2024 – to £295,000 from £310,306 this year, a drop of almost 5%.
For the financial year to the end of July, Bellway reported a 3.7% drop in revenue of £3.4 billion and an 18% fall in profit before tax of £532.6 million.
Rio Tinto boss hails “strong progress”
Tuesday 17 October 2023 07:52 , Graeme Evans
Rio Tinto shares have closed 1% higher in Sydney after the iron ore giant delivered its production update for the third quarter.
It said shipments from its Pilbara iron ore operations in western Australia rose 1% to 83.9 million tonnes as it continues to target a performance for the year in the upper half of the original 320 to 335 million tonnes range.
Chief executive Jakob Stausholm also reported “good headway” ramping up the Oyu Tolgoi high-grade underground copper mine in Mongolia, while Rio’s Kitimat aluminium smelter returned to full production.
He also highlighted agreements for a leading position in recycled aluminium in North America and a joint venture with Codelco to explore for copper in Chile.
Stausholm told investors: ““We are making strong progress towards building the Rio Tinto of the future, striking a balance between disciplined performance in evolving market conditions, investing to generate valuable long-term growth and delivering attractive shareholder returns.”
Chancellor hails real pay growth
Tuesday 17 October 2023 07:38 , Daniel O'Boyle
The Chancellor of Exchequer, Jeremy Hunt, highlighted theat wage growth came in ahead of inflation, meaning that real pay is growing.
He said: "It’s good news that inflation is falling and real wages are growing, so people have more money in their pockets. To keep this progress, we must stick to our plan to halve inflation."
However his counterpart on the opposition benches Rachel Reeves said: “Thirteen years of Conservative economic failure has left working people worse off, with low growth, low pay and high taxes.
“Working people saw pay rise faster under the last Labour government. But, with the Conservatives we have seen a decade of stagnant wage growth.
“Labour’s plan to grow the economy will boost wages, create good jobs and get Britain’s future back.”
Rolls-Royce to cut 2,000 to 2,500 jobs
Tuesday 17 October 2023 07:29 , Michael Hunter
Rolls-Royce has announced plans to cut between 2,000 and 2,500 jobs across its global operations as part of its long-term transformation under chief executive Tufan Erginbilgic.
The FTSE 100 engineer, which employs 42,000 people, said the changes would “remove duplication and deliver cost efficiencies”.
Its restructuring plans will bring its Engineering Technology & Safety unit “together as a single team across the group”. It will be “responsible for product safety, engineering standards, process, methods and tools,” Rolls-Royce said, and “enable engineering talent and technology to be used more effectively across the business.” It will be led by Simon Burr, currently the director of product evelopment and technology, in its Civil Aerospace division.
Rolls-Royce also said Grazia Vittadini, chief technology officer, will be leaving t in April 2024.
The plans also include a group-wide “procurement and supplier management organisation” to consolidate spending.
Tufan Erginbilgic said : “This is another step on our multi-year transformation journey to build a high performing, competitive, resilient and growing Rolls-Royce,” adding:
“We are building a Rolls-Royce that is fit for the future. That means a more streamlined and efficient organisation that will deliver for our customers, partners and shareholders.”
Strong gains for US and Asia markets, FTSE 100 seen flat
Tuesday 17 October 2023 07:12 , Graeme Evans
The S&P 500 index advanced by more than 1% yesterday, with investors in an optimistic mood ahead of this week’s results by the likes of Tesla and Netflix.
Shares in tech giants Amazon and Meta Platforms were 2% higher as the tech-focused Nasdaq Composite improved 1.2% by last night’s close.
Asia markets reflected Wall Street’s performance as Hong Kong’s Hang Seng index rose by 0.7% in afternoon trading and the Nikkei 225 rallied by 1%.
The FTSE 100 index yesterday lifted by 0.4% or 31.03 points to 7630.63, but CMC Markets expects an unchanged performance at today’s opening bell.
On commodity markets, Brent Crude stood at just below $90 a barrel this morning as supply fears caused by the Middle East conflict underpin prices.
UK pay grows by another 8.1%
Tuesday 17 October 2023 07:08 , Daniel O'Boyle
Avergae pay in the UK including bonuses grew by 8.1% from June to August, slightly below expectations.
When bonuses are excluded, pay was up by 7.8%, in line with expectations.
Recap: Yesterday’s top stories
Monday 16 October 2023 21:40 , Simon Hunt
Good morning. Here’s a summary of our top headlines from yesterday:
Gas and oil prices expected to rise further as Middle East tensions continue ahead of Gaza ground invasion
Hipgnosis slashes dividend after past song royalities fall below expectations
Google UK profits fall as advertising market weakens but business still adds 1300 UK staff
Super high end estate agency Becky Fatemi merges with Sotheby’s Realty
Online insurer Marshmallow run by identical twins treble profits
Podcast network Audioboom sees return to profit this quarter after agreeing new contracts to cut minimum pay for creators
And...Mormons in Mammon: First Mormon chapel in the City to open near London Wall
