Yahoo Finance FTSE 100 Live 13 December: Pound rallies past $1.24 to 6-month high; US CPI inflation lower than expected at 0.1%
The UK unemployment rate today rose to 3.7% as official figures also showed no let up in the squeeze on real-terms wages.
Growth in average total pay and regular pay excluding bonuses both stood at 6.1% in the August to October period, representing a fall in real terms of 2.7%.
Figures from the US economy showed a further drop in the annual inflation rate to around 7.3%.
FTSE 100 Live Tuesday
Wage growth adds to rate rise fears
US inflation seen falling to 7.3%
Jitters spread through crypto market
That’s all folks. Tomorrow: UK inflation
Tuesday 13 December 2022 17:30 , Simon Hunt
That concludes our markets blog coverage today, on the day US inflation came in lower than expected and FTX founder Sam Bankman-Fried was arrested after being accused of fraud.
The Evening Standard City desk will be back at 7am tomorrow where we’ll find out if UK inflation is taking a similar trajectory to the US, and results from package holiday firm Tui will shed light on the health of the travel sector ahead of the Christmas holiday season.
FTSE 100 closes up 57 points: Evening wrap
Tuesday 13 December 2022 16:53 , Simon Hunt
The FTSE 100 closed up 57 points to 7,503 today, thanks to a late afternoon rally, joining New York stocks which made broad and strong gains after US inflation data fell, adding to hopes that the Federal Reserve would be able to adopt a smaller, 0.50% rate hike at the end of its December policy meeting on Wednesday.
The volatile run in online grocer and e-commerce technology specialist Ocado took another twist today, with its shares making some of the strongest gains of the FTSE 10, up 4.57%.
Some investors see the company as big potential growth case, with plenty of viable partners for its tech, highlighted by its recent deal with Lotte Shopping of South Korea. Others can’t see past a string of profit warnings from the company and it frequently moves from top slot to bottom place in a matter of days. Over the year, its shares are down almost 60%.
Rolls-Royce was the biggest single faller after bearish comment on the stock from JP Morgan analysts.
Binance net outflows top $3 billion in 24 hours
Tuesday 13 December 2022 15:40 , Simon Hunt
Net outflows at leading crypto exchange Binance have topped $3 billion in the past 24 hours, according to data platform Nansen, as the demise of FXT continues to send jitters around the crypto market.
Earlier, Binance had sought to reassure customers it had enough reserves to support customer funds by commissioning a “proof of reserves” report by French accountancy firm Mazars.
But Douglas Carmichael, a former head of US audit watchdog, the Public Company Accounting Oversight Board, told the Wall Street Journal it would be a “gross misrepresentation to call this an audit.”
Changpeng Zhao, the billionaire founder of crypto exchange Binance, tweeted: “Ignore FUD. Keep Building!” in reference to an abbreviation for ‘fear, uncertainty and doubt’ widely used by crypto traders on social media.
“There has hardly been a week going by without some FUD. We learned the ability to ignore them or keep building”, he said.
Binance 24H net outflow has increased to $3B
Source: https://t.co/bkRLuBPCtq
Their disclosed holdings show that they have over $62.5B as of now: https://t.co/x1ITMCFg26 pic.twitter.com/PG4C85hmSV— Nansen 🧭 (@nansen_ai) December 13, 2022
Laith Khalaf, head of investment analysis at AJ Bell, said: “Crypto buyers should be willing to accept a total wipeout on their investment as a result of the highly speculative nature of digital coins, but not because the exchange they used to make the purchase goes bust, taking their cash with it.”
Blockbuster week for the economy moves on to inflation as Bank of England interest rate hike looms
Tuesday 13 December 2022 15:09 , Simon Hunt
Londoners are making headway through a blockbuster week for the economy, one which will set the tone for homeowners, consumers and investors alike into 2023.
Next up is one of the biggest numbers on the billing -- inflation data for November -- and it will reveal if there is any hope that the runaway pace of price rises may have peaked the month before Christmas during a cost-of-living crisis.
HSBC expects the Consumer Price Index to ease back slightly to 10.9% from 11.1% in October, in what would be the first sign of a fall. But that will leave it significantly above the Bank of England’s official target of 2%, leaving the way wide open for rate hikes.
Wall Street stocks rally on hopes inflation data means Fed’s inflation medicine is working into December rate call
Tuesday 13 December 2022 14:38 , Michael Hunter
New York stocks made broad and strong gains after US inflation data fell, adding to hopes that the Federal Reserve would be able to adopt a smaller, 0.50% rate hike at the end of its December policy meeting on Wednesday.
The S&P 500 rose over 2% to 4087.61, a rise of around 2%. The Nasdaq Composite was up over 3% and the 30-stock Dow Jones Industrial Average was up 2%.
The US ConsumerPrice Index for November fell to 7.1% year-on-year, down from 7.7% and lower than the 7.3% forecast, its lowest for over a year. While it remains significantly higher than the 2% target held by the Federal Reserve, it was also the fifth consecutive monthly fall and its lowest reading in over a year.
Pound at six month high amid tale of two rate hikes
Tuesday 13 December 2022 14:13 , Michael Hunter
The pound hit a six-month high against the dollar after the fifth consecutive monthly drop in the annual rate of US inflation took a toll on America’s currency above $1.24, but it wasn’t just the prospect of a softer rate hike from the Federal Reserve on Wednesday that was setting the pace.
While the US data made a Fed move of 0.50% more likely when it makes its December announcement on Wednesday, there was more talk in the market that the the Bank of England could stick with a 0.75%-sized hike on Thursday. It came after a run of supportive-looking UK data in a blockbuster week for the country’s economy.
That differential gave the pound some extra momentum, extending its rebound from the historic lows touched during Liz Truss’s time in 10 Downing Street.
US inflation falls by more than forecast, boosting Wall Street stocks and hitting the dollar
Tuesday 13 December 2022 14:00 , Michael Hunter
Signs that the fight against inflation in the US is kicking in properly to economic data boosted Wall Street stock futures and hit the dollar in the run up to the start of US trade.
The ConsumerPrice Index for November fell to 7.1% year-on-year, down from 7.7% and lower than the 7.3% forecast, its lowest for over a year. It is the fifth consecutive monthly fall, but it remains significantly higher than the 2% target held by the Federal Reserve.
The US central bank will make its December announcement on interest rates on Wednesday and the CPI data looks to open the way for a softer 0.50% hike.
After the CPI data came out, futures trade pointed to an opening rally of about 3% for the three main US stock trackers, the S&P 500, the Dow Jones Industrial Average and the Nasdaq Composite.
The dollar index fell by over 1%. The pound rallied by over 1% to $1.2412, its highest in six months.
City comment: Don’t shoot the MPC pilots
Tuesday 13 December 2022 13:03 , Simon Hunt
Who would be a rate setter on the MPC this week? It must be like flying through thick cloud with different control panel dials showing that the plane is descending - yet also climbing. Which indicators do you trust to avoid that worst case scenario (for pilots at least) a hard landing on terrain that is unpleasantly lumpy rather than flat?
This week’s data so far points to an economy running warmer than most commentators expected in the chaotic aftermath of the mini-Budget less than three months ago. Yet there is little doubt Britain is already in recession with apparently little hope of UK Plc’s nose pulling up much before the summer. But labour shortages are still holding back growth. Go figure.
My hunch is that the MPC will prioritise jobs and output over inflation by trimming their next rate hike to 0.5%. But there is still a lot riding on the CPI number tomorrow. Forecasts in the Reuters poll range from 10.6% to 11.5%. Anything at the upper end of that - particularly if it is above October’s high water mark of 11.1% and all bets are off.
If inflation is still seen to be accelerating despite the eight consecutive rate hikes that have been thrown at it, the pilots at the MPC may well reluctantly agree that the plane is gaining too much height and throw in another 0.75% rise. It is a tough call and will require strong nerves. There is no autopilot for the economy. So over to you Andrew Bailey and Co. Good luck.
SEC charges FTX founder Sam Bankman-Fried over allegedly defrauding investors
Tuesday 13 December 2022 12:09 , Simon Hunt
The US securities regulator has charged FTX founder Sam Bankman-Fried with orchestrating a scheme to defraud equity investors in the collapsed crypto exchange.
Bankman-Fried is accused of having orchestrated a years-long fraud to conceal from FTX’s investors the undisclosed diversion of FTX customers’ funds to Alameda Research LLC, his privately-held crypto hedge fund.
SEC Chair Gary Gensler said: "We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto.
"The alleged fraud committed by Mr. Bankman-Fried is a clarion call to crypto platforms that they need to come into compliance with our laws. Compliance protects both those who invest on and those who invest in crypto platforms with time-tested safeguards, such as properly protecting customer funds and separating conflicting lines of business.”
FTSE 100’s biggest movers: Ocado bounces higher
Tuesday 13 December 2022 11:52 , Michael Hunter
The volatile run in online grocer and e-commerce technology specialist Ocado took another twist today, with its shares back at the top of the FTSE 100.
Some investors see the company as big potential growth case, with plenty of viable partners for its tech, highlighted by its recent deal with Lotte Shopping of South Korea. Others can’t see past a string of profit warnings from the company and it frequently moves from top slot to bottom place in a matter of days. Over the year, its shares are down almost 60%.
Rolls-Royce was the biggest single faller after bearish comment on the stock from JP Morgan analysts.
London fintech Checkout.com sees valuation plunge over 70% to $11 billion
Tuesday 13 December 2022 11:06 , Simon Hunt
London’s biggest tech firm, Checkout.com has seen its value plunge over 70% to $11 billion as dwindling consumer sentiment weighs on the fortunes of the fintech sector.
The company told employees it had slashed its internal valuation to “reflect current macroeconomic conditions”, according to reports in the Financial Times. The Shoreditch-based business had been valued at as much as $40 billion in January following a $1 billion funding round.
Employees were told the price at which they could exercise equity awards would be reduced from $252 to $65 per share.
A Checkout.com spokesman declined to comment on the reports.
Sell note hits easyJet shares, FTSE 100 steady
Tuesday 13 December 2022 10:32 , Graeme Evans
Shares in easyJet fell today after Deutsche Bank gave the FTSE 250-listed stock a “sell” recommendation and cut its target price by 20% to 330p. The move reflected lower profit forecasts due to cost headwinds and weaker-than-expected passenger growth.
The airline’s shares dropped 1% or 3.7p to 376.1p, leaving them down by more than a third so far this year.
Deutsche Bank’s note on European transportation also included a “sell” rating for Royal Mail owner International Distributions Services, although its analysts continue to back Dublin-based airline Ryanair.
The bank said: “With next year's potential recession set to be consumer-led, we think the risks for our stocks, in particular the airlines, are finely balanced.”
Elsewhere on the London market, renewed optimism over China’s Covid reopening helped support the shares of BP and Shell after Brent crude futures rose to near $79 a barrel.
The pair were 5.4p and 19.5p higher at 467.5p and 2315p respectively, while other risers included Asia-focused insurer Prudential following a gain of 2% or 23.5p to 1084.5p.
The FTSE 100 index added 3.35 points to 7449.32, while the FTSE 250 index improved 18.05 points to 18,837.49.
Second-tier risers included speciality chemicals firm Synthomer, whose plans to raise £200 million from the sale of its laminates, films and coated fabrics businesses helped shares rebound 4.1p to 121.5p.
Jitters spread around crypto market amid FTX founder arrest
Tuesday 13 December 2022 10:00 , Simon Hunt
Further jitters reverberated through the crypto market today amid the arrest of Sam Bankman-Fried, the founder of bankrupt exchange FTX, as senior figures in the crypto world instructed traders to “ignore” widespread fear and uncertainty.
Net withdrawals from the world’s largest crypto exchange, Binance, have spiked to $1.6 billion (£1.3 billion) in the past 24 hours, according to data analytics platform Nansen, almost reaching the volumes of withdrawals in the immediate aftermath of the FTX collapse, while the value of Binance’s token, BNB sunk almost 6%.
Earlier, Binance had sought to reassure customers it had enough reserves to support customer funds by commissioning a “proof of reserves” report by French accountancy firm Mazars.
But Douglas Carmichael, a former head of US audit watchdog, the Public Company Accounting Oversight Board, told the Wall Street Journal it would be a “gross misrepresentation to call this an audit.”
Changpeng Zhao, the billionaire founder of crypto exchange Binance, tweeted: “Ignore FUD. Keep Building!” in reference to an abbreviation for ‘fear, uncertainty and doubt’ widely used by crypto traders on social media.
“There has hardly been a week going by without some FUD. We learned the ability to ignore them or keep building”, he said.
Begbies on the up as insolvencies rise
Tuesday 13 December 2022 09:24 , Simon English
INSOLVENCY specialist Begbies Traynor is on the up as more and more companies need its recovery services.
The likelihood of more firms going bust and needing help to wind-up their operations should also bode well for Begbies.
In the half-year, revenue was up 12% to £58.5 million while profits jumped 13% to £9 million.
Begbies shares fall 6p to 141p, which leaves the business valued at £217 mllion.
New clients include Worcester Rugby Club and casino group Silverbond Enterprises, who needed Begbies financial advice.
The divi is up slightly to 1.2p.
Chairman Ric Traynor said: “We expect continued growth from business recovery and financial advisory, given its increased order book, higher level of enquiries and increasing economic headwinds. We are also confident in the prospects for property advisory and transactional services, reflecting its resilient income streams, continuing flow of new instructions and potential to continue developing its mix of services.”
More than 20,000 firms collapsed in the year to September, 23% more than before the pandemic.
Poundland owner to speed up expansion plans as profits rise
Tuesday 13 December 2022 09:09 , Michael Hunter
Poundland’s owner, Pepco Group, said today it would beef up plans to open more shops across the group as it reported a rise of over a fifth in profits.
The Polish-listed company, which also includes the Dealz chain in Europe, reported a rise in annual profit of over a fifth at €300 million, from revenue of €4.8 billion, up 17%. It came as the number of stores grew to almost 4,000 from just over 3,500.
Poundland began in Burton-upon-Trent in 1990, and now has 800 stores in the UK and Ireland. It employs 16,000 people and has seven million customers a week.
Pepco said: “We are committed to accelerating our profitable store roll-out programme which, combined with our increased focus in Western Europe and our extensive refit programme in Central and Eastern Europe, means that our annual capex spend will rise from historical levels to between €350m and €400m over the next couple of years.”
Oil giants power FTSE 100, Synthomer shares up 3%
Tuesday 13 December 2022 09:06 , Graeme Evans
Shares in BP and Shell are more than 1% higher after Brent crude recovered to $79 a barrel on hopes for a pick-up in demand from China’s Covid-hit economy.
The support from the energy giants ensured the FTSE 100 index edged up 9.66 points to 7455.63 in thin trading ahead of this afternoon’s US inflation reading. Other risers included Asia-focused insurer Prudential following a gain of 2% or 23.5p to 1084.5p.
Engines giant Rolls-Royce led the fallers board with a decline of 3% or 3.3p to 89.5p, while London Stock Exchange gave up some of yesterday’s rise by drifting 146p to 7480p.
The FTSE 250 index improved 9.45 points to 18,828.89, led by Synthomer after the specialty chemicals firm announced the planned sale of its laminates, films and coated fabrics businesses in a move that raises around £200 million. Shares rose 3% or 4.1p to 121.5p.
Europe’s biggest life sciences lab building could be coming to Canary Wharf
Tuesday 13 December 2022 08:40 , Michael Hunter
Bankers in Canary Wharf may soon be getting a new kind of neighbour, after plans were submitted to build Europe’s biggest life sciences building among the skyscrapers of London’s second financial sector.
A detailed application has been submitted to build a 23-storey tower which provide a “vertical campus” of over 820,000 square feet, capable of housing laboratories on every floor. The company behind the proposals, specialist real estate firm Kadans Science Partner, has formed a joint venture with Canary Wharf for the project. It says the building will also be the most technologically advanced of its kind in Europe.
Designed by Kohn Pedersen Fox Associates, the architects of Shanghai’s World Financial Centre and Tokyo’s Sky Mile Tower, the building, if approved, will go up at Canary Wharf’s North Quay
Wage growth adds to BoE rates rise pressure
Tuesday 13 December 2022 08:36 , Graeme Evans
A fall in the number of job vacancies to 1.19 million for the three months to November today provided further evidence of a gradual loosening in the labour market.
However, upward pressure on inflation generated from wages continues to increase after growth in average earnings excluding bonuses went from 5.7% in September to 6.4% in October.
The signs of accelerating wage growth are likely to complicate this week’s deliberations by the Bank of England’s monetary policy committee (MPC).
Capital Economics said: “This is the second data release in two days that might increase the chances of the MPC repeating November’s 0.75 hike, instead of delivering the smaller 0.5% rise that we and most others are expecting, on Thursday.”
US inflation seen at 7.3%, FTSE 100 higher
Tuesday 13 December 2022 07:53 , Graeme Evans
US inflation figures due later are expected to show a further fall in the consumer prices index, with Wall Street looking for a year-on-year reading of 7.3%.
The previous month’s lower-than-expected result of 7.7% gave a significant boost to US shares by raising the prospect that interest rates are nearing their peak.
The next decision by the US Federal Reserve is due tomorrow, with policymakers expected to follow four consecutive 0.75% increases with a rise of 0.5%.
More evidence that inflation is falling back will boost hopes that US interest rates may eventually peak at around 5% early next year.
Uncertainty created by the US economic calendar meant the FTSE 100 index fell 0.4% yesterday but CMC Markets expects a recovery of 20 points to 7466 this morning.
Job vacancies fall, pay growth hits 6.1%
Tuesday 13 December 2022 07:37 , Graeme Evans
The UK unemployment rate of 3.7% in the three months to October was 0.1% higher than the previous three-month period, but 0.3% down on pre-pandemic levels. It was in line with City forecasts.
Economic inactivity was estimated at 21.5%, some 0.2% lower than the previous three-month period as the Office for National Statistics reported a return to the workforce by those who previously considered themselves to be retired.
Growth in average total pay and regular pay excluding bonuses both rose 6.1% on a year earlier in the August to October period. This is the strongest growth rate seen outside of the pandemic, but still represents a fall in real terms of 2.7%.
The number of job vacancies in September to November was 1.19 million, which represents a decrease of 65,000 from June to August.
London-based tech firm Beamery hits unicorn status after $50 million funding round
Tuesday 13 December 2022 07:25 , Simon Hunt
London has added yet another tech unicorn to its growing list after AI-based talent management firm Beamery completed a $50 million (£41 million) funding round valuing it at over $1 billion.
The Shoreditch-based firm, which uses artificial intelligence to help businesses identify and plug workforce skills gaps via training programmes, plans to use the funding to expand product development and add more recruits to its 400-strong workforce, the majority of which is based in the UK.
The funding makes the firm the latest in a growing number of London-based tech companies that have defied economic gloom and achieved unicorn status in 2022, including fintech firm Paddle and Euan Blair’s online education platform Multiverse. The UK created the most unicorns in Europe in 2021, with over 23 billion euros invested in 41 separate billion-dollar businesses.
