- Weaker-than-expected retail sales growth pulls sterling down on the currency markets; sales growth contracted by 0.8pc in September but the pound pares early losses against the dollar
- FTSE 100 reverses yesterday's gain; IBEX 35 plunges 0.9pc as Spanish government begins the process of suspending Catalonia's autonomy
- Consumer goods giant Unilever sinks to the bottom of the index after missing sales growth forecasts; retreats 3pc early on, the firm blamed bad weather and hurricane season for the miss
- Dow Jones retreats following record close as Apple sinks 2pc on reports of poor iPhone 8 sales
Markets wrap: Pound tumbles as retail sales growth dips; weakened investor sentiment sinks stocks
The pound has tumbled on the currency markets today after retail sales figures showed UK shoppers shunning the high street in September, heightening fears that consumers are tightening their belts.
Two months of expansion indicated that consumers were resilient to their incomes being squeeze by rising inflation but today's 0.8pc contraction in sales growth pulled down the pound 0.5pc against a basket of the leading currencies.
Elsewhere, investor sentiment on stock markets has been weakened by a slew of disappointing corporate releases with consumer goods giant Unilever sinking 5.5pc on its underwhelming sales figures.
Madrid's blue-chip index, the IBEX 35, has dived 0.7pc as the crisis in Catalonia grows and the sour mood on the markets has reached New York with tech giant Apple dropping 2.6pc on reports of poor iPhone 8 sales.
Office firm IWG warns on profits as slower London market and natural disasters hit trading
A weaker London market and disruption as a result of natural disasters has hit serviced office provider IWG, sending its shares down as much as 36pc as it warned on profits.
The firm, which was previously known as Regus and still trades using the brand, said that previously anticipated improvement in sales had been weaker than expected and so it has not made up any of the 1.9pc fall in revenues which it announced earlier this year.
While the company said that it would continue to invest in opening new offices around the world, it acknowledged that in the short term this means its overheads will rise and its new centres will make a loss when they open.
“Group operating profit for 2017 is now expected to be materially below market expectations and in a range of £160m to £170m,” the company said.
Goldman Sachs boss Lloyd Blankfein takes potshot at Brexit by saying he'll be spending more time in Frankfurt
Lloyd Blankfein, chairman and chief executive of Goldman Sachs, has hinted that the City of London could lose out to Frankfurt in the wake of Brexit.
The head of one of the world's most powerful banks took a deliberate potshot at Brexit via Twitter, saying: "Just left Frankfurt. Great meetings, great weather, really enjoyed it. Good, because I'll be spending a lot more time there.
His message, fired out after a week of client meetings in Germany and a day after he hosted an employee town hall in Frankfurt, adds to the pressures facing Theresa May as she prepares for a crucial Brexit meeting with European leaders in Brussels.
Unilever sales dragged down by US natural disasters
Unilever has been punished by investors after the consumer goods giant missed sales expectations following earthquakes and hurricanes in Mexico and the Caribbean, which have wreaked havoc with its business.
The maker of Dove soap and Marmite, which fended off a £115bn takeover attempt from rival Kraft Heinz earlier this year, recorded a 2.6pc lift in underlying third quarter sales to €13.2bn (£11.8bn). That figure fell far short of analyst expectations of 3.9pc growth and a 3pc increase in the first half of the year.
Shares in the company fell by 191.5p, or 4.2pc, to £43.57 after Unilever blamed its lacklustre growth on natural disasters in the US and Mexico, poor weather in Europe and growing competition from local ice cream competitors nibbling away at sales of its Magnum and Ben & Jerry's ice creams.
Apple slips on iPhone 8 sales concerns
After coasting to a record high and smashing through the 23,000 barrier yesterday, the Dow Jones is struggling early on today and has joined its European peers in the red.
Tech giant Apple has slipped 2pc on reports that it has cut November and December orders of the iPhone 8 due to weak sales.
APPLE INC SHARES DOWN ABOUT 1.8 PCT AMID WORRIES ABOUT IPHONE 8 DEMAND$AAPL— *Walter Bloomberg (@DeItaOne) October 19, 2017
That and aviation giant Boeing's 1.3pc dip are almost single handedly dragging the index into the red. There are no economic releases of note to tell you about this afternoon but the pound has managed to pare this morning's losses against the dollar and bring the pair back up to flat territory.
Airbus jet designed to win back sales from Boeing takes maiden flight
Airbus’s newest airliner - the A330neo - has made a successful maiden flight, marking an important milestone for both the pan-European plane-maker and Rolls-Royce, which builds the engines for it.
The new aircraft is an upgraded version of its wide-bodied workhorse the A330, with improved aerodynamics and better engines, which it claims will make it the most efficient airliner in its class.
Confirmed at the Farnborough air show in 2014, Airbus said the A330neo would be powered exclusively by Trent 7000 engines built by Rolls-Royce.
Travis Perkins reassures on profits despite rising costs and market volatility
Travis Perkins, the UK's biggest supplier of building materials, has reassured investors that it is on track to meet City forecasts as it posted an uptick in sales despite a "challenging" backdrop.
The FTSE 250 company, which was demoted from Britain's blue-chip index in December, recorded a 3.5pc rise in sales for the three months to the end of September. Like-for-like sales grew by 4.1pc during the period, helped by the return of inflation, which pushed prices higher.
Travis Perkins said that inflation had increased to 3.9pc during the quarter due to the weaker pound since the EU referendum last June, and recent increases in the cost of timber, copper and some specialist insulation materials.
Mood soured on stock markets; 30th anniversary of Black Monday
After the Dow Jones hit a euphoric record high overnight, the mood has undoubtedly soured on stock markets today.
A batch of disappointing corporate figures from giants Unilever and Nestle and escalating tensions in Catalonia have pulled the FTSE 100, DAC, CAC 40 and IBEX 35 firmly into the red.
Spreadex analyst Connor Campbell said this on today's retreat:
"Traditionally this kind of sterling slide would be a boon to the FTSE. Yet the UK index fell 30 points as the day went on, dragged lower by the near 4.5% drop seen by Unilever, and a set of commodity stocks unimpressed with China’s better than forecast 6.6% rise in industrial production."
Just as a reminder of how much worse it could be, today is the 30th anniversary of Black Monday. On October 19 1987, the FTSE 100 shed 11pc before plunging another 12pc the following day.
Could stocks sink this October?
Panmure Gordon market commentator David Buik gave his two cents:
"There have been other adverse movements in the month of October in 1993, 2000 and 2008. Will there be a serious sell-off this year with two weeks to go? It seems unlikely. The Brexit impasse is of great concern. The Trump/Kim spat is even more terrifying. The earnings season is proving quite satisfactory. If interest rates are raised aggressively in the US, then that might be a signal for a correction.
"Come March or April 2018, there could well be an overdue shake-out on over-valuations, but I doubt that it would measure with the magnitude of 1987. Who knows?"
Postal union to march through London as Royal Mail row continues
Postal workers will today march across London in protest against proposed changes to Royal Mail pensions.
The Communications Workers' Union (CWU) is spearheading the march, which will see members walk from the TUC Headquarters in Bloomsbury to the Royal Mail’s Mount Pleasant Delivery Office.
Royal Mail last week won a High Court injunction blocking a planned 48-hour strike by workers after claiming it was “unlawful” because the union had failed to follow previously agreed upon dispute resolution procedures.
But the CWU has called its actions "underhanded" and said the planned march is the next phase in its fight for what it thinks are fair terms for workers.
Lunchtime update: Pound under pressure following disappointing retail figures; Unilever sinks on Q3 miss
The pound is under renewed pressure on the currency markets after retail sales figures showed shoppers shunning the high street in September.
After two months of expansion, sales growth contracted by 0.8pc last month as consumers feel the squeeze from rising inflation with the pound slipping to as low as $1.3130 before clawing back some lost ground.
A disappointing day of corporate releases has dragged the FTSE 100 into the red with Unilever sinking 4.4pc after third quarter sales missed expectations to crank up the pressure on boss Paul Polman.
Elsewhere, outsourcer Interserve has plunged 33pc on another profit warning while office space provider IWG has nosedived 34pc after telling shareholders that its profit will "materially" miss estimates.
Meanwhile on the Continent, the IBEX 35 has slipped 0.8pc after the Spanish government started the process of suspending Catalonia's autonomy after leader Carles Puigdemont threatened to declare independence.
Do you work for one of the 20 best companies in Britain?
Northern Gas and Power has been named the best company to work for in Britain, coming top of a list of 20 employers that have displayed a positive workplace culture and strong leadership development.
The league table, produced by the Chartered Management Institute (CMI) and jobs site Glassdoor, analysed reviews by current and former employees of more than 700,000 companies on the platform. Other companies that feature prominently include energy supplier First Utility, pest control firm Rentokil and dating app Badoo.
Northern Gas and Power, an energy consultant, was ranked top because of its "focus on management behaviour and a track record of promoting and developing its people, which employees said helped boost productivity and morale".
Poor Unilever figures will reignite shareholder concerns dating back to Kraft Heinz's takeover attempt
Consumer goods giant Unilever has been under pressure to pick-up its growth ever since Kraft Heinz launched a bid for the company last year and today's poor figures will undoubtedly reignite shareholders' concerns about the company's strategy.
City Index market analyst Ken Odeluga believes that today's disappointment is "likely to have diminished grounds to finesse the case for value creation by investment in core brands, supply chain optimisation and spending €1bn each year on innovation".
"The group conceded on Thursday that “competitiveness dropped off a little”, in Q3 to quote CFO Graeme Pitkethly, who also noted market share gains were down to about 50% across the group compared to 60% in previous year.
"It’s another demonstration that whilst global home and personal care groups like Unilever, and Nestle, have formidable resources to deploy to win over increasingly demanding consumers, challenges from unforeseen markets shifts and fragmentations, and an abundant supply of upstart rivals at the longer end of the tail, can upset the most comprehensive plans."
Retail sales slide in September as higher prices dampen spending on food and petrol
Shoppers reined in their purchasing during September, almost wiping out the surprisingly strong growth in sales seen in August.
Retail sales dropped by 0.8pc between the two months, a steeper fall than the slight downward shift of 0.1pc that economists had expected.
It was also a sharp drop on August's figure of 1pc growth, according the latest figures from the Office for National Statistics (ONS).
The pound fell as the figures were released, dipping 0.3pc against the dollar to $1.3148.
Retail sales reaction: Disappointing growth casts further doubt on BoE decision
The dismal UK retail sales figures sent the pound back below $1.3200, the low so far is $1.3135, exp. of rate hike not helping £ now...— City Index (@CityIndex) October 19, 2017
September's disappointing retail sales "cast further doubt on whether the Bank of England will follow through on recent hawkish comments and deliver an interest rate hike", according to EY ITEM Club chief economic advisor Howard Archer.
"We believe a hike is just about more likely than not, but it is looking an increasingly close call."
Hargreaves Lansdown analyst Laith Khalaf believes that the central bank will try to avoid applying the brakes on consumer spending if it is slowing down of its own accord already.
He added that the stage is now set for its crucial meeting in November:
"On top of that the Bank could well find its credibility compromised if it fails to follow through on its recent hawkish commentary, and would once again be on the hook for providing 'forward misguidance'.
"The currency markets are clearly paring back bets that the Bank is going to raise rates imminently thanks to these latest figures, though the odds are still very much in favour of a rate hike. The stage is now set for a big decision from the central bank on 2nd November.’"
Xavier Rolet to step down as boss of London Stock Exchange next year
Xavier Rolet, the chief executive of the London Stock Exchange Group, is to step down in December 2018, the company said this morning.
Mr Rolet, who became CEO in May 2009, said he would focus on delivering an “orderly transition” to his successor. The process to replace him would begin immediately, LSEG said.
The company hailed his “extraordinary success” as leader, pointing out LSEG’s market capitalisation had risen from £800m to almost £14bn today.
Donald Brydon, chairman, said: "There will be many opportunities ahead to celebrate Xavier's remarkable achievements. Under his leadership, LSEG has been transformed in scale to become a truly diversified and international leader in financial markets infrastructure.
Disappointing retail sales growth reaction
Latest retail sales figures confirm sharp slowdown in growth. Annual rate down to 1.5pc in past 3 months compared with 5.5pc at end of 2016 pic.twitter.com/edna3njpHa— Andrew Sentance (@asentance) October 19, 2017
Going back to those retail figures, store prices continued to rise across the board in September and are now at their highest year-on-year growth since March 2012 at 3.3pc.
The slump in retail sales was "driven by retailers implementing large price rises", according to Pantheon Macro economist Samuel Tombs.
He added that the third quarter's momentum in retail sales "likely won't be maintained" as "growth in consumers’ spending likely will be held back by slow growth in employment, further austerity and rising borrowing costs".
Let's have a silver lining from Capital Economics after that quite miserable assessment.
Its UK economist Ruth Gregory said:
"The surveys suggest that spending off the high street has remained robust. As a result, total household spending growth still probably registered a small pick-up in Q3.
"This should help the economy to re-accelerate a little and further supports our view that the MPC will press ahead and hike Bank Rate in November."
IBEX 35 plunges as the Spanish government begins the process of suspending Catalonia's autonomy
We have two letters again. Catalonia seek dialogue, Spain continues repression❗️Where are all European leaders who kept asking for dialogues pic.twitter.com/BBJY9oR2cs— Robert Masih Nahar (@rmnahar) October 19, 2017
The Spanish government has started the process of suspending Catalonia's political autonomy after the region's leader Carles Puigdemont threatened to declare independence.
The IBEX 35, Spain's blue-chip index, has dived 0.9pc in response to the latest escalation while the euro has dipped against the dollar.
While the pound briefly advanced on the euro following the announcement, those disappointing retail sales figures are dictating sterling's movement this morning.
We can but hope that this weakening sales pattern is also bringing about a slowing of the consumer credit expansion; retail sales in the 1/2— WorldFirst (@World_First) October 19, 2017
Retail sales growth key takeaways
And for people who like charts that go: up, down, up, down, up, down... - here's monthly retail sales growth. September - down (-0.8%m/m). pic.twitter.com/I8FyXSxmU7— Rupert Seggins (@Rupert_Seggins) October 19, 2017
- Retail sales growth slumped by 0.8pc in September as consumers feel the squeeze from rising inflation.
- However, the ONS said that the "underlying pattern in the retail industry is one of growth" with the three months on three months measure showing growth increasing by 0.6pc.
- Sterling slips in reaction to the weaker-than-expected figures, retreating 0.3pc against the dollar to $1.3148.
Retail sales stumble to send the pound sliding
Retail sales growth slumped by 0.8pc in September as the squeeze on real wage growth stops shoppers from hitting the high street.
The contraction was worse than economists had expected and the pound has sank 0.4pc against the dollar at $1.3240 following the release. More to follow...
Will the rebound in retail sales continue?
The latest prognosis of the retail sector is due at the bottom of the hour and economists are expecting monthly sales growth to have contracted by 0.1pc in September after two months of expansion.
The high street enjoyed a strong end to the summer with shoppers brushing aside the squeeze put on incomes by rising inflation.
Here's what CMC Markets analyst Michael Hewson said on this morning's macro highlight:
"Retail sales have held up fairly well in recent months though one has to ask how much this may have been financed on consumer credit.
"The last three months have seen positive months for retail sales, and with Christmas coming it wouldn’t be too much of a surprise if we were to see a pause in the September numbers."
IWG and Interserve nosedive over 30pc on profit warnings
Interserve IRV -28% after 'realistic prospect that we will not meet the net debt to EBITDA test contained in our financial covenants'— Neil Wilson (@neilwilson_etx) October 19, 2017
Crikey! We have some big movers in London this morning. Add two more to your list of huge fallers on profit warnings over the last couple of months
IWG, the FTSE 250 firm behind office space provider Regus, has plummeted 33pc after warning that its operating profit will be "materially below market expectations and in a range of £160m to £170m".
At 8.25am - FTSE -20 at 7522 - Schroders -0.3%, Rank -1%, Unilever -3.5%, Interserve -25%!! - IWG -35%!— David Buik (@truemagic68) October 19, 2017
Meanwhile, struggling construction and support services group Interserve, which plunged 11pc on Monday after admitting that it's in discussions with lenders following a profit warning, has nosedived 33pc today on another profit warning.
Since February its share price has crashed 83pc, taking it from a firm worth 500m to one valued at just 86m in the space of eight months.
Just off the top of my head Carillion, Acacia Mining, Provident Financial, ConvaTec and Merlin have also all seen their share prices plummet in the last four months or so.
Agenda: Pound stuck below $1.32 against the dollar ahead of retail figures
Ahead of retail sales figures this morning, the pound has pared its modest overnight gains and is stuck just below $1.32 against the dollar, where it has sat since Mark Carney and two other Bank of England policymakers appeared in front of MPs on Tuesday.
After two months of growth, retail sales are expected to have contracted in September as consumers feels the pinch from rising inflation and lagging wage growth.
Happy 1987 crash anniversary: Global stocks hit the highest value in history 30yrs after Dow Jones fared it's biggest one day fall. pic.twitter.com/w3U0djaJzw— Holger Zschaepitz (@Schuldensuehner) October 19, 2017
The FTSE 100 has reversed yesterday's advance, retreating 0.3pc early on, with Unilever's big third quarter miss sending its sliding to the bottom of the index. The consumer goods giant blamed bad weather and hurricane season in the US for the weak sales growth with its shares dipping 3.1pc.
Meanwhile on the Continent, the deadline is looming for Catalonia leader Carles Puigdemont to clarify the region's declaration of independence. Markets in Spain have been spooked by events in Barcelona and Mr Puigdemont is reportedly ready to step up his secession plans if Madrid tries to take away the region's autonomy.
Interim results: Stobart Group, Unilever
Full-year results: Tristel
Trading statement: Travis Perkins, London Stock Exchange, Rentokil Initial, Segro, Travis Perkins
AGM: PCI-PAL, BHP Billiton, Rank Group
Economics: Retail Sales m/m (UK), Unemployment Claims (US), CB Leading Index m/m (US)