Proactive Investors -
- FTSE 100 swings into positive territory
- 888 tumbles as CEO exits amid 'VIP' probe
- All change at the top of Unilever (LON:ULVR) and L&G
1.54pm: Sachs leaving Russia
Goldman Sachs (NYSE:GS) is edging closer to a full exit from Russia, according to reports.
Reuters, which cites RBC Daily, a Russian newspaper, said the Wall Street bank has restructured its assets in Russa.
Sachs had said last March it was winding down its operations in the Kremlin following its invasion of Ukraine, reducing credit exposure by 9% to US$205mln in November.
RBC Daily, which itself quotes sources familiar with the matter, said Sachs had sold minority stakes in recruitment firm Headhunter and real estate database Cian to local management.
1.30pm: London movers
Here’s a look at some of today’s fallers and risers in London.
Risers
RA International- up 13% to 13p
The remote site services contractor said it has been hired by the Foreign, Commonwealth and Development Office for construction and refurbishment services at the British High Commission in Botswana. It is a £3.3mln contract which is expected to be completed during 2023.
N Brown- up 9% to 35p
Frasers increased its stake in the online retailer to 17.88%. Mike Ashley’s company is now the second largest shareholder behind Lord Alliance, who acquired the group in 1968.
Caspian Sunrise- up 14% to 5.8p
The firm told investors that oil is flowing in its side-track to Deep Well 802 in Western Kazakhstan at a rate of between 700 and 900 barrels of oil per day.
The company noted that the side track still had 100 metres left to drill nevertheless after encountering a strong flow of gas the well began producing oil, with the rates to date coming in ‘open hole’ conditions.
Online Blockchain- up 16% to 23.7p
Shares bounced on the news that the blockchain firm intends to launch an NFT collection based on characters from The Rocky Horror Show.
“This year is the 50th Anniversary of the first performance of The Rocky Horror Show and we are delighted with the prospect of bringing these NFTs to market at this time,” said chief executive Clem Chambers.
888- down 27% to 75p
William Hill owner 888 saw shares tumble on Monday following news it has suspended VIP activities in some of its .com markets pending the outcome of an internal compliance investigation.
Separately, it also announced the departure of Itai Pazner, its chief executive officer and executive director.
1.00pm: Weak start seen in the US
Wall Street is expected to open lower as the market prepares for a raft of interest rate decisions from the US Federal Reserve, the European Central Bank and the Bank of England in a week that culminates with the all-important non-farm payroll data in the US. All this as earnings season continues.
Futures for the Dow Jones Industrial Average declined 0.6% in Monday pre-market trading, while those for the broader S&P 500 index dropped 0.9% and contracts for the Nasdaq-100 fell 1.2%.
The major US indexes all finished in positive territory on Friday, with the DJIA gaining 0.1% to close at 33,978, the S&P 500 increasing 0.3% to 4,071 and the Nasdaq up 1% at 11,622 to cap off a great week for the tech-laden index.
"Leading into this week and indeed the end of January, there has been a groundswell of optimism based on hopes that inflation has peaked and that central banks will therefore cut their cloth accordingly,” commented Richard Hunter, head of markets at interactive investor.
“This optimism will face several stern tests in a particularly busy week. Interest rate decisions are due from the ECB and the Bank of England as well as the Fed, where a 0.25% hike is all but priced in.”
Hunter noted that the US non-farm payrolls report on Friday is currently expected to show that 175,000 jobs were added in January, compared to 223,000 the previous month.
While there have been any number of economic releases pointing to the desired economic slowdown in the US, he said the jobs market seems to be the main area which is resisting a slowdown and the report, therefore, assumes added significance.
“Alongside the slew of economic data, the reporting season continues apace, with updates from the likes of General Motors (NYSE:GM), Ford, Starbucks (NASDAQ:SBUX), Pfizer (NYSE:PFE) and McDonald’s providing further colour to the state of the economy on the ground,” Hunter added. “In addition, the initial strength of the Nasdaq will also come under scrutiny, with reports due from Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL) and Meta Platforms.”
12.50pm: Barclays (LON:BARC) to extend local offering
More bank branch closures are scheduled to take place this year, but Barclays PLC (LSE:BARC) has announced it will launch new banking pods and open 70 local sites across the UK to help customers with their banking.
Almost half of these sites will be in communities without an existing Barclays presence.
The bank set up 200 so called Barclays Local outfits last year under a plan aimed at limiting the impact of branch closures sweeping the industry and this move will see an extension of this offering.
The bank said the format "offers a way of remaining in places where there is no longer enough demand to support a traditional branch".
12.40pm: Carbon emissions on the wane - BP (LON:BP)
Global carbon emissions are expected to fall quicker than previously expected as a result of the war in Ukraine and Joe Biden’s efforts to encourage green investment, BP PLC has said.
The oil and gas company said carbon emissions would fall more rapidly than it forecast a year ago thanks to renewed efforts by countries to pursue greater energy security by supporting domestic, renewable energy supplies.
In its annual energy outlook report, BP said it had reduced forecasts for global emissions in 2030 by 3.7% and by 9.3% in 2050. It expects oil demand to be 5% lower and gas demand to have fallen by 6% by 2035.
12.20pm: N Brown jumps as Frasers ups stake
Shares in N Brown Group PLC has enjoyed a good day so far, rising 10.6%, following news that Mike Ashley’s Frasers Group PLC has significantly increased its stake to become its second-largest shareholder.
In announcement after the market close on Friday the owner of Sports Direct (LON:FRAS) and House of Fraser said it now held a 17.88% interest in the online retailer.
In November, Frasers said it had increased its holding in N Brown to over 5% having first bought into the listed group last month.
The move means Frasers is now N Brown’s second largest single shareholder, behind Lord David Alliance, who acquired the group in 1968.
The move is the latest in a strong of share purchases and small acquisitions made by Frasers in recent months.
11.50am: 888 revelations "incredibly damaging " - AJ Bell
Shares in 888 Holdings PLC have now crashed over 26% following news that its boss, Itai Pazner, has left the business and ‘VIP’ operations in the Middle East have been suspended after the company found best practice over money laundering was not being adhered to.
AJ Bell investment director Russ Mould described the news as “incredibly damaging.”
“Gambling stocks are under enough regulatory scrutiny as it is without inviting reasons for further attention and yet that’s exactly what 888 has done” he pointed out.
Although the announcements were announced separately Mould said the “market is likely to draw its own conclusions.”
“A brief and to the point statement with the usual pleasantries doesn’t indicate the reason for his exit, leaving the obvious supposition that this debacle is to blame.”
“Investors may have been more reassured by him staying in place to sort out the problems in the Middle East – an unenviable task which will now fall to the newly ‘executive’ chair Jon Mendelsohn” Mould noted.
“Longer term the betting industry faces scrutiny for the harm it does to wider society – with those harms only likely to be magnified against a more difficult economic backdrop” Mould suggested.
11.14am: Business confidence improves in January
Signs of an improvement in business morale with confidence rising for a second month in a row according to the latest Lloyds (LON:LLOY) Bank Business Barometer.
The survey which showed a five points uptick in January to 22% was the first back-to-back increase since September 2021 and took the index to a six-month high.
The upturn was again driven by a more optimistic assessment of the wider economy which has posted sizeable gains since November’s nadir.
Firms’ own trading prospects were unchanged on the month but continued to outperform economic optimism, suggesting some resilience in the outlook for business activity in the face of economic headwinds.
Year-ahead anticipated staffing levels edged higher, but the broad trend is still lower since the summer.
Businesses’ pay growth and own pricing expectations eased but remain near highs.
Confidence in manufacturing and services increased for a second straight month to their highest levels for seven months but retail confidence fell to its lowest since February 2021.
Regionally, the North East and the North West were the most upbeat, while London bounced back strongly from its December drop.
“It is still a tough environment for businesses, with high energy bills remaining a concern during the winter months, but there are grounds for optimism for 2023 if inflation starts to trend lower” commented Hann-Ju Ho, from Lloyds Bank Corporate & Institutional Banking.
10.48am: Coumputacenter marches higher
Shares in Computacenter stormed ahead by 9% as it finished the year with a record fourth quarter, which will mean 2022 results will be slightly ahead of the guidance given by the group in its quarter three trading update.
The company said would result in “an eighteenth consecutive year of underlying adjusted diluted earnings per share growth.”
Performance in 2022 has been helped by a strong US dollar, and a small acquisition in the second half of the year, although this has been far outweighed by the headwinds faced by the business as the Covid-related benefits it experienced in 2020 and 2021 unwound, particularly impacting our services margins.
Nevertheless, the company said it is “encouraged by our customers continued investment in technology, and we are as bullish as we have ever been about our target market and competitive positioning.”
10.15am: Housebuilders given 6-week deadline to agree cladding deal
Housebuilders and developers have been given six weeks to agree to a £2bn remediation package for unsafe buildings or face "significant consequences", the UK government said on today.
Together with an earlier Building Safety Levy, it means developers will pay about £5bn as the UK government moves to shore up building safety in the wake of the Grenfell fire in London back in 2017.
The announcement came from Department for Levelling Up, Housing and Communities, and legislation will be brought forward in the spring giving the Secretary of State powers to prevent developers from operating freely in the housing market if they fail to sign and comply with the remediation contract.
The contract also requires developers to reimburse taxpayers where public money has been used to fix unsafe buildings.
Secretary of State for Levelling Up, Housing and Communities, Michael Gove, said: “In signing this contract, developers will be taking a big step towards restoring confidence in the sector and providing much needed certainty to all concerned.”
Dean Finch, group chief executive at Persimmon, said: “The publication of the developer remediation contract is the culmination of many months of hard work on all sides and we are pleased to confirm our intention to sign the final document in the near future, becoming the first developer to do so.”
Shares in Taylor Wimpey PLC fell 1.6%, Persimmon PLC dipped 1.1% and Barratt Developments PLC slipped 1.25% in early trading.
9.40am: JD Sports hit by cyber attack
JD Sports Fashion PLC has become the latest company to be targeted by cyber criminals following recent attacks on the Royal Mail and the Guardian amongst others.
The FTSE 100 listed retailer said the incident resulted in the unauthorised access to a system that contained customer data relating to "some online orders placed between November 2018 and October 2020."
The affected JD Sports group brands are JD, Size?, Millets, Blacks, Scotts and MilletSport, the company said in a statement.
The affected data is limited, JD added, noting it does not hold full payment card data and it has no reason to believe that account passwords were accessed.
The company said the information that may have been accessed consists of the name, billing address, delivery address, email address, phone number, order details and the final four digits of payment cards of around 10mln customers.
“We have taken the necessary immediate steps to investigate and respond to the incident, including working with leading cyber security experts” JD said.
“We are engaging with the relevant authorities, including the UK's Information Commissioner's Office (ICO), as necessary” it added.
Shares dipped 0.6% on the news.
9.28am: German GDP falls in Q4
Over in Europe now and news that the German economy contracted in quarter four by 0.2% which was worse than economists had expected.
Forecasts were that GDP would be flat but official numbers from statistics body Destatis showed growth declined in the October-December quarter.
Good Morning from #Germany where GDP contracted 0.2% in Q4 2022 QoQ, meaning Statistical Office has revised its estimate from stagnation to contraction in Q4, and that makes a #recession more likely. The consensus expects German GDP to contract by 0.5% in Q1 2023 QoQ. pic.twitter.com/0sqju6TeSb— Holger Zschaepitz (@Schuldensuehner) January 30, 2023
With current consensus forecasts predicting a 0.5% fall in GDP between January and March 2023 this leaves Germany on course to enter recession in the first quarter of 2023.
9.00am: FTSE lower, rate calls awaited
FTSE 100 remained lower but bounced off earlier worst levels as investors looked ahead to a key week of central bank announcements with the Federal Reserve, ECB and Bank of England all making their interest rate moves this week.
The lead index is now down 11 points.
Neil Wilson at Markets.com said “All eyes are on the Fed and what it says about the future path of monetary policy.”
“Two key things remain unknown – how high and for how long. I don’t think even the Fed knows the answers to these questions at the moment, but it will undoubtedly want to push back against the dovish read the markets have taken.“
Asian-focused stocks were a weak early feature following falls in the Hang Seng with Standard Chartered PLC and Prudential PLC near the top of the FTSE 100 fallers while J Sainsbury topped the rises on further refection of Friday’s stake purchase by Bestway Group.
Aside from the CEO changes at L&G and Unilever (LON:ULVR), another FTSE 100 company in the spotlight was oil major, Shell PLC, after it revealed it will combine its oil and gas production and liquified natural gas divisions as part of an overhaul by its new chief executive.
Wael Sawan, who took over at the start of this month, said the changes will take place from July.
Shell also confirmed its shake-up will reduce the size of its executive committee from nine to seven members in order to "simplify the organisation further and improve performance."
Sawan said: “I believe that fewer interfaces mean greater co-operation, discipline and speed, enabling us to focus on strengthening performance across the businesses and generating strong returns for our investors.”
But the news failed to inspire the share price, down 0.3%.
Frasers PLC fell 2% on reports the retailer is set to offer financial services which will allow its customers to buy goods on credit while building materials group, Marshalls PLC, dipped 2.6% as Deutsche Bank cut its 2023 and 2024 profit forecasts by 18% reflecting lower volumes
The bank also cut its price target to 479p from 629p.
8.17am: FTSE 100 lower and 888 tumbles
FTSE 100 opened lower ahead of a key week of central bank announcements and as investors digested changes at the top at two of the UK’s best known names.
At 8.15am London’s blue chip index was down 25 points, at 7,740, while the FTSE 250 was 91 points lower at 19,944.
Richard Hunter, head of markets at interactive investor, commented: “Markets tempered their strong opening to the year, as investors braced for a week brimming with important economic and corporate releases.”
888 Holdings PLC tumbled after the gambling company, which owns William Hill, suspended ‘VIP’ activities in the Middle East following an internal probe and said CEO, Itai Pazner, is leaving with immediate effect.
Broker Peel Hunt said “While these two pieces of news were announced separately, it seems reasonable to assume that the CEO departure is, at least partly, a consequence of the compliance failings.”
They also pointed out it follows the announcement earlier this month that the CFO would depart at the time of the final results.
“This news is clearly likely to have a negative impact on a share price already burdened with too much debt, and may have a knock-on impact on other other gambling companies, as shareholders reflect on the unpredictability of regulatory risks” the broker said.
Entain PLC and Flutter Entertainment PLC were also early fallers, down 1.2% and 1.1% respectively.
Legal & General PLC was another notable early faller, down 2.1%, after it announced that CEO, Sir Roger Wilson, was to step down after over a decade at the helm of the FTSE 100 listed insurer.
L&G said the process to name his successor would take around 12 months.
But news of a new boss at Unilever PLC was more warmly received which has announced the appointment of Hein Schumacher as its new chief executive officer.
He will replace Alan Jope, who announced in September 2022 his intention to retire.
Shares rose 0.8% against the weaker market trend.
7.56am: Unilever names new CEO
Another FSE 100 company changing management is Unilever PLC which has announced the appointment of Hein Schumacher as its new chief executive officer.
He will replace Alan Jope, who announced in September 2022 his intention to retire.
Hein is currently CEO of the global dairy and nutrition business Royal FrieslandCampina and became a non-executive director of Unilever in October last year.
He will start his role on 1 July 2023, after a one-month handover period.
Prior to joining Royal FrieslandCampina as CFO in 2014, Hein worked for HJ Heinz for over a decade across the US, Europe and Asia.
Unilever Chairman Nils Andersen said Hein was “a dynamic, values-driven business leader who has a diverse background of experiences and an excellent track record of delivery in the global consumer goods industry.”
7.43am: L&G's chief to step down
Legal & General Group PLC’s CEO, Sir Nigel Wilson, is to step down after over a decade at the helm.
Wilson joined joined Legal & General Group in 2009 as chief financial officer and was appointed chief executive in 2012.
He will remain as CEO until a successor has been found, a process which has now begun with L&G considering internal and external candidates.
The FTSE 100 listed insurer said the process will take around a year.
L&G’s Sir John Kingman said Wilson was a “world-class leader who has worked with great passion and energy.”
“Under his stewardship, the group has consistently delivered profitable, sustainable and inclusive growth. Nigel has been a tireless champion for investment-led growth and responsible investment.”
Sir Nigel Wilson said: “It has been an honour and privilege to serve as chief executive of Legal & General over the past decade.”
7.30am: 888 Holdings suspends 'VIP' operations in the Middle East, CEO exits
888 Holdings PLC has suspended VIP activities in some of its .com markets pending the outcome of an internal compliance investigation.
In a statement today, the betting company, said that following the review, it has come to light that certain best practices have not been followed in regard to Know Your Client and Anti-Money Laundering processes for 888 VIP customers in the Middle East region.
“While further internal investigations are underway, the board has taken the decision to suspend VIP customer accounts in the region, effective immediately” the company said.
The group, which is headquarted in Gibralter and owns and operates brands including 888casino, 888sport, 888poker, William Hill and Mr Green, estimated that the impact is less than 3% of group revenues, should the suspensions remain in place.
“Based on the board's current understanding, the process deficiencies identified are isolated to this region only”, 888 commented.
Lord Mendelsohn, chair, promised strong action in response: "The board and I take the group's compliance responsibilities incredibly seriously.”
“We will be uncompromising in our approach to compliance as we build a strong and sustainable business."
In a separate statement, 888 also announced that Pazner is immediately leaving office as CEO and as a director.
The company said Lord Mendelsohn, is assuming the position of executive chair on an interim basis while the board searches for a permanent CEO.
7.00: Weak start expected in London
FTSE 100 expected to start the week on the back foot as investors look ahead to interest rate calls in the US, UK and Europe later this week alongside a bumper batch of earnings updates.
Spread betting companies are calling the lead index down by around 40 points.
Michael Hewson chief market analyst at CMC Markets UK commented: “The strong start to 2023 appears to have given way to a little bit of caution for markets in Europe as we look to this week’s trifecta of central bank meetings, and what sort of outlook is painted by the Federal Reserve, ECB and Bank of England, and more importantly how many more rate hikes can we expect to see after next week.”
“This caution looks set to translate into a lower open for markets in Europe this morning ahead of Q4 German GDP numbers which are expected to show the economy in Germany ground to a halt.”
In the US on Friday the major US indexes all finished off a busy week of earnings in positive territory.
At the close, the Dow had gained 0.1% to close at 33,978, the S&P 500 increased 0.3% at 4,071 and the Nasdaq was up 1% on the day at 11,622 to cap off a great week for the tech-laden index.
Elsewhere, housebuilders will be in focus on reports the government is close to agreeing a multi-billion pound deal with the sector to help resolve the cladding crisis exposed by the 2017 Grenfell Tower disaster.
On the corporate front a trading update from Computacenter PLC is due.