- FTSE 100 back in positive territory, up 19 points
- Emergency budget set for September 23rd - The Guardian
- Private equity firms competiing for stake in Vodafone unit - Bloomberg
Hilton Food Group PLC topped the FTSE 250 fallers after warning on full-year profits after posting a drop in interim pre-tax profits to £34.4mln, down 3.9%.
The group cautioned "Across our markets, we have seen volumes come under pressure with the cost of living increasing and consumers becoming ever more cost-conscious.”
“In our Seafood business these trends have been exacerbated with world events leading to unprecedented raw material price increases.”
"Given these factors, and combined with the impact of start-up costs and rising interest rates, the board now anticipates that profitability for the year will be below expectations."
Shares fell 27% to 686.50p and Russ Mould, investment director at AJ Bell said “even food suppliers are finding life hard” as “consumers are watching every penny.”
“That means higher prices for meat and seafood are becoming too much for many people to stomach, feeding into lower sales volumes for Hilton.”
2.45pm: FTSE heads south after weak US open
Shares in London slipped into negative conceding the fragile gains from earlier as US stocks opened lower following a mixed bag of US economic data.
At 2.45pm the FTSE 100 was down 11 points at 7,266 and the FTSE 250 down 23 points at 18,826.
In the US retail sales and initial jobless claims came in better than expected, but import prices saw a smaller drop than estimated, while manufacturing data also showed a slowing economy.
Just after the open, the Dow Jones Industrial Average had shed 72 points or 0.2% at 31,064 points, the S&P 500 was down 18 points or 0.5% at 3,928 points, and the Nasdaq Composite had slipped 74 points or 0.6% at 11,646 points.
2.15pm: Emergency budget set for September 23rd
The Guardian reported that Kwasi Kwarteng will deliver his emergency mini-budget to bring in winter tax cuts for millions of people and set out more detail on energy support next Friday, September 23, citing sources.
The report said that with Liz Truss expected to be at the UN general assembly in New York next week and the government also planning to set out its priorities for the NHS, there was limited time available for a fiscal event.
In the mini-budget, the government is expected to confirm plans to reverse the recent rise in national insurance, even though it benefits higher earners the most, handing back about £1,800 a year to top earners while the lowest earners get about £7 a year.
Truss has already said she would ditch a planned rise in corporation tax. Her team has also spoken to business groups about changes to business rates and cuts to VAT to help with the energy crisis, as well as a longer-term review of these taxes.
2.00pm: Private equity firms eyeing stake in Vodafone's Vantage Towers business
Shares in Vodafone Group PLC pushed higher on reports that KKR & Co. and Global Infrastructure Partners are among private equity firms competing for a stake in the company's wireless towers unit.
Bloomberg cited people familiar with the matter as saying that Swedish investment firm EQT AB has also been exploring a potential investment in Frankfurt-listed Vantage Towers.
Sources told Bloomberg that Vodafone hasn't made a final decision on the size of the stake it wants to sell, though a number of bidders are keen to get a majority holding.
The UK carrier currently holds around 82% of Vantage, according to Bloomberg.
The report said there's no certainty the private equity firms will proceed with formal offers, and other bidders could still emerge.
Vodafone shares rose 3.3%.
13.35pm: CMA to launch "in depth" probe into Microsoft (NASDAQ:MSFT) deal
The Competition and Markets Authority (CMA) is to launch an “in depth” investigation into Microsoft’s $69bn purchase of the Call of Duty maker Activision Blizzard (NASDAQ:ATVI) after the US tech giant failed to offer remedies to allay competition concerns.
Britain’s competition watchdog reiterated its warning that “it is or may be the case that this merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.”
The CMA will look to determine if the merger may undermine competition in the UK video games market in an investigation that will last until March 2023.
The Xbox owner’s proposed takeover of the company behind popular titles including World of Warcraft and Candy Crush would be the biggest ever gaming industry merger.
The deal, which was announced in January, will also require approval in the US, the EU, China and other places.
12.35pm: Shares in Wickes advance after "robust" first half
Shares in Wickes Group PLC advanced after it delivered record first-half sales performance in what it described as "a challenging macro backdrop."
Shares rose 9.9% as the group reported interim revenues rose 1.3% year-on-year to £822.3mln with like-for-like sales up 0.8% year-on-year and 23.4% on a three-year basis.
Investec analyst Kate Calvert said “In a challenging environment, Wickes continues to take market share and has delivered a robust first half performance, in-line with our expectations.”
In a note following the results she said there would no change to their full year 2023 pre-tax profit forecast but she did increase the dividend forecast as management guided to a maintained full year payout.
Calvert said “Whilst short term demand is difficult to project, Wickes has multiple self-help growth levers to go after, which we expect to drive market share.”
“With the shares trading on a full year 2023 PE of 6.1x and a forecast 9% DPS yield, the valuation is very undemanding.”
Investec has a buy rating on Wickes.
12.00pm: Tertiary Minerals soars after Fist Quantum link up in Zambia
Tertiary Minerals PLC pleased the market with news that it has signed a technical cooperation agreement with First Quantum Minerals (TSX:FQM) Ltd in connection with two of its copper exploration projects in Zambia.
Shares took off, rising 72%, as executive chairman Patrick Cheetham said “"This agreement will turbo-charge Tertiary's Zambian exploration in these two key licence areas.”
The agreements covers Tertiary's Mukai and Mushima North projects.
Together, Tertiary and First Quantum will set up a technical committee to work collaboratively to advance and develop the two projects.
Quantum will also advise and assist Tertiary on the project's technical matters and provide Tertiary with all of its historical exploration data for the two licence areas.
Cheetham added “We are set to benefit from FQM's extensive and in-depth country experience, gained over many years of exploration and mine development in Zambia and, importantly, its site-specific historical exploration in and around these two exciting projects.”
11.30am: US markets expected to open higher
US markets may give London a positive nudge this afternoon with stocks expected to start slightly higher on Thursday although direction will come from another batch of economic data following this week's consumer price index (CPI) inflation disappointment.
Ahead of the US open the FTSE 100 was trading 38 points higher at 7,316 with the FTSE 250 up 47 points at 18,896.
Futures for the Dow Jones Industrial Average were ahead 0.2% in pre-market trading, while those for the S&P 500 also added 0.2%, and Nasdaq 100 futures ticked 0.1% higher.
After recent CPI-inspired plunges, the Dow closed 0.1% higher on Wednesday, while the S&P 500 rose 0.3%, and the Nasdaq Composite added 0.7%, recovering tentatively from falls earlier in the session.
Stocks sought stability after posting their worst session since 2020 on Tuesday following the above-forecast inflation reading. August’s CPI showed headline inflation rose 0.1% on a monthly basis, despite a drop in gas prices.
Investors will have US retail sales, import prices and weekly jobless claims, as well as the Philadelphia Fed manufacturing survey and the Empire State manufacturing survey to mull over today, all due at 8.30am ET.
Latest figures from the Office for National Statistics show people in Britain have cut back on spending on credit and debit cards, and have been eating out less amid the cost of living crisis.
11.00am: Credit and debit card spending falls - ONS
UK credit and debit purchases fell by 2 percentage points in the week to 11 September, while the number of seated diners was decreased by 16 percentage points, but were 117% of the level in the same week in 2019, before the pandemic, the ONS said.
Visits to shops and leisure venues fell by 6%, while more people went to work – workplace visits increased by 14% and were 79% of their pre-pandemic levels.
Pret A Manger transactions increased in most locations in the week to 8 September with the largest increases seen in the London city worker and Manchester stores.
In the week to September 4 2022, the estimated quantity of automotive fuel demand per average transaction was 90% of the equivalent week of 2021 although over the last month estimated quantity of automotive fuel demand per transaction has gradually increased, coinciding with the fall in average fuel prices.
10.40am: Consumer confidence slumps in August - YouGov (LON:YOU)
Consumer confidence has suffered its biggest fall since the early days of the pandemic, according to a survey.
The Consumer Confidence Index (CCI) from YouGov and the Centre for Economics and Business Research (Cebr) measures how optimistic people are feeling about the state of the economy.
Benchmarked at 100, above that figure consumers are generally optimistic, below 100 they are pessimistic.
The CCI fell by 4.2 points in August from 103.0 to 98.8, as inflation, largely driven by energy price rises, piles pressure on people ahead of winter.
10.00am: DFS tumbles after profits warning
Shares in DFS Furniture PLC hit the rocks on Thursday as analysts lowered profit forecasts after it reported that profits had dipped in the twelve months ended June 27 and cautioned that sales could fall even further amid a fall in consumer spending.
The furniture retailer said pre-tax profits had fallen 43% to £58.5mln as order numbers "softened markedly" in the fourth quarter of the trading year and the first three months of the new year.
DFS outlined three potential profit scenarios for the current 2022-23 financial year, warning that underlying profits may plunge to £20.0mln-£54.0mln if sales numbers decline by 5% to 15%.
Chief executive Tim Stacey said: "Looking forward, the UK furniture market continues to be challenging and the outlook for the sector remains uncertain given the macroeconomic environment."
Analysts at Peel Hunt said the “retail market for big ticket purchases has been almost impossible and furniture has been no different” as it downgraded profit forecasts for the next two years.
The broker cut its forecast for full year 2023 to £32mln from £65mln and for 2024 to £42mln from £70mln as well as lowering its price target to 200p from 260p.
But on a positive note “history tells us that DFS comes out of crises much stronger and there is no reason that will not happen this time” it said retaining a buy rating.
9.30am: John Lewis reports half year loss
Further signs of stress on Britain's high streets as John Lewis Partnership reported an underlying loss in the first half of the year and said the outlook for the rest of 2022 was "highly uncertain" due to the impact of the cost of living crisis on consumer discretionary spending.
The employee-owned group, which runs John Lewis department stores and the Waitrose supermarket chain, posted a loss before tax and exceptional items of £92mln in the six months to July 30, compared to a profit of £69mln in the same period last year.
Sales at the department stores rose 3% on a like-for-like basis to £2.1bn, but fell 5% at Waitrose to £3.6bn.
John Lewis said the loss reflected a combination of factors, cost inflation not being fully passed on to customers, the impact of the cost of living crisis on demand and the unwinding of COVID-19 shopping patterns and investment in the business.
9.00am: FTSE 100 makes steady early progress
FTSE 100 made steady early progress on Thursday as investors cautiously dip their toes back into the market after two days of falls.
At 8.55am the UK’s blue-chip index was up 37 points to 7,315 while the broader FTSE 250 advanced 116 points to 18,965.
Richard Hunter, head of markets at interactive investor, said ““UK markets showed some signs of brief relief, with the flagship FTSE 100 posting moderate gains in early exchanges.”
“The turnaround was not enough to reverse the declines of the previous day, however, with the index hugging neutral territory for some weeks now.”
“Volatility seems set to remain entrenched for the time being as the global economy grapples with high inflation and central bank measures to tame it” Hunter said.
Hilton Food Group PLC (LSE:HFG) topped the FTSE 250 fallers after warning on full-year profits after posting a drop in interim pre-tax profits to £34.4mln, down 3.9%.
The group cautioned "Across our markets, we have seen volumes come under pressure with the cost of living increasing and consumers becoming ever more cost-conscious.”
“In our Seafood business these trends have been exacerbated with world events leading to unprecedented raw material price increases.”
"Given these factors, and combined with the impact of start-up costs and rising interest rates, the board now anticipates that profitability for the year will be below expectations."
8.40am: Citi Research upgrades Tate & Lyle to buy
Tate & Lyle PLC (LSE:TATE) received a boost today as Citi Research put the company on its buy list.
Shares rose 2% after the upgrade to buy from hold with Citi forecasting that the company can deliver 9% normalised EBIT compound annual growth which it said is not appreciated at the current levels of the share price.
Although in the near-term Tate is more exposed to gas inflation than its peers Citi estimated that the downside to consensus EBIT forecasts was limited in full year 2024 once adjusted for pricing and self help.
Citi said it lied the company for its transformational story and defensive characteristics and sees further upside coming from as it narrows the valuation discount to higher multiple ingredients names.
8.15am: FTSE 100 opens higher
The FTSE 100 opened higher on Thursday following gains in the US overnight and ahead of US retail sales figures later today which will give another indication as to the strength of the US economy.
At 8.10am the FTSE 100 was 45 points higher at 7,322 with the broader FTSE 250 up 62 points at 18,911.
But investor confidence is fragile shown in a snapshot of investor attitudes from Hargreaves Lansdown (LON:HRGV).
The Hargeaves Lansdown Investor Confidence Index showed confidence plunged 38% between August and September with confidence in UK economic growth dropping 35% between August and September.
Susannah Streeter, senior investment and markets analyst, at Hargreaves Lansdown said: “Recent market volatility has hit sentiment and data showing that inflation is still proving very hot to handle for central banks is clearly proving disconcerting.”
“Investors are expecting that growth will be sideswiped by robust interest rate hikes, with confidence in UK economic growth plummeting by 35% between August and September.”
“This is a marked change to sentiment about UK economic growth in August, which was more optimistic, with confidence rising by around 13%.”
DFS Furniture PLC (LSE:DFS) slumped 13% after warning that order volumes softened markedly in the fourth quarter of full year 2022 and the first quarter of full year 2023 reflecting a trend seen widely across the furniture industry.
As a result, the group presented three scenarios for performance this year giving a wide range of pre-tax profit forecasts for the coming year of between £20mln to £54mln which it based on assumptions of an average market order volume decline relative to pre-pandemic levels of between -15% and -5%.
Chancellor Kwasi Kwarteng is reportedly considering a plan to scrap caps on bankers' bonuses as part of a post-Brexit bid to boost the City's competitiveness and the UK economy.
He argues the cap, which was introduced under EU rules in 2014 following the 2008 financial crisis and subsequent eurozone debt crisis, would make London a more attractive destination for top global talent according to the Financial Times.
The measure was always opposed by the UK on the grounds that it would damage London's standing as a global financial hub.
But the idea of ditching the cap was dropped by Boris Johnson's government on the grounds it would be politically difficult to support wealthy bankers at a time of a cost of living crisis.
7.25am: Shell (LON:RDSa) CEO steps down
Oil and gas giant Shell PLC (LSE:SHEL, NYSE:SHEL) has confirmed recent speculation that chief executive Ben van Beurden will step down from the role at the end of 2022 following a 39 year career with the company.
Van Beurden will be succeeded by Wael Sawan on January 1, 2023, but will remain with the group until June 30, 2023, acting as an advisor to the board, in order to ensure a smooth transition.
Chairman Andrew Mackenzie said: "Ben can look back with great pride on an extraordinary 39-year Shell career, culminating in nine years as an exceptional CEO.”
“He leaves a financially strong and profitable company with a robust balance sheet, very strong cash generation capability and a compelling set of options for growth.”
"Wael Sawan is an exceptional leader, with all the qualities needed to drive Shell safely and profitably through its next phase of transition and growth.”
7.15am: London seen higher ahead of US retail sales numbers
UK markets are expected to open higher today, recouping some of the losses of the past two days but Michael Hewson chief market analyst at CMC Markets UK said the US inflation surprise earlier this week continued to hang over European markets like “a black cloud.”
Hewson said “The only question now remains over whether we might see a 75bps move, or something more substantive in the form of a 100bps move” by the Federal Reserve.
“It still seems unlikely that the Fed will go by more than 75bps at this point despite the collective freakout of the past couple of days, with the positive finish in the US last night expected to see European markets open slightly higher later this morning.”
Another gauge of the state of the US economy will come today with US retail sales numbers due which could reinforce this hawkish narrative if there is another strong number.
“The resilience of the US consumer in the face of shrinking disposable incomes has been fairly notable this year, despite high food and energy prices which appear to have had little effect on the US consumer’s willingness to go out and spend money” Hewson said.
“US retail sales have been positive every single month this year, apart from a modest -0.1 fall in May” he added.
“Expectations for today’s August numbers have been revised lower in the past few days from a rise of 0.3%, and is now expected to come in at -0.1%” Hewson said.
6.55am: FTSE 100 seen higher
FTSE 100 expected to make a bright start to the day following gains in the US overnight with another important set of US economic data later with retail sales due to be announced.
In London, spread betting companies are calling the lead index up by around 30 points.
US markets ended a roller coaster session in positive territory, but Tuesday’s market rout continued to weigh heavily as investors speculated just how aggressive the Federal Reserve would be with its next rate rise.
At the close the Dow Jones Industrial Average was 30 points higher, or 0.1%, at 31,135, The S&P 500 gained 13 points, or 0.34%, to 3,946, while the Nasdaq Composite rose 86 points, or 0.74%, to 11,720.
In London, IG Group PLC is set to issue a trading statement while results are due from DFS Furniture amongst others.