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FTSE 100 Live: Aston Martin shares leap 12%, first major London IPO in 2023, CBI ‘renewal’ pledge

 (Evening Standard)
(Evening Standard)

London shares remain under pressure after Tuesday’s session saw oil prices fall 4% and the FTSE 100 index lose 1.4%.

Sentiment took a further blow in Asia trading when China’s manufacturing sector showed weaker-than-expected activity for May.

Today’s calendar includes results from Bloomsbury Publishing and B&M European Value Retail, as well as a trading update from WH Smith.

FTSE 100 Live Wednesday

  • Entain faces ‘substantial’ HMRC penalty

  • Soda ash firm plots FTSE 100 listing

  • Prudential CFO quits after investigation

FTSE 100 closes down 0.9%: Afternoon wrap

16:50 , Simon Hunt

The FTSE 100 closed down 0.9% at the end of the day’s trading session in London as evidence of China’s cooling momentum added to worries over the global outlook.

Asia markets fell sharply and the FTSE 100 index lost another 76 points to 7446 after the world’s second largest economy reported a miss on manufacturing activity.

Here’s a look at the key market stats.

Hundreds of jobs at risk as Luton loses its bearings

16:41 , Simon Hunt

Hundreds of jobs at Luton are at risk after the Swedish owner of a ball-bearing factory said it plans to shut the facility by the end of next year.

SKF said the move was “in line with the Group’s strategy to invest in automation and regionalization, and accordingly rightsize its manufacturing operations in Europe.”

Aldo Cedrone, acting EMEA president for SKF, said: “Although it is a difficult decision to make, this is an important step in securing our long-term competitiveness on the European markets.

“To ensure that our spherical roller bearing production stays competitive, investments are needed in new machinery and our evaluation showed Poznan is the optimum site for this investment. Our immediate focus is to support our colleagues in Luton.”

The Luton factory currently employs approximately 300 people.

Aston Martin stock jumps 12% to reclaim £2 billion market cap

15:13 , Simon Hunt

Shares in Aston Martin Lagonda climbed 12% to hit its highest price in three months.

It comes after the luxury carmaker’s billionaire shareholder, Lawrence Stroll, sold £120 million worth of the stock.

Stroll remains the largest shareholder, but sold shares to Chinese carmaker Geely, which has now increased its stake to around 17%. Geely earlier announced a new long-term partnership with Aston.

(PA) (PA Archive)
(PA) (PA Archive)

Stocks slide as trading opens in New York

14:53 , Simon Hunt

Stocks slid in the opening minutes of trading on Wall Street after a huge tech stock rally showed signs of running out of steam.

Semiconductor firm Nvidia partially reversed the heady gains it made yesterday after touting of demand for its chips for AI technologies, with the stock down 1%.

The Nasdaq stayed broadly flat while the S&P 500 index fell 0.5%.

Here’s a look at the key data.

FTSE 100: Ocado clings on to FTSE 100 status as British Land braces for exit

12:46 , Simon Hunt

Ocado is poised to narrowly avoided relegation from the FTSE 100 today, leaving British Land to drop out after its property portfolio was hit by soaring interest rates.

Susannah Streeter, head of money and markets, Hargreaves Lansdown, said: ‘’Ocado, like Everton, looks like it may have escaped relegation at the last gasp as the FTSE reshuffle deadline loomed. Instead, it looks like British Land will be demoted, after shares in the commercial property giant fell further as fresh hikes in interest rates were forecast.

“The value of its property portfolio had already been sideswiped by the rapid tightening in monetary policy and the shocker of an inflation reading last week, dented the company’s valuation further.”

“Ocado was lifted up on the coattails of M&S resilience last week. Although their joint venture has been struggling, M&S has staged a slick recovery and still spies further potential with their partnership. It is planning to deepen its collaboration with an Ocado Retail reset underway. This will include leveraging the potential of its vast treasure trove of M&S customers. This announcement gave Ocado’s share price a little bit more wind in its sails, helping it speed upwards, but volatility has returned today. However, it still may mean that it will escape relegation with worries about the property sector edging out retail concerns from the centre of the field during the final session before reshuffle.”

(Doug Peters/PA) (PA Archive)
(Doug Peters/PA) (PA Archive)

FTSE down at noon: lunchtime update

12:11 , Simon Hunt

Halfway through the day’s trading session in London, the FTSE 100 is down 0.6% to 7451.

AJ Bell investment director Russ Mould said: “The FTSE 100 started Wednesday on the back foot.

“The deadline for an agreement on the US debt ceiling may have been pushed back from tomorrow to next Monday but with some hardliners in the Republican party coming out against the agreement its passage through Congress could be bumpy.

“Weak Chinese data also contributed to a subdued market mood with Asian stocks a little sickly overnight.”

Here’s a look at your main market metrics:

City Comment: Mortgage peaks bring depression for home owners

11:19 , Simon Hunt

Frustrating is probably the mildest word to describe the minefield that securing a new mortgage has become over the last weeks or so.

Just as in the wake of the mini-Budget last September, hundreds of products have been pulled from the market, reducing choice, and rates are rising inexorably.

Today the average two-year deal cost 5.45%, up by seven basis points on yesterday and now at the highest level seen since late January.

We are not yet quite at Truss levels of pain, but the direction of travel is clear. Rates will continue to head north and stay there up to the point when the bond markets are convinced that the Bank of England has inflation tamed.

The result will inevitably be more downward pressure on prices and transactions, which are already subdued, if latest data from HMRC is anything to go by. Residential sales were 29% down in April compared with March.

Last year the gilt and mortgage markets pulled out of their tailspin when the rapid appointments of Jeremy Hunt and Rishi Sunak convinced investors that grown up politicians were back in charge. But clearly the “dullness dividend” card can only be played once.

There is not another PM and Chancellor team even more sober and sensible than the current incumbents ready to move into Downing Street.

No, as Hunt bleakly acknowledged last week, it will be a long hard slog that could mean recession by the end of the year. For first-time buyers and homeowners needing to remortgage, these are tough times.

All that can be done is to batten down the hatches and wait for the storm to pass. But this time, rather than the hurricane that blew through last autumn, it threatens to be a slow-moving depression with few signs of the skies clearing this side of Christmas.

B&M shares 6% higher after sales update

10:36 , Joanna Bourke

Discount retailer B&M today said shoppers have been seeking lowest possible prices for certain goods during the cost-of-living crisis, sending sales up to reach nearly £5 billion.

In his chief executive’s review Alejandro Russo said delivering strong results has in part been helped by “laser like focus on price and value for money”. He added: “Many consumer trends favour B&M, including trading down.”

Shares in B&M European Value Retail are up 6%, or 28.59p, to 500.49p.

Read the full story HERE.

CBI moves to renew itself

10:35 , Simon English

THE scandal torn CBI today made an effort to regain some footing while admitting there is “serious work to be done”.

The business lobby group has been hit by a series of misconduct allegations, notably involving former boss Tony Danker.

Some have said it should be disbanded as it can no longer effectively speak for business.

Today it said it had completed a “listening exercise” with more than 1000 corporate leaders.

Principa, the “independent experts” hired to conduct the review said that blanket terms portraying CBI culture as toxic are ‘not accurate’.

A statement said: “The prospectus - A Renewed CBI - for our Members, our Stakeholders and our People - is the result of extensive work in the weeks since the group paused activity, in which businesses, stakeholders, colleagues and external experts have all been involved in drawing up the proposed changes.”

Rain Newton-Smith, CBI Director General, said:

“Our members and colleagues have spoken. We have listened, we have acted and we are taking accountability. An accelerated programme of change on people, governance and culture is already underway with a more focused, collaborative approach on our purpose lifting up the voices of our members.”

FTSE 100 lower on China uncertainty, Drax shares down 4%

10:11 , Graeme Evans

The risk averse mood of markets continued today as evidence of China’s cooling momentum added to worries over the global outlook.

Asia markets fell sharply and the FTSE 100 index lost another 21.42 points to 7500.65 after the world’s second largest economy reported a miss on manufacturing activity.

The May factory update highlights an increasingly uneven recovery in China’s economy, with separate figures showing the softest pace for services growth since January.

The Hang Seng index closed more than 2% lower in Hong Kong, a performance that set the tone for losses of more than 2% for Asia-focused lender Standard Chartered and the luxury goods group Burberry in London’s FTSE 100 index.

The selling pressure comes with traders still uncertain about whether the Biden-McCarthy debt ceiling deal will get through Congress before the 5 June default deadline.

Hargreaves Lansdown analyst Susannah Streeter said: “Far from being the powerhouse which will offset America’s slowdown, China’s economic recovery from the pandemic is looking more precarious.”

The economic nervousness has been reflected in this week’s price of oil after Brent Crude futures slumped 4% on Tuesday and dipped below $73 a barrel today. This contributed to BP shares weakening 4.2p to 462.45p and Shell losing 18p to 2264p.

European stock markets also retreated to their lowest level in two months, even though France reported a steeper-than-expected drop in its inflation rate to 5.1%.

Favoured stocks in London’s top flight included those in the utilities sector after gains of more than 1% for SSE and Centrica, while Vodafone came off last night’s multi-year low with a rise of 0.9p to 78.6p.

The AI-driven momentum behind Tuesday’s latest year-to-date high for the Nasdaq Composite benefited FTSE 100-listed tech investor Scottish Mortgage as its shares continued their recent improvement with a rise of 6.5p to 679.7p.

The FTSE 250 index weakened 45.70 points to 18,761.67, with Drax shares down 4% or 24p to 565.8p after Ofgem announced it was looking at the biomass energy generator’s reporting under the Renewables Obligation scheme. The regulator said the opening of an investigation does not imply any finding of non-compliance.

Entain investigation widens

10:09 , Simon English

The owner of Ladbrokes is facing a hefty fine from the taxman and punishment from the Crown Prosecution Service for matters related to bribery.

Entain, which also owns Coral, PartyPoker and Sportingbet, said today it is in a “deferred prosecution agreement” with the CPA and is “working towards” a deal with HMRC.

The investigation centres on a Turkey business that it sold in 2017. Entain “acknowledges that historical misconduct involving former third-party suppliers and former employees of the Group may have occurred.”

This is not the first recent legal snafu involving gambling firms, which are under pressure to do more to help addicts who make up large chunks of their revenues.

Entain was fined £17 million by the Gambling Commission last year for failing to protect customers who were plainly betting in problematic ways, said the watchdog.

The government has promised tougher laws.

On the Turkish matter, Entain said: “While the company cannot say at this stage what the consequences of the investigation will be, it is likely that they will include a substantial financial penalty which is yet to be determined.”

It added: “The offences under investigation include, but are not limited to, section 7 of the Bribery Act 2010.”

Entain shares fell 29p to 1346p.

Purplebricks bidder withdraws offer

10:08 , Simon Hunt

Shareholders of Purplebricks suffered another blow today after the beleaguered online estate agent revealed investor Lecram holdings said it had walked away from its offer to take the company private.

The Lecram bid included a cash offer of 0.5p per share, valuing Purplebricks at £1.5 million, a far cry from the more than £1 billion market cap it boasted in 2018.

The rescinded offer leaves one remaining bid from rival Strike, in which the company is to be bought for a token £1, which is the one favoured by the company directors. Shareholders are set to vote to wave through the deal at a meeting on Friday.

Chairman Paul Pindar said: “I am disappointed with the financial value outcome… However, there was no other proposal or offer which provided a better return.”

Purplebricks suffered a series of profit warnings in recent months and was forced to set aside £9 million at the end of 2021 after it failed to follow the law on the protection of tenants’ deposits.

Pru CFO out after probe

09:37 , Simon English

The £4m a year chief financial officer of Prudential was forced to quit today after conduct that “fells short” of the insurer’s standards.

James Turner, who landed the job a year ago after a stint as chief risk and compliance officer, is out after an investigation into a “recent recruitment situation”, but specific details were not forthcoming.

He was paid £4m last year, and £3 million the year before. as the number two at the giant insurer, which has been around for 175 years and now has a largely Asian focus.

His chief executive Anil Wadhanwi said: “Our code of conduct sets out that we expect all our colleagues to adhere to the highest professional standards and behaviours.”

Turner is likely to miss out on some future bonuses. Lawyers were appointed earlier to look into Turner after concern was raised about certain “red flags”. Pru would not name the legal firm behind the investigation.

He will be replaced by long-standing executive Ben Bulmer, who has been with the business since 1997.

Turner is just the latest top businessman to fall foul of tighter corporate governance rules and lower levels of tolerance among investors for behaviour deemed short of required standards.

He joined the Pru in 2010 from Barclays, where he was deputy head of compliance. Prudential shares, listed in Hong Kong and London, fell 22p to 1102p today. The business is valued at £30 billion.

The Pru’s statement to the stock market said: “ Mr Turner will remain available to the Group for a period of four months to support a smooth transition. There are no implications for the financial performance, reporting or operations of the business.”

Asia weakness adds to FTSE 100 pressure, B&M shares up 3%

08:32 , Graeme Evans

The FTSE 100 index has fallen another 50.96 points to 7471.11, with Asia-focused Standard Chartered and Burberry among stocks under pressure amid today’s latest signs of softer momentum in China’s economy.

The pair fell by 2%, while Hong Kong-based insurer Prudential weakened 29p to 1096p after it announced the resignation of its finance boss on the back of an investigation into a “recent recruitment situation”.

Shares in gaming group Entain led the fallers board, declining 45p to 1329.5p after warning of a “substantial” fine from HMRC in connection with an investigation at a former Turkish business.

B&M European Value Retail shares provided one of the few bright spots in the FTSE 100 index, rising 3% or 13.4p to 485.3p after the discount retailer posted annual results and revealed a trading boost from the sale of Coronation merchandise.

The FTSE 250 index fell 0.6% or 105.44 points to 18,701.93, with Currys among the stocks 3% lower. However, pub chains JD Wetherspoon and Mitchells & Butlers rose 4% and 2% respectively.

FTSE 100 set to get its first IPO in 2023

08:23 , Simon Hunt

An industrial materials maker controlled by a billionaire Turkish family is set to launch the FTSE’s first major IPO this year in signs a dearth in public listings could be coming to an end.

WE Soda, the world’s largest producer of natural soda ash which is used in glass manufacturing, expects to price its share offering by the end of June and join the FTSE 100 shortly thereafter.

The company is controlled by the Turkish Ciner family, who are domiciled in London and own a number of industrial businesses as well as media outlets in Turkey.

The firm could fetch a market cap of up to $8 billion (£6.5 billion), according to Mergermarket. That would make it the biggest UK IPO since pharma giant GSK’s £28 billion spinoff of its consumer health business Haleon in July last year. It comes amid a turbulent time for the London market, in which a suite of businesses including chip designer firm Arm and building materials maker CRH snubbed the FTSE in favour of pursuing a listing in New York in search of higher valuations.

WE Soda chief strategy and risk officer Nicholas Hall told the Standard: “Despite the challenging market backdrop, we’re confident of a successful listing.

“The FTSE 100 is associated with quality and prestige and given that history it seems the right place to list. Investors are seeking quality companies with defensive characteristics.”

The company is also exploring an offering to retail investors of up to £7 million in shares.

 (WE Soda)
(WE Soda)

Market snapshot as LSE opens

08:20 , Simon Hunt

A few minutes into the day’s trading session in London, here’s a look at your key market metrics.

Harry Potter publisher Bloomsbury’s sales and profits leap

07:56 , Joanna Bourke

Readers are turning to books as an affordable treat in challenging economic times, publisher Bloomsbury said today as it revealed its “best ever” annual financial performance.

The publishing house which chief executive Nigel Newton founded in 1986, said it achieved its “best ever performance” in the year to February 28.

Sales rose 15% to £264.1 million and profits before tax and highlighted items jumped 16% to £31.1 million.

The company, which publishes the Harry Potter series, had told the City in March it expected those figures to respectively be over £260 million and some £30 million.

The board has proposed a 10% increase in its final dividend to 10.34p per share.

More to follow.

Entain faces ‘substantial’ HMRC penalty after bribery probe

07:22 , Simon Hunt

Sports beting business Entain said it was anticiating a ‘substantial’ penalty in connection with an HMRC probe into bribery.

The firm said it was in negotiations with the Crown Prosecution Service in relation to alleged misconduct by workers at its former Turkish-facing online betting and gaming business.

Entain said in a statement: “While the company cannot say at this stage what the consequences of the investigation will be, it is likely that they will include a substantial financial penalty which is yet to be determined. The Company cannot identify reliably at this stage the size of any financial penalty.

“Since the investigation first commenced, the Group has undertaken a comprehensive review of anti-bribery policies and procedures and has taken action to strengthen its wider compliance programme and related controls.”

FTSE 100 seen lower, Brent crude at $73.50 a barrel

07:14 , Graeme Evans

The FTSE 100 index closed 1.4% lower and Wall Street indices ended the session flat as recession fears swept through markets yesterday.

Uncertainty over whether the Biden-McCarthy debt ceiling deal will get through Congress and a sharp fall in oil prices ahead of this week’s Opec+ meeting added to the pressure.

Sentiment took a further blow in Asia trading this morning when China’s manufacturing PMI missed market forecasts by falling to a five-month low of 48.8 in May.

Brent crude lost 4% in yesterday’s session but is broadly flat so far today at $73.53 a barrel.

On a morning likely to be dominated by the latest GDP and inflation figures from France and Italy, CMC Markets expects the FTSE 100 index to open 22 points lower at 7500.