FTSE 100 Live: Retail sales in surprise rise, consumer confidence at record low

 (Evening Standard)
(Evening Standard)

Retail sales volumes rose by an unexpected 0.3% in July as online promotional activity boosted demand.

The figures from the Office for National Statistics showed volumes 2.3% above their pre-coronavirus level, but down over the past year.

July’s better-than-expected performance contrasted with August’s consumer confidence barometer from GfK, which posted a record low as cost of living worries mount.

Read more on the retail sales figures

FTSE 100 Live Friday

  • Consumer confidence at record low in August

  • Stock markets cool amid interest rates uncertainty

  • Bitcoin plunges to three week low

  • Just Eat sells iFood stake in £1.5 billion deal

FTSE 100 gains as investors buy into heavyweight stocks

15:35 , Michael Hunter

The FTSE 100 ticked higher in afternoon trade toward the end of a mainly sluggish session, with some of the index’s biggest-name stocks in demand.

AstraZeneca, the drug maker famed for its Covid-19 vaccine, and fellow pharmaceutical company GSK topped the leaderboard with a rise of 2.3% apiece taking them to 11270p and 1434p respectively.

Consumer product stocks were also higher, with Reckitt Benckiser and Unilever both up 1.8%, at 6632p and 4008p respectively.

Overall, London’s main stock index was up 9 points at 7551,0.

The parent of British Airways, International Consolidated Airlines, was the biggest single faller, down 3.4% at 115p.

New York stocks fail to shake off rate rise blues

14:50 , Michael Hunter

Wall Street shares fell further in opening trade on Friday, with investors stuck in cautious mood with the prospect of sustained rate rises at the Federal Reserve looking like more of a certainty.

The S&P 500 fell 37 points in early trade to 4246.40, a drop of 0.9%.

Robust economic data this week entrenched expectations for sustained rate hikes at the Federal Reserve, as jobs data in particular looked to give the central bank more room to fight inflation with tighter monetary policy, without slowing the economy too much.

Such expectations were setting the tone to trade across global makets, where the dollar was rising more or less across the board and developed-market government bond yields were rising as investors moved away from the debt.

Cineworld preparing to file for bankruptcy according to US media reports

14:10 , Michael Hunter

Cineworld is on the brink of filing for bankruptcy protection in the US, in a move that would make the global movie theatre chain one of the biggest names to fall victim to the Covid-19 pandemic.

The company’s flagship London cinema is also a West End landmark -- Cineworld Leicester Square -- and is familiar to millions worldwide as the venue for many film premiers. It includes a state-of-the-art, 721-seat Imax screen and can trace its roots back to origins as the oldest commercial cinema in the UK.

According to the reports in the Wall Street Journal citing “people familiar with the matter”, Cineworld has appointed lawyers from Kirkland & Ellis and consultants from AlixPartners to advise on the process of securing bankruptcy protection in the US and insolvency proceedings in the UK.

Cinema audiences have been slow to return to pre-pandemic levels, with Cineworld describing the recovery in ticket sales as gradual and below its expectations, in part due to a limited run of blockbuster films.

Sterling slumps more than a cent against the dollar at end of torrid week for the British economy

13:05 , Jonathan Prynn

The pound tumbled more than a cent against the dollar on the foreign exchanges this morning as concerns mounted about the budget deficit, rampant inflation and collapsing consumer confidence.

By lunchtime sterling traded at $1.1825, down around 1%. Cable has fallen more than 2 per cent this week making the worst weekly performance since June 2021.

As well as worries about the British economic outlook the pound was up against a strong greenback after the Federal Reserve doubled own on its commitment to fight inflation.

One hawkish menber of the US central bank St Louis Fed President James Bullard even suggested there should by another three quarter point rise in September.

Travel firm Pollen to lay off staff after collapse of parent company

12:48 , Simon Hunt

Staff at the London based travel and music events firm Pollen have been told most are to be laid off after the collapse of its parent company.

Restructuring firm Kroll will wind up Streetteam Software, which raised $150 million in fourth-round venture capital funding in April.

Pollen’s ability to work with music producers and travel operators to provide bespoke experiences was badly hit by Covid lockdowns.

Streetteam had sought a buyer for the whole business with help from Goldman Sachs, according to an internal email quoted on the Sifted website, which covers the European start-up scene.

The company was founded in 2014 by brothers Callum and Liam Negus-Fancey and employed 250 people in the UK.

“The legacy of the Covid-19 pandemic has had a devastating impact on the growth model of the group, but the underlying concept, brands and technology that the business has established will present a compelling opportunity as the travel sector recovers,” said Kroll’s managing director, Matt Ingram.

Backers included venture capitalists Northzone and hedge fund Lansdowne Partners. Pollen partners with music event promoters like Live Nation and Electric Zoo.

Wholesale gas nears peak seen just after invasion of Ukraine

12:20 , Simon Hunt

Gas prices in the UK are rising fast towards the peak they touched in the immediate aftermath of Russia’s invasion of Ukraine, just a week before regulators set a new price cap for consumers’ energy costs.

In early trading in London wholesale prices neared £4.60 a therm for gas delivered in September, taking the week’s rise to 16%. Front-month contracts hit £4.93 in early March.

A director of energy regular Ofgem Christine Farnish, resigned this week saying its move to change the price cap more frequently gave too much benefit to companies. The cap to annual energy costs — at £1,971 via Direct Debit and £2,017 for prepayment customers — is likely to rise by as much as £1,500 in October.

Read more here

Just Eat Takeaway sells iFood stake in £1.5 billion deal

11:42 , Simon Hunt

Just Eat Takeaway has sold its stake in Brazilian food delivery firm iFood in a €1.8 billion (£1.5 billion) deal.

The deal sees Dutch investment firm Prosus take full ownership of iFood. Prosus have offered Just Eat €1.5 billion in cash plus a further €300 million conditional on the recovery of the food delivery sector.

As recently as August last year, CEO Jitse Groen said he had turned down a €2.3 billion offer for iFood, snubbing the offer as “inadequate”.

Just Eat, which has seen it shares tank 63% since the start of the year, is also under pressure from activist investor Cat Rock Capital to sell its US arm GrubHub. In April, Just Eat said it was exploring a “partial or full sale” of the business.

Read more here

Over £10bn wiped off value of Bitcoin in crypto plunge

11:00 , Simon Hunt

More than £10 billion was wiped from the value of Bitcoin in a matter of minutes this morning in the latest blow to the ailing cryptocurrency.

It has fallen 7% to a three-week low of just under $22,000 in the past 24 hours, after minutes released from the US Federal Reserve showed officials were not minded to soften interest rate rises until inflation could be brought under control.

Analysts Coinglass said about $220 million of crypto positions were liquidated in an hour with Bitcoin accounting for about half.

Overnight, crypto lender Hodlnaut filed for credit protection, suspended withdrawals and fired 80% of staff, saying it had “pending proceedings” with the Singapore police force.

Downgrade hits Compass shares, FTSE 250 below 20,000

10:36 , Graeme Evans

Compass and Bunzl shares fell today as recession fears led to the loss of “buy” recommendations from City firm Jefferies.

Jefferies regards a material slowdown in business and employment services as inevitable, prompting it to cut its 2023/24 earnings estimates across the sector by up to 10%.

Compass shares have been on a strong run since the start of July, but the provider of catering at major sporting events including Wimbledon fell 36.5p to 1933p as Jefferies lowered its price target to 2000p.

Bunzl, which delivers essential items to retailers, workplaces and hospitality venues, also fell 76p to 3084p after Jefferies reduced its target to 2900p.

The bank continues to have “buy” recommendations on FTSE 100-listed Rentokil Initial and former Electrocomponents business RS Group. It said: “With slowing earnings and a challenging macro backdrop we favour quality and resilience, or where we feel recession is priced in.”

The downgrades came amid more signs that the stock market rally of the past month is starting to cool, with the FTSE 100 index 22.74 points lower at 7519.11 on the back of a lacklustre week on Wall Street.

The recent gains were fuelled by optimism over an end to central bank hawkishness, but comments from US policymakers this week suggest that the inflation fight is far from over.

The heightened UK economic uncertainty was reflected in the FTSE 250 index slumping back below the 20,000 threshold, down 165.21 points to 19,971.44. Leading fallers included easyJet, which declined 4% or 15.3p to 393.4p.

FTSE 100 lower amid rate hike fears

08:44 , Graeme Evans

The stock market rally of the past month continues to cool, with the FTSE 100 index down 11.86 points at 7529.99 after yesterday’s lacklustre session on Wall Street.

Recent gains have been fuelled by optimism over an end to central bank hawkishness, but comments from US policymakers this week suggest that the inflation fight is far from over.

UBS Global Wealth Management said: “We maintain our view that the Fed will raise rates by another 1% by year-end, with risks of more hikes if inflation does not slow in line with our forecasts.”

The weaker FTSE 100 index included declines of 2% for consumer-focused stocks Howden Joinery and B&M European Value Retail, while contract catering giant Compass fell 27.5p to 1942p after Jefferies removed its “buy” recommendation.

The FTSE 250 index dropped 77.88 points to 20,058.59, with pavings firm Marshalls the biggest faller after dropping 25.2p to 396.8p.

Consumer confidence at record low

07:57 , Graeme Evans

GfK’s closely-watched consumer confidence survey has declined by three points to a score of minus 44, the lowest level since the survey started in 1974.

All sub-measures fell compared to the previous month, reflecting acute concerns as the cost of living soars and worries grow about the economic outlook over the next year.

GfK client strategy director Joe Staton said: "These findings point to a sense of capitulation, of financial events moving far beyond the control of ordinary people.

“With headline after headline revealing record inflation eroding household buying power, the strain on the personal finances of many in the UK is alarming.

“Just making ends meet has become a nightmare and the crisis of confidence will only worsen with the darkening days of autumn and the colder months of winter.”

Brent crude at $96 after Opec remarks

07:56 , Graeme Evans

Energy and mining stocks rallied yesterday after Opec’s new secretary general said fears over slowing consumption in China have been “exaggerated” by markets.

Haitham al-Ghais told Reuters that demand was robust in the physical market and that he took a relatively optimistic view on the outlook for 2023.

The Brent crude price stood at just above $96 a barrel today, having fallen back in recent weeks amid global recession fears. BP and Glencore shares rose more than 2% in London following the comments as the FTSE 100 index closed 0.4% higher.

CMC Markets expects the top flight to add nine points to 7550 when trading resumes after US markets continued this week’s mixed performance by last night’s close.

Initial jobless claims in the US yesterday fell to 250,000 compared with the 264,000 expected and the figure for continuing claims also came in below forecast.

Remarks by Federal Reserve chairman Jerome Powell to the Jackson Hole economic symposium next Friday and subsequent releases on inflation and employment will be key to determining whether policymakers hike interest rates by another 0.75% in September.