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FTSE bounces back as pound slips

Louise Moon
·23 min read
City of London 
City of London

Deliveroo’s shares slid to an all-time low after rival Uber Eats announced plans to expand its service to Germany in the coming weeks, ramping up competition among food delivery firms.

While the news doesn’t have direct implications for London-listed Deliveroo, which withdrew from Germany in 2019, “it’s a reminder that there are deep-pocketed competitors in this industry,” Berenberg analyst Sarah Simon told Bloomberg.

Uber’s senior vice president of delivery, Pierre-Dimitri Gore-Coty, told the Financial Times that Germany would be “strategically important”.

Shares in Deliveroo, which have had a hard time mustering up gains since listing at the end of March, flopped 9.8p to 233p, extending declines to 40pc below its listing price.

Joining the fallers was fellow food delivery service Just Eat Takeaway, which dropped 214p to £77.16, marking it down as one of the worst performers on the benchmark. Germany is one of its most lucrative markets.

The wider market pared some of Tuesday’s declines, though the FTSE 100 failed to bounce back up above the 7,000 level as it rose 35.42 points to close at 6,895.29. The FTSE 250 shed 22.82 points 22,085.73.

Tobacco giants British American Tobacco and Imperial Brands rebounded 44p to £27.36 and 32.5p to £14.98 respectively. It followed a slump on Tuesday for both stocks on the news that the Biden administration is considering tougher curbs on cigarettes.

Healthcare, however, was an outperformer of the day. According to Michael Hewson, market analyst at CMC Markets, “a positive read across from US medical devices company Intuitive Surgical” sent medical equipment manufacturer Smith & Nephew to a more than two-month high and to the top of the FTSE 100. It added 52p to £14.66.

Drug maker AstraZeneca advanced 126p to £76.20 after India’s Serum Institute said it would sell its vaccine to private hospitals at $8 (£5.70) per dose. Among others in the pharmaceuticals sector, Hikma Pharmaceuticals and GlaxoSmithKline were in the top 10 winners on the benchmark.

Ladbrokes parent Entain rose 36p to a fresh all-time high of £16.63 after BetMGM – a US joint venture with the Las Vegas casino operator – said it was targeting net revenue of $1bn in 2022. It also said it expects the US sports betting market to be worth $32bn, more than previously expected.

The US venture is the largest “iGaming” operator – online casinos and bingo – and the second-biggest sports betting firm behind FanDuel, which is owned by FTSE 100 rival Flutter Entertainment. Shares of Flutter rose 20p to £146.95.

Meanwhile distribution and outsourcing firm Bunzl weighed on the top flight, down 80p to £24.24 despite saying it expects “robust” revenue growth for 2021. It reported a 1.4pc rise in underlying revenue for the first three months of the year.

05:11 PM

Wrapping up

That's all from us today - here are some of our top stories:

As ever, thank you for following along. Have a good evening and see you back here bright and early.

04:46 PM

Bunzl falls to the bottom of FTSE 100

Distribution and outsourcing firm Bunzl was the biggest loser on the FTSE 100 today, down more than 3pc despite saying it expects "robust" revenue growth for the year ahead in the face of challenges posed by the pandemic.

Bunzl reported a 5.4pc rise in revenue in the first quarter of 2021, helped by demand for Covid-related products like PPE. It expects revenue growth in the first half of this year, but warned of a "moderate decline" in the second half.

Overall, Bunzl expects "robust" revenue growth in 2021 after excluding larger Covid-19 related orders, which contributed around £550m last year.

Chief executive Frank van Zanten said: "The resilience of the Bunzl model continues to be demonstrated by our ability to respond to changing customer needs and through our financial performance".

04:26 PM

KPMG shuts Manchester tech centre

KPMG
KPMG

KPMG has told staff it will shut its Manchester Technology Centre as the firm looks to offload office space and shift to a hybrid working model post-pandemic.

My colleague Simon Foy reports:

The Big Four accounting firm said it does not plan to renew the lease on the 12,000 sq ft hub and will relocate employees to its main office in the city, One St Peter’s Square.

The building will be refitted to “support collaboration and project style working”, KPMG said, adding that there will be no job losses in Manchester, where the firm employs 1,200 people.

It comes less than two years after the group moved 100 tech workers into the centre as part of a “major investment” in the region.

The move is the latest example of major employers reducing their office space to prepare for a post-crisis era where home working becomes mainstream.

04:06 PM

Kier Group launches equity raise to pay down debts

Kier Group has launched an equity raise to combat maturing debt, the company announced alongside its half year results.

My colleague Ben Gartside reports:

The proposed equity raise is expected to be in the range of £190m to £240m, and is set to begin within the next two weeks.

An extension on the construction company's revolving credit facility is conditional upon a further equity raise, according to the company. The facility is worth £670m, and is due to mature in September 2022, but can be extended to 2025 if there is a successful equity raise.

Kier Group initially floated the prospect of an equity raise in July last year, which saw shares slip 15pc. The Sunday Telegraph previously reported that lenders had tried to sell on Kier Group's debt to specialists at reduced prices

Chief Executive Andrew Davies claims that the extension is a good sign for Kier's future. Mr Davies said: "The 2025 maturity extension shows the support given to the company by lenders, and is a sign of support for our strategic review".

Kier currently has a net debt of £354m, up from £242m for the year previous. A previous equity raise in 2018 was unsuccessful, although it was only targeted at existing shareholders.

Analysts said that the new raise was unlikely to encounter the same problems as the 2018 iteration, which led to the departure of former chief executive Haydn Mursell.

03:44 PM

L'Oreal bets big on men's beauty

L'Oreal
L'Oreal

L’Oreal is betting big on men’s beauty after demand for make-up and skincare surged in lockdown.

My colleague Laura Onita reports:

The 112-year-old beauty firm said that cosmetics for men have grown in popularity as customers became more conscious about how they look on Zoom calls.

Vismay Sharma, an executive at the retailer, said he expects the trend to continue, with L’Oreal poised to capitalise on new make-up ranges, creams and serums.

“In the past, men were not using enough beauty products,” Sharma told CNBC, but they are now much more discerning about their skin.

His remarks came two months after John Lewis revealed it will sell foundation, concealer and bronzer for men at its flagship Oxford Street store.

Demand for the UK brand War Paint for Men was 50pc higher than the department store expected. John Lewis has said that more men have been taking beauty treatments in-store as well as personal styling tips.

03:11 PM

Treasury launches new team to oversee government guarantees

The Treasury has launched a new team to oversee Government guarantees amid worries over the growth of its Covid-19 loan schemes.

My colleague Louis Ashworth reports:

A new unit within UK Government Investment – the company which oversees the UK’s divestment from NatWest – will advise officials on how to manage “contingent liabilities” across the Government.

The new team, dubbed the Contingent Liability Central Capability, will aim to examine the liabilities, which the Treasury said represent a “significant source of fiscal risk” to the public coffers.

Common examples include loan guarantees, and indemnities on certain events such as some negligence claims against NHS doctors.

The CLCC will look at new or contentious contingent liabilities that carry a potential exposure of greater than £3m.

The new body will consist of credit risk experts, policy professionals and analysts, and work across all parts of Government.It will analyse existing arrangements, conduct stress tests and help departments to monitor their exposure.

02:52 PM

NatWest pledges action on financial crime

NatWest 
NatWest

NatWest has insisted it is making financial crime detection a "key priority" as it faces criminal action by the City watchdog for alleged money-laundering failures.

In a speech to shareholders ahead of the bank's annual meeting on April 28, NatWest chairman Sir Howard Davies said news last month of the criminal case was "disappointing".

"Detecting and preventing financial crime to protect people, families and businesses is a key priority for the group," he told investors.

He said the banking giant now has 4,000 staff dedicated to detecting and preventing financial crime.

He added the group has invested nearly £500 million into anti-money laundering systems and controls in the past three years alone.

But he said the bank "cannot tackle financial crime in isolation".

02:34 PM

Deliveroo slides 5pc

Things keep getting worse for Deliveroo. Its share price has fallen a further 4.4c today and is currently trading at 232p, extending declines since last month's IPO to more than 40pc.

The shares are following European food-delivery firms lower as Uber Eats plans to expand its service to Germany in coming weeks.

While the news doesn’t have any direct implications for Deliveroo, “it’s a reminder that there are deep-pocketed competitors in this industry,” Berenberg analyst Sarah Simon told Bloomberg.

02:07 PM

Exclusive: CNN to put online broadcasts behind paywall in UK

CNN
CNN

British viewers flocked to CNN to watch live coverage of the US election and the Capitol Hill riot, but now the US news channel is to impose a paywall on its online news broadcasts in the UK.

My colleague Ben Woods reports:

The broadcaster of Anderson Cooper 360° plans to put the livestream of its international rolling news service behind a paywall from June as it attempts to muscle in on the burgeoning subscription market.

The decision will only target mobile and desktop users in the UK, but could form a precursor to a broader rollout that will affect more countries outside the US.

The Telegraph understands the move may prompt CNN to review TV distribution deals with Sky, Virgin Media, BT and Freesat should the subscription drive prove successful.

It comes after the Reuters news agency announced last week that it was moving to a subscription model for its website by charging $35 (£25) a month for access.

The BBC also said in March that it may begin charging overseas audiences for access to news to help prop up falling income from the £157.50 annual licence fee.

01:44 PM

Wall Street retreats further on fresh virus concerns

US stocks continued their retreat at the open as a Covid resurgence in India sparked fears that the economic recovery could stall.

The Nasdaq was also dragged down by Netflix, which fell more than 7pc at the open, after issuing downbeat earnings after the close on Tuesday.

US market data - Bloomberg 
US market data - Bloomberg

01:22 PM

Oil slides on fresh virus concerns

The oil price has declined by 2pc today amid concerns that a resurgent virus will hurt demand in some economies.

West Texas Intermediate retreated 2.1pc, extending Tuesday’s decline, while Brent crude fell 1.8pc to $65.05.

The resurgence of the virus in countries such as India is casting a shadow over the global economic rebound, even as signs of an improvement in energy demand elsewhere continue to mount.

12:57 PM

Prosecutors raid Greensill offices

Greensill Bank's office in Bremen - Markus Hibbeler /Bloomberg 
Greensill Bank's office in Bremen - Markus Hibbeler /Bloomberg

Bloomberg reports prosecutors are raiding the offices of Greensill bank, the lender that collapsed recently with billions of debts.

The homes of five suspects in Bremen were also raided by prosecutors investigating accounting irregularities, the publication said.

Bloomberg has the details:

Searches in the bank’s offices started last week and are continuing, said Frank Passade, a spokesman for prosecutors. Investigators on Tuesday also raided the homes of some of the five suspects in the probe.

“The raid continues as long as we say it continues,” Passade said. “This gives us the opportunity to get into the bank’s offices whenever we need it.”

Greensill collapsed in March in one of the most spectacular financial blow-ups of recent years after key backers walked away over concerns about the valuation of its accounts.

In Germany, a group of lenders that runs a deposit insurance fund is seeking 2 billion euros ($2.4 billion) from Greensill Bank. Uninsured depositors such as municipalities also want their money back.

The five suspects are members of Greensill Bank’s last management board and two previous members of that panel, Passade said.

12:34 PM

Europe in recovery mode

The City bounced back today from a sharp fall on the FTSE 100 index  - Luciana Guerra /PA
The City bounced back today from a sharp fall on the FTSE 100 index - Luciana Guerra /PA

European stocks are climbing higher today, shaking off the collapse of the Super League football tournament proposal as well as coronavirus-inspired Asian losses from overnight.

Indices bounced back from yesterday's sell-off, with the FTSE 100 up marginally to 6,889 points in the afternoon, a rise of almost 0.3pc. Germany's Dax was flat at 15,130 points but France's Cac rose 0.5pc, while the pan-European Euro Stoxx 600 posted a gain of 0.36pc.

"European markets are in recovery mode today, with stocks turning upward to regain lost ground after sharp declines yesterday," said analyst Joshua Mahony at trading firm IG.

"Markets are caught between optimism over vaccination progress at home, and the fact that global efforts to combat the pandemic remain reliant upon economic restrictions until vaccines are widespread."

11:59 AM

Eurozone haunted by 'ghost' bankruptcies

The spectre of “ghost bankruptcies” is hanging over Europe with more than 200,000 companies across the region’s four biggest nations under threat when Covid-19 lifelines are ended, according to new research.

My colleague Russ Lynch reports:

Bankruptcies across Europe have so far been limited by hundreds of billions in support measures to keep companies alive, artificially depressing business failures. Between July and September last year, the number of bankruptcies fell by almost 20pc compared to a year earlier.

But analysts at investment bank BAML have warned that the number of companies could sink by 1-3pc by the end of 2022 across Germany, France, Spain and Italy, leaving Europe’s economy with permanent scars from the pandemic.

The report’s authors, Alessandro Infelise Zhou and Ruben Segura-Cayuela, said: “Reported bankruptcies may remain 'ghosts' for now, but longer-term economic scarring may be waiting for us just around the corner.”

11:31 AM

More on the upgraded GDP forecasts..

Britain’s economy is on track for its strongest year of growth since 1988 as economists hiked their forecasts sharply on the reopening of the high street.

My colleague Tim Wallace reports:

City and independent analysts surveyed by the Treasury upgraded their forecasts to take the average prediction for 2021 to 5.7pc, significantly up from the 4.8pc anticipated just a month ago.

Economists had chopped their forecasts when the new lockdown was imposed in January, but progress on vaccines means hopes for a renewed rebound are back as the economy unlocks again.

JP Morgan is the most optimistic, anticipating growth of 7.4pc this year, which would beat the post-war record of 6.5pc which was set back in 1973.

Economist Allan Monks at the investment bank expects a “consumption boom” with services companies making up much of the rebound, as households get back to spending in businesses such as beauty salons and barbers.

“Boomy growth does not require households to spend their pandemic savings, which will remain high and present a source of upside risk to future spending,” said Mr Monks, indicating that if individuals choose to spend more of that cash then they will boost GDP even further.

11:06 AM

Taxpayers underwrite £600m loan to Nissan

Sunderland 
Sunderland

Nissan’s giant Sunderland plant has been given almost £500m of taxpayer backing after the company’s British manufacturing arm reported a huge annual loss as output plunged because of lockdowns.

My colleague Alan Tovey reports:

Accounts filed with Companies House show Nissan Motor Manufacturing UK agreed a £600m, five-year loan with a syndicate of banks understood to be led by HSBC in December, which is 80pc underwritten by UK Export Finance (UKEF).

UKEF is Britain’s state-backed export credit agency. It provides finance and insurance to help exporters win and fulfil foreign sales, and picks up the tab if the customer fails to pay.

The support was offered under the body’s Export Development Guarantee (EDG). It is not linked to financing any specific export contract. Instead, it supports big companies with large foreign sales and provides working capital or financing for new equipment.

About 80pc of cars rolling off the production lines at Sunderland are destined for foreign roads.

10:37 AM

Air Partner climbs as rich customers prepare to go abroad

Shares in Air Partner climbed more than 4pc after the company said wealthy customers were charging up their private jet travel cards ahead of the summer.

New UK customers added £750,000 worth of deposits to their so-called JetCards with the company in February and March, it said.

It also saw a 15pc rise in sales and renewals of JetCards year-on-year, however, this figure was compared to February and March 2020, when the pandemic had already started to weigh on international travel.

In the US, sales and renewals were up 54pc, and deposits from new customers rose more than five-fold, to £300,000.

Chief executive Mark Briffa said:

The US private jet market is one vast, domestic market so it has not been subject to the types of restrictions and national lockdowns that we have seen in the UK and Europe.

As a result, the skies have remained open and we have seen sustained private leisure flying from high-net-worth individuals in the region.

10:11 AM

Bounceback forecast to be stronger than expected as economy reopens

The UK's economic recovery is now forecast to be stronger than expected with economists upgrading GDP growth to 5.7pc from 4.8pc for 2021.

The Treasury has published the latest consensus forecasts from City and independent economists, with stronger investment, government spending and exports all now expected to boost growth.

09:45 AM

Pendragon rebounds

Pendragon 
Pendragon

Car dealer Pendragon has rebounded from a disastrous first quarter last year, posting an underlying profit of £10.8m in the first three months of 2021, compared with a £2.3m loss last time round.

My colleague Alan Tovey reports:

Last summer the company announced plans to cut almost a quarter of its staff - 1,800 jobs - as it shut showrooms and transferred much of its operations to more efficient digital methods.

In the quarter to the end of March 2021, Pendragon said it delivered 40,000 cars, down 5,000 on a year ago.

Vehicles were handed over through home delivery and clock-and-collect services as the latest lockdown shut dealerships for most of the period.

Bill Berman, chief executive, said: “We have delivered a strong performance, demonstrating the benefits of our omni-channel offering. Building on the progress made in 2020, our online capabilities continue to gain momentum as we advance our strategy and this has contributed to a resilient sales performance in the period.”

09:22 AM

'SPACs just keep on sinking like sediment through the day'

Commenting on the Spac market, AJ Bell Investment Director Russ Mould, says:

The poem ‘Sinking like sediment through the day’ is the work of Philip Larkin and it offers a picture of disillusionment and a gathering sense of failure.

Investors who have spent the past few months following the fad for SPACs in the USA may be sharing such feelings as share prices continue to slide – the Defiance Next Gen SPAC Derived ETF is now down by a third from its early-year peak and is even trading below its launch price from last autumn.

The fall from grace of the poster child for SPACs, Nikola, is even more stunning, as the electric vehicle start-up is down by nearly 90% from its high and is also trading below its acquisition price of a year ago.

Such a rapid cycle of rise-and-fall offers further evidence, as if it were needed, of the value of Warren Buffett’s pithy observation that ‘speculation is at its most dangerous when it looks easiest.

With 263 SPACs already floated this year and 308 more looking for a target, according to the website SPAC Insider, SPAC activity has soared to new highs.

08:33 AM

Pensionbee debuts with £365m market cap

Romi Savona 
Romi Savona

Conditional trading in online platform Pensionbee started this morning, with the company being valued at £365m.

Shares are currently trading flat at 165p. The company has raised £55m as part of the listing, which will be used to support future growth.

08:08 AM

Junevtus shares slide by a tenth

Ronaldo 
Ronaldo

Shares in Italian football giant Juventus have plunged by more than a tenth this morning after a JP Morgan-backed plan to upend European football collapsed with the departure of six English clubs.

Neil Wilson, chief market analyst at Markets.com, says:

Total football, total shambles: Shares in Juventus and Manchester Utd fell as the wheels came off the ESL quicker than you can shout ‘sack the owners’. It’s been a total debacle for the clubs – investors may be cautious about investing in football teams; they usually are.

Whilst the ‘big’ six English clubs have pulled out, the Italian and Spanish teams are still committed on paper – I wonder how long they can eke this out. Juventus shares tumbled 10pc in early trade on Wednesday, taking the stock back almost to where it was closed on Friday as traders saw blood. After dropping 6pc yesterday and a further 2pc after hours, Man Utd stock is also back to where it was before the weekend bombshell.

07:51 AM

PureGym posts 'awful' 2020 losses

Gym
Gym

Fitness chain PureGym has revealed "awful" losses for 2020 after sites were forced to close in the pandemic, but said tens of thousands of new members have joined since reopening across England.

The group reported a £214.6m annual loss, against losses of £39.5m in 2019, after revenues slumped 40pc as UK gyms were shut for nearly half of the year's trading days.

PureGym shed 12pc of members in 2020, to 1.5 million, which fell further to 1.4 million by the end of March.

But the group cheered an "excellent" reaction since reopening its 240 gyms across England on April 12, with new joiners at similar levels seen in the same week before the pandemic struck.

It has seen more than one million workouts completed in the first week since lockdown lifted for gyms.

07:27 AM

Chart: Inflation remains below Bank's 2pc target

07:17 AM

FTSE rallies after Tuesday's slide

The FTSE 100 has opened higher after the blue-chip index suffered its biggest fall in two months on Tuesday due to fresh virus concerns.

European market data - Bloomberg 
European market data - Bloomberg

06:45 AM

'Nothing to worry about – yet'

Laith Khalaf, at AJ Bell, says the spike in inflation "is nothing to worry about - yet". He adds:

We always knew inflation was going to rise once we started lapping the beginning of the pandemic, in particular the steep falls in energy prices witnessed in the spring of last year. Petrol prices were 4.3p higher in March than a year ago, when they stood at 119.4p. In May 2020, they dropped to 106.2p, so this upward pressure on inflation will continue to grow in the coming months, even if fuel prices are relatively stable now.

But CPI is still way below target, and this isn’t the kind of embedded, long term inflation that will cause sleepless nights for anyone at the Bank of England. The Bank has looked through much higher inflation before, so interest rate rises remain very much in the long grass. The big question is whether the economic recovery, combined with fiscal and monetary stimulus, will start to foster a more sustained, inflationary trend that has the potential to get out of hand.

06:24 AM

Inflation rise below expectations

The UK's rate of inflation rose in March, however it remained below expectations as the price of vehicle fuels and clothing rose.

The Office for National Statistics (ONS) said the Consumer Prices Index (CPI) hit 0.7pc in March, from a 0.4pc reading in February and 0.7pc in January.

Inflation had unexpectedly eased in February, in part because of the biggest annual fall in clothing and footwear costs since 2009.

Discounting, which had been commonplace in February, eased somewhat in March, the ONS said, however it was still unseasonably high.

Inflation is expected to increase this year, as the UK and other countries around the world emerge from the pandemic.

Bank of England forecasts have inflation reaching around 2pc by the end of 2021.

A consensus of analysts supplied by Pantheon Macroeconomics was that CPI would rise to 0.8pc in March.

06:07 AM

Inflation rises

Good morning. The rate of Consumer Price Index inflation rose to 0.7pc in March from 0.4pc in February, the Office for National Statistics said this morning, as fuel and clothing costs climbed.

5 things to start your day

1) Asda takeover may force billionaire brothers to sell 50 petrol stations: CMA warned the £6.8bn takeover could push prices up at the pump and demanded extra assurances to prevent a full-blown investigation.

2) Baillie Gifford joins Bitcoin rush with $100m funding for Blockchain.com: Scottish asset manager has become the biggest outside shareholder in Blockchain.com with the investment, part of a $300m funding round.

3) Netflix shares tank as it predicts slowest growth in history: The streaming giant booked revenues of $7.2bn (£5.2bn) but signed up just 4m new people, the lowest first quarter figure for four years.

4) Big Four auditors accused of 'failing society': A report by the Institute for Public Policy Research said the industry is "failing society" via limited scope and lack of rigorous audit practices.

5) Recovery gains momentum as eurozone fightback falters: 11 of the UK’s 14 industries grew last month, up from six in February and three in January, when the most recent national lockdown was imposed.

What happened overnight

Asian stocks tumbled and US futures declined on Wednesday as rising virus cases around the world led to renewed concern about their economic impact. Treasuries held overnight gains.

The Topix index fell 2pc. Australia’s S&P/ASX 200 index dropped 1.7pc. The Kospi index fell 1.7pc. Hang Seng index lost 1.8pc and Shanghai Composite index rose 0.1pc.

Coming up today

Corporate: Kier (Interim); BHP, Rio Tinto, Antofagasta, Quilter, Hochschild mining, Bunzl (Trading update)

Economics: Producer, retail and consumer prices index (UK)