Bets that US interest rates will stay higher for longer today continued to weigh on stock market sentiment.
Global shares started the quarter on the back foot yesterday as US-government bond yields traded at post-2007 highs.
As well as the focus on the rates outlook, today’s London session included updates from Boohoo and the food-on-the-go chain Greggs.
FTSE 100 Live Tuesday
Pound falls on US rate bets
Boohoo forecasts revenues slide
Greggs eyes record store openings
FTSE 100 closes down 0.5%
Tuesday 3 October 2023 16:36 , Daniel O'Boyle
The FTSE 100 closed below 7500 today, after another tough afternoon session.
London’s top flight finished the day down 0.5% at 7,470.16, despite having hit as high as 7541. Today’s figure is the lowest end-of-day mark for the index in almost a month.
Ocado was again the biggest faller, followed by Antofagasta and Burberry. Top risers included Pearson and Smiths Group.
Where it went wrong for Sharon White at John Lewis
Tuesday 3 October 2023 16:16 , Daniel O'Boyle
She is the East End born daughter of Windrush generation parents who smashed every glass ceiling she encountered on her way to the top of the business establishment.
Sharon White, the Cambridge educated former top Treasury mandarin and boss of the powerful media and communications sector regulator Ofcom notched up a series of firsts as a black woman as she rose to take on one of the scrutinised jobs in retail - chairing the John Lewis Partnership.
But this week, little more than three years into her tenure, it was announced that Dame Sharon - as she became in 2020 - will be stepping down when her term comes to an end in February 2025.
That may sound like an orderly handover, but for an organisation that has only been chaired by five people since 1929 it is a clear signal that this appointment just has not worked out.
So where did all go wrong for Sharon White in a career that had otherwise been one of trail-blazing progress and success?
Eataly blames staff shortages as it reports another loss
Tuesday 3 October 2023 15:55 , Daniel O'Boyle
Eataly, the vast Italian food and drink emporium on Bishopsgate, stayed stuck in the red last year as it grappled with the impact of strikes, staff shortages and soaring food and energy costs.
Latest accounts for Eataly Retail UK Ltd show a pre-tax loss of almost £1.3 million in 2022, though that was down from £4.8 million the previous year.
Turnover rose by almost half from £17.25 million to £25.04 million.
Greggs overtakes Subway to become UK’s biggest fast food chain
Tuesday 3 October 2023 15:17 , Daniel O'Boyle
Greggs’ expansion across the country showed no signs of slowing today as it overtook Subway to become the biggest fast-food chain in the UK.
The Newcastle-based baker has opened 82 net new shops since the start of the year, taking its total store estate past 2,400, topping the roughly 2,300 Subways nationwide. It plans to reach as many as 145 net openings by the end of 2023 — a record for the number of new shops in a year.
In London, a new site recently opened at Waterloo station, taking the total in the capital to 40, and two more are planned at Richmond station and Westfield London in Shepherd’s Bush.
Poundland offers jobs to more than 200 ex-Wilko staff as stores reopen
Tuesday 3 October 2023 14:44 , Daniel O'Boyle
Poundland has offered jobs to more than 200 former Wilko workers as it continues to open stores bought by administrators for the collapsed retailer.
Last month, Poundland bought up to 71 Wilko stores from administrator PwC following the collapse of the high street chain.
All of the stores will be relaunched under the Poundland brand, with the first 10 shops reopening their doors last weekend.
No workers were directly transferred to Poundland as part of the rescue deal, but the discount chain encouraged former Wilko staff to apply for roles and said it would “prioritise” them for positions at the stores.
Even Brunel went over-budget, but HS2 needs new leadership
Tuesday 3 October 2023 14:00 , Daniel O'Boyle
“Announced to fanfare in 2009, HS2 was heralded as ‘’playing a vital role in delivering the Government’s ambitious goal of Britain becoming net zero carbon by 2050’,” Professor Stefan Allesch-Taylor writes.
“Amid all the Tory conference kvetching over whether the Birmingham to Manchester section will be ditched, consider this: every significant UK infrastructure project in the UK has been an initial disaster (Act 1), then come the “professionals”, and Act 2 ensues.
“HS2’s initial £33billion budget is now said to be £100billion. The real shock to me is that this is a surprise.”
Stocks fall as gilt yields rise again
Tuesday 3 October 2023 12:54 , Daniel O'Boyle
London shares’ rally this morning has fizzled out, while long-dated gilt yields are creeping up again.
Take a look at our full market snapshot
Tube strikes this week called off
Tuesday 3 October 2023 12:47 , Daniel O'Boyle
Tube strikes that would have caused chaos for millions of passengers on Wednesday and Friday have been called off.
The RMT union announced at lunchtime on Tuesday that the walkout by thousands of station staff had been suspended.
It said there had been a breakthrough in talks at Acas with Transport for London.
Current account switchers could receive cash windfall in run-up to Christmas
Tuesday 3 October 2023 12:18 , Daniel O'Boyle
People looking to switch current account may also be able to get their hands on a cash windfall in time for Christmas.
Several current account providers have launched free cash offers to entice new business, but not all of them may not be around for long, financial information website Moneyfactscompare.co.uk said.
Nationwide Building Society recently launched a £200 free cash offer, Lloyds Bank has launched a £175 free cash deal and TSB has a £150 offer.
City Comment: The weather gods are toying with clothing retailers
Tuesday 3 October 2023 11:31 , Jonathan Prynn
The weather gods really are not helping.
The July washout hammered retail sales that month and contributed to a 0.5% fall in GDP. There was a rebound in high street activity in August, but September is likely to be dire, again for meteorological reasons.
Fashion retailers look for a big margin boost in the autumn as the racks are cleared of T-shirts and light summer dresses and replaced by coats and chunky knitwear. But those autumn/winter ranges will not be going anywhere.
City needs urgent reform
Tuesday 3 October 2023 10:59 , Simon English
Picture this: James Bond, our quintessential MI6 agent, decides after years of rigorous training in London, to serve the CIA in America. An audacious move, considering he’s the very embodiment of Britishness, and his departure would no doubt prompt others to follow suit: betrayal of the highest order.
While not quite in the realm of high treason, the conveyor belt of homegrown companies, trained in the British market environment yet looking elsewhere for their big listing, should create a similar uproar.
Over the past five years, the number of companies listed on the FTSE 100, FTSE 230, SmallCap and Fledging indices has fallen by 20%.
Of the 125 IPOs on the LSE that we tracked since 2020, 103 are below their IPO price. The median loss is 55% and this excludes those business such as Made.com where investors lost all their money.
The UK is suffering from a lack of growth and productivity when compared with our international peers, as pinpointed by The Growth Commission and Liz Truss, and the efficacy of our capital markets in addressing productivity stands questioned.
Burberry downgrade hits shares, FTSE 100 steadies
Tuesday 3 October 2023 10:27 , Graeme Evans
Burberry shares were hit by more selling today after a leading City bank downgraded its stance on the luxury goods group.
The FTSE 100-listed stock has fallen 15% over the past month and today lost 47p to 1846.5p as UBS analysts switched their recommendation from “neutral” to “sell” and cut their price estimate to 1614p.
Burberry led the FTSE 100 fallers board in a session when the prospect of global interest rates staying higher for longer continued to weigh on investor sentiment.
Those fears contributed to Monday’s 1.3% decline for London’s top flight, although today’s session saw signs of resilience with a recovery of 27.96 points to 7538.68.
Tech-focused stocks defied the rates outlook as property portal Rightmove lifted 11p to 565.4p as the biggest riser, while publisher Pearson added 10.4p to 867.8p.
On the fallers board, the surge in bond yields dented the investment appeal of utility stocks as the quartet of Severn Trent, National Grid, SSE and United Utilities dropped 1%.
The FTSE 250 index posted a resilient performance, falling by 20.03 points to 17,957.26. Those under pressure included biomass power station business Drax, which dropped another 10.3p to 420.3p to leave losses in the past month near to 25%.
Housebuilder Vistry also eased 14.5p to 871p after analysts at Jefferies removed their “buy” recommendation with a new 999p target.
Among the risers, an order from the US Army helped shares in the defence industry supplier Qinetiq to improve 2.4p to 319.6p.
The five-year contract worth $84 million (£69.5 million) will see Qinetiq supply over 700 bomb suits for use by soldiers as they deal with improvised explosive devices and other threats.
The upgrade on the current 20 year-old suit provides greater situational awareness through built-in technology.
On AIM, Gooch & Housego jumped 29p to 529p after the Somerset-based maker of photonic components for industries including aerospace and life sciences forecast full-year revenues slightly ahead of City hopes.
Pound falls on US rate bets
Tuesday 3 October 2023 10:11 , Simon English
THE pound fell again today as traders bet that US interest rates will stay higher for longer than previously thought as the world’s biggest economy continues to pull away from the rest of the world.
With US inflation stubbornly high, the Federal Reserve is giving clear signals that it will keep borrowing costs up, while in the eurozone and the UK the expectation is that rates have peaked, and could soon fall.
That forced sterling to a more than six month low at $1.2061 as investors decided they would earn a better return on US bonds.
Asian shares fell overnight for the same reason.
Xi Qiao, managing director for wealth management at UBS, said: “The Fed is gonna keep rates high and we are expecting higher rates for longer. That could be good for the US dollar, but more caution on the equity markets."
Russ Mould, investment director at AJ Bell, said: “Stubbornly high US government bond yields are making life harder for equities to press ahead. The US Treasury yield exceeded 4.7% overnight as investors took the view that the US economy is in a decent and resilient shape. While a robust economy would be positive, it theoretically lowers the chances of the Federal Reserve making interest rate cuts in the near-term or at least fewer cuts than previously expected.”
The yield on the 10-year US Treasury -- a focal point for investors -- reached the highest level since 2007 while the 30-year bond yield was at its highest since 2010.
The FTSE 100 edged up 30 points to 7541. Global banks such as HSBC, up 12 at 652p, and defensive stocks such as GSK, up 12p at 1496p.
The yield on UK government bonds passed 5% yesterday to 5.020%, the highest since the fallout from Liz Truss’s mini-budget last October. Today the 30-year gilt was paying 4.986%.
Market snapshot as FTSE 100 begins to rally
Tuesday 3 October 2023 09:24 , Daniel O'Boyle
The FTSE 100 has started to rebound from yesterday’s tumble after a steady start this morning.
Take a look at our market snapshot.
AstraZeneca forks out $425 million over legal settlements
Tuesday 3 October 2023 09:18 , Simon Hunt
AstraZeneca today sought to draw a line under costly legal action over alleged side-effects from its stomach acid drugs as it forked out $425 million (£352 million) in settlements.
The pharma giant had faced a string of lawsuits in the US alleging that the two drugs, called Nexium and Prilosec, had led to kidney disease and kidney failure.
AstraZeneca continues to believe the claims are without merit and admits no wrongdoing, but said it had reached the settlements, the terms of which it did not disclose, in order to “avoid continued costly litigation and allow the company to move forward.”
One further court case remains pending in a court in Louisiana, scheduled for April next year.
Nexium and Prilosec drugs are used to treat patients with acid-related symptoms and diseases, which work by binding to and inhibiting the acid pumps of a particular type of cells in the lining the stomach wall to stop the production of stomach acid, lowering levels of acidity in the stomach in the process.
The two drugs are prescription-only in the UK but an over-the-counter version is available for Nexium which uses a lower dosage and is popular in pharmacies for the treatment of heartburn.
AstraZeneca shares rose 0.5% to 11,008p.
FTSE 100 holds firm, utility stocks under pressure
Tuesday 3 October 2023 08:47 , Graeme Evans
The FTSE 100 index stood close to its opening mark today, a better-than-expected performance after yesterday’s 1.3% slide.
Property portal Rightmove posted the biggest gain as its shares added 6.8p to 561.2p, while heavyweight blue-chip stock GSK improved 12.4p to 1496.4p.
Burberry shares topped the fallers board after analysts at UBS gave the luxury goods group a sell recommendation and lowered their price target to 1614p. The shares dropped 3% or 49p to 1844.5p.
Investors also dumped stocks in the utility sector to leave Severn Trent, National Grid, SSE and United Utilities down by between 1.5% and 2.5%.
The FTSE 250 index fell 65.66 points to 17,911.63, with Drax shares down 3% and housebuilder Vistry off 23p to 862.5p after analysts at Jefferies removed their “buy” recommendation. On AIM, Boohoo shares fell 8% after the fashion chain’s half-year results.
Brent Crude near $90 a barrel
Tuesday 3 October 2023 07:55 , Graeme Evans
Brent Crude futures are back near to $90 a barrel this morning after the oil benchmark’s worst run since prices began their rally in June.
A stronger dollar and uncertainty over the demand outlook caused by interest rates remaining high for longer have more than offset supply pressures created by recent production cuts by Saudi Arabia and Russia.
Brent had appeared on track for $100 a barrel last week, but has fallen by as much as 6% in the past three sessions to trade as low as $89 a barrel yesterday.
Bohoo expects sales to tumble as higher-margin push falls flat
Tuesday 3 October 2023 07:42 , Daniel O'Boyle
Boohoo expects revenue to tumble by as much as 17% this year, as it efforts to improve margins led to falling sales.
The online retailer, like most of the fast-fashion industry, has been making efforts to improve margins by focusing on more profitable items and limiting the availability of returns.
While Boohoo did improve margins, it said it now expects sales to fall by 12% to 17%,, partly due to “the continued targeting of more profitable sales”.
CEO John Lyttle said: “Our confidence in the medium-term prospects for the Group remains unchanged as we execute on our key priorities where we see a clear path to improved profitability and getting back to growth.”
The group now expects lower profits, of between £58 million and £70 million.
Interest rate fears hit markets, FTSE 100 set for another fall
Tuesday 3 October 2023 07:24 , Graeme Evans
London’s FTSE 100 index is set for another session in the red as traders continue to worry that global interest rates will remain elevated during 2024.
Those fears were fuelled yesterday when a report on activity in the US manufacturing sector revealed the strongest performance since November.
The latest signs of a robust US economy and comments from various Federal Reserve officials fed Wall Street’s expectations that monetary policy will remain tight in the fight to get inflation back to its 2% target.
The yield on the US 10 year Treasury bond hit another post 2007-high of 4.68% and UK gilts also rose sharply as markets priced in the prospect of at least one more rate hike from both the Federal Reserve and the Bank of England.
The S&P 500 index fell by 0.5% at one point yesterday before a late recovery, while the FTSE 100 index finished down 1.3% after initially being in positive territory.
Asia markets fell sharply today on the back of the developments, with the Hang Seng more than 2% lower after being closed for a public holiday yesterday. CMC Markets expects the FTSE 100 index to open 24 points lower at 7486.
Greggs eyes record store openings as sales jump
Tuesday 3 October 2023 07:23 , Simon Hunt
Greggs is braced for its fastest-ever rate of store openings this year as the baker wrestles to keep up with a jump in demand.
The Newcastle-based business opened 82 net new shops so far in the year and expects this to climb to as much as 145 by the end of the year.
It sales climbed 20.8% for the 13 weeks to 30 September 2023 as it confirmed full-year guidance.
Greggs said evening sales were occupying a greater proportion of total demand, while it was hoping to boost online orders with a new partnership with Uber Eats.
Recap: Yesterday’s top stories
Tuesday 3 October 2023 06:44 , Simon Hunt
Good morning. Here’s a summary of our top headlines from yesterday:
London house prices fall “only” 3.8% as the capital rides out the property slump better than most other regions says Nationwide
City investment bank Peel Hunt urges Government to revitalise share ownership in the UK
Malono Blahnik celebrates huge rise in sales and profits as revenues exceed $100 million for first time
Water companies unveil investment plans amid warning that bills could soar
London “on the brink” on overtaking Paris to reclaim its throne as Europe’s biggest stock exchange