As well as the interest rate outlook, risk appetite has been impacted by recent events in China’s debt-laden property sector.
FTSE 100 Live Tuesday
Water firms told to return £114m
ASOS lowers earnings guidance
Card Factory profits surge
FTSE closes flat at 7,625.72
Tuesday 26 September 2023 16:36 , Daniel O'Boyle
The FTSE 100 ended the day roughly flat at 7,625.72.
The index of London blue-chips fell as low as 7597 soon after opening, and climbed to 7656 just before US markets opened, but ultimtely ended the day less than two points away from where it started.
RS Group, Barclays and Ocado were the top risers, while Smiths Group and Sainsbury’s were the biggest fallers.
‘Liquid in’ airport scanners help drive Smiths Group profits beyond £500m
Tuesday 26 September 2023 16:21 , Daniel O'Boyle
New airport scanners that allow passengers to keep their liquids in their bags, as used at London City Airport, helped annual profits rise beyond £500 million at 172-year-old engineering firm Smiths Group.
The group revealed today that operating profit in the year to 31 July rose by 20% to £501 million, as revenue exceeded £3 billion.
Roughly a third of that revenue came from products developed in the last five years, with one of the top items being 3D CT scanners for security scans, which allow passengers to pass through airport security without removing liquids or laptops from their bags.
Market snapshot with shares flat
Tuesday 26 September 2023 16:00 , Daniel O'Boyle
London shares are flat again today despite being up for much of the early afternoon.
Take a look at the latest key market data.
Former Wirecard executive Jan Marsalek accused of being behind Russian spy ring
Tuesday 26 September 2023 15:20 , Daniel O'Boyle
Former Wirecard executive Jan Marsalek has been accused of being behind a Russian spy ring operated out of the UK, according to a court case heard today.
Five Bulgarian nationals are accused of having conspired to collect information that would be useful to an enemy between August 2020 and February this year.
The home of one of the suspects, 45-year-old Orlin Roussev, was used as a “hub” for the alleged spying activity, Westminster magistrate’s court heard, while a man “known as Jan Marsalek” is suspected of being the “tasker”.
Meta pays “record” £149 million to escape London office lease
Tuesday 26 September 2023 14:27 , Daniel O'Boyle
Facebook’s owner Meta has paid £149 million to break its lease on an office building near Regent’s Park in the latest consolidation of space occupied by major tech firms in the era of hybrid working.
Landlord British Land disclosed the payment in a trading update today. It said Meta had surrendered the lease at 1 Triton Square, one of two buildings it leases at the Regent’s Place development.
British Land admitted that the surrender will dilute earnings in the six months to March as it seeks a new occupier for the eight storey building.
Property ‘fall throughs’ rise amid higher mortgage interest rates
Tuesday 26 September 2023 13:41 , Daniel O'Boyle
The number of property sales collapsing rose 10% in the second quarter of the year as buyers faced dramatically higher mortgage costs, according to new figures.
There were 69,940 so-called “fall throughs” in the three months to June according to data from property purchasing specialist, House Buyer Bureau. That was up from 63,446 in the first quarter.
The average cost of a failed sale during the second quarter was estimated at £3,394, making the total cost £237.4 million.
Media Watch: Does Lachlan have the cojones to take on his father’s empire?
Tuesday 26 September 2023 12:52 , Daniel O'Boyle
“Conrad Black told the story over the weekend of how Rupert Murdoch positively delighted in the death of Robert Maxwell,” Chris Blackhurst writes. “The former Telegraph proprietor, while no fan of Maxwell, did not relish the thought of his competitor floating, dead, in the sea. ‘I do,’ said Murdoch.”
“Among proprietors there is an unwritten code, that while they do not exactly go out of their way to embrace each other, neither do they go personally hostile. Clearly, Murdoch, who had been Maxwell’s head-to-head rival for years as The Sun took on The Mirror, saw things differently. He was that ruthless and unforgiving.
“Now that the veteran Australian has announced he is becoming chairman emeritus of Fox and News Corporation, and that his son, Lachlan, will be in charge, the question being asked by Murdoch’s workers is does Lachlan have the cojones, does he possess that streak so evident in his father?”
US bond yields rise further over Fed rate fears
Tuesday 26 September 2023 12:12 , Daniel O'Boyle
US bond yields have continued to march upwards as ‘higher-for-longer’ interest rate fears and renewed government shutdown risks encouraged investors to sell treasuries.
Victoria Scholar, Head of Investment, interactive investor said: “Yields are marching higher with the 10-year US Treasury yield hitting its highest level since October 2007 while the dollar index traded close to highs not seen since November 2022. Dollar-yen has also rallied to an 11-month high. T
“his follows hawkish comments from the Minneapolis Fed President Neel Kashkari who said the central bank may need to raise rates further given the strength of the US economy.”
FTSE flat at noon
Tuesday 26 September 2023 12:02 , Simon Hunt
Midway through the day’s trading session, the FTSE 100 index is flat while the pound has fallen further against the dollar.
Here’s a look at your key market data.
Financial Times returns to profit despite print circulation cut
Tuesday 26 September 2023 11:21 , Daniel O'Boyle
The Financial Times returned to profit in 2022 despite a drop in print circulation as the City newspaper affectionately known as the ‘pink’un’ focused its efforts on driving up digital subscriptions.
Paying print readership fell 16% to 135,000, the FT said, but digital subscribers rose 13% as pre-tax profits climbed to £6.8 million, up from a pre-tax loss of £3.2 million the year before.
Revenues went up 14% to £422.5 million, led by a 24% jump in North America sales to £92.1 million, while advertising sales rose 7.9% to £149.7 million.
FTSE 100 steadies, Videndum slides on strike impact
Tuesday 26 September 2023 10:29 , Graeme Evans
Shares in media content technology firm Videndum have lost a third of their value after it highlighted the impact of strike action among US screenwriters and actors.
The Richmond-based company, whose customers include broadcasters and media studios as well as vloggers and influencers, pulled its interim dividend and flagged that it may require an equity raise in order to bolster its balance sheet.
Profits fell 65% to £10.1 million after a 25% decline in revenues to £165 million. Its products range from video transmission systems to live streaming solutions and smartphone accessories.
Despite yesterday’s hopes of a deal involving striking film screenwriters, Videndum said it had little visibility on when productions might restart and that it could not provide the City with financial guidance.
It remains upbeat about medium-term prospects but shares in the company formerly known as Vitec surrendered all of Monday’s 8% rise to stand 197p lower at 353p in the FTSE All-Share.
Elsewhere on the London market, sentiment remains fragile as traders face up to a longer spell of monetary policy in restrictive territory.
The FTSE 100 index today edged 15.26 points higher at 7639.25, having slumped 0.8% yesterday on a combination of rising bond yields and fears over China’s economy.
Barclays led the risers board, improving 4.5p to 158.2p after analysts at Morgan Stanley upgraded the bank to “overweight” with a price target of 230p.
Smiths Group also added 8.5p to 1675p as the industrial conglomerate reported a 20% jump in operating profits to £501 million. Revenues were 18% higher at £3 billion as the blue-chip company forecast underlying growth of 4%-6% for the current year.
The FTSE 250 index fell 24.06 points to 18,391.25, although shares in Paddington Central owner British Land were 4.9p higher at 321p after a reassuring update on leasing activity.
On AIM, the hot streak for Yu Group continued as the supplier of electricity, gas and water to business customers made another upgrade to profits guidance. The shares are close to a record level after adding 30p to 980p.
Imperial Leather maker PZ Cussons faces hit from Nigerian currency moves
Tuesday 26 September 2023 10:16 , Daniel O'Boyle
Soap maker PZ Cussons has said that its financial performance could be at the mercy of the Nigerian economy this year as it warned that profit will likely drop.
The business said on Tuesday that a recent devaluation of the Nigerian naira is expected to have a “material adverse impact” on its financial performance in the near term.
The hit from the movement in the currency would have wiped more than £100 million from the Imperial Leather company’s revenue for the last financial year, had it happened a year earlier.
Card Factory profits boom amid rivals’ struggles
Tuesday 26 September 2023 09:28 , Daniel O'Boyle
Card Factory took advantage of the collapse of Paperchase in the six months to the end of July, as stationery and soft toys helped profits soar in the six months to 31 July.
The retailer’s profits jumped from £14.3 million to £24.7 million, as sales grew by 11.5% to £220 million. Sales of stationery and soft toys, commonly sold at rival card retailer Paperchase before it went bust earlier this year, drove much of the growth. Clintons Cards has also struggled of late, closing 38 stores in order to stay afloat.
The shares lost 5.6% this morning to 105p, which AJ Bell investment director Russ Mould put down to profit-taking after they more than doubled in value over the last year.
“The numbers themselves are impressive and show there is still a place for keenly priced greetings cards and gifts in the market,” he said.
Acquisitions boost sales at AG Barr
Tuesday 26 September 2023 08:52 , Simon Hunt
Irn Bru maker AG Barr today recorded another jump in sales as a string of acquisitions help strengthen its bottom line.
Revenues for the six months to the end of July rose 33.2% to £210 million, led by a near 40% jump in soft drink sales, while pre-tax profits climbed 12.6% to £27.8 million.
But sales of its Funkin cocktails brand held flat amid a real-terms contraction in the size of the cocktails market.
Departing chief executive Roger White said of cocktail sales: “Last year was a strong period, post-lockdown there were lots of young folk in bars and clubs.”
“But a combination of the cost of living crisis and poorer weather means the market is now more subdued. But I think it’s just a moment in time.”
The firm, which acquired energy drink company Boost and oat milk brand Moma in December last year, said it was continuing its search for opportunities to expand its portfolio.
AG Barr upped its dividend 6% to 2.65p per share. Its stock rose 2.1% to 495p in early trade.
FTSE 100 struggles, Burberry and Smiths lower
Tuesday 26 September 2023 08:31 , Graeme Evans
The FTSE 100 index has fallen 25.35 points to 7598.64, with Burberry, Marks & Spencer and Whitbread among the blue-chip stocks down 1% or more.
Barclays led the risers board, improving 3.2p to 156.2p after analysts at Morgan Stanley upgraded the bank to “overweight” with a price target of 230p.
Industrial conglomerate Smiths Group opened 8.5p lower at 1658p, despite a big jump in 2023 profits and its confidence in delivering revenues growth of 4%-6% for the current year.
Results by consumer-focused AG Barr and PZ Cussons helped their shares rally by more than 2% in a session when the FTSE 250 index came under pressure.
In the FTSE All-Share, ASOS fell 3.9p to 382.9p after forecasting annual earnings towards the bottom of its expected range.
Thames Water hit hardest as regulators force the sector to return £114 million to customers
Tuesday 26 September 2023 08:04 , Michael Hunter
Thames Water has been hit hardest as industry regulators force utility firms to return £114 million in total to customers next year.
The rebate will come in the form of lower bills and follows an assessment at Ofwat of targets for water companies for 2022/23.
The watchdog found that the performance of London’s water provider was “lagging behind” its targets. It will take the hardest financial hit, reducing bills by around £100 million.
David Black, Ofwat CEO said: “The targets we set for companies were designed to be stretching – to drive improvements for customers and the environment. However, our latest report shows they are falling short, leading to £114m being returned to customers through bill reductions. While that may be welcome to billpayers, it is very disappointing news for all who want to see the sector do better.”
Thames Water has 15 million customers in the capital and around the south east and is the biggest supplier in the country.
A company spokesperson said: “Our customers expect a great service from us every time, and we’re sorry when we fail to deliver at the first opportunity. In 2022-2023 , we met 55% of our annual performance commitments. While it is our job to deliver our services whatever the weather, our performance last year was severely affected by the summer drought and December freeze/thaw event.”
Six other companies were put by Oftwat in the “lagging” category: Anglian Water, DÅµr Cymru, Southern Water, , Yorkshire Water, Bristol Water and South East Water.
ASOS profits at bottom of expected range as wet summer weather hits sales
Tuesday 26 September 2023 07:38 , Daniel O'Boyle
ASOS said profits are likely to come in at the bottom of its expected range, after the wet summer weather contributed to a 15% sales decline at the fast fashion brand.
The business had already anticipated a sales decline as it attempts to restore margins following a tough start to 2023, but it said the wet weather led to “a deterioration in the UK clothing market”.
The group now expects profit for the year to be at the bottom of its £40 million to £60 million range. It has taken a number of steps to improve future profitability, with its profit per order now 35% higher thanks to steps to “improve the behaviour of our least profitable customers”, who tend to use buy-now-pay-later services and return clothes at high rates.
The bottom-of-guidance profits may be cheered by short sellers, who have made ASOS by far the City’s most bet-against stock in recent months.
Poor run for Asia markets continues, sterling and Brent Crude lower
Tuesday 26 September 2023 07:22 , Graeme Evans
US markets closed in positive territory for the first time in five sessions yesterday, led by a rise of 0.45% for the technology-based Nasdaq Composite.
The improvement came despite the 10 year US Treasury yield ending the day at a post-2007 high of 4.53% as traders reacted to last week’s message from the Federal Reserve that interest rates are likely to stay in restrictive territory.
The FTSE 100 index yesterday fell 0.8%, driven by a combination of rising bond yields and weakness for mining stocks after China’s Evergrande said its debt restructuring plan had run into difficulty.
CMC Markets today expects London’s top flight to open broadly unchanged at 7622 after Asia markets failed to benefit from the stronger Wall Street session.
Hong Kong’s Hang Seng index is down another 0.9% today and on course close at its lowest level since November.
Meanwhile, the strengthening of the dollar has continued to leave the pound below $1.22 at its lowest level since March. Brent Crude stood at $92.50, a decline of 0.8% on fears that high interest rates will curb economic demand.
Recap: Yesterday’s top stories
Monday 25 September 2023 22:52 , Simon Hunt
Good morning. Here’s a summary of our top headlines from yesterday:
Oil prices continues to edge towards $100 a barrel landmark
Ladbrokes owner Entain to miss full-year revenue guidance as implementation of new UK safer gambling rules has bigger impact than expected
Luke Johnson’s Brighton Pier falls into the red and warns on impact on train styrikes, rotten summer weather and cost of living squeeze
The capital’s commercial property sector urges government to move forwards with its plans for a HS2 hub at Euston “at pace”, amid concerns that the mega project may not reach central London
Fledgling battery maker Invinity sees revenues grow ten fold after deal with US department for energy
And...the secret World War Two spy tunnels under London Kingsway Exchange that once housed the capital’s deepest bar sold to Australian fund manager for £220 million with plans to create interactive tourist attraction