FTSE 100 Live: ‘Recession increasingly likely’, shares end week lower
Retail sales figures have kept the UK economy in focus after yesterday’s knife-edge rates decision by the Bank of England.
The Federal Reserve also paused this week but its hawkish tone has left Wall Street fearing a longer run of high interest rates.
Elsewhere, Microsoft’s Activision deal has moved a step closer to clearance by the the UK’s Competition and Markets Authority.
The FTSE 100 finished the day flat, meaning it ends the week down 0.4%.
FTSE 100 Live Friday
Recession fear as private sector slows
Microsoft-Activision deal gets CMA boost
Retail sales short of hopes
Dinner with Tucker… then 48 hours later Murdoch’s engagement was off
Friday 22 September 2023 17:16 , Daniel O'Boyle
“In 1998, when Rupert Murdoch announced the end of his second marriage, unsettling the entire Murdoch world, he did it through Liz Smith, a columnist at the New York Post.
“Ever after he used the Post to curate, and underplay, the increasingly dramatic signposts of his personal life. On March 20, 2022, less than a month before the Dominion trial, and little more than six months after first meeting Ann Lesley Smith, he used the aged Post columnist Cindy Adams (Liz Smith had died in 2017) to announce his engagement at 92 to Smith, unnerving his close circle and especially his children for whom the announcement came as a bolt from the blue.
“The announcement felt awfully like he was hurrying to try to publicly prove something, or, even more disconcerting, that Smith — a 66-year-old former dental hygienist turned conservative radio host — was trying to prove something.”
Read the exclusive serialisation of Michael Wolff’s new book here
FTSE 100 closes flat, ends week down
Friday 22 September 2023 16:40 , Simon Hunt
The FTSE 100 closed close to flat today at 7,683.91, after gains were erased in the afternoon.
The leaves the index down 0.4% for the week, after a strong rally last week.
Ocado was the biggest riser today after a dramatic fall yesterday. Safety equipment firm Halma was the biggest faller.
City Voices: Hopes for a constructive AI safety summit are fading following Sunak’s watered-down green pledges
Friday 22 September 2023 16:03 , Simon Hunt
Rishi Sunak this week delivered a hasty press conference at Downing Street where he unveiled a bonfire of green regulation.
The move was roundly condemned by big business leaders, who complained that they had already poured oodles of cash into their net-zero plans, and desperately needed certainty from government. Those who didn’t comment may be quietly breathing a sigh of relief that they have more time to go green.
But whether Sunak’s looser approach to environmental goals proves a vote winner or not, it is diminishing his status on the world stage.
London Fashion Week lifts footfall and sales in the city centre
Friday 22 September 2023 12:50 , Daniel O'Boyle
London Fashion Week helped boost shopper numbers in the city centre, figures suggest, with footfall up 17.8% on one of its five days.
Many fashion fans who went to the event, which ended on Tuesday, also visited upmarket stores, pushing up revenues for a number of retailers.
Analytics group MRI Springboard said footfall in central London on LFW days rose by an average 7.3% on the same days the week before, compared with a 1.2% rise across all UK high streets. Saturday saw the largest jump in the capital, up 17.8% on the same day a week earlier.
Hopes for the high street and the economy rise as economic gloom lifts
Friday 22 September 2023 12:21 , Daniel O'Boyle
There was a run of better news from the high street today, as improving retail sales and a brighter consumer confidence report provided the latest signs of hope for the economy.
It came at the end of a potentially pivotal week. The Bank of England left interest rates on hold for the first time in almost two years yesterday, in a clear sign that policymakers think they are winning their long fight against inflation.
Shoppers getting their wardrobes ready for autumn and snapping up back-to-school bargains helped August retail sales rise 0.4% , led by a 2.3% rise in clothing, with food up 1.2%. World Cup football gave the figures a boost, with an England team in a final for the first time since 1966 helping to keep tills ringing after a spending washout a month earlier.
City Voices: Is the cost-of-living squeeze coming to an end?
Friday 22 September 2023 11:44 , Daniel O'Boyle
“For much of my first year as one of the Evening Standard’s City Voices, I have been warning about the economic pain to come,” Paul Dales writes. “There’s still a bit of that in the pipeline. But two developments this week have convinced me that we are at the beginning of the end of the economic squeeze on households.
“First, the fall in consumer price inflation from 6.8% in July to 6.7% in August announced on Wednesday took it further below the annual growth rate of average earnings in July (the latest data available) of 8.5%. This means that for only the second month since November 2021 “real wages” rose.
“Put another way, after almost two years in which the increases in wages were not keeping pace with the increases in prices in the shops, households’ living standards are now climbing again. This doesn’t mean the cost-of-living crisis is over (more on that below) but it means we are at the beginning of the end.”
Lloyds higher as FTSE 100 steadies, Ascential up 6%
Friday 22 September 2023 10:33 , Graeme Evans
Lloyds Banking Group shares today rose 0.6p to 45.1p after Deutsche Bank analysts backed the UK’s biggest lender with a 62p price target.
An already low valuation and stable deposit base means the bank’s analysts see enough leeway to compensate for mounting risks as the Bank of England begins to normalise monetary policy.
Lloyds shares rallied 2% or 0.6p to 45.1p, well ahead of NatWest after Deutsche Bank cut its target from 370p to 320p. The state-backed bank edged 1.7p higher at 241.4p today.
The improvement came as the FTSE 100 index overcame overnight Wall Street jitters to post a rise of 24.22 points to 7702.84.
The weak US handover, which reflected fears that the Federal Reserve will keep interest rates high in 2024, saw the S&P 500 index close 1.6% lower and the Vix index of volatility rise for a fifth consecutive day.
Despite these pressures, London’s tech-focused stocks Auto Trader and Rightmove added 2% and the grocery warehouse company Ocado put back 30p at 677.8p after falling heavily yesterday.
The UK-focused FTSE 250 index fell by 25.76 points to 18,612.79.
The best performing midcap was the former EMAP business Ascential, which rose 6% or 11.3p to 201.6p as the success of its Cannes Lions and Money20/20 events helped it report a 17% improvement in half-year underlying earnings.
Comptoir dives after swinging to loss
Friday 22 September 2023 10:00 , Simon Hunt
Shares in Lebanese restaurant group Comptoir plunged as much as 20% this morning after the firm swung to a pre-tax loss of more than £1.2 million for the first half of the year.
The London Bridge based business, which operates 26 restaurants under the Comptoir Libanais, Kenza, Shawa and Yalla Yalla brands, said sales had been hurt by train strikes and dismal summer weather.
Comptoir offered shareholders scant certainty over its future trading, saying little more than that it “would look to grow” in the second half of the year and that the board has “confidence in its prospects.”
Recession warning as private sector output slows further
Friday 22 September 2023 09:37 , Daniel O'Boyle
UK private sector output is falling further in September in the latest sign the Bank of England may have raised interest rates high enough, according to a key indicator.
The S&P Global / CIPS Flash United Kingdom PMI recorded a reading of 46.8 for September, the lowest in almost three years and below economists’ expectations, as well as down from August’s surpisingly poor reading. Any figure below 50 represents a decline in output.
The dominant service sector missed expectations with a reading of 47.2, also the worst month in almost three years. Manufacturing picked up slightly, but remained firmly in decline.
Chris Williamson, chief business economist at S&P Global Market Intelligence said: “The disappointing PMI survey results for September mean a recession is looking increasingly likely in the UK.
“The steep fall in output signalled by the flash PMI data is consistent with GDP contracting at a quarterly rate of over 0.4%, with a broad-based downturn gathering momentum to hint at few hopes of any imminent improvement.”
Like this morning’s retail sales figures, the decline in private sector output will validate the Bank of England’s decision yesterday to pause its interest rate hikes, as signs the economy is already slowing grow.
FTSE 100 steadies despite US slump, Rightmove up 2%
Friday 22 September 2023 08:42 , Graeme Evans
The FTSE 100 index today showed resilience at the end of a busy week of central bank developments.
London’s top flight initially fell to 7652 on the back of last night’s poor Wall Street session before a rally to 5.41 points higher at 7684.03.
The UK-focused FTSE 250 index also improved on its position at the opening bell to settle 28.97 points lower at 18,609.58.
Auto Trader and Rightmove led the FTSE 100 with gains of 2% while Lloyds Banking Group added 0.4p to 44.8p after Deutsche Bank backed the lender with a 62p target price.
Cannes Lions events business Ascential topped the FTSE 250 index, up 6.6p to 196.9p following a 17% rise in half-year underlying earnings.
Mothercare woes go on as sales fall in Middle East
Friday 22 September 2023 08:36 , Daniel O'Boyle
Mothercare’s troubles showed no signs of slowing, as the retailer blamed “continuing challenges” for its Middle Eastern franchisees for sliding sales.
The business, which licenses the Mothercare brand abroad since the UK high street arm collapsed, saw sales fall by 15% in the six months to mid-September, to £132.5 million.
Mothercare says it is in discussion with prospective lenders “to ensure that the group has adequate and appropriate financing for the future”.
The shares lost another 15.7% to 3.5p. The business, once worth £7.5 billion, is now valued at £24 million.
Investec profits grow as Rathbones wealth merger closes
Friday 22 September 2023 08:22 , Daniel O'Boyle
Investec’s profits are set to rise as the City and South Africa-based firm closed the deal to sell its wealth arm.
The business expects profits to land between £428.7 million and £449.6 million for the six months to 30 September, which would be up around 6-10% from last year.
Most of the growth was driven by its UK business, where profits are set to be up 20%.
Investec said successful acquisition of new clients for its wealth business - which was sold to 281-year-old City firm Rathbones in a deal that closed yesterday - helped to boost profits, as did higher interest rates.
Shares are up 1.3% to 478.1p.
Consumer optimism rises to 20-month high
Friday 22 September 2023 07:37 , Graeme Evans
Consumer confidence is its strongest since January 2022 after the monthly index compiled by GfK improved by four points to minus 21.
The upturn in optimism has been driven by expectations for the UK economy in the coming year, which increased six points, and by a four-point boost to the major purchase measure.
The index measuring changes in personal finances rose two points at minus 13, some 15 points better than a year ago. The forecast for personal finances over the next 12 months is 38 points higher than during last year’s mini budget turmoil.
The improvement comes against a backdrop of falling inflation figures, growth in wages and high interest rates.
GfK director Joe Staton said: “While this month’s improved headline score is good news, it’s important to note many households are still struggling with the cost-of-living crisis and that economic conditions are tough.
“The reality is that consumer confidence remains suppressed, and the financial mood of the nation is still negative.”
Volatility up after Fed rates message, pound at $1.22
Friday 22 September 2023 07:21 , Graeme Evans
Fears that Federal Reserve interest rates will stay high throughout 2024 left its mark on US shares yesterday as the S&P 500 index experienced its worst session since March.
The S&P’s 1.6% fall accelerated after strong labour market data fuelled market jitters caused by the hawkish tone of the central bank’s rates decision on Wednesday.
With the 10-year US Treasury yield its highest since 2007 and the VIX index of volatility up for a fifth consecutive day, the tech-focused Nasdaq closed 1.8% lower last night.
The FTSE 100 index declined 0.7% to 7678 yesterday, with futures trading for today pointing to a 10 point fall according to IG Index.
The pound, meanwhile, is at its lowest level against the US dollar since March after declining 1% to $1.22 on the back of a pause in Bank of England rate rises. Brent Crude futures today stood near to $93.50.
Retail sales up 0.4% month-on-month
Friday 22 September 2023 07:16 , Daniel O'Boyle
UK retail sales came in slightly below expectations in August, in a reading that will support the Bank of England’s decision to pause rate hikes yesterday.
Sales recovered by 0.4% month-on-month after a sharp fall in July, but were still down 1.4% year-on-year amid bad weather for most of the month. Both figures were 0.1 percentage points below economists’ forecasts.
ONS senior statistician Heather Bovill said: “Retail recovered a little from the large fall seen in July, driven by a partial bounce back in food and a strong month for clothing, though sales overall remain subdued.
“These were partially offset by internet sales, which dropped slightly as some people returned to shopping in person following a very wet July. Fuel sales also fell, with increased prices hitting demand.”
Fresh Microsoft-Activision deal ‘opens the door’ to being cleared, CMA says
Friday 22 September 2023 07:13 , Simon Hunt
Microsoft’s revised deal with Call of Duty maker Activision has addressed the concerns of the UK competition watchdog, it said today, adding that it “opens the door” to being cleared.
The Competition and Markets Authority had blocked a previous version of the deal, citing Microsoft’s already-dominant position in cloud gaming services. Microsoft came back with a fresh deal, under which Ubisoft would manage Activision’s cloud streaming rights.
In a statement the CMA said: “The CMA considers that the restructured deal makes important changes that substantially address the concerns it set out in relation to the original transaction earlier this year.
“In particular, the sale of Activision’s cloud streaming rights to Ubisoft will prevent this important content – including games such as Call of Duty, Overwatch, and World of Warcraft – from coming under the control of Microsoft in relation to cloud gaming.
“While the restructured deal is materially different to the previous transaction and substantially addresses most concerns, the CMA has limited residual concerns that certain provisions in the sale of Activision’s cloud streaming rights to Ubisoft could be circumvented, terminated, or not enforced.
“To address these concerns, Microsoft has offered remedies to ensure that the terms of the sale of Activision’s rights to Ubisoft are enforceable by the CMA. The CMA has provisionally concluded that this additional protection should resolve those residual concerns.”
Recap: Yesterday’s top stories
Thursday 21 September 2023 22:44 , Simon Hunt
Good morning. Here’s a summary of our top stories from yesterday:
Bank of England pushes pause on interest rate rises, adding to speculation we have hit the peak
Rupert Murdoch steps down as chairman of News Corp and Fox.
Next ups profit guidance against by another £30m to £875m as high street king shows life in the retail sector yet.
JD Sports full year profits to top £1 billion as CEO shrugs off concerns about consumers paring back spending
UK August public borrowing less than officially forecast at £11.6 billion, after OBR eyed £13 billion - as self-assessment tax returns came in higher than expected.
DFS consults on job cuts at one of its factories and wood mills as it expects the furniture market to decline by another 5% over next year, after profits halved in 2022-23
Vet group CVS’ profits jump by 50%, to £53 million, as monopolies watchdog threatens to crackdown on large corporates taking over the sector. But with a £350m war chest, is it still planning on buying out smaller vets?
