FTSE 100 Live: Goldman eyes crypto spending spree, rate rise fears dampen mood, food price inflation dips

 (Evening Standard)
(Evening Standard)

Jitters over the eventual peak for US interest rates have returned to cast a cloud over financial markets, while Goldman Sachs is ready to snap up crypto trading companies according to a news wire report.

Solid figures from the US economy yesterday cooled speculation that the Federal Reserve might soften its approach on rates early next year.

The resulting stronger dollar means the pound is back below $1.22, while the S&P 500 index dropped 1.8% on Monday night.

FTSE 100 Live Tuesday

  • Food price inflation dips for first time in 21 months

  • US rate rise outlook hits shares

  • Upper Crust chain SSP back in profit

New York stocks make neutral start after rate outlook sell-off

Tuesday 6 December 2022 14:44 , Michael Hunter

Worries that expectations for smaller rate rises at the Federal Reserve’s December meeting had let the stock market run too far, too fast persisted in opening New York trade.

While the broad and brisk sell-off seen over the previous session did not repeat itself, the S&P 500 slipped a further 5 points to 3993.55, down 0.1%.

The modest decline came after the index closed at its lowest level in a week on Monday.

Goldman Sachs prepares crypto spending spree after FTX collapse says report

Tuesday 6 December 2022 13:42 , Michael Hunter

The crypto crash has caught the attention of one of the biggest names in global finance, with Goldman Sachs ready to go on a spending spree in a sector hit by the collapse of FTX.

A report from Reuters quoted Goldman’s head of digital assets, Mathew McDermott, as saying there were “really interesting opportunities, priced much more sensibly” after the impact on the crypto industry of the demise of the exchange.

The news agency said Goldman was already carrying out due diligence on potential deals, and MCDermott said the demise of FTX had increased demand for crypto trade with properly regulated and trusted names. That increased demand has also come from financial institutions.

The report said Goldman’s potential spending could be worth”tens of millions of dollars.

FTSE 100 midday movers: Rolls-Royce stays in the lead while Phoenix takes off

Tuesday 6 December 2022 12:29 , Michael Hunter

Rolls-Royce held on to the top slot on the FTSE 100 leaderboard in midday trade, with some other dollar earnings not too far behind, while it also held off Phoenix Group after a strong trading update from the insurer, which set upbeat new business targets.

The world-famous Derby-based engineer’s stock rallied on upbeat contract news. Rolls-Royce engines will power the next generation of US army helicopters that will replace the Blackhawk vehicles.

Overall, London’s main stock index slipped almost 19 points to 7548.73, losing 0.3%, with resource stocks at the bottom of the market.

London overtakes New York and San Francisco for fintech funding

Tuesday 6 December 2022 10:59 , Simon Hunt

London has edged ahead of San Francisco and New York to become the world’s biggest centre for fintech investment, a new report reveals today.

London has attracted $9.5 billion (£7.8 billion) in fintech venture capital funding since the start of the year, according to data from Dealroom, finishing ahead of New York’s $7.8 billion and San Francisco’s $7.4 billion despite coming third behind both US cities in 2021.

It marks an striking achievement for London which has combined its strengths in financial services and tech to become a world powerhouse in fast growing areas such as payment processing and online banking.

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World Cup lift for Marston’s, Rolls-Royce shares up 3%

Tuesday 6 December 2022 10:20 , Graeme Evans

Marston’s, whose estate of 1468 pubs includes Moorgate’s Rack and Tenter and the Pitcher & Piano in Cornhill, today reported a sales uplift of more than 50% for England’s World Cup games.

The update came as the chain returned to profit for the year to 1 October and said like-for-like sales were up 6.8% so far in this period. year.

Despite the cost of living pressures, Marston’s said: “Pubs have demonstrated their resilience time and time again and, to date, there is little in our trading performance to suggest that there has been a change to consumer behaviour.”

Its shares have fallen 50% this year and were little moved by today’s update, surrendering an initial 3% gain to later settle 0.3p higher at 39p. Among other pub chains, Mitchells & Butlers was flat at 144.9p and JD Wetherspoon down 3.8p at 444.2p.

Their performances reflected the lacklustre mood of the wider London market, with traders concerned that the US Federal Reserve is now looking less likely to soften its approach to interest rate rises in the new year.

The FTSE 100 index fell 12.56 points at 7554.98, with Severn Trent and United Utilities down 26p to 1030.5p and 61p to 2698p respectively. BP and Shell also weakened 1% despite Deutsche Bank lifting its price targets on both oil giants.

Rolls-Royce attracted buying interest as the engine giant’s shares rose 3.2p to 93.75p at the top of the blue-chip risers board.

The FTSE 250 index eased 65.33 points to 19,264.25, led by cyber security firm Darktrace with a fall of 17.6p to 332.9p. Industrial threads business Coats rose 2.3p to 69.1p after announcing a move that further de-risks its UK pension scheme.

Ashtead and Rolls-Royce lead FTSE 100, SSP up 2%

Tuesday 6 December 2022 08:42 , Graeme Evans

Plant hire business Ashtead has posted the biggest rise in the FTSE 100 index, lifting 4% or 200p to 5236p after its interim results included an uplift to full-year profits guidance.

The company, which generates the bulk of its revenues through Sunbelt in North America, said its business was “performing well with clear momentum in robust end markets”.

Ashtead shares were joined at the top of the FTSE 100 by Rolls-Royce, which lifted 3.1p to 93.65p, but the top flight overall fell 12.05 points to 7555.49.

Defensive stocks Severn Trent and United Utilities contributed to the weakness after they fell 2%, while BP and Shell were 1% lower despite Deutsche Bank lifting its price targets on both oil stocks.

The FTSE 250 fell 0.5% or 88.77 points to 19,240.81, although food-on-the-go firm SSP rose 2% or 4.4p to 220.8p after its annual results.

Paragon shrugs off buy to let woes

Tuesday 6 December 2022 08:09 , Simon English

PARAGON today shrugged off talk of strife in the buy-to-let market and fading house price growth to record a storming set of figures.

The buy-to-let specialist saw mortgage lending jump 17% to £1.9 billion for the year to September. Profits near doubled to £418 million and the divi is up by almost 10% to 28.6p.

That represents quite a bounce-back from the pandemic and comes amidst growing talk that amateur buy to let landlords face a “cliff edge” due to rising borrowing costs.

Paragon CEO Nigel Terrington, at the helm for 27 years, says: “We have a very long tem focus to high quality customers. They are mostly professional landlords who have been doing it for the last 20 years.”

Arrears on loans are put at 0.15% on a mortgage book of more than £14 billion. Retail deposits are up 15% to £10.7 billion.

Added Terrington: “To date, the credit performance on our portfolio has been really strong. This is not to say 2023 won’t hold challenges.”

While higher interest rates which prove challenging for borrowers, they also increase margins for lenders such as Paragon.

Data from Moneyfacts shows that many buy to let deals have been pulled from the market altogether. Those that remain are much more expensive.

Retail sales volumes under pressure

Tuesday 6 December 2022 08:03 , Graeme Evans

Retail sales rose 4.1% on a year earlier during the Black Friday month of November, the British Retail Consortium (BRC) said today.

That suggests volumes are well below last year, considering that October’s inflation rate was recorded at 11.1%.

Coats, hot water bottles and hooded blankets sold well during the month, while Black Friday discounts boosted sales of home furnishings amid signs that households have traded nights out for budget nights in.

BRC chief executive Helen Dickinson said: “Despite facing huge cost pressures, retailers are doing all they can to keep prices affordable for all their customers.

“But, the cost-of-living crisis means many families might dial back their festive plans. Yet, with three weeks to go, there is still plenty of time for the Christmas cheer to bring sales home this Christmas.”

Food price inflation dips for first time in 21 months as Lidl hits record market share

Tuesday 6 December 2022 08:00 , Simon Hunt

The rate of grocery price inflation has fallen for the first time in nearly two years, according to the latest figures from Kantar, with four-week inflation now standing at 14.6%.

Fraser McKevitt, head of retail and consumer insight at Kantar, comments: “As we move into the busiest time of the year for supermarkets, there are signs that the pace of grocery price inflation is easing off slightly.”

“Grocery inflation still has a long way to come down though and based on the current rate, shoppers will have to spend an extra £60 in December to buy the same items as last year.”

Lidl’s year-on-year sales increased by 22.0%, pushing its market share to a record 7.4%. An additional 1.5 million households shopped with Aldi compared with 2021 as it grew sales by 24.4% to claim 9.3% of the market.

Phoenix Group sets sights on £1.5 billion in new business by 2025

Tuesday 6 December 2022 07:45 , Michael Hunter

Phoenix Group, the FTSE 100 pension provider and life insurer, has said it expects £1.2 billion in new long-term business this year and cash generation at the top end of its £1.3 billion to £1.4 billion target range.

The company, whose brands include Standard Life and Sun Life says it is making “strong progress” in building its organic growth capabilities and is setting a target for around £1.5 billion in new business by 2025, a rise of around a quarter.

That will come “primarily through” its Standard Life business, which it acquired from what was then Standard Life Aberdeen in 2018 for almost £3 billion.

Rate rise outlook hits Wall Street, FTSE 100 seen flat

Tuesday 6 December 2022 07:45 , Graeme Evans

The S&P 500 index fell 1.8% and the tech-focused Nasdaq Composite by 1.9% last night after better-than-expected services activity data fuelled US rate rise expectations.

Rates are due to rise by another 0.5% this month, with similar hikes now appearing to be in the pipeline for early next year based on current economic trends.

Deutsche Bank noted that Wall Street’s forecasts for the Fed terminal rate in May moved up by 9.5 basis points yesterday to 5.01%. That's a noticeable shift from where it was just before Friday’s non-farm payrolls report boosted confidence in the resilience of the US economy.

It also means that most of the moves lower after a speech last Wednesday by Federal Reserve chair Jerome Powell have now reversed.

Pricing for the end of 2023 rose by an even larger 16.8 basis points to 4.60%, as markets now think that policy will be restrictive for longer. The resulting rise in Treasury yields saw the US 10 year lift to 3.57%.

A stronger dollar left the pound at below $1.22, reversing some of the trends seen in recent weeks. The FTSE 100 index, which added 0.2% yesterday, is forecast by CMC Markets to open three points lower at 7564.

SSP back in black but warns on rail strike impact

Tuesday 6 December 2022 07:41 , Simon Hunt

Upper Crust owner SSP marked a return to profitability but warned industrial action was hurting sales.

The firm, which also owns the Café Ritazza and Camden Food Co. brands, posted sales of £2.2 billion, more than double last year’s thanks to a “rapid recovery in passenger demand” at the airports and rail stations at which it operates.

However, the firm said sales were still only at 85% of pre-pandemic levels, and warned of “further impacts from ongoing industrial action in the rail network.”

Rationing may be used in 2023 to tame inflation warns City expert

Tuesday 6 December 2022 14:47 , Michael Hunter

The UK has not seen inflation like it since the 1980s, and it has been the main economic and financial factor of the year. Tne cure for it could involve drastic tactics last used in the 1950s according to one City expert: Rationing.

Saxo Bank’s chief investment officer, Steen Jakobsen, says the drastic step could help the government fix the “underlying issues” behind rising prices. It comes as part of Saxo’s annual end-of-year exercise in making “outrageous predictions”, in a light-hearted effort to speculate on what might yet shock financial markets as the calendar flips over.

Saxo itself describes its predictions as “unlikely but underappreciated events” which would send shockwaves around the world if they were to occur. Others on the list for 2023 include the resignation of France’s President Macron and the gold price rocketing to $3,000, roughly double current levels. It also said the EU could set up a full army.

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