FTSE 100 Live: Musk nears Twitter deal, China lockdown fears hit shares, Brent crude price falls sharply
Heavy stock market selling continued today as fears intensified over the economic impact of China’s zero Covid policy.
Major Asian markets fell by 4% or more and the FTSE 100 index lost 2% after it emerged that authorities have ordered mandatory tests in a district of Beijing and locked down some buildings.
The move, which comes on top of ongoing lockdowns in Shanghai, caused Brent crude futures to fall 5% to below $102 a barrel as shares in miners, oil majors and Asia-focused companies including Burberry fell sharply in London.
FTSE 100 Live Monday
Markets slide on fears of China disruption
Elon Musk ‘nears deal to buy Twitter'
Prudential, Burberry and miners all lower
McColl’s Retail warns of equity wipe out
London set to close lower as Beijing extend Covid testing
16:05 , Oscar Williams-Grut
State officials in Beijing have just announced that Covid-19 testing will be extended to the whole city from tomorrow until April 30 as authorities try to get a handle on an outbreak in the city. Testing in parts of the city began over the weekend after an outbreak of Covid-19.
The news means the FTSE 100 is almost nailed on to close lower. It is down by 116 points, or 1.5%, with just half an hour left of the trading day. Stock markets around the world have been dogged by concerns about Covid lockdowns in China.
Other big stories today include:
- Elon Musk is edging closer to a deal to buy Twitter
- Manufacturers are raising their prices at the fastest rate in 40-years
- Singapore’s sovereign wealth fund has bought a major chunk of Paddington
- Just Eat is facing more pressure from its activist investor Cat Rock Capital, which has accused it of a “betrayal of trust” and is trying to oust the delivery firm’s CFO
- and house prices continue to accelerate despite inflation, rising interest rates and collapsing consumer confidence.
That’s all from us on the blog today. Join us again tomorrow.
Activist turns up the heat at Just Eat Takeaway
15:45 , Oscar Williams-Grut
The heat under Just Eat Takeaway increased today after a major shareholder called for an AGM revolt over the re-election of finance boss Brent Wissink.
Cat Rock, which owns 6.9% of the food delivery company, also wants fellow shareholders to vote against the supervisory board at next week’s annual meeting.
The pressure from the activist investor follows a 75% slide for Just Eat shares in the two years since its acquisition of US-based Grubhub. As well as reporting a 1% drop in orders in the first quarter, the company said last week it was considering the partial or full sale of Grubhub.
Cat Rock founder and managing partner Alex Captain said management had made a mistake buying Grubhub but that this alone could not fully explain the loss of value.
FTSE firmly lower as China fears, Anglo disappointment drags
15:34 , Oscar Williams-Grut
The FTSE 100 is 130 points, or 1.7%, lower in afternoon trade as fears of a slowdown in China and woes for Anglo American drag on the index.
Concerns about possible lockdowns in China are denting stocks with big exposure to the country, including commodity giants like Glencore and Rio Tinto, and luxury brand Burberry. All three are down more than 4%.
Oil is back at $100 a barrel as traders bet that China will need less of it if curbs are introduced to slow the spread of Covid-19. That’s pushed BP down 5.2% and Shell 4.4% lower.
But Anglo American is the worst performer of the day though, off almost 6% after warning that authorities in Chile were minded not to extend a permit for a copper project in the country.
Elsewhere, the FTSE 250 is down over 300 points and Wall Street stocks are in the red, though not by as much as those in London.
US markets open narrowly in the red
14:55 , Bradley Gerrard
Two major US stockmarkets fell at the opening bell but the drop seems to have been less severe than some had expected.
The S&P 500 index fell 0.74% to 4,240.27just after trading began, while the tech-heavy Nasdaq slipped 0.39% to 166.2.
A strong earnings beat from Coca-Cola earlier in the day may have helped mitigate losses, in a week where the major tech giants Apple, Microsoft, Amazon and Alphabet (owner of Google) will report results.
The signposted moves by the US Federal Reserve to raise interest rates is seen as negative for tech stocks.
Although rising bond yields can be bad for equities generally, as they make fixed income more appealing for investors, and can increase the costs of borrowing.
A total of 180 S&P 500 companies are reporting earnings updates this week, which is likely to have a major bearing on the performance of the index this week.
Bitcoin wobbles as US dollar lures investors
14:25 , Bradley Gerrard
The rising attraction of the US dollar is weighing on cryptocurrencies, with Bitcoin extending this month’s losses in trading today.
The largest cryptocurrency slid as much as 3.3% to $38,223, the lowest since March 15, and down more than 20% from last month’s high. The second-biggest coin, Ether, slumped as much as 4.8% to $2,799, a level not seen since March 18.
Commentators say the move is being driven by the US Federal Reserve, which has guided that it will raise interest rates in the coming months.
Rising rates are usually positive for currencies, meaning investors may reallocate away from the likes of Bitcoin to the greenback instead.
So far in 2022, Bitcoin has traded between $35,000 to $45,00, but given that it often trades in-line with the tech-heavy Nasdaq, whcih is viewed as being under pressure from rising rates, and is negatively correlated with the dollar, some expect the cryptocurrency to go below this range.
“Like the negative correlation of Bitcoin to the dollar, the negative correlation of Bitcoin to real rates has only emerged in the last couple ofyears,” analysts at Bitcoin firm Nydig wrote in a note.
Fears for US markets after Netflix miss helps erase $1trn from Nasdaq
13:32 , Bradley Gerrard
Index futures in the US are pointing to further losses on the nation’s stockmarkets, suggesting the Nasdaq’s $1 trillion drop in value since Netflix’s disappointing results last week could worsen.
Fears about monetary tightening by the Federal Reserve and worries about China’s renewed battle with Covid-19 and creating market jitters, alongside the prospect of rising bond yields and their impact on sectors such as tech.
S&P 500 index futures were 0.7% lower, while Nasdaq 100 contracts retreated 0.6% by 5:51 am in New York, paring earlier declines of as much as 1.2%.
The Nasdaq 100 Index has erased about $1 trillion in market value, caused in significant part by Netflix’s 25% share price drop on the back of its Q1 earnings, which revealed it had lost 200,000 subscribers - the first time it had lost subscribers in more than a decade.
On Friday, Federal Reserve Chair Jerome Powell’s endorsement of aggressive actions to curb inflation sent traders racing to price in half-percentage-point interest-rate increases at the bank’s next four meetings, anticipating a stark break with its decades-long practice of tightening monetary policy at a gradual pace.
“Our view is that the market may have now priced in too great an extent of Fed tightening this year,” said UBS Wealth Management chief investment officer Mark Haefele.
“A month ago, the Fed’s dot plot pointed to a year-end federal funds rate of 1.9%, the market now expects that level to be reached in July and fed funds to end the year at 2.83%.”
Coca-Cola posts earnings beat as fizz returns to US hospitality sector
13:15 , Bradley Gerrard
A resurgence in the US hospitality sector helped Coca-Cola beat earnings expectations.
The soft drinks giant posted revenues of $10.5 billion, surpassing the $9.84 billion average estimate of analyst predictions compiled by Bloomberg.
The 18% rise in revenues - almost double the expected rate - was driven in large part by a huge uptick in the restaurant industry, as well as price rises, which have been instigated to battle raw ingredient price increases.
The impressive results extend a string of in-line-or-better earnings for Coca-Cola going back to 2019.
Analysts said the company was navigating supply constraints andcost pressures better than some of its peers, according to Bloomberg.
Coca-Cola said suspending its business in Russia due to the conflict in Ukraine will have a 1% to 2% impact on revenue and 4-cent effect on earnings per share.
Elon Musk could reach takeover deal with Twitter ‘as soon as today’ as shares rise
12:34 , Bradley Gerrard
Elon Musk’s audacious bid to buy Twitter is moving closer, with reports that a deal could be thrashed out as soon as Monday.
The two sides met to discuss a deal for the first time over the weekend and Blomberg reported that Twitter was “in the final stretch of negotiations” about a sale to the Tesla CEO.
Shares in the company rose 5% to 51.40 in pre-market trading, nearing the level of Musk’s offer.
Twitter hasn’t responded to a request for comment and Musk hasn’t tweeted on his Twitter pursuit in recent days.
Tesla boss Musk met with executives from the social media service on Sunday, the Wall Street Journal reported, claiming a deal could be done as soon as this week.
It was the first meeting of the two sides since Musk stunned the world with his surprise attempt to buy Twitter a week and a half ago.
Dollar gains put pound at lowest rate against the greenback for 18 months
12:32 , Bradley Gerrard
A rapid strengthening in the US dollar has pushed the pound to a one-and-a-half year low against the greenback.
The pound now sits at $1.2711 - the lowest rate since September 2020 - as the US currency strengthens amid projected rises in interest rates by the Federal Reserve.
Broadly speaking, higher interest rates often lead to currencies strengthening as long as there are no major fears about a country’s economy relative to its peers.
Neil Wilson, chief market analyst at Markets.com, said the dollar was “steamrolling everything in its way”.
He said that while there were some worries about the UK economy, such as the soft retail sales figures last week, the currency move was mainly a response to the predicted direction of monetary policy in the US.
“Markets are pricing for an aggressive rate hike cycle with multiple 50 basis point hikes to 1.9% by August and 2.7% by the end of the year, a level at which it would be actively restraining potential,” he said.
Wilson said the pound’s weakness versus the dollar would be good for exporters but bad for consumers and “is liable to make the inflation situation even worse”.
The euro hit a two-year low versus the dollar at $1.07.
Commodity stocks take brunt of FTSE fall as global markets drop
12:05 , Bradley Gerrard
Commodity stocks on the FTSE 100 are dragging the index down as shares across Europe slip after a sea of red across Asian bourses.
Anglo American and Glencore are down more than 6%, while Rio Tinto and BP have both dropped more than 5%, taking the FTSE 100 to 7,360.12 - a fall of 2.15%.
Pressure is being put on commodity stocks as fears rise about a slowdown in China, which is fighting to control the latest outbreak of Covid-19, which has seen the country lockdown its largest city, Shanghai.
This scale of UK stockmarket drop is being mirrored across Europe, with France’s CAC 30 index falling 2.4% to 6,424.68, in spite of French president Emmanuel Macron secruing re-election, and Germany’s DAX 40 down nearly 1.8% to 13,888.35.
The falls come after a torrid session in Asian markets, where the Shenzen Composite index in China slipped more than 6% to 10,379.28, and the Shanghai-based market fell 5.1% to 2,928.51.
After a sell-off on Wall Street on Friday, investors will be hoping for a strong showing from the slew of tech giants reporting this week, including Microsoft, Apple, Amazon and Google’s parent company, Alphabet. A total of 180 S&P 500 companies are reporting earnings updates this week.
Cost of living fears rocketed before energy price rise
11:47 , Bradley Gerrard
Nearly nine in 10 adults saw a rise in their cost of living in March - a rapid spike compared to just 62% in November last year, according to new data from the Office for National Statistics.
The ONS said 87% of those surveyed reported an increase in their cost of living in March, with nearly a quarter (23%) stating it was ‘very difficult’ or ‘difficult’ to pay ther usual household bills - up from just 17% in November.
Perhaps worryingly, among the people who pay energy bills, roughly four in 10 (43%) reported that it was ‘very difficult’ or ‘somewhat difficult’ to afford their enrgy bills.
This will be a concern for households given that the energy price cap rose by £693 from 1 April under Ofgem rules, and is scheduled to rise again in October.
For borrowers, nearly a third (30%) rpeorted it was ‘very difficult’ or ‘somewhat difficult’ to afford hosuing costs, and 3% claimed to be behind on rent or mortgage payments.
Furthermore, 43% of adults said they would not be able to save money in the next 12 months, the highest percentage since March 2020.
Asda follows rivals in upping pay for staff
11:16 , Rhiannon Curry
Asda has upped pay for shop floor workers to £10.10 an hour amid pressure to bring wages in line with other supermarkets that have hiked pay in recent months.
Rivals Tesco, Sainsbury’s, Aldi and Lidl have all raised pay for front line staff in the last six months, reflecting the higher cost of living. The moves left Asda the UK’s lowest paying supermarket.
From July 1, the hourly pay for 120,000 Asda workers will rise from £9.66 to £10.10. The new pay is 60p higher than the living wage, an independently verified marker that is set at a rate to reflect the current cost of basic goods such as food and energy.
Nick Candy-backed podcast firm Audioboom secures maiden profit
11:10 , Bradley Gerrard
Global podcast firm Audioboom has bagged its first profit after a rise in downloads and a strong performance from its automated advertising technology.
The firm, backed by property magnate and Chelsea FC bidder Nick Candy, secured pre-tax profits of $1.7 million (£1.3 million) in 2021, reversing its $3.3m loss from 2020.
Global monthly downloads hit an average of 113 million in the final three months of last year (81.7 million in Q4 2020) and its Showcase advertising technology, which monetises the firm’s back catalogue, hit $1 million in monthly revenue for the first time in December.
The firm added its production arm, Audioboom Studios, had been helped by further commercial success of Dark Air with Terry Carnation, as well as the extension of its production partnership with Formula 1, while it had secured new content creation partnerships with leading podcasts, including Redhanded, The Way I Heard It with Mike Rowe, Zane & Heath Unfiltered, Dark History, Hacks on Tap, and Spitballers.
Musk’s Twitter takeover edges closer
11:08 , Oscar Williams-Grut
Elon Musk’s audacious bid to buy Twitter is moving closer after the two sides met to discuss a deal for the first time.
Tesla boss Musk met with executives from the social media service on Sunday, the Wall Street Journal reported, claiming a deal could be done as soon as this week.
It was the first meeting of the two sides since Musk stunned the world with his surprise attempt to buy Twitter a week and a half ago.
Markets slide on stagflation fears
10:35 , Graeme Evans
Stagflation fears have risen sharply in recent weeks, which is why markets are reacting so badly to the threat of further China lockdowns.
The FTSE 100 index is down more than 2%, with miners, oil majors and Asia-focused companies such as Burberry all impacted.
The sell-off comes at the start of a week that will see earnings figures from leading UK banks and Wall Street tech titans including Apple.
AJ Bell investment director Russ Mould said: “The prospect of further restrictions in China could lead to a poisonous mix of further inflationary pressure, as supply chains in the so-called ‘factory of the world’ get disrupted, and weaker economic growth.
“The result could be stagflation – a slowing economy accompanied by surging prices – a brew few investors would be able to stomach.”
Retailers lower, McColl’s warning hits shares
10:22 , Graeme Evans
A potential rescue deal for McColl's Retail that threatens to leave investors out in the cold caused a huge sell off for the convenience store chain’s shares today.
The stock lost half its value, falling 2.1p to 1.85p, as McColl’s said that ongoing efforts to tackle its short term funding issues were increasingly likely to result in “little or no value being attributed to the company’s shares”.
While the talks with its lenders continue, McColl’s added that trading over Easter had been impacted by reduced consumer spending and continued supply chain disruption.
The group, which has 1,100 managed convenience stores and newsagents, now expects its annual results to be no higher than the level achieved in 2021, despite its Morrisons Daily stores continuing to perform strongly.
The plight of McColl’s added to the downbeat mood in the retail sector as investors fret about cost of living pressures.
Analysts at Deutsche Bank warned that companies with the highest proportion of sales from lower income demographics will suffer the most in 2022, a view reflected in the City firm’s “sell” recommendation on B&M European Value Retail.
It also removed a “buy” rating for Marks & Spencer and lowered its price target by more than a quarter to 185p. The shares were today 3.85p lower at 148.05p as Deutsche Bank’s note flagged the impact of higher energy costs on M&S’s food business.
In a session when the FTSE 100 index slid 2.3% or 172.65 points to 7349.03, defensive Unilever and Reckitt Benckiser offered some shelter as their shares rose 1%.
The FTSE 250 index fell 428.96 points to 20,452.84, with Rolex retailer Watches of Switzerland among the stocks 5% or more lower.
09:24 , Oscar Williams-Grut
Burger King UK’s earnings almost tripled last year thanks to a jump in people ordering online.
The chain made sales of £211.7 million for the year to December 2021, which was 68% higher than in 2020 and well above pre-Covid levels.
Online orders now account for a quarter of the fast-food chain’s UK business, it said.
Burger King attributed this to higher sales made over its app, which increased user numbers by more than 60% to 1.3 million in 2021. Meat-free menu options such as the Vegan Royale and a plant-based Whopper burger also boosted sales.
Pre-tax earnings for the period were £49.6 million, up from £17.2 million in 2020.
British Land sells £694 million chunk of Paddington to Singapore
09:14 , Oscar Williams-Grut
Singapore has bought a major chunk of Paddington in a £694 million deal.
GIC, Singapore’s sovereign wealth fund, has snapped up a 75% stake in British Land’s 11-acre Paddington Central estate for £694 million.
The deal establishes a new partnership to run the site, which is home to businesses including Microsoft, Kingfisher, Finastra, Vodafone and Mars.
GIC has a further option to buy a 50% stake in 5 Kingdom Street, the last office development at the site, and 3 Kingdom Street, a Novotel hotel, at a later date.
British Land bought the site in 2013 and has invested in offices, restaurants and bars in the area, as well as new green spaces and revitalising the area around the Grand Union Canal. It has spent £680 million buying up property in the area.
Mining giants fall 4%, Prudential and Burberry slide
08:31 , Graeme Evans
The FTSE 100 index has fallen by a bigger-than-expected 114.80 points to 7406.88, a decline of 1.5% driven by heavy losses for stocks exposed to the China economy.
Mining giants Rio Tinto and Glencore fell 4%, while Asia-focused insurer Prudential retreated 38p to 1006p and luxury goods group Burberry eased 3% or 47p to 1587p.
Today’s sharp fall in the Brent crude price to below $103 a barrel also meant BP dropped 3% or 11.25p to 381.9p. Growth stocks were hit by the outlook for higher US interest rates as Scottish Mortgage Investment Trust lost another 18.4p to 889.5p.
The UK-focused FTSE 250 index dropped 282.28 points to 20,599.52, led by falls of 6% for Tullow Oil and 4% for Aston Martin Lagonda.
Macron re-election “supportive“ for European assets
08:12 , Graeme Evans
Markets were little moved by Emmanuel Macron’s re-election as France president, particularly with this morning’s focus on China lockdowns and US interest rates.
However, Dean Turner, chief Eurozone and UK economist at UBS Global Wealth Management’s Chief Investment Office, believes the result should be supportive for French and European assets as well as the single currency.
He said: “There is much focus on Macron's domestic policy, which will be on labour market reforms and delivering on the green deal. But arguably, the greater focus will be on what the result means for Europe.
“Reform of the Eurozone’s fiscal rules, with the Stability and Growth Pact set to return later this year (although there is a high chance this will be delayed again) will be a key challenge.
“With Macron’s support, reform is likely to favour a more gradual path of fiscal consolidation which, other things equal, would be supportive for growth and investment, especially in areas such as decarbonisation and digital technologies.”
Covid fears hit Asia shares, FTSE 100 lower
07:40 , Graeme Evans
Big losses for Asian markets as Covid lockdown restrictions continue to spread in China have added to selling pressures in Europe.
The Shanghai Composite has fallen more than 3% amid worries about the impact of the worsening pandemic situation on China’s economy. On top of ongoing restrictions in Shanghai, authorities this weekend ordered mandatory Covid tests in a district of Beijing while some buildings were locked down.
The demand uncertainty created by China’s troubles has hit the price of oil, with Brent crude down 4% at below $103 a barrel this morning.
European markets are set for another poor session as CMC Markets has forecast that the FTSE 100 index will open 90 points lower at 7431, having lost 1.4% on Friday.
Alongside the China weakness, today’s session will take into account an acceleration of Wall Street selling on Friday afternoon after the prospect of faster-than-expected rises in interest rates chilled tech and growth stocks.
The ongoing US earnings season will test the fragile mood, given that Apple, Amazon, Microsoft and Facebook owner Meta Platforms are all due to report quarterly figures this week.
