FTSE 100 Live: Retail sales improve despite grocery weakness

Grocery retailers have seen another decline in sales as households react to the impact of rising prices.

UK retail sales volumes rose 0.6% in October, representing a better-than-expected recovery after the closure of stores for the Queen’s funeral the previous month.

But the Office for National Statistics said food sales declined 1% in the month and are 4.1% below their pre-Covid levels in February 2020.

FTSE 100 Live Friday

• Retail sales lifted by clothing and second-hand stores

• FTSE 100 higher, Centrica shares higher

• Builder Gleeson reports surge in cancellation rates

That’s all folks. Next week: results from AO World and Kingfisher

21:46 , Simon Hunt

That concludes our markets coverage today, on the week that chancellor Jeremy Hunt ripped up his predecessor, Kwasi Kwarteng’s mini Budget plans and replaced them with a string of tax rises and spending cuts.

The Evening Standard City desk will be back next week, when results from AO World and B&Q owner Kingfisher will shed light on the health of the UK’s retail sector.

FTSE 100 closes up 39 points: Evening wrap

17:03 , Simon Hunt

The FTSE 100 closed up 39 points to 7,386 today as investors digested the economic implications of yesterday’s Autumn Statement.

Real estate stocks gained the most, up an average of 1.9%, while energy stocks fell an average of 0.7%. Sporting retailer Frasers Group gained the most today, up5.7% on the last day of trading before the start of the football World Cup on Sunday.

Steven Bell, Chief Economist (EMEA) at Columbia Threadneedle Investments, said: “We now have both the fiscal and monetary authorities hitting the brakes hard just as the economy suffers a huge headwind from higher food and energy prices. Tough times indeed.

“To a large extent the fiscal squeeze has been justified by the need to restore financial stability after the turmoil induced by former Prime Minister Truss and her Government. But we are concerned that Prime Minister Sunak and his Chancellor, Jeremy Hunt, may be overdoing matters.

“The shock induced by skyrocketing food and energy prices in particular is cutting consumer incomes by 5% in real terms, according to some estimates. Rising mortgage rates represent a further knock to disposable incomes both directly and indirectly by the likely recession in house prices. Europe, our biggest trading partner, is also going into recession so we can expect little help from overseas demand.”

Shares rise on Wall Street after retail numbers impress

14:40 , Simon Hunt

Stocks made gains in the opening minutes of trading on Wall Street after a string of retail results came in higher than market forecasts.

Shares in Gap rose ove 12% after the fashion retailer posted better-than-expected quarterly earnings, while JD shares rose 3.6% after continued Covid restrictions in China helped the boost the online retailer’s turnover.

The Nasdaq opened up 1%, while the S&P 500 climed 0.5% and the Dow Jones went up 0.2%.

New York stocks expected to rise after strong results from Gap

13:26 , Michael Hunter

Positive earnings news helped Wall Street’s S&P 500 set course for opening gains on Friday, in what would be a turn-around from losses over the previous session which came as fears over big interest rate hikes returned.

The better mood came after some big Main Street names filed stronger-than-forecast earnings. Gap’s stock rose almost 10% in pre-market trade after its upbeat quarterly numbers after Thursday’s close and discount retailer Ross Stores surged nearly 20% after it too beat forecasts.

Overall, the broad Wall Street stock gauge was ready to rise by about 30 points, or 0.8%, to 3989.75 at the open according to futures trade.

ConvaTec and L&G are the big FTSE 100 winners with BAE and Intertek falling furthest

12:33 , Michael Hunter

ConvaTec, the medical products company that helps patients manage chronic conditions, was the best singe riser. It outlined plans for double-digit earnings growth at a capital markets presentation on Thursday, having upped its guidance last week, with the shares back in demand on Friday. Ocado bounced higher after spending much of the week under heavy pressure.

Legal & General, the insurer, was in second place after a reassuring trading update.

Defensive stocks were at the other end of the market, with BAE Systems and Intertek, the engineer, making the two biggest falls in mid-session trade. Prudential, another insurer, also fell.

Surprise rally in retail sales ‘calm before the storm’

11:28 , Simon Hunt

The High Street enjoyed a surprise bounce in October as retail sales rose 0.6% but analysts said it was the calm before the storm as the cost of living crisis intensifies.

The Office for National Statistics said the higher than expected jump —which follows a 1.5% fall in September — was probably linked to spending deferred from the extended Bank Holiday weekend of the Queen’s funeral.

ONS director of economic statistics Darren Morgan said: “Looking at the broader picture, retail sales continue their downward trend seen since summer 2021 and are below where they were pre-pandemic.”

The new figures reveal sales improved last month in most categories, except for supermarkets and other food stores, which saw a 1% dip.

Sales volumes for the three months to October were down 2.4% against the previous quarter, representing the steepest drop since March 2021, when Covid restriction were in place.

Biffa’s CFO resigns to join DS Smith

10:38 , Michael Hunter

Biffa’s chief financial officer is leaving the FTSE 250 waste management company to take on the same job at DS Smith, the FTSE 100 packaging group.

Richard Pike will leave firm, which handles the waste of around 2 million Londoners, no later than April 30 having run its finances for four years. During that time Biffa lost a case in the High Court about classified waste at some of its landfill sites, brought by tax authorities, which have not yet made a claim, amid reports it could reach £153 million.  That did not deter a £1.3 billion takeover from Energy Capital Partners of the US, which Biffa recommended, although the price was lowered.

Richard Pike said “I’m   proud of   Biffa’s   strong performance  during my tenure  and   I retain a strong belief in the group’s strategy, the leadership team, and the efforts that all of our employees make every day.”

The date he will take up the new job has not yet been set.

FTSE 100 higher, Centrica shares continue to rise

10:16 , Graeme Evans

Shares in British Gas owner Centrica are continuing to run hot in the wake of the Chancellor’s windfall tax raid on power generators.

Jeremy Hunt revealed yesterday the tax on renewables, biomass and nuclear power stations will be set at 45% but gas and coal generators will be exempt.

The announcement, which brought an end to weeks of uncertainty, will raise £14 billion from 2023-28 but is seen in the City as being less onerous than some had feared.

The 45% tax rate is higher than expected, but analysts at UBS point out the threshold of £75/MWh is about 50% higher than the average UK power price over the last decade.

Shares in Centrica, which owns 20% of Britain's nuclear fleet as well as oil and gas production assets, rose sharply yesterday and added another 3% or 2.9p to 94.6p today.

The widely-held stock has now risen 16% in the past month and by 36% since 27 October. Renewable power generators also rode out the storm as SSE added 2% or 30p to 1699p and biomass firm Drax added 4.4p to 605.4p.

Lenders were among other beneficiaries of the Autumn Statement as the Chancellor confirmed the industry surcharge will be reduced from 8% to 3% in order to offset an increase in corporation tax.

NatWest improved 4.4p to 257.4p, meaning its shares have risen 4.5% since yesterday morning, while Lloyds Banking Group added 0.75p to 45.15p.

The gains came as the FTSE 100 index put on a better-than-expected performance by rallying 44.88 points to 7391.42.

Defensive stocks including BAE Systems were out of favour, while North Sea explorer Harbour Energy dropped another 4.7p to 309.33p after the government increased the levy on oil and gas companies to 35% until March 2028.

The FTSE 250 index improved 76.25 points to 19,198.56, with Liontrust Asset Management up 2% or 24p to 1128p after the fund manager left its dividend unchanged alongside a 9% rise in half-year profits to £42.9 million.

FTX assets seized by Bahamas regulator

09:58 , Simon Hunt

Assets of collapsed crypto firm FTX have been seized by regulators in the Bahamas as creditors jostle to get their money back amid accusations of mismanagement of customer funds.

In a statement the Securities Commission of The Bahamas said it “took the action of directing the transfer of all digital assets of FTX Digital Markets to a digital wallet controlled by the Commission, for safekeeping.

“Urgent interim regulatory action was necessary to protect the interests of clients and creditors.”

It comes amid accusations FTX clients’ assets were mishandled, with some being transferred to Alameda Research, an investment vehicle owned by FTX’s founder Sam Bankman-Fried.

Bankruptcy filings released yesterday revealed Bankman-Fried and other FTX executives received over $4 billion in loans from Alameda, which were reportedly used to fund Bankman-Fried’s investments and political donations.

“Based on the Commission’s information, any such actions would have been contrary to normal governance, without client consent and potentially unlawful,” the Commission said.

Bankman-Fried told a Vox reporter over Twitter: “I didn’t want to do sketchy stuff, there are huge negative effects from it…and I didn’t mean to.”

Gleeson shares tank 10% as cancellation rates double

09:05 , Simon Hunt

Shares in MJ Gleeson sunk 10% to hit an eight-year low of 335p today after the house builder said cancellation rates had doubled in the past six weeks to 41%.

The Sheffield-based business also warned reservation rates, a metric indicating buyer appetite, had sunk from 0.42 per site to 0.26 over the same period.

The firm said in a statement: "In September we…said that we were well-positioned to deliver further profitable growth.

“Since then much has changed. The market volatility and sharp increase in interest rates following the mini budget impacted buyer confidence and caused a significant slowdown in demand.”

But tough market conditions were attracting first-time buyers to its cheaper homes, Gleeson said, for which the average selling price since July was £186.500.

“We are now seeing interest from customers who might previously have considered a more expensive property built by another developer but who, in the current environment, are attracted by Gleeson’s more affordable price points,” the house builder said.

US shares hit by rates uncertainty, FTSE 100 holds firm

08:19 , Graeme Evans

The FTSE 100 index has opened higher, despite selling on Wall Street last night after a Federal Reserve policymaker warned against reading too much into last week’s softer-than-expected inflation report.

The remarks from St Louis Fed president James Bullard caused expectations for the peak on US interest rates to return back above 5% for the first time since it emerged that US inflation had fallen back to 7.7%.

The S&P 500 index closed 0.3% lower but the benchmark had been as much as 1.3% lower earlier in the session.

Richard Hunter, head of markets at Interactive Investor, said: “It is a testament to the current levels of uncertainty on the outlook that investors seem continually surprised by the Fed merely repeating its mantra.

“Rates are likely to continue rising for the moment, and may well stay higher until such time as a sustained slowdown in inflation is evident.”

Hunter said the current market view is that a 0.5% interest rate rise in December will be followed by a similar hike in February, at which time there could be a pause for reflection.

This would leave rates in a range of 4.75% to 5%, but the latest Fed comments edged up the projected range to 5% to 5.25%.

The FTSE 100 index stood 9.56 points higher at 7356.10.

Retail sales recover, clothing and second-hand stores in demand

07:52 , Graeme Evans

Retail sales volumes rose 0.6% in October, meaning they only regained part of the 1.5% fall recorded in September when the extra bank holiday for the Queen’s funeral closed many stores.

October’s recovery, which compared with City expectations for a 0.5% improvement, reflected a 2.5% rise in clothing and footwear sales.

The Office for National Statistics said the category of “other” non-food stores grew sales by 3.6% due to demand in second-hand goods stores and auction houses in particular.

Food sales volumes fell for the fourth consecutive month, declining by 1% as households react to higher prices.

Capital Economics said: “The fiscal measures announced in the Chancellor’s Autumn Statement yesterday didn’t darken the near term outlook for consumer spending.

“Indeed, the measures for 2022/23 amount to a net fiscal loosening of £3.8 billion, as most of the tightening measures were backloaded from 2024/25.

“But the big picture is that we’re still expecting high inflation and a rise in interest rates to trigger a five quarter recession, with a peak-to-trough fall in GDP of around 2%.”

Consumer confidence recovers from September low

07:36 , Graeme Evans

Consumer confidence remains close to a record low after GfK recorded a figure of minus 44 in November.

The reading was driven by the cost of living crisis and ongoing economic worries, but represents an improvement on the minus 49 seen during September’s political turmoil.

Gfk client strategy director Joe Staton said: “This month's fillip is likely to reflect nothing more than a collective sigh of relief as a new prime minister takes charge following the alarming fiscal antics we saw in September.”