FTSE 100 Live: Snapchat warning hits shares, April UK borrowing at £18.6bn

City Staff
·5 min read
(Evening Standard)
(Evening Standard)

The owner of Snapchat added to US economy concerns last night by warning that it will miss earnings forecasts for the current quarter.

Snap’s shares plunged more than 30% in after-hours trading on Wall Street as the social media platform said the macroeconomic environment had “deteriorated further and faster than anticipated”. Facebook owner Meta Platforms was 7% lower and Twitter fell by 4%.

In the UK, the latest public sector net borrowing figure of £18.6 billion was the fourth-highest for April since records began in 1993 but £5.6 billion below a year earlier.

FTSE 100 Live Tuesday

  • Windfall tax fears hit shares in power firms

  • Snapchat warning adds to economy worries

  • Public sector borrowing at £18.6 billion in April

Windfall tax fears hit power shares, ITV falls

10:03 , Graeme Evans

Windfall tax speculation hit Britain’s biggest power firms today as investors unplugged from SSE, Drax and British Gas owner Centrica.

The heavy selling came as the Financial Times reported that Chancellor Rishi Sunak is working on a plan that will go beyond just targeting North Sea oil and gas producers.

The potential focus on £10 billion of excess profits made by power generators covers producers of renewables as they have also benefited from the surge in wholesale prices.

Shares in FTSE 100-listed wind farm giant SSE tumbled 11% or 208p to 1708.5p, while North Yorkshire biomass firm Drax skidded 15% or 122p to 690p in the FTSE 250.

The pair were not helped by a note from Citi analysts removing the bank’s “buy” recommendation on SSE and switching Drax to “sell'. Other stocks sharply lower included Centrica, which dropped 8% or 7.14p to 82.46p and Greencoat UK Wind after a fall of 8.9p to 150.2p.

The FTSE 100 index retreated 57.74 points to 7455.70, with advertising-focused stocks under pressure after last night’s profits warning by Snapchat owner Snap.

Broadcaster ITV dropped 2.92p to 71.44p and heavyweight marketing business WPP slipped 31p to 934p, while broader concerns about the US economy left JD Sports Fashion 3.45p lower at 120.2p.

The biggest rise of the blue-chip session came from Barclays after its green light for the £1 billion share buyback it put on hold at first quarter results. Shares lifted 3.8p to 161.5p.

The FTSE 250 index fell 134.77 points to 20,011.41, despite a rise of 11% for Upper Crust travel food firm SPP after half-year results showed continued progress in its Covid recovery.

Elsewhere, Amigo Holdings rose 0.7p to 7p as shares resumed trading after the High Court sanctioned the company’s redress scheme for creditors who are owed compensation because of past lending practices.

Advertising slowdown fears hit FTSE 100, power firms slide

08:37 , Graeme Evans

Fresh worries over the global economy in the wake of the Snap warning contributed to European markets falling 1%, with the FTSE 100 index down 54.15 points at 7459.

Big fallers included marketing and advertising group WPP after it fell 3%, while broadcaster ITV was down by a similar level.

The biggest downward moves came in the energy sector as speculation turned to the possibility of a much broader windfall tax covering more than just the oil industry. Renewables firm SSE slid 7% in the FTSE 100 index, while North Yorkshire-based Drax and British Gas owner Centrica fell 13% and 7% respectively in the FTSE 250 index.

Barclays shares posted the biggest rise in the FTSE 100 index as the banking giant gave the green light to the £1 billion share buyback it put on hold at its first quarter results. Shares lifted 3.3p to 161p.

April borrowing fourth highest on record

07:44 , Graeme Evans

The new financial year has started with the government borrowing £18.6 billion, the fourth highest April figure since records began in 1993.

It is also £7.6 billion more than the level prior to the pandemic in April 2019, but £5.6 billion less than recorded for the same month last year.

The Office for National Statistics said government receipts of £70.2 billion included tax of £50.2 billion, which was an increase of £5.5 billion.

Current day-to-day expenditure of £76 billion included the additional £3 billion cost of Council Tax rebate payments. This was offset by reductions in other areas for an overall improvement of £6.7 billion on a year earlier.

Snap shares down over 30%, FTSE 100 to open lower

07:28 , Graeme Evans

A rebound for US markets is set to be short lived after social media platform Snap warned last night that it will miss guidance for its second quarter results.

Shares in the Snapchat owner plunged by more than 30% in after-hours trading, while Facebook owner Meta Platforms was 7% lower and Twitter fell by 4%. The Nasdaq, which rallied 1.6% on Monday, is forecast to decline 1.2%.

Snap said: “The macroeconomic environment has deteriorated further and faster than anticipated. As a result, we believe it is likely that we will report revenue and adjusted earnings below the low end of our Q2 guidance range. We remain excited about the long-term opportunity to grow our business.”

The caution from US advertisers adds to ongoing worries over the health of the world’s largest economy, with the weaker demand outlook leading to weakness for Asian markets and pushing Brent crude down by 1.2% to $112 a barrel.

The FTSE 100 index is forecast by CMC Markets to open 53 points lower at 7,460, having risen by 123 points yesterday.