FTSE 100 Live: Oil price surges past $90 a barrel, shares close in red again, Autumn statement date set

 (Evening Standard)
(Evening Standard)

Improved PMI figures helped blue-chip share recover after starting under pressure today following disappointing readings on service sector activity in China and Europe.

The August PMI reading from S&P Global and CIPs still showed the private sector in decline, but was up from the initial ‘flash’ reading.

Plant hire firm Ashtead was among the biggest fallers in the FTSE 100 index, despite reporting a record quarter of trading.

Investors also dumped grocery stocks after JP Morgan downgraded its recommendations on Tesco and B&M European Value Retail.

FTSE 100 Live Tuesday

  • B&M rescues 51 Wilko shops

  • Downgrade hits Tesco shares

  • UK private sector declines in August

FTSE closes down at 7,437.93

16:38 , Daniel O'Boyle

The FTSE 100 closed at 7,437.93 today, down 0.2%, after falling back into negative territory late in the day.

The index started the day down by as much as 0.8%, but recovered in the late morning and early afternoon following improved August PMI data.

However, it fell back below the mark of 7452 where it started the day around an hour before markets closed.

Big risers included BP and Shell after oil prices surged. B&M, which announced the purchase of 51 Wilko stores today, and Tesco were among the big fallers, following a JPMorgan downgrade of supermarkets.

Post-pandemic travel rebound boosts linens business Johnson Service Group

16:10 , Daniel O'Boyle

Hotel linens provider Johnson Service Group upgraded its full-year guidance today as the UK’s post-pandemic tourist rebound helped to drive a 46% rise in its profits to £16.4 million.

In the first six months of the year, revenue jumped to £215 million, thanks to hotels and catering revenue jumping by more than 30% to £143.9 million.

This, CEO Peter Egan told the Standard, was mostly due to a return to normal for hospitality, having still been affected by the Covid-19 pandemic a year earlier.

Read more here

The clubs where mums chill to ‘stop going mad with parenting’

15:44 , Lucy Tobin

A LOT of entrepreneurs report falling into their careers by chance – but Maggie Bolger says she “accidentally fell into parenting” and that triggered her successful career building family clubs.

After growing up in New Zealand, she took a gap year “and went travelling to Australia, Hong Kong and London, then got knocked up at 22 with my first child in London”.

That was in 2000 — and she and her then-husband decided to stay in the capital; Bolger was soon a young mum with three kids under five. “That’s when I began to wonder why a nice place did not exist for parents. Soho House was getting traction, as were lots of celebrity restaurants, but all parents’ offerings were an afterthought.”

Bolger would have her friends with kids over to her flat in Kensington, and do activities with them all.

Read more here

Oil surges past $90 a barrel

15:21 , Daniel O'Boyle

The price of oil has surged today, crossing the $90-a-barrel threshold, after Suadi Arabia and Russia extended their cuts to supply of the commodity.

Saudi Arabia will continue to cut back its supply by one million barrels a day until December, while Russia will cut its own prduction by 300,000 a day until the same point.

The announcement sent the price of oil surging and boosted the share price of London-listed oil supermajors.

BP shares are up 1.8% today to 510.6p. Shell shares are up by 1.2% to 2,474p.

Man United shares plunge on possibility takeover is shelved

15:17 , Daniel O'Boyle

Shares in Manchester United have lost 19% since markets opened in the US, following reports that the Glazer family may opt not to sell the club after all.

The club appeared to be on the verge of a sale, with Ineos founder Sir Jim Ratcliffe and a Qatari group battling to close the deal.

However, recent reports that the Glazers may prefer to keep owning the club have led to shares falling to $19.27, down 19% from yesterday’s close and in line with their level in early June.

 (Manchester United via Getty Images)
(Manchester United via Getty Images)

Labour plans will boost investment but could squeeze money for new schools – IFS

14:40 , Daniel O'Boyle

Labour’s plans would bring above-average investment but could still mean a “squeeze” on budgets for repairing schools and hospitals, the Institute for Fiscal Studies (IFS) has said.

Against a background of concern about underinvestment in school buildings, the respected think tank suggested Labour’s proposals for a £28 billion “Green Prosperity Plan” would increase investment to 60% higher than the average for the last 45 years.

The plan involves making the UK a “clean energy superpower” by 2030, decarbonising the energy system, setting up a publicly-owned green power generator and investing in areas such as battery factories, clean steel and green hydrogen.

The IFS estimated this would mean, by the end of the next parliament, an extra £20 billion being spent per year on top of the £8 billion the Conservatives have already planned, increasing public sector investment to 2.6% of GDP compared to an average of 1.6% since the late 1970s.

Read more here

City Comment: ‘Tourist tax’ campaign comes to Westminster, but don’t get too optimistic

13:58 , Daniel O'Boyle

The tourist tax saga finally gets its moment in the parliamentary sun this week.

Despite more than two years of campaigning by business leaders representing huge swathes of the economy, there has been remarkably little engagement by government other than a vague pledge to look at any fresh evidence of the economic harm done.

So the response from the minister put into bat for the Government in Thursday’s Westminster Hall debate on the subject will be illuminating.

Conservative backbench MP Geoffrey Clifton-Brown has done well to secure 90 minutes of parliamentary time on an issue that has caused huge concern across London’s tourism, hospitality and retail sectors.

Read more here

British newspapers to take multi-million pound knock as Meta pulls plug on European news content deals

13:35 , Daniel O'Boyle

British newspapers are braced for a multi-million pound knock as social media giant Meta said it would end its news content deals with publishers across Europe.

The move, which Meta said was part of “an ongoing effort to better align our investments to our products and services people value the most,” would also involve the closure of Facebook News – a dedicated tab on Facebook in the bookmarks section that spotlights news – in early December.

Meta has not disclosed the precise sums of money involved in its deals with publishers, but they are thought to run into the tens of millions in the UK, according to the Guardian. Publishers in France and Germany will also be affected.

Read more here

Pump price of unleaded petrol climbs to highest level this year

13:31 , Daniel O'Boyle

The price of petrol on UK forecourts has risen to its highest level so far this year, figures show.

The average pump price of a litre of unleaded petrol stood at 151.7p as of September 4, up from 150.7p the previous week.

It is the seventh weekly jump in a row.

The rise is being driven by an increase in the cost of oil, which has gone up by nearly 12 US dollars a barrel since the start of July to more than 88 US dollars, due to producing group Opec+ reducing its supply.

Read more here

Arm eyes valuation of up to $52 billion in NYSE IPO

12:58 , Simon Hunt

British chip designer ARM is eyeing a valuation of as much as $52 billion in its forthcoming New York Stock Exchange IPO.

The Cambridge-based business, whose chip designs feature in the majority of smartphones, is setting a share price range between $47 and $51, it said today. That range is significantly lower than some market analysts who speculated its valuation could be as high as $65 billion.

Only 9.4% of Arm’s shares are set to be freely traded on the New York Stock Exchange. The company was listed in London and New York before SoftBank took the firm private in 2016 for $32 billion.

Chip firm Arm has said it plans a US only listing this year (Alamy/PA)
Chip firm Arm has said it plans a US only listing this year (Alamy/PA)

Chancellor’s Autumn Statement on 22 November

12:42 , Daniel O'Boyle

Jeremy Hunt will set out an Autumn Statement on November 22, the Chancellor has told MPs.

He has commissioned an Office for Budget Responsibility forecast, which will be presented alongside the statement.

The Prime Minister and Chancellor have spent recent months promising to halve inflation, amid a series of Bank of England interest rate rises designed to ease soaring prices.

Mr Hunt has also faced pressure from some Tory MPs for tax cuts ahead of the next general election, expected before January 2025.

Read more here

Allwyn to take ‘fresh look’ at National Lottery as UK sales flag

12:29 , Daniel O'Boyle

The boss of incoming National Lottery owner Allwyn has said he is looking to reinvigorate the game as sales in Britain flag amid the cost-of-living crisis and ahead of the licence switchover next year.

Robert Chvatal, chief executive of the Czech company, said the UK had underperformed the rest of the group in the first six months of 2023, with consumer spending under pressure.

In the UK, the Camelot business saw total revenues fall 3% on a comparable and constant currency basis in the second quarter, although this was also down to “exceptional” EuroMillions rollovers a year earlier.

UK revenues grew 1% on a reported basis to 980.3 million euros (£838.8 million) in the three months to the end of June.

Read more here

European billionaires spend big on London’s ‘second-tier’ offices

11:52 , Daniel O'Boyle

European billionaires are snapping up central London’s tired “second tier” office blocks, according to a new study today.

Occupiers’ scramble for new office space that complies with modern environmental standards has sent prices of unwanted secondary or “brown” workspace stock tumbling.

However, they have proved attractive for cash-rich individuals or families looking for investments with high potential returns, says the research from agents Knight Frank.

They have bought £690 million of such buildings over the past 12 months, usually with plans to refurbish. Investors from Europe have led the activity, accounting for 48% of all transactions, followed by UK investors (14.4%).

Read more here

Pocket Planet aims for one million visitors to Oxford Street ‘miniature world’

11:29 , Simon Hunt

Hopes for a revival in Oxford Street’s fortunes got another boost today as leisure experience developer Pocket Planet unveiled plans for Britain’s biggest indoor miniature world.

The 30,000 sq ft attraction will take up 50 metres of frontage of Oxford Street in a former New Look store site between Bond Street and Marble Arch. There are hopes for one million visitors a year when it is fully open in 2025.

Pocket Planet COO said: “Over the last five years we’ve looked at all the world’s leading miniature attractions, such as Small Worlds in Tokyo and Miniatur Wunderland in Hamburg. They’re all great, but Pocket Planet will go an extra level.

“The team we’ve put together draws on the best of breed in leisure interior design and some of the greatest modellers in the world.”

Read more here

B&M rescues 51 Wilko shops in £13 million deal

10:34 , Daniel O'Boyle

B&M has bought 51 Wilko shops for £13 million after the firm collapsed into administration.

The shops are set to be rebranded under B&M’s name, as the FTSE 100 retailer did not acquire Wilko’s brand name or any of its intellectual property. It said it would provide an update on the timing of the new B&M openings in November.

The deal comes amid reports that a larger rescue deal, from HMV owner Doug Putnam, hit a snag, meaning a large number of stores may be forced to close.

Redundancies began at Wilko’s head offices yesterday, with warehouse staff also set to lose their jobs this week, as there were no bids on the table that included Wilko’s support staff.

Read more here

Downgrades hit Tesco and B&M, shares in Johnson Service up 3%

10:34 , Graeme Evans

Grocery shares fell sharply today after JP Morgan removed its “overweight” recommendation on Tesco and hit B&M with a double downgrade to “underweight”.

The cautious stance reflects the bank’s fears that heightened competition brought on by a period of disinflation will add to the squeeze on margins from wage increases.

JP Morgan cut its target price on Tesco by 20p to 250p, resulting in shares falling by 3% or 6.7p to 257.1p. B&M European Value Retail surrendered some of its recent strong gains by shedding 4% or 24.2p to 542.8p at the top of the FTSE 100 fallers board.

Among other grocery stocks, Sainsbury’s weakened 4.7p to 263.9p and M&S food partner Ocado lost 22.8p to 856p.

The FTSE 100 index dropped 21.08 points at 7431.68 as sentiment was also impacted by today’s snapshot of service sector growth in China, with a reading below expectations at an eight-month low of 51.8 compared with July’s 54.1.

A shortened FTSE 100 risers board featured a number of defensive stocks as AstraZeneca lifted 56p to 10,746p and Severn Trent improved 13p to 2394p.

The FTSE 250 index fell 77.67 points to 18,446.47, with Dr Martens and the shopping centre owner Hammerson among those 2% lower.

On AIM, Johnson Service Group jumped 3% or 3.8p to 127.8p after the workwear and hotel linen business upgraded full-year guidance alongside interim results showing a 46% rise in profits to £16.4 million. It also launched a fresh £10 million buyback of shares.

PMI shows UK private sector in decline, but ahead of initial estimates

09:40 , Daniel O'Boyle

The UK private sector declined in August, but by a little less than initial estimates, according to  the S&P Global / CIPS UK Services PMI.

The monthly PMI came to 48.6, which was ahead of the 47.9 flash figure that sparked recession fears, but was still below the 50 mark that represents no change. That was the first time the PMI has recorded a decline in the private sector since July.

The PMI for the dominant service sector also showed a decline, coming in at 49.5.

Tim Moore, Economics Director at S&P Global Market Intelligence, which compiles the survey, said: "Service providers saw customer spending reverse course during August as higher borrowing costs, subdued business confidence, and stretched household finances all acted to curtail sales opportunities.”

There was good news on inflation though as the rate of increase in prices charged in the service sector fell to a two-year low.

New car market grew by nearly a quarter in August

09:30 , Daniel O'Boyle

The new car market grew 24.4% in August, the Society of Motor Manufacturers and Traders (SMMT) said.

Some 85,657 new cars were registered last month, compared with 68,858 in August 2022.

Despite this improved performance, the market remained 7.5% below pre-pandemic levels, with 92,573 registrations in August 2019.

Demand for electrified vehicles (EVs) continued to grow, accounting for nearly two out of five new cars reaching the road.

Read more here

Ashtead and supermarkets under pressure, FTSE 100 down 0.6%

08:32 , Graeme Evans

Sunbelt plant hire firm Ashtead is the leading faller in the FTSE 100 index, despite reporting record sales in its latest quarter.

The company, which generates over 90% of its revenues and 95% of operating profits in North America, fell 5% or 280p to 5188p after downgrading its forecast for growth in the UK. Revenues in the US rose 16% to $1.6 billion (£1.3 billion).

Ashtead’s share price slump came as the FTSE 100 index weakened 0.6% or 48.17 points to 7404.59.

The retail sector was under pressure after JP Morgan downgraded its price target on supermarket giant Tesco by 20p to 250p. The shares fell 6.8p to 257p, alongside a drop of 5.9p to 262.7p for rival Sainsbury’s.

The FTSE 250 index declined by 71.43 points to 18,452.71, led by a drop of 3% for Jupiter Fund Management.

STV profits plunge despite studios success

08:13 , Daniel O'Boyle

Scottish broadcaster STV’s profits plunged in the first half of the year, despite a successful six months for its studios arm.

Revenue from STV’s studios arm almost tripled, which the business put down to the success of Blue Lights and Bridge of Lies. That allowed the studios business to return to a profit, making £100,000.

However, ad revenue - still STV’s  main source of income - plummeted, as the Scottish government stopped broadcasting Covid safety messages.

That meant profit for the first half fell by 61%.

STV expects a better outlook for the second half of the year, with the Rugby World Cup boosting ad spend.

Ashtead cuts revenue guidance for UK market but US powers record quarter

07:55 , Michael Hunter

Industrial equipment rentals firm Ashtead lowered its revenue growth forecast for its UK business today, pointing to “softening” market conditions.

It cut its prediction for revenue growth in the UK to a range between 6% and 9%, down from 10% to 13%, but left group-wide forecasts steady at 13% to 16%. It said that inflation was still a factor, and even as rental rates improved, it was “insufficient” to offset higher costs. An end of work for the Department of Health also took a toll.

But UK revenue rose 15% to £120 million in the first quarter of the financial year. A strong showing for its Sunbelt operations in the US helped the company to a record quarter, with group revenue up almost a fifth to $2.7 billion. US revenue was up 16% to $1.6 billion.

Profit before tax rose 11% to $585 million.

Retailers report August sales lift

07:37 , Graeme Evans

Consumer spending showed improvement in August after the British Retail Consortium reported a 4.3% rise in like-for-like sales in August.

That was much better than July’s 1.8% growth, which was the worst performance by the retail sector since the summer of 2022.

Health, beauty and food and drink were the strongest performing categories last month as UK retailers posted a result stronger than the 4.1% 12-month growth rate.

However, the figures still point to lower sales volumes when compared with July’s annual inflation rate of 6.8%.

Hang Seng falls on more China weakness, FTSE 100 seen lower

07:19 , Graeme Evans

Asia markets have fallen and the FTSE 100 index is forecast to open lower as global markets continue to unwind the China-inspired gains seen at the start of the week.

The Hang Seng index is 1.5% lower, having rallied yesterday due to China stimulus measures and a debt restructuring deal for property firm Country Garden.

Today’s mood wasn’t helped by the latest snapshot of services sector growth in China, with the headline reading below expectations at an eight-month low of 51.8 compared with July’s 54.1.

Prior to the release of services figures in the UK and Europe, CMC Markets expects the FTSE 100 to open 22 points lower at 7430. London’s top flight closed 12 points lower last night, having been above 7500 at one point in the morning.

The return of US markets after yesterday’s Labor Day holiday should provide some impetus to trading, particularly after Friday’s jobs report fuelled hopes that US interest rates will be unchanged at the Federal Reserve’s 20 September meeting.

Morning refresh: What you need to know to start the day

Monday 4 September 2023 17:24 , Simon Hunt

Good morning from the City desk of the Evening Standard.

The collapse of FTX sent shockwaves through the world of crypto, and has set the SEC in the US on a march to crackdown on crypto businesses. But that does not mean that innovation in the sector is not proceeding at pace, and this opens up an opportunity for London to gain a foothold in the market if regulators move quickly, our City Editor Jonathan Prynn argues.

Elsewhere, another major company was yesterday poised to leave the London Stock Exchange after getting a higher valuation elsewhere. The offer of £13.51 per share for life sciences firm Ergomed by private equity giant Permira represents a 28.3% premium over Guildford based Ergomed’s share price as at Friday’s market close and valued the company at just over £700 million.

Here’s a summary of our other headlines from yesterday:

And...why London has 19 of the UK’s top 20 ‘risky mortgage’ postcodes.