House prices are in focus after lender Halifax reported a 1.1% rise for October and Persimmon said the amount generated from completed homes lifted 2%.
The builder’s shares were among several doing well in the FTSE 250 index, with others higher after updates including Direct Line Insurance and Watches of Switzerland.
Trading conditions remain tough, however, as the owner of Pizza Express today pulled out of bidding for Wagamama business The Restaurant Group.
Pay discrimination alive and well in City boardrooms
Tuesday 7 November 2023 13:59 , Daniel O'Boyle
The gender pay gap is alive, well and flourishing in FTSE boardrooms.
Research today by Fox & Partners shows that while the gap between what male and female directors are paid is down on a year ago from 74%, it is still at a fairly extraordinary 70%.
The average pay for women directors is £309,000, while it is £1.04m for men.
The women’s pay rose 26%, compared to 11% for the men.
This pay gap is partly explained by the vast majority of women board directors typically being in lower paid non-executive roles.
US stocks to dip
Tuesday 7 November 2023 13:33 , Daniel O'Boyle
US shares are set to dip when trading starts on Wall Street, according to futures markets.
Dow Jones futures are down 0.3% to 34,065.00 and S&P 500 futures down 0.3% to 4,371.75. Nasdaq futures are also down 0.3%, to 15,192.25.
FRC to bring in 'small number' of rules to streamline reporting rules
Tuesday 7 November 2023 12:59 , Daniel O'Boyle
The Financial Reporting Council is to consult on changes to the UK Corporate Governance Code to simplify reporting requirements.
However, it is only taking forward a "small number" of the original 18 proposals it set out.
Economic Secretary to the Treasury, Andrew Griffith, said: “We welcome these pragmatic and proportionate changes by the FRC.
“The U.K. rightly enjoys a strong reputation for high governance standards but it’s important that we don’t burden our best and brightest companies to the extent that it’s not a level playing field versus our international competitors.
“This move from the FRC, combined with our reforms to listings, pensions and investment promises to make the U.K. the best place in the world to be a public company.”
City Comment: A housing market crash? Not likely while supply remains this low
Tuesday 7 November 2023 12:51 , Daniel O'Boyle
Is it possible to have green shoots emerging in the depths of chilly November?
Maybe not horticulturally, but there were certainly some encouraging signs today that the great post-mini-Budget downturn in the property market might be past its worst.
After a succession of gloomy trading updates and results from the house building sector, Persimmon today became the first major player to see some indications of confidence returning among buyers.
Meanwhile Halifax said it had seen the same pattern as Nationwide last week with a small uptick in prices in October.
London Chambers hails careers and pedicab reforms in King's Speech
Tuesday 7 November 2023 11:57 , Daniel O'Boyle
London Chamber of Commerce and Industry has welcomed the announcement in today’s King’s Speech that the careers advice system and the rules for pedicab drivers will be reformed.
The business lobby group’s head of policy and public impact James Watkins said:
“Young people need the very best advice to ensure they can fulfil their potential in life. This is why the announcement in the King’s Speech to reform careers advice is to be warmly welcomed.
“For too long young people have had haphazard careers support depending on where they live while, for businesses, they are finding it difficult to find workers for highly paid skilled jobs. This dichotomy needs to end and with the announcement by His Majesty the King that reform of the careers advice system is now on its way, this will be a vital first step to solving the ongoing skills crisis”.
“We also welcome reform of pedicab legislation. For too long rogue pedicab operators have played fast and loose with the law. Too many visitors to our city have been fleeced and intimidated - which has harmed London's global reputation. This has happened because of a law that is over a hundred years old. The law took no account of the needs of contemporary visitors to our global city.
“Those days will soon be over thanks to the news that the licensing of pedicabs is in the King's Speech. This is good news for the reputable pedicab operators, good news for tourists and good news for London. It is only the criminals who will regret that this century old loophole will finally be closed”.
Regus owner to swoop for bargains after WeWork bankruptcy
Tuesday 7 November 2023 11:19 , Simon Hunt
A British rival to WeWork today said it was eyeing the bankrupt business’s portfolio for acquisition opportunities after it posted a boost in sales.
London-listed IWG, which operates the Regus and Spaces brands of commercial offices, said it had already acquired some sites from WeWork and was on the lookout to snap up more deals. Today it reported a 10% growth in revenues to £2.2 billion for the first nine months of the year.
CEO Mark Dixon said WeWork’s downfall would attract more customers to IWG as any restructuring would likely result in higher rents for customers to pay off its steep debts.
“Part of their problem is that they have not been pricing to make a margin, in fact they have been pricing in some cases to lose money,” he told investors.
“Them pricing normally to make a margin would be helpful [to us].
“Clearly, there will be some customers that will avoid using them because they will be closing quite a few centres and that’s a difficulty if you’re thinking about putting people into space.
“We’ve picked a few centres up last week, pre-filing, we’ll no doubt pick up some more in the coming weeks and months.”
Accounting giant PwC to cut up to 600 jobs
Tuesday 7 November 2023 10:59 , Daniel O'Boyle
Accounting giant PwC will cut around 600 jobs in the UK as staff have been reluctant to leave on their own, according to a report.
The company confirmed that it planned to make “voluntary severance offers” to some of its staff as attrition numbers were lower than usual.
PwC did not mention any job numbers, but the Financial Times reported that it is targeting around 500-600 cuts.
Naked Wines decants boss as shares plunge deep into red after another profit warning
Tuesday 7 November 2023 10:50 , Daniel O'Boyle
Shares in wine delivery service Naked Wines plunged deep into the red today as the firm decanted its CEO after warning sales and profits are set to fall even faster than previously thought.
The company had already expected a rough year, with sales set to fall by about 10% and profits to fall by as much as 50% as wine delivery firms struggle to adapt to the post-pandemic landscape. But its US arm performed even worse than expected, as customers quit the subscription service.
Global sales are now set to fall by 12-16%, and underlying profit could tumble by almost 90% to just £2 million.
Oil stocks drag on FTSE 100, Direct Line rallies
Tuesday 7 November 2023 10:36 , Graeme Evans
Direct Line shares have rallied 4% as the Churchill owner's turnaround benefits from much higher car insurance premiums.
Interim boss Jon Greenwood said the motor arm was back writing business profitability in the face of higher claims costs.
Direct Line also offered reassurance that the impact of recent storms has not been above its normal provisions for the period.
The FTSE 250-listed shares rose 5.9p to 163.75p, putting back some of the losses seen since January’s shock decision to axe its dividend.
The developments boosted the rest of the sector as shares in rival Admiral rallied 2% or 48p to 2528p near the top of the FTSE 100 index.
Retail and housebuilding stocks also improved but it was a flat overall performance for London’s top flight, which drifted 11 points to 7406.76 due to the impact of a three-month low for oil prices on energy giants BP and Shell.
The biggest blue-chip faller was RS Group, with the supplier of industrial and electronic components down 7% due to a bigger-than-expected 25% decline in half-year profits to £143 million.
Chief executive Simon Pryce called the result a “resilient performance in difficult markets”, but shares in the former Electrocomponents business weakened 46.8p to 635.2p.
In the FTSE 250 index, Watches of Switzerland raced 9% or 44.5p higher to 563.5p after fast-forwarding investors to 2028 and a time when it hopes to deliver sales and profits double current levels.
On current trading, the retailer said demand for luxury watches remains robust and continues to exceed supply after reporting a 5% rise in quarterly sales to £379 million.
The company has lost a third of its value this year after confidence was shaken by the surprise move of Rolex to buy Swiss retailer Bucherer.
Metro says outflows have returned to normal
Tuesday 7 November 2023 09:41 , Simon English
SAVERS were pulling money out of Metro Bank in fear of the bank’s safety ahead of a £325 million fund raiser in October.
The lender admitted today that there had been a “increase in deposit outflow rates” ahead of the deal, which also included a £600 million debt refinancing.
Those flows “have returned to more normal ranges” it said in a statement to the stock market.
In the third quarter assets fell by 1% to £21.6 billion. Deposits rose 1% to £15.6 billion.
Metro said: “The third quarter delivered continued momentum in Personal and Business Current Accountgrowth and customer acquisition as well as a modest statutory profit after tax. Lending reflects continued controlled asset origination and as such capital resources were broadly flat relative to 30 June levels.”
The refinancing deal saw Colombian billionaire Jaime Gilinski Bacal seize a controlling 53% stake in the bank.
Metro had hoped to challenge the big high street banks with a fresh approach to customer service, including dog friendly branches.
It ran into difficulty with an accounting scandal that saw it underreport how much capital it needed to hold against its liabilities.
Then CEO Craig Donaldson stepped down in December 2019. The bank was fined £10 million by the Financial Conduct Authority in 2022.
It has 2.8 million customer accounts. City talk had it that Metro would look to sell off some of its mortgages to perhaps Lloyds or NatWest.
Metro Bank shares rose 1.2p to 43.7p today, that leaves the tock market value at £75 million. The shares were once well over 2000p each.
Weston family land £45.9m divi as Primark surges
Tuesday 7 November 2023 08:39 , Simon English
Christmas trading has started early as families gear up for the festive season and seek to spread costs across several pay packets, says ABFchief executive George Weston.
The Primark and Silver Spoon giant saw annual sales jump 16% to£19.7 billion and thinks next year looks strong.
The profits, up 9% to £1.47 billion, allow it to pay a huge dividend of 60p and plan another £500 million of share buybacks, on top of £500 million already done.
That 60p divi is worth £459 million. The charitable foundation gets 45% of that, shareholders the same, and the Weston family 10% -- £45.9 million.
Primark has 432 stores and plans another 100 by 2026. “Then we will just keep going,” says Weston. Stores outside the UK are doing better than those in the home market, but Primark in London is on the up. The stores are busy between 4pm and 8pm, a sign that people are back in offices.
Market snapshot: FTSE 100 slightly lower
Tuesday 7 November 2023 08:33 , Daniel O'Boyle
The FTSE 100 is slightly lower today, while oil prices have fallen to their lowest since August
Direct Line and Persimmon higher in FTSE 250, RS slides in FTSE 100
Tuesday 7 November 2023 08:28 , Graeme Evans
Shares in Associated British Foods have jumped 5% or 116p to 2222p after full-year results by the Primark owner included a special dividend and £500 million buyback. The shareholder returns come after annual profits jumped by a quarter to £1.34 billion.
Other stocks doing well on the back of updates included FTSE 250-listed Direct Line Insurance, which rose 4.45p to 162p after reporting a 68.3% jump in third quarter written premiums to £1.1 billion.
Watches of Switzerland, which set out long-term growth ambitions alongside figures showing an improved second quarter performance, jumped 12% or 63.5p to 582.5p.
Among other mid-cap risers, Persimmon shares lifted 26.75p to 1108.25p after reporting that prices on completion were 2% higher in the third quarter to £296,822. The sector was also boosted by this morning’s publication of resilient house price figures by lender Halifax.
The performances helped the FTSE 250 index to rise by 44.95 points to 17,792.42, while the FTSE 100 edged 3.59 points higher to 7421.35.
The biggest top flight faller was components supplier RS, which slumped 5% or 32.2p to 649.8p after interim results showed trading conditions more challenging than anticipated at the beginning of the year.
Grocery price inflation falls to single digits for first time in 16 months
Tuesday 7 November 2023 08:11 , Daniel O'Boyle
Grocery price inflation has fallen to single digits for the first time in 16 months, figures show.
Prices across grocers were 9.7% higher than a year ago over the four weeks to October 29, down from the previous month’s 11%, analysts Kantar said.
It is the eighth consecutive decline in the rate of price rises since the figure peaked at 17.5% in March, and the first time the figure has fallen below 10% since July last year.
However, despite the milestone, consumers are only seeing year-on-year price falls in a limited number of categories, including butter, dried pasta and milk, according to Kantar’s data.
Pizza Express will not bid for Wagamama owner TRG
Tuesday 7 November 2023 07:56 , Daniel O'Boyle
Pizza Express owner Wheel Topco says it will not bid for Wagamama owner The Restaurant Group (TRG), seemingly clearing the path for TRG to be bought by private equity giant Apollo.
TRG revealed last month that the company behind Pizza Express had made an approach about a rival bid, after the TRG board had already agreed to accept Apollo’s £506 million deal.
However, Wheel Topco has now said that “due to market conditions” it will not submit a binding offer.
House prices keep rising at Persimmon while completions slump as market slows
Tuesday 7 November 2023 07:50 , Michael Hunter
The average private selling price at housebuilder Persimmon is still rising, while the wider market slowdown hit the number of completions at the FTSE 100 firm.
It said the group's price on completion was up 2% in the third quarter to £296,822. Completions of new homes slumped 37% to 1,439 in the period.
It said private sales rates had improved in the last five weeks. But it also said "we anticipate market conditions will remain highly uncertain".
Asia markets struggle after China trade figures, Wall Street higher
Tuesday 7 November 2023 07:20 , Graeme Evans
A fresh rise for bond yields failed to prevent technology stocks extending Wall Street's recent run of gains to a sixth session.
The Nasdaq Composite was the best performer with a gain of 0.3%, while the S&P 500 index added 0.2% thanks to improvements of more than 1% by Apple and Microsoft.
Smaller stocks struggled, however, as the Russell 2000 dropped more than 1% due to worries over whether interest rates are at their peak.
The renewed speculation of another interest rate hike caused the 10 year bond yield to reverse some of last week’s decline to stand at 4.65%.
The uncertainty led to a poor session for Asia markets, compounded by a mixed set of China trade figures after exports fell by a bigger-than-expected 6.4% in October.
Imports showed a surprise 3% rise but the Hang Seng index still fell 1.5% this morning. The FTSE 100 index was unchanged yesterday and is expected by CMC Markets to open seven points lower at 7410.
WeWork files for bankruptcy
Tuesday 7 November 2023 07:18 , Simon Hunt
Office sharing company WeWork has filed for bankruptcy in the US.
The firm, which has over a dozen office locations in London, said it was seeking to bear down on its tens of billions of debts through a restructuring agreement and by significantly cutting its lease portfolio.
WeWork said its office spaces spaces remain open and operational and the Company will continue to provide member services.
CEO David Tolley said: “Now is the time for us to pull the future forward by aggressively addressing our legacy leases and dramatically improving our balance sheet.”
Halifax: House prices up 1.1% in October
Tuesday 7 November 2023 07:15 , Daniel O'Boyle
House prices rose by 1.1% in october, according to the country’s biggest mortgage lender Halifax, as the market continued to defy predictions of a crash.
October is typically a month of strong demand and prices were down 3.2% year-on-year £281,974, but that annual decline is more modest than many feared.
Kim Kinnaird, director of Halifax Mortgages, said: “Prospective sellers appear to be taking a cautious attitude, leading to a low supply of homes for sale. This is likely to have strengthened prices in the short-term, rather than prices being driven by buyer demand, which remains weak overall. While many people will have seen their income grow through wage rises, higher interest rates and wider affordability pressures continue to be challenges for buyers.
“Across the medium-term, with financial markets not anticipating a decline in the Bank of England’s Base Rate soon, we expect house prices to fall further overall – with a return to growth from 2025.
“The current picture should continue to be seen in the context of the longer-term house price trend as, on average, prices remain around £40,000 above pre-pandemic levels.”
Recap: Yesterday's top stories
Tuesday 7 November 2023 06:32 , Simon Hunt
Good morning. Here's a summary of our top headlines from yesterday:
UK “probably” now in recession says City forecaster ahead of official GDP figures expected to show contraction in the third quarter
Ryanair pays first ever regular dividend, lands first half profits of €2.18 billion after record summer traffic
Melrose signs $5 billion aero engines deal with GE
Hipgnosis says it will pay no dividends before the end of the financial year to preserve cash
Online fashion business boohoo still using unethical high pressure tactics with its suppliers reveals Panorama investigation