FTSE 100 Live: Shares fall in afternoon to close at 7745; ‘economic backdrop starting to weigh on job market’
Vodafone, Greggs, Boohoo, Landsec and Imperial Brands are in the spotlight during a busy session of corporate updates.
There’s also the latest UK unemployment figures, which show a higher jobless rate of 3.9% alongside more signs of elevated wage growth.
The FTSE 100 index is up slightly this morning, despite the pattern of lacklustre trading seen across global markets in recent weeks.
FTSE 100 Live Tuesday
Vodafone shares fall after results
Unemployment rate rises to 3.9%
Boohoo reveals big loss, shares rise
FTSE closes down 0.4%, Vodafone down 8.8%
Tuesday 16 May 2023 16:37 , Daniel O'Boyle
The FTSE 100 closed down 0.4% to 7744.6 despite having held steady for the first half of the day.
Vodafone was by far the biggest loser, with shares down 8.8% to their lowest level since 1997.
FTSE in afternoon slump
Tuesday 16 May 2023 16:12 , Daniel O'Boyle
The FTSE 100 is now down 0.4% for the day, as it slumped in the afternoon.
While shares were flat immediately after opening and even rose modesty in the mid-morning, the index fell just ahead of US markets opening, after news that the US was no closer to a debt deal.
Vodafone was the biggest faller, as its shares hit their lowest level since 1997, while Ocado and Prudential were also among the losers.
Why Tesco should come clean on CEO tax
Tuesday 16 May 2023 15:47 , Simon English
Last week we reported that Tesco chief executive Ken Murphy was paid £4.4 million for his work this year.
That’s a lot, but not out of line with peers (his Sainsbury rival got £3.8 million in the last reported figures).
The point of interest was that Murphy seems to be based in Ireland for tax purposes. Where he presumably pays less, and of course, nothing to the UK government where most of the business is based.
Initially, Tesco didn’t say anything at all. No confirmation, no denial, nothing.
Today it got it together to say this: “We don’t comment on any individual colleagues tax arrangements”, as if Murphy were a private guy who runs a warehouse in Wigan, rather than the CEO of one of the biggest and most important businesses in Britain.
US shares fall as debt limit fears persis
Tuesday 16 May 2023 15:21 , Daniel O'Boyle
Shares in US companies are down today as investors continue to worry about the possibility of the country defaulting on its debts.
House Speaker Kevin McCarthy said today that there had been “no progress” on talks over the US debt ceiling. Investors still see an eventual solution as overwhelmingly likely, but the catastrophic effects of a default mean that it is still weighing on markets.
The S&P 500 is down 0.3% to 4122, while the Dow Jones is down 0.5% to 33168. The Nasdaq is faring better, but is still down 0.1% to 12350 .
Cooling in jobs market reduces pressure on Bank of England to raise interest rates
Tuesday 16 May 2023 12:56 , Daniel O'Boyle
Growing signs of a cooling jobs market today eased the pressure on the Bank of England to raise interest rates once again next month.
The latest data from the Office for National Statistics (ONS) came on the day that Vodafone revealed that it will shed 11,000 jobs over the next three year, many of them in the UK.
Rishi Sunak will listen to calls to axe ‘tourism tax’ damaging London’s economy
Tuesday 16 May 2023 12:49 , Daniel O'Boyle
Rishi Sunak is ready to listen to growing calls to axe the “tourism tax” damaging London’s economy, Downing Street said on Tuesday.
No10 made clear the Prime Minister’s willingness to hear the views of business chiefs in the capital.
The PM’s official spokesman said: “We are always happy to listen to the sector about their concerns and obviously we will respond accordingly.”
Today’s business page
Tuesday 16 May 2023 12:16 , Daniel O'Boyle
Pick up a copy of today’s Standard from any of our distribution points
Petrol below 145p per litre for first time since November 2021
Tuesday 16 May 2023 12:03 , Daniel O'Boyle
Average petrol prices have fallen below 145p per litre for the first time in 18 months.
RAC analysis shows the average price of a litre of the fuel at UK forecourts has dropped to 144.95p.
Prices have not been that low since November 2021.
Robinsons owner Britvic squashes costs to juice profits
Tuesday 16 May 2023 11:25 , Daniel O'Boyle
Robinsons and Tango maker Britvic hailed the soft drink company’s cost-management strategy as its profits rose more quickly than sales.
That comes despite a wider surge in the cost of many of Britvic’s key ingredients, with sugar prices soaring by 40% while the prices of many types of fruit have risen significantly as well.
Revenue rose by 10.4% to £794.0 million, while profit growth was faster at 16.1%.
Boss Simon Litherland said it took a range of steps to keep costs down.
“We’re very focused on making sure we provide great tasting soft drinks,” he said. “Like many businesses we have experienced serious cost increases which we have tried to mitigate through better procurement.
“We’ve made packaging changes too. For example we lightweighted the Ballygowan bottle which improves cost. And Rockstar and London Essence we brought in house which reduces cost.”
China updates knock Pru shares, Diageo shares higher
Tuesday 16 May 2023 10:31 , Graeme Evans
Headwinds from China hampered the progress of the London market today as traders scaled back expectations on the pace of the country’s Covid recovery.
Figures from the world’s second biggest economy showed year-on year growth in monthly retail sales and industrial production well below market forecasts.
The signs of China’s weaker-than-expected recovery from a long period of pandemic lockdowns had a big impact on Prudential shares, which fell 2% or 23p to 1148p.
The insurer has refocused its operations to target the high growth savings and investment markets of Asia and Africa, but shares remain lower over the year-to-date despite the reopening of the Hong Kong-China border.
Other China-related fallers included animal genetics firm Genus, which slumped 100p to 2468p in the FTSE 250 as its latest update showed a slower recovery in the country’s pig prices.
Despite the uncertainty connected to one of its key markets, Rolls-Royce raced to the top of the FTSE 100 index as analysts at Jefferies swung behind the engines maker with an improved target price of 210p.
The shares, which have come under pressure since an AGM trading update last week, resumed their 2023 rebound by adding 4% or 5.4p to 150.5p.
The FTSE 100 index edged up 19.21 points to 7796.91, with Guinness owner Diageo 47.5p higher at 3585.5p after filings showed that Warren Buffett’s Berkshire Hathaway has been a recent buyer on the New York stock market.
Imperial Brands, which is one of the biggest dividend payers in the FTSE 100 index, fell 14p to 1859p after it revealed a 13% drop in half-year tobacco volumes.
The company’s exit from the Russia market drove the decline, but price rises meant the maker of John Player Special and Winston cigarettes still reported steady revenues.
The FTSE 250 index was 36.24 points higher at 19,294.99, with Royal Mail owner International Distributions Services among the biggest risers ahead of this week’s annual results. The shares rallied 3% or 6.7p to 235.1p.
On AIM, Angling Direct shares improved a penny to 27p after the fishing tackle and equipment retailer reported first quarter sales growth of 11%.
City Voices: Britain needs a new business advisory body with teeth
Tuesday 16 May 2023 10:18 , Daniel O'Boyle
The Confederation of British Industry has a grand title. It’s a 57-year-old institution representing 190,000 British companies and millions of businesspeople that has sat around the top tables for decades. But now following the messy events of recent weeks ending in the sacking of its former boss Tony Danker - who has insisted he was the ‘fall guy’ for the whole sorry saga - the CBI is fighting for its very survival.
So, if it does not have a long term future what should happen next?
Boohoo shares surge despite £90m loss
Tuesday 16 May 2023 09:56 , Daniel O'Boyle
Markets responded positively to Boohoo’s results as the retailer said it will return to growth in the second half of this financial year.
Its growth plan will involve attempting to reduce its rate of returns “whilst not impacting our customer experience”, while also looking for ways to reduce costs in all areas, which may include workforce costs.
Sarah Riding, retail partner at Gowling WLG, said there is still a clear path back to growth.
“Investors still have much to be hopeful for though as boohoo has proven it can return a significant profit and still has a large customer base, especially amongst younger generations who prefer the convenience of online shopping,” she said. “If the company can successfully close the gap on its margins while surviving the current pressures, then it's likely to get itself back to growth.”
Marston’s take hit on rate swaps
Tuesday 16 May 2023 09:29 , Simon English
MARSTON’s, the pub group that goes back to 1834, woke to a stiff hangover today after getting burnt by complex City interest rate swaps.
The operator of 1440 pubs took a £34.5 million hit due to sharp moves in interest rates post the catastrophic Liz Truss/Kwasi Kwarteng “mini-budget” last September.
This was supposed to hedge against moves in its debt, but had the opposite effect.
That masked an otherwise decent half-year in which revenues rose from £370 million to £407 million, suggesting the appetite of drinkers for a night out remains undimmed.
The company is targeting sales of a billion by 2026 and is hopeful of a strong summer, perhaps boosted by the Rugby World Cup.
There was a loss of £2.9 million. The bigger issue would seem to be debts of £1.2 billion compared to a stock market value of £235 million.
All pubs have struggled during and since the pandemic. CEO Andrew Andrea said today’s results “clearly demonstrates that consumers remain as keen as ever to celebrate - and socialise within - the Great British Pub”.
Marston’s employs 11,000.
The shares were steady at 37p.
Transport for London to license roundel and seat patterns across the globe
Tuesday 16 May 2023 09:17 , Daniel O'Boyle
Transport for London (TfL) is set to license the roundel, tube map and even seat design patterns across the globe through a new tie-up with brand gurus IMG.
The partnership will expand upon TfL’s existing licensing plans, which have allowed it to cash in on deals with Arsenal, Kurt Geiger and Uniqlo. That comes as the body looks for a way to improve its finances, having racked up a £1.27 billion deficit in 2021-22.
Tuesday 16 May 2023 09:08 , Simon English
The Glass Ceiling is the social barrier that prevents women from landing the very top jobs. Lately, and not before time, the ceiling has been punctured.
There’s still aren’t enough top women bosses, but we’re going the right way.
The next issue is what academics call the Glass Cliff. Here the idea is that women get the top job at an organisation that was already failing.
When they fail to rescue it, the Glass Cliff is what they fall off. Men in the same situation get the chance of another top job – after all, they joined a business that was already in trouble and made the best of it. Women don’t.
One wonders if there is a risk of this playing out for Sharon White at John Lewis.
The partnership owned retailer is under all sorts of pressure. The sorts of issues that blighted other shops for years have finally caught up with the department stores and with Waitrose.
Dame White has proposed some fairly radical solutions to this, including the notion that she could sell a chunk of the company to outside shareholders to raise capital the business plainly needs.
Staff and industry veterans were furious. Didn’t White get what this business was all about? Other experts have cropped up to offer platitudes about JLP returning to “its core ethos” of putting customers first, as if it were that simple, as it if weren’t already doing that.
One take is that White is having to shove through changes that previous (male) executives ignored or avoided, while they basked in the certainty that upper-middle class England loved the brand so much they would continue to shop there in the face of any number of credit crunch’s or booms in inflation.
This turns out to have been false confidence.
So now it is up to her, and she’s a ready-made scapegoat if saving the partnership turns out to be even more difficult than it looks (This isn’t White’s spin I should say, I haven’t spoken to her on this).
Still, next time we read that staff or “experts” think she is getting it wrong, perhaps we should at least ask why her predecessors didn’t do any of the things she now feels forced to do.
Vodafone shares fall another 4%, FTSE 100 flat
Tuesday 16 May 2023 08:37 , Graeme Evans
Vodafone shares have fallen 4% after its new boss admitted the company’s performance had not been good enough.
Margherita Della Valle set out her turnaround plans alongside updated guidance for the 2024 financial year but shares remain under pressure after falling another 3.8p to 86.3p. The widely-held stock has lost a quarter of its value over the past year.
Other blue-chip fallers included Prudential after today’s disappointing figures from China’s retail and industrial production sectors. The insurer, which has pivoted its operations to focus on Asia and Africa, fell 15.5p to 1155.5p.
The FTSE 100 index stood 3.61 points higher at 7781.31 and the FTSE 250 index lifted 3.86 points at 19,262.61.
In the second tier, Greggs shares were broadly unchanged at 2833.9p after its trading update but animal genetics company Genus slumped 10% or 260p to 2308p as it reported a slower-than-expected recovery in China pig prices.
Boohoo plunges to £90 million loss
Tuesday 16 May 2023 08:09 , Daniel O'Boyle
Boohoo plunged to a £90.7 million loss in the year to the end of February, as sales fell while costs rose.
It set out plans for a turnaround, but expects revenue to decline further during the current financial year, with a sharp drop in the first six months before starting to see a turnaround during the Autumn/Winter season.
Josh Warner, Market Analyst at City Index, said: “What a rough year for Boohoo. Sales fell by a double-digit percentage and adjusted Ebitda halved as it struggled with higher costs and excess inventory.
“Boohoo must now rebuild profitability and return to growth, but investors will have to wait to see any noticeable improvement considering it expects sales to be down another 10% to 15% in the first half of the new financial year. “
Cigarette volumes drop 13% at Imperial Brands on exit from Russia and as Covid sales spike cools
Tuesday 16 May 2023 07:36 , Michael Hunter
Imperial Brands said its tobacco volumes fell 13% in the first six months of its financial year, as the maker of John Player Special and Winston cigarettes took a hit from its withdrawal from Russia.
It also said that the end of Covid restrictions hit sales, which rose during lockdowns, making year-on-year comparisons “tough”. But it lifted its market share in what it called its “top five combustible markets”, with gains in US, Australia and Spain offsetting declines in Germany and UK.”
The FTSE 100 giant, one of the biggest dividend payers on the index, was able to offset the drop in volumes with price rises, meaning revenue was steadier, rising 0.3% to £15.4 billion. Operating profit rose almost 28% to £1.5 billion for the six months to the end of March. It lifted it payout to investors by 1.5% to 43.18p, and said it was “on track” to return £1.5 billion to investors via share buybacks.
Stefan Bomhard chief executive, called the performance “resilient”, adding: “I am confident the actions we have taken are creating a stronger, more resilient business capable of driving shareholder returns through a growing dividend and an ongoing share buyback.”
Imperial, which also makes the Lambert & Butler and Davidoff brands, stood by its guidance for the full-year.
Markets flat amid US debt uncertainty
Tuesday 16 May 2023 07:34 , Graeme Evans
The quiet run for global stock markets is set to continue, with CMC Markets calling the FTSE 100 index to open three points lower than last night’s close of 7777.70.
US stock market futures are also little changed after yesterday’s session saw the Dow Jones Industrial Average rise by 0.1% and the S&P 500 by 0.3%.
Deutsche Bank pointed out this morning that the S&P 500 has traded within a narrow 1.5% range over the last six sessions and about 3.5% over the last month.
One factor has been uncertainty over whether Joe Biden and congressional leaders will secure a deal by next month to avoid a US debt default. Talks are due to take place today.
The malaise also reflects a wait of another month to find out whether Federal Reserve policymakers call time on the run of rate hikes at their meeting on 14 June.
DWP Minister for Employment hails ‘progress in the labour market'
Tuesday 16 May 2023 07:28 , Daniel O'Boyle
Following the latest unemployment figures, the Minister for Employment, Guy Opperman MP said:
“We’re continuing to see progress in the labour market as we take action across government to grow the economy. Employment is up; economic inactivity is down; and vacancies have fallen in successive quarters.
“As well as helping deliver on our priority to grow the economy, we know that being in work remains the best way for people to get on in life. That’s why I’m focused on matching jobseekers with roles, and businesses with a resilient and skilled workforce.
“Through partnerships with local employers, we have thousands of placements in sectors such as banking and engineering, helping people to achieve new qualifications and build rewarding careers."
China figures point to slower Covid recovery
Tuesday 16 May 2023 07:20 , Graeme Evans
The pace of China’s Covid recovery is showing signs of being slower than expected after figures published today came in short of forecasts.
The annual growth in retail sales hit 18.4% for April, up from 10.6% the previous month but short of the predicted 21.9%. For industrial production, Beijing reported a year-on-year rise of 5.6% compared with hopes for an improvement of 10.9%.
Michael Hewson, chief market analyst at CMC Markets, said the figures pointed to the world’s second largest economy being held back by low confidence and weak global demand.
He added: “There were many who suggested that we would see a sharp V-shaped rebound, which would have the effect of creating a supply shortage in certain commodity markets.
“Against most expectations this hasn’t happened in the manner expected with inflationary pressure remaining extremely muted, while the rebound in economic data has been lacklustre.”
Vodafone to cut 11.000 jobs
Tuesday 16 May 2023 07:11 , Daniel O'Boyle
Telecoms giant Vodafone will cut 11,000 jobs, with roles in both its Newbury, Berkshire headquarters and local markets to be eliminated.
The losses were revealed in CEO Margherita Della Valle’s first results announcement since becoming permanent CEO. She said the telecoms giant needed drastic change.
UK unemployment at 3.9%
Tuesday 16 May 2023 07:05 , Daniel O'Boyle
The UK’s unemployment rate came to 3.9%, higher than the expected 3.8%.
ONS director of economic statistics Darren Morgan said:“Employment and unemployment both rose again in the first three months of 2023, driven in particular by men. This means the number of those neither working nor looking for work continues to fall, although the number of people not working due to long-term sickness rose again, to a new record.
“However, the number of people on employers’ payrolls fell in April for the first time in over two years, though this is an early estimate that could be revised later.
“Despite continued growth in pay, people’s average earnings are still being outstripped by rising prices.
“The number of days lost to strikes rose again in March, with education and health making up four-fifths of the total this month.
Yesterday’s top stories
Tuesday 16 May 2023 06:56 , Daniel O'Boyle
Good morning, here are some of yesterday’s top stories:
There was an abrupt change at the top of one of the biggest FTSE 100 companies when British American Tobacco parted with CEO Jack Bowles
The Government will investigate whether supermarkets might be to blame for driving up food prices via ‘greedflation’, after finding that they are charging an extra 5p per litre on petrol and diesel
Beleaguered tech firm WANdisco has sounded the alarm on its cash levels as it seeks a speedy $30 million capital raise to avert its demise.